<PAGE>
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- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934
and
STATEMENT ON
SCHEDULE 13D
Under the Securities Exchange Act of 1934
------------------------
MELAMINE CHEMICALS, INC.
(Name of Subject Company)
BORDEN, INC.
BORDEN CHEMICAL, INC.
MC MERGER CORP.
(Bidder)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
(Title of Class of Securities)
585332
(CUSIP Number of Class of Securities)
LAWRENCE M. DIEKER, ESQ.
BORDEN CHEMICAL, INC.
180 EAST BROAD STREET
COLUMBUS, OHIO 43215
TELEPHONE: (614) 225-4313
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
COPIES TO:
DAVID J. SORKIN, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
TELEPHONE: (212) 455-2000
CALCULATION OF FILING FEE
<TABLE>
<CAPTION>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
<S> <C>
$122,690,860 $24,538.17
</TABLE>
* Based on the offer to purchase all of the outstanding shares of Common Stock
(including the associated preferred share purchase rights) of the Subject
Company at a purchase price of $20.50 cash per share, 5,627,934 shares
outstanding and 356,986 options outstanding.
** 1/50 of 1% of Transaction Valuation.
/ / 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:
Form or Registration No.:
Filing Party:
Date Filed:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CUSIP NO. 585332109
<TABLE>
<C> <S> <C> <C>
1 NAMES OF REPORTING PERSONS: MC MERGER CORP.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS: 52-2059331
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e)
OR 2(f) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,275,000*
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES / /
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
22.7% (based on 5,627,934 shares outstanding)*
10 TYPE OF REPORTING PERSON
CO
</TABLE>
* Beneficial ownership is based solely on the provisions of the Tender
Agreement, pursuant to which among other things, ChemFirst, Inc. has agreed
with the reporting person or its affiliates to vote the shares shown as
beneficially owned in favor of the Merger and against any action or agreement
(other than the Merger Agreement or the transactions contemplated thereby)
that would impede, interfere with, delay, postpone or attempt to discourage
the Offer or the Merger, all as more fully described herein. Capitalized terms
have the meanings assigned thereto herein.
2
<PAGE>
CUSIP NO. 585332109
<TABLE>
<C> <S> <C> <C>
1 NAMES OF REPORTING PERSONS: BORDEN CHEMICAL, INC.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS: 51-0370356
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS
AF and WC
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
1,275,000*
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES / /
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
22.7% (based on 5,627,934 shares outstanding)*
10 TYPE OF REPORTING PERSON
CO
</TABLE>
* Beneficial ownership is based solely on the provisions of the Tender
Agreement, pursuant to which among other things, ChemFirst, Inc. has agreed
with the reporting person or its affiliates to vote the shares shown as
beneficially owned in favor of the Merger and against any action or agreement
(other than the Merger Agreement or the transactions contemplated thereby)
that would impede, interfere with, delay, postpone or attempt to discourage
the Offer or the Merger, all as more fully described herein. Capitalized terms
have the meanings assigned thereto herein.
3
<PAGE>
CUSIP NO. 585332109
<TABLE>
<C> <S> <C> <C>
1 NAMES OF REPORTING PERSONS: BORDEN, INC.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS: 13-0511250
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e)
OR 2(f) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
New Jersey
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,275,000*
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES / /
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
22.7% (based on 5,627,934 shares outstanding)*
10 TYPE OF REPORTING PERSON
CO
</TABLE>
* Beneficial ownership is based solely on the provisions of the Tender
Agreement, pursuant to which among other things, ChemFirst, Inc. has agreed
with the reporting person or its affiliates to vote the shares shown as
beneficially owned in favor of the Merger and against any action or agreement
(other than the Merger Agreement or the transactions contemplated thereby)
that would impede, interfere with, delay, postpone or attempt to discourage
the Offer or the Merger, all as more fully described herein. Capitalized terms
have the meanings assigned thereto herein.
4
<PAGE>
This Tender Offer Statement on Schedule 14D-1 relates to the offer by MC
Merger Corp., a Delaware corporation (the "Purchaser"), to purchase all of the
outstanding shares of Common Stock, par value $0.01 per share (the "Shares"), of
Melamine Chemicals, Inc., a Delaware corporation (the "Company"), including the
associated preferred share purchase rights (the "Rights") issued pursuant to the
Rights Agreement dated as of November 5, 1990, as amended (the "Rights
Agreement") between the Company and Wachovia Bank and Trust Company (now
Wachovia Bank, N.A.), as rights agent (the "Rights Agent"), at a purchase price
of $20.50 per Share (and associated Right), net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer to Purchase dated October 15, 1997 (the "Offer to Purchase"), a copy of
which is attached hereto as Exhibit (a)(1), and in the related Letter of
Transmittal (which, together with the Offer to Purchase, constitute the
"Offer"), a copy of which is attached hereto as Exhibit (a)(2). The Purchaser is
a wholly owned subsidiary of Borden Chemical, Inc., a Delaware corporation (the
"Parent"), which is itself a subsidiary of Borden, Inc., a New Jersey
corporation ("Borden").
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Melamine Chemicals, Inc. The
information set forth in Section 7 ("Certain Information Concerning the
Company") of the Offer to Purchase is incorporated herein by reference.
(b) The exact title of the class of equity securities being sought in the
Offer is common stock, par value $.01 per share, of the Company, and the
associated preferred share purchase rights. The information set forth in the
Introduction (the "Introduction") of the Offer to Purchase is incorporated
herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares; No Cash
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is filed by the Parent, the Purchaser and
Borden. The information set forth in Section 8 ("Certain Information Concerning
the Parent, the Purchaser and Borden, Inc.") of the Offer to Purchase and in
Schedule I thereto is incorporated herein by reference.
(e) and (f) During the last five years, none of the Parent, the Purchaser or
Borden, nor, to the best knowledge of the the Parent, the Purchaser or Borden,
any of the persons listed in Schedule I to the Offer to Purchase (i) has 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 and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting activities subject to, federal or state securities
laws or finding any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth in Section 8 ("Certain Information Concerning
the Parent, the Purchaser and Borden, Inc.") of the Offer to Purchase is
incorporated herein by reference. Except as set forth in Section 8 of the Offer
to Purchase, since July 1, 1994, there have been no transactions which would be
required to be disclosed under this Item 3(a) between any of the Parent, the
Purchaser or Borden, or, to the best knowledge of the Parent, the Purchaser and
Borden, any of the persons listed in Schedule I to the Offer to Purchase and the
Company or any of its executive officers, directors or affiliates.
(b) The information set forth in Section 8 ("Certain Information Concerning
the Parent, the Purchaser and Borden, Inc."), Section 10 ("Background of the
Offer; Contacts with the Company"),
5
<PAGE>
Section 11 ("The Merger Agreement; the Tender Agreement") and Section 12
("Purpose of the Offer; the Merger; Plans for the Company; Rights Agreement") of
the Offer to Purchase is incorporated herein by reference. Except as set forth
in Sections 8, 10, 11 and 12 of the Offer to Purchase, since July 1, 1994, there
have been no contacts, negotiations or transactions which would be required to
be disclosed under Item 3(b) between any of the Parent, the Purchaser, Borden or
any of their respective subsidiaries or, to the best knowledge of the Parent,
the Purchaser and Borden, any of those persons listed in Schedule I to the Offer
to Purchase and the Company or its affiliates concerning a merger, consolidation
or acquisition, a tender offer or other acquisition of securities, an election
of directors or a sale or other transfer of a material amount of assets.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 9 ("Source 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 BIDDER.
(a)-(g) The information set forth in the Introduction, Section 6 ("Price
Range of Shares; No Cash Dividends"), Section 10 ("Background of the Offer;
Contacts with the Company"), Section 11 ("The Merger Agreement; the Tender
Agreement"), Section 12 ("Purpose of the Offer; the Merger; Plans for the
Company; Rights Agreement") and Section 14 ("Effect of the Offer on the Market
for the Shares, Nasdaq National Market Quotation and Exchange Act Registration")
of the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in the Introduction and Section 8 ("Certain
Information Concerning the Parent, the Purchaser and Borden, Inc.") of the Offer
to Purchase is incorporated herein by reference. Except as set forth in the
Introduction and Section 8 of the Offer to Purchase, none of the Parent, the
Purchaser or Borden, nor, to the best knowledge of the Parent, the Purchaser and
Borden, any of the persons listed in Schedule I to the Offer to Purchase or any
associate or majority-owned subsidiary of the Parent, the Purchaser or Borden or
any of the persons so listed beneficially owns or has any right to acquire,
directly or indirectly, any Shares.
(b) The information set forth in the Introduction and Section 11 ("The
Merger Agreement; the Tender Agreement") of the Offer to Purchase is
incorporated herein by reference. Except as set forth in the Introduction and
Section 11 of the Offer to Purchase, neither the Parent, the Purchaser or Borden
nor, to the best knowledge of the Parent, the Purchaser and Borden, any of the
persons or entities referred to above or any executive officer, director or
subsidiary of any of the foregoing has effected any transactions in the Shares
during the past sixty days.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE
SUBJECT COMPANY'S SECURITIES.
The information set forth in Section 9 ("Source and Amount of Funds"),
Section 10 ("Background of the Offer; Contacts with the Company"), Section 11
("The Merger Agreement; the Tender Agreement"), Section 12 ("Purpose of the
Offer; the Merger; Plans for the Company; Rights Agreement") and Section 17
("Fees and Expenses") of the Offer to Purchase is incorporated herein by
reference. Except as set forth in Sections 9, 10, 11, 12 and 17 of the Offer to
Purchase, none of the Parent, the Purchaser or Borden, nor, to the best
knowledge of the Parent, the Purchaser and Borden, any of the persons listed in
Schedule I to the Offer to Purchase, 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
6
<PAGE>
contract, arrangement, understanding or relationship concerning the transfer or
the voting of any such securities, joint ventures, loans or option arrangements,
puts or calls, guarantees of loans, guarantee agreements or any giving or
withholding of proxies).
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 ("Certain Information Concerning the
Parent, the Purchaser and Borden, Inc.") of the Offer to Purchase is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 11 ("The Merger Agreement; the
Tender Agreement") and Section 12 ("Purpose of the Offer; the Merger; Plans for
the Company; Rights Agreement") of the Offer to Purchase is incorporated herein
by reference.
(b) and (c) The information set forth in Section 16 ("Certain Legal Matters
and Regulatory Approvals") of the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth in Section 16 ("Certain Legal Matters and
Regulatory Approvals") of the Offer to Purchase is incorporated herein by
reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a) (1) Offer to Purchase dated October 15, 1997.
(a) (2) Letter of Transmittal.
(a) (3) Notice of Guaranteed Delivery.
(a) (4) Letter from the Dealer Manager to Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees.
(a) (5) Letter to clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees.
(a) (6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a) (7)(i) Summary Advertisement as published on October 15, 1997.
(a) (7)(ii) Summary Advertisement in the form to be published on October 16,
1997.
(a) (8) Press Release issued by the Parent on October 9, 1997.
(a) (9) Press Release issued by the Parent on October 15, 1997.
(b) (1) Loan Agreement dated as of July 1, 1996 between, Borden Chemical,
Inc., as borrower, and Borden, Inc., as lender.
(b) (2) Letter dated October 1, 1997 from Borden, Inc. to Borden Chemical,
Inc.
(c) (1) Agreement and Plan of Merger dated as of October 9, 1997 by and
among Borden Chemical, Inc., MC Merger Corp. and Melamine Chemicals, Inc.
(c) (2) Tender Agreement dated as of October 9, 1997 among Borden Chemical,
Inc., MC Merger Corp. and ChemFirst Inc.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
7
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify the
information set forth in this Statement is true, complete and correct.
BORDEN, INC.
By: /s/ ELLEN GERMAN BERNDT
-----------------------------------------
Name: Ellen German Berndt
Title: Secretary
BORDEN CHEMICAL, INC.
By: /s/ JOSEPH M. SAGGESE
-----------------------------------------
Name: Joseph M. Saggese
Title: Chairman of the Board, President
and Chief Executive Officer
MC MERGER CORP.
By: /s/ JAMES O. STEVNING
-----------------------------------------
Name: James O. Stevning
Title: President
Date: October 15, 1997
8
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NO. DESCRIPTION NO.
- -------------- ------------------------------------------------------------------------------------------ -----
<C> <S> <C>
11(a)(1) Offer to Purchase, dated October 15, 1997.................................................
11(a)(2) Letter of Transmittal.....................................................................
11(a)(3) Notice of Guaranteed Delivery.............................................................
11(a)(4) Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks, Trust Companies and
Nominees..................................................................................
11(a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and
Nominees..................................................................................
11(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 ....
11(a)(7)(i) Summary Advertisement as published on October 15, 1997....................................
11(a)(7)(ii) Summary Advertisement in the form to be published on October 16, 1997.....................
11(a)(8) Press Release issued by the Parent on October 9, 1997.....................................
11(a)(9) Press Release issued by the Parent on October 15, 1997....................................
11(b)(1) Loan Agreement dated as of July 1, 1996 between Borden Chemical, Inc., as borrower, and
Borden, Inc., as lender...................................................................
11(b)(2) Letter dated October 1, 1997 from Borden, Inc. to Borden Chemical, Inc....................
11(c)(1) Agreement and Plan of Merger dated as of October 9, 1997 by and among Borden Chemical,
Inc., MC Merger Corp. and Melamine Chemicals, Inc.........................................
11(c)(2) Tender Agreement dated October 9, 1997 among Borden Chemical, Inc., MC Merger Corp. and
ChemFirst Inc.............................................................................
</TABLE>
9
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MELAMINE CHEMICALS, INC.
AT
$20.50 NET PER SHARE
BY
MC MERGER CORP.
A WHOLLY OWNED SUBSIDIARY OF
BORDEN CHEMICAL, INC.
A SUBSIDIARY OF
BORDEN, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, NOVEMBER 13, 1997,
UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PURSUANT TO THE OFFER PRIOR TO THE EXPIRATION OF THE
OFFER SUCH NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE (THE
"COMMON STOCK"), OF MELAMINE CHEMICALS, INC. (THE "COMPANY"), WHICH CONSTITUTES,
ON A FULLY-DILUTED BASIS, NOT LESS THAN 51% OF THE SHARES OF COMMON STOCK OF THE
COMPANY OUTSTANDING ON THE DATE OF PURCHASE AND (II) THE EXPIRATION OR
TERMINATION OF ANY APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED. THE OFFER IS ALSO SUBJECT TO
OTHER TERMS AND CONDITIONS. SEE THE INTRODUCTION AND SECTIONS 1 AND 15.
--------------------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED, BY UNANIMOUS VOTE OF THE
DIRECTORS PRESENT, THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER, AND DETERMINED THAT THE TERMS OF
THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS
OF SHARES OF COMMON STOCK OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS OF THE
COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES TO THE PURCHASER PURSUANT TO
THE OFFER.
--------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) (and the associated preferred share purchase rights
(the "Rights") of the Company) should either (1) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in the
Letter of Transmittal, mail or deliver the Letter of Transmittal (or such
facsimile) and any other required documents to the Depositary (as defined
herein), and either deliver the certificates representing the tendered Shares
(and Rights, if applicable) and any other required documents to the Depositary
or tender such Shares (and Rights, if applicable) pursuant to the procedure for
book-entry transfer set forth in Section 3 or (2) request such stockholder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. Stockholders having Shares (and Rights, if
applicable) 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 if they desire to tender Shares (and Rights, if
applicable) so registered.
A stockholder who desires to tender Shares (and Rights) and whose
certificates representing such Shares (and Rights, if applicable) are not
immediately available, or who cannot deliver the certificates for Shares (and
Rights, if applicable) and all other required documents to reach the Depository
on or prior to the Expiration Date (as defined herein), or who cannot comply
with the procedure for book-entry transfer on a timely basis may tender such
Shares (and Rights, if applicable) by following the procedures for guaranteed
delivery set forth in Section 3.
Questions and requests for assistance may be directed to Chase Securities
Inc. (the "Dealer Manager") or to Mackenzie Partners, Inc. (the "Information
Agent") at their respective addresses and telephone numbers set forth on the
back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
also be obtained from the Information Agent or the Dealer Manager, or from
brokers, dealers, commercial banks or trust companies.
THE DEALER MANAGER FOR THE OFFER IS:
CHASE SECURITIES INC.
OCTOBER 15, 1997
<PAGE>
TABLE OF CONTENTS
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PAGE
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<C> <S> <C>
INTRODUCTION..................................................................................................... 1
THE TENDER OFFER................................................................................................. 3
1. Terms of the Offer; Expiration Date................................................................... 3
2. Acceptance for Payment and Payment for Shares......................................................... 4
3. Procedure for Tendering Shares and Rights............................................................. 6
4. Withdrawal Rights..................................................................................... 9
5. Certain Federal Income Tax Consequences............................................................... 10
6. Price Range of Shares; No Cash Dividends.............................................................. 10
7. Certain Information Concerning the Company............................................................ 11
8. Certain Information Concerning the Parent, the Purchaser and Borden, Inc.............................. 14
9. Source and Amount of Funds............................................................................ 16
10. Background of the Offer; Contacts with the Company.................................................... 17
11. The Merger Agreement; the Tender Agreement............................................................ 17
12. Purpose of the Offer; the Merger; Plans for the Company; Rights Agreement............................. 28
13. Dividends and Distributions........................................................................... 33
14. Effect of the Offer on the Market for the Shares, Nasdaq National Market Quotation and Exchange Act
Registration.......................................................................................... 33
15. Certain Conditions of the Offer....................................................................... 34
16. Certain Legal Matters and Regulatory Approvals........................................................ 36
17. Fees and Expenses..................................................................................... 38
18. Miscellaneous......................................................................................... 38
SCHEDULE I -- DIRECTORS AND EXECUTIVE OFFICERS OF THE PARENT, THE PURCHASER AND BORDEN, INC. ....................
I-1
</TABLE>
i
<PAGE>
To the Stockholders of
MELAMINE CHEMICALS, INC.
INTRODUCTION
MC Merger Corp., a Delaware corporation (the "Purchaser"), which is a wholly
owned subsidiary of Borden Chemical, Inc., a Delaware corporation (the
"Parent"), which is itself a subsidiary of Borden, Inc., a New Jersey
corporation ("Borden"), hereby offers to purchase all of the outstanding shares
of Common Stock, par value $.01 per share (the "Shares"), of Melamine Chemicals,
Inc., a Delaware corporation (the "Company"), and the associated preferred share
purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated as
of November 5, 1990, as amended (the "Rights Agreement"), between the Company
and Wachovia Bank and Trust Company, N.A. (now Wachovia Bank, N.A.), as Rights
Agent (the "Rights Agent"), at a purchase price of $20.50 per Share and
associated Right, net to the seller in cash without interest thereon, 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 from time to time, together
constitute the "Offer"). The Rights Agreement is described in greater detail
below in Section 12. Unless the context requires otherwise, all references in
this Offer to Purchase to Shares shall be deemed to refer also to the associated
Rights, and all references to Rights shall be deemed to include all benefits
that may inure to the stockholders of the Company or to holders of the Rights
pursuant to the Rights Agreement. In connection with the Merger Agreement (as
defined below), the Company has amended the Rights Agreement so that the
execution and delivery of the Merger Agreement and the Tender Agreement (as
defined below), and the consummation of the transactions contemplated thereby,
including the Offer and the purchase of Shares pursuant thereto, will not result
in the occurrence of a Distribution Date, a Shares Acquisition Date or any
person becoming an Acquiring Person (each as defined in the Rights Agreement),
or in any adjustment to the exercise price or other terms of the Rights. Unless
and until the Distribution Date occurs, the Rights will be transferred with and
only with the Shares and, therefore, the surrender for transfer of any of the
certificates representing Shares (the "Share Certificates"), including upon
acceptance for payment of such Shares pursuant to the Offer, will also
constitute the surrender for transfer of the Rights associated with the Shares
represented by such Share Certificates. See Section 12.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the transfer and sale of Shares and Rights pursuant to the
Offer. The Purchaser will pay all fees and expenses of Chase Securities Inc.,
which is acting as Dealer Manager for the Offer (in such capacity, the "Dealer
Manager"), IBJ Schroder Bank & Trust Company, which is acting as the Depositary
(in such capacity, the "Depositary"), and Mackenzie Partners, Inc., which is
acting as the Information Agent (in such capacity, the "Information Agent"),
incurred in connection with the Offer. See Section 17.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD OF DIRECTORS") HAS
APPROVED, BY UNANIMOUS VOTE OF THE DIRECTORS PRESENT, THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER (AS
DEFINED BELOW), AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE
FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF THE SHARES AND RECOMMENDS
THAT THE HOLDERS OF THE SHARES ACCEPT THE OFFER AND TENDER THEIR SHARES TO THE
PURCHASER PURSUANT TO THE OFFER.
The Board of Directors has received the opinion dated October 9, 1997 of
Goldman, Sachs & Co. ("Goldman Sachs"), financial advisor to the Company, to the
effect that, as of such date and based upon and subject to certain assumptions
stated therein, the $20.50 per Share cash consideration to be received in the
Offer and the Merger by holders of Shares (other than Parent and its affiliates
and holders who exercise their appraisal rights in accordance with applicable
law) was fair from a financial point of view to such holders. A copy of the
opinion of Goldman Sachs is attached to the Company's Solicitation/
1
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Recommendation Statement on Schedule 14D-9, which is being distributed to the
stockholders of the Company, and stockholders are urged to read the opinion
carefully in its entirety for the assumptions made, matters considered and
limitations on the review undertaken by Goldman Sachs.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PURSUANT TO THE OFFER PRIOR TO THE EXPIRATION DATE
(AS DEFINED IN SECTION 1) SUCH NUMBER OF SHARES WHICH CONSTITUTES, ON A
FULLY-DILUTED BASIS, NOT LESS THAN 51% OF THE SHARES ON THE DATE OF PURCHASE
(THE "MINIMUM CONDITION") AND (II) THE EXPIRATION OR TERMINATION OF ANY
APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT
OF 1976, AS AMENDED (THE "HSR ACT") (THE "HSR ACT CONDITION"). SEE SECTIONS 1
AND 15. IF THE PURCHASER PURCHASES NOT LESS THAN THAT NUMBER OF SHARES NEEDED TO
SATISFY THE MINIMUM CONDITION, IT WILL BE ABLE TO EFFECT THE MERGER WITHOUT THE
AFFIRMATIVE VOTE OF ANY OTHER STOCKHOLDER OF THE COMPANY. SEE SECTION 12.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of October 9, 1997 (the "Merger Agreement"), among the Parent, the Purchaser
and the Company. The Merger Agreement provides, among other things, for the
making of the Offer by the Purchaser, and further provides that, following the
completion of the Offer, upon the terms and subject to the conditions of the
Merger Agreement, and in accordance with the Delaware General Corporation Law
(the "DGCL"), the Purchaser will be merged with and into the Company (the
"Merger"). Following the Merger, the Company will continue as the surviving
corporation (the "Surviving Corporation") and become a wholly owned subsidiary
of the Parent, and the separate corporate existence of the Purchaser will cease.
Borden has guaranteed the Parent's obligations under the Merger Agreement. See
Section 11.
At the effective time of the Merger (the "Effective Time"), each Share
issued and outstanding immediately prior to the Effective Time (other than
Shares owned by the Company or any subsidiary of the Company and Shares owned by
the Parent, the Purchaser or any other subsidiary of the Parent, which shall be
cancelled, and other than Shares, if any (collectively, "Dissenting Shares"),
held by stockholders who have properly exercised and perfected appraisal rights
under Section 262 of the DGCL) will, by virtue of the Merger and without any
action on the part of the holders of the Shares, be converted into the right to
receive $20.50 in cash (the "Merger Consideration"), payable to the holder
thereof, without interest, upon surrender of the certificate formerly
representing such Share, less any required withholding taxes.
The Merger Agreement is more fully described in Section 11. Certain federal
income tax consequences of the sale of the Shares pursuant to the Offer and the
exchange of Shares for the Merger Consideration pursuant to the Merger are
described in Section 5.
The Company has represented to the Parent that as of the close of business
on October 9, 1997, there were 5,627,934 Shares issued and outstanding and
356,986 Shares issuable upon the exercise of outstanding stock options. Based
upon the foregoing, the Purchaser believes that 3,052,310 Shares constitutes 51%
of the outstanding Shares on a fully-diluted basis.
Simultaneously with the execution of the Merger Agreement and as a condition
to the willingness of the Parent and the Purchaser to proceed with the Offer and
the Merger, the Parent and the Purchaser entered into a Tender Agreement (the
"Tender Agreement") with ChemFirst, Inc., a Mississippi corporation ("ChemFirst"
or the "Stockholder"), pursuant to which, among other things, ChemFirst agreed
to validly tender (and not withdraw) its Shares to the Purchaser pursuant to the
Offer, and to vote the Owned Shares, among other things, in favor of the Merger
and against any action or agreement (other than the Merger Agreement or the
transactions contemplated thereby) that would impede, interfere with, delay,
postpone or attempt to discourage the Merger or the Offer. As of the date of the
Tender Agreement, ChemFirst beneficially owned 1,275,000 Shares (the "Owned
Shares"), representing approximately 21.3% of the outstanding Shares on a
fully-diluted basis. See Section 11.
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THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of such extension or amendment), the Purchaser will accept
for payment and pay for all Shares validly tendered on or prior to the
Expiration Date and not properly withdrawn as permitted by Section 4. The term
"Expiration Date" means 12:00 Midnight, New York City time, on Thursday,
November 13, 1997, unless and until the Purchaser, in its sole discretion (but
subject to the terms and conditions of the Merger Agreement), shall have
extended the period 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 the Purchaser, shall expire.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition and the HSR Act Condition and certain other conditions. See
Section 15, which sets forth in full the conditions to the Offer. Subject to the
provisions of the Merger Agreement and the applicable rules and regulations of
the Securities and Exchange Commission (the "Commission"), the Purchaser
reserves the right, in its sole discretion, to waive any or all conditions to
the Offer (other than the Minimum Condition and the HSR Act Condition) and to
modify the terms of the Offer. Subject to the provisions of the Merger
Agreement, including the provisions of the Merger Agreement described in the
next paragraph, and the applicable rules and regulations of the Commission, if
by the Expiration Date any or all of such conditions to the Offer have not been
satisfied, the Purchaser reserves the right (but shall not be obligated) to (i)
terminate the Offer and return all tendered Shares to tendering stockholders,
(ii) waive such unsatisfied conditions and purchase all Shares validly tendered
or (iii) extend the Offer and, subject to the terms of the Offer (including the
rights of stockholders to withdraw their Shares), retain the Shares which have
been tendered, until the termination of the Offer, as extended.
Under the terms of the Merger Agreement, the Purchaser has agreed with the
Company that it will not, without the prior written consent of the Company,
impose conditions to the Offer in addition to those set forth in Annex A to the
Merger Agreement, decrease the price per Share payable in the Offer, change the
form of consideration (other than by adding consideration), reduce the number of
Shares sought to be purchased in the Offer, extend the Expiration Date (except
as described below in this paragraph) or otherwise change any term of the Offer
in any manner adverse to any holder of Shares. The Merger Agreement provides
that the Purchaser may, without the consent of the Company, (i) extend the Offer
(on one or more occasions) beyond the scheduled expiration date if at any such
date any of the conditions to the Purchaser's obligation to purchase Shares have
not been satisfied or waived, until such time as such conditions are satisfied
or waived, (ii) extend the Offer to the extent required by any rule or
regulation of the Commission or (iii) extend the Offer (on a one-time basis
only) for not more than five business days beyond the scheduled expiration date
if all of the conditions thereto have been satisfied or waived and at least 51%
but less than 90% of the outstanding Shares have been validly tendered and not
properly withdrawn pursuant to the Offer. In addition, notwithstanding anything
in the preceding sentence to the contrary, the Merger Agreement provides that
the Purchaser may not, without the Company's prior written consent, (A) extend
the Expiration Date if the failure to meet any condition to the Offer was
directly or indirectly caused by an act or omission of the Parent or the
Purchaser that constitutes a breach of the Merger Agreement or (B) effect any
individual extension as a result of a failure to meet a condition to the Offer
in excess of the amount of time reasonably believed by the Parent to be
necessary to satisfy such condition, which shall in no event exceed 10 business
days. The Purchaser shall have no obligation to pay interest on the purchase
price of tendered Shares. Subject to the applicable rules and regulations of the
Commission and the provisions of the Merger Agreement described above in this
paragraph, the Purchaser expressly reserves the right, in its sole discretion,
at
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any time and from time to time, and regardless of whether or not any of the
events set forth in Section 15 shall have occurred, to (i) 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 or (ii) amend the Offer in any respect by giving
oral or written notice of such amendment to the Depositary. 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.
Any extension, delay, termination, waiver or amendment of the Offer will be
followed as promptly as practicable by public announcement thereof, and such
announcement in the case of an extension will be made in accordance with Rule
14e-1(d) under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), no later than 9:00 A.M., New York City time, on the next business day
after the previously scheduled Expiration Date. Without limiting the manner in
which the Purchaser may choose to make any public announcement, except as
provided by applicable law (including Rules 14d-4(c) and 14(d)-6(d) under the
Exchange Act, which require that material changes be promptly disseminated to
holders of Shares), the Purchaser shall have no obligation to publish, advertise
or otherwise communicate any such public announcement other than by issuing a
release to the Dow Jones News Service.
If the Purchaser makes a material change in the terms of the Offer or if it
waives a material condition of the Offer, the Purchaser will disseminate
additional tender offer material 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 an offer must remain open following material changes in the terms
of the offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances, including the
materiality, of the changes. With respect to a change in price or, subject to
certain limitations, a change in the percentage of securities sought, a minimum
ten business day period from the day of such change is generally required to
allow for adequate dissemination to stockholders. For purposes of the Offer, a
"business day" means any day other than a Saturday, Sunday, or a federal holiday
and consists of the time period from 12:01 A.M. through 12:00 Midnight, New York
City time.
The Company has provided the Purchaser with the Company's stockholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of Transmittal
and other relevant materials will be mailed by the Purchaser to record holders
of Shares and furnished to brokers, dealers, commercial banks, trust companies
and similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing, for subsequent transmittal to beneficial
owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. 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), the Purchaser will
accept for payment and will pay for all Shares validly tendered and not properly
withdrawn on or prior to the Expiration Date as soon as practicable 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, including without
limitation the Minimum Condition and the HSR Act Condition. In addition, subject
to applicable rules of the Commission, the Purchaser expressly reserves the
right to delay acceptance for payment of or payment for Shares pending receipt
of any other regulatory approvals specified in Section 16. Any such delays will
be effected in compliance with Rule 14e-1(c) under the Exchange Act (relating to
a bidder's obligation to pay for or return tendered securities promptly after
the termination or withdrawal of such bidder's offer).
For information with respect to approvals required to be obtained prior to
the consummation of the Offer, including the HSR Act, see Section 16.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
Share Certificates and, if applicable, certificates
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evidencing the Rights ("Rights Certificates"), or timely confirmation (a
"Book-Entry Confirmation") of a book-entry transfer of such Shares and, if
applicable, Rights into the Depositary's account at The Depository Trust Company
or the Philadelphia Depository Trust Company (each a "Book-Entry Transfer
Facility" and, collectively, the "Book-Entry Transfer Facilities") pursuant to
the procedures set forth in Section 3, (ii) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined below) in connection
with a book-entry transfer, and (iii) any other documents required by the Letter
of Transmittal.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to and received by the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares and, if applicable, Rights that such
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and that the Purchaser may enforce such agreement against such
participant.
PRIOR TO A DISTRIBUTION DATE, A VALID TENDER OF SHARES WILL ALSO CONSTITUTE
A TENDER OF THE ASSOCIATED RIGHTS. If Rights Certificates have been distributed
to holders of Shares, such holders are required to tender, or make book-entry
transfer of, Rights Certificates representing a number of Rights equal to the
number of Shares being tendered in order to effect a valid tender of such
Shares. See Section 12.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such Shares and Rights
pursuant to the Offer. Upon the terms and subject to the conditions of the
Offer, payment for Shares and Rights 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
payments from the Purchaser and transmitting such payments to stockholders whose
Shares and Rights have been accepted for payment. UNDER NO CIRCUMSTANCES WILL
INTEREST ON THE PURCHASE PRICE FOR SHARES AND RIGHTS BE PAID BY THE PURCHASER,
REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
If, for any reason whatsoever, acceptance for payment of or payment for any
Shares and Rights tendered pursuant to the Offer is delayed or the Purchaser is
unable to accept for payment or pay for Shares and Rights tendered pursuant to
the Offer, then without prejudice to the Purchaser's rights set forth herein,
the Depositary may nevertheless, on behalf of the Purchaser and subject to Rule
14e-1(c) under the Exchange Act, retain tendered Shares and Rights and such
Shares and Rights may not be withdrawn except to the extent that the tendering
stockholder is entitled to and duly exercises withdrawal rights as described in
Section 4.
If any tendered Shares and Rights are not accepted for payment for any
reason or if Share Certificates are submitted for more Shares and Rights than
are tendered, Share Certificates evidencing unpurchased or untendered Shares and
Rights will be returned without expense to the tendering stockholder (or, in the
case of Shares and Rights tendered by book-entry transfer into the Depositary's
account at a Book-Entry Transfer Facility pursuant to the procedures set forth
in Section 3, such Shares and Rights will be credited to an account maintained
at such Book-Entry Transfer Facility), in each case with the related Rights
Certificates, if any, as promptly as practicable following the expiration,
termination or withdrawal of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of its affiliates the right to purchase all
or any portion of the Shares and Rights tendered pursuant to the Offer, but any
such transfer or assignment will not relieve the Purchaser of its obligations
under the Offer and will in no way prejudice the rights of tendering
stockholders to receive payment for Shares and Rights validly tendered and
accepted for payment pursuant to the Offer.
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3. PROCEDURE FOR TENDERING SHARES AND RIGHTS.
VALID TENDERS. Except as set forth below, in order for Shares and Rights to
be validly tendered pursuant to the Offer, the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, or an Agent's Message in connection with a
book-entry delivery of Shares and Rights, and any other documents required by
the Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase on or prior to
the Expiration Date and either (i) Share Certificates and Rights Certificates,
if applicable, evidencing tendered Shares and Rights must be received by the
Depositary at such address or such Shares and Rights must be tendered pursuant
to the procedure for book-entry transfer described below and a Book-Entry
Confirmation must be received by the Depositary, in each case on or prior to the
Expiration Date or (ii) the guaranteed delivery procedures described below must
be complied with.
RIGHTS CERTIFICATES. PRIOR TO A DISTRIBUTION DATE, A VALID TENDER OF SHARES
WILL ALSO CONSTITUTE A TENDER OF THE ASSOCIATED RIGHTS. If the Distribution Date
has occurred and Rights Certificates have been distributed to such holders prior
to the date of tender pursuant to the Offer, Rights Certificates representing a
number of Rights equal to the number of Shares being tendered must be delivered
to the Depositary or, if available, a Book-Entry Confirmation must be received
by the Depositary with respect thereto, in order for such Shares to be validly
tendered. If the Distribution Date has occurred and Rights Certificates have not
been distributed prior to the time Shares are tendered pursuant to the Offer,
Rights may be tendered prior to a stockholder receiving Rights Certificates by
use of the guaranteed delivery procedures described below. A tender of Shares
without Rights Certificates as set forth above constitutes an agreement by the
tendering stockholder to deliver Rights Certificates representing a number of
Rights equal to the number of Shares tendered pursuant to the Offer to the
Depositary within three business days after the date Rights Certificates are
distributed. See Section 1.
BOOK-ENTRY TRANSFER. The Depositary will make a request to establish
accounts with respect to the Shares at the Book-Entry Transfer Facilities for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the system of any
Book-Entry Transfer Facility may make book-entry delivery of Shares by causing
such Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at such Book-Entry Transfer Facility 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 at a Book-Entry Transfer
Facility, the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, together with any required signature guarantees, or an
Agent's Message in connection with a book-entry transfer, and any other
documents required by the Letter of Transmittal, must in any case be received by
the Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase on or prior to the Expiration Date, or the guaranteed delivery
procedures described below must be complied with. If the Distribution Date
occurs, to the extent that the Rights become eligible for book-entry transfer
under procedures established by a particular Book-Entry Transfer Facility, the
Depositary will make a request to establish an account with respect to the
Rights at such Book-Entry Transfer Facility as soon as practicable. If book-
entry delivery of Rights is available, the foregoing book-entry transfer
procedure will also apply to Rights. However, no assurance can be given that
book-entry delivery of Rights will be available. If book-entry delivery is not
available and if separate Rights Certificates have been issued, a tendering
stockholder is not relieved of delivery requirements hereunder and thus will be
required to tender Rights by means of actual physical delivery of Rights
Certificates to the Depositary or pursuant to the guaranteed delivery procedures
set forth below.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND RIGHTS CERTIFICATES, IF
APPLICABLE, AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY
BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING
STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN
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ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF BOOK-ENTRY
TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL
WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
SIGNATURE GUARANTEES. Signatures on Letters of Transmittal must be
guaranteed by a firm which is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agents Medallion Program (each of the foregoing being referred to as an
"Eligible Institution"), except in cases where Shares and Rights are tendered
(i) by a registered holder of Shares and Rights who has not completed either the
box labeled "Special Payment Instructions" or the box labeled "Special Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of an
Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal.
If the Share Certificates and Rights Certificates, if applicable, are
registered in the name of a person other than the signer of the Letter of
Transmittal, or if payment is to be made, or Share Certificates and Rights
Certificates, if applicable, not accepted for payment or not tendered are to be
returned, to a person other than the registered holder, the Share Certificates
and Rights Certificates, if applicable, must be endorsed or accompanied by
appropriate stock powers, in either case, signed exactly as the name of the
registered holder appears on such certificates, with the signatures on such
certificates or stock powers guaranteed as aforesaid. See Instructions 1 and 5
of the Letter of Transmittal.
If Share Certificates and Rights Certificates, if applicable, are forwarded
separately to the Depositary, a properly completed and duly executed Letter of
Transmittal (or a facsimile thereof) must accompany each such delivery.
GUARANTEED DELIVERY. If a stockholder desires to tender Shares and Rights
pursuant to the Offer and such stockholder's Share Certificates and Rights
Certificates, if applicable, are not immediately available, or such stockholder
cannot deliver the Share Certificates and Rights Certificates, if applicable,
and all other required documents to reach the Depositary on or prior to the
Expiration Date, or such stockholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, such Shares and Rights may
nevertheless be tendered, provided that all of the following conditions are
satisfied:
(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 made available by the Purchaser is
received by the Depositary as provided below on or prior to the Expiration
Date; and
(iii) the Share Certificates and Rights Certificates, if applicable (or
a Book-Entry Confirmation), representing all tendered Shares and Rights in
proper form for transfer, together with the 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 any other documents required by the Letter of Transmittal 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 Nasdaq National Market is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted by
telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution and a representation that the
stockholder owns the Shares and Rights tendered within the meaning of, and that
the tender of the Shares and Rights effected thereby complies with, Rule 14e-4
under the Exchange Act, each 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 Share Certificates and Rights Certificates, if
applicable, for, or of Book-Entry Confirmation with respect to, such Shares and
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Rights, a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof), together with any required signature guarantees (or, in the
case of a book-entry transfer, an Agent's Message), and any other documents
required by the Letter of Transmittal. Accordingly, payment might not be made to
all tendering stockholders at the same time and will depend upon when Share
Certificates and Rights Certificates, if applicable, or Book-Entry Confirmations
with respect to such Shares and Rights are received into the Depositary's
account at a Book-Entry Transfer Facility.
APPOINTMENT AS PROXY. By executing the Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of the Purchaser and each of them as
such stockholder's attorneys-in-fact and proxies, with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the full
extent of such stockholder's rights with respect to the Shares and Rights
tendered by such stockholder and accepted for payment by the Purchaser (and with
respect to any and all other Shares or Rights or other securities issued or
issuable in respect of such Shares or Rights on or after the date hereof). All
such powers of attorney and proxies shall be considered irrevocable and coupled
with an interest in the tendered Shares. Such appointment will be effective
when, and only to the extent that, the Purchaser accepts such Shares and Rights
for payment. Upon such acceptance for payment, all prior powers of attorney and
proxies given by such stockholder with respect to such Shares and Rights (and
such other Shares, Rights and other securities) will be revoked without further
action, and no subsequent powers of attorney and proxies may be given nor any
subsequent written consents executed (and, if given or executed, will not be
deemed effective). The designees of the Purchaser will, with respect to the
Shares and Rights (and such other Shares, Rights and other securities) for which
such appointment is effective, be empowered to exercise all voting and other
rights of such stockholder as they in their sole discretion may deem proper at
any annual or special meeting of the Company's stockholders or any adjournment
or postponement thereof, by written consent in lieu of any such meeting or
otherwise. The Purchaser reserves the right to require that, in order for Shares
and Rights to be deemed validly tendered, immediately upon the Purchaser's
payment for such Shares and Rights, the Purchaser must be able to exercise full
voting rights with respect to such Shares, Rights and other securities,
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 and Rights will be determined by the Purchaser in its sole discretion,
which determination shall be final and binding. The Purchaser reserves the
absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may in the opinion of its
counsel be unlawful. The Purchaser also reserves the absolute right to waive any
of the conditions of the Offer (subject to the provisions of the Merger
Agreement) or any defect or irregularity in any tender of Shares and Rights of
any particular stockholder whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares or Rights will be
deemed to have been validly made until all defects and irregularities have been
cured or waived. None of the Purchaser, the Parent, Borden, any of their
affiliates or assigns, the Dealer Manager, the Depositary, the Information Agent
or any other person will be under any duty to give notification of any defects
or irregularities in tenders or incur any liability for failure to give any such
notification. The 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 FEDERAL INCOME TAX WITHHOLDING AND SUBSTITUTE FORM W-9. Under the
"backup withholding" provisions of federal income tax law, the Depositary may be
required to withhold 31% of the amount of any payments of cash pursuant to the
Offer. In order to avoid backup withholding, each stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the payor of such
cash with such stockholder'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 stockholder is not subject to backup withholding. If a
stockholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service ("IRS") may impose
a penalty on such stockholder and
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payment of cash to such stockholder pursuant to the Offer may be subject to
backup withholding of 31%. All stockholders surrendering Shares pursuant to the
Offer should complete and sign the substitute Form W-9 included in 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 Depositary). 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 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 9 of the Letter of Transmittal.
OTHER REQUIREMENTS. The Purchaser's acceptance for payment of Shares and
Rights tendered pursuant to any of the procedures described above will
constitute a binding agreement between the tendering stockholder and the
Purchaser upon the terms and subject to the conditions of the Offer, including
the tendering stockholder's representation and warranty that the stockholder is
the holder of the Shares and Rights within the meaning of, and that the tender
of the Shares and Rights complies with, Rule 14e-4 under the Exchange Act.
4. WITHDRAWAL RIGHTS. Tenders of Shares and Rights made pursuant to the
Offer are irrevocable, except that Shares and Rights tendered pursuant to the
Offer may be withdrawn at any time on or prior to the Expiration Date and,
unless theretofore accepted for payment by the Purchaser pursuant to the Offer,
may also be withdrawn at any time after December 13, 1997. If the Purchaser
extends the Offer, is delayed in its acceptance for payment of Shares and Rights
or is unable to purchase Shares and Rights validly tendered pursuant to the
Offer for any reason, then without prejudice to the Purchaser's rights under the
Offer, the Depositary may nevertheless, on behalf of the Purchaser, retain
tendered Shares and Rights and such Shares and Rights may not be withdrawn
except to the extent that tendering stockholders are entitled to withdrawal
rights as described in this Section 4. Any such delay in acceptance for payment
will be accompanied by an extension of the Offer to the extent required by law
or by the Merger Agreement.
For a withdrawal to be effective, a written, telegraphic, telex 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
notice of withdrawal must specify the name of the person who tendered the Shares
and Rights to be withdrawn, the number of Shares and Rights to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered such Shares or Rights. If Share Certificates or, if applicable, Rights
Certificates to be withdrawn have been delivered or otherwise identified to the
Depositary, then prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and the
signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution unless such Shares or Rights have been tendered for the account of
an Eligible Institution. If Shares or Rights have been tendered pursuant to the
procedure for book-entry transfer as set forth in Section 3, any notice of
withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Shares or Rights, in which
case a notice of withdrawal will be effective if delivered to the Depositary by
any method of delivery described in the first sentence of this paragraph.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of the
Purchaser, the Parent, Borden, any of their affiliates or assigns, the Dealer
Manager, the Depositary, the Information Agent or any other person will be under
any duty to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
Withdrawals of Shares and Rights may not be rescinded. Any Shares and Rights
properly withdrawn will thereafter be deemed not to have been validly tendered
for purposes of the Offer. However, withdrawn Shares and Rights may be
re-tendered at any time prior to the Expiration Date by following one of the
procedures described in Section 3.
9
<PAGE>
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The summary of tax consequences
set forth below is for general information only and is based on the law as
currently in effect. The tax treatment of each stockholder will depend in part
upon such stockholder's particular situation. Special tax consequences not
described herein may be applicable to particular classes of taxpayers, such as
financial institutions, broker-dealers, persons who are not citizens or
residents of the United States, stockholders who acquired their Shares through
the exercise of an employee stock option or otherwise as compensation, and
persons who received payments in respect of options to acquire Shares. ALL
STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX
CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY
AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL OR FOREIGN INCOME
AND OTHER TAX LAWS AND CHANGES IN SUCH TAX LAWS.
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for Federal income tax purposes under the Internal Revenue Code of
1986, as amended, and may also be a taxable transaction under applicable state,
local, foreign income or other tax laws. Generally, for Federal income tax
purposes, a stockholder will recognize gain or loss in an amount equal to the
difference between the cash received by the stockholder pursuant to the Offer or
the Merger and the stockholder's adjusted tax basis in the Shares and the
associated Rights tendered by the stockholder and purchased pursuant to the
Offer or the Merger. For Federal income tax purposes, such gain or loss will be
a capital gain or loss if the Shares are a capital asset in the hands of the
stockholder, and a long-term capital gain or loss if the stockholder's holding
period is more than one year as of the date the Purchaser accepts such Shares
for payment pursuant to the Offer or the effective date of the Merger, as the
case may be. There are limitations on the deductibility of capital losses.
Long-term capital gains of individuals are eligible for reduced rates of
taxation, with additional rate reductions applicable to gains from capital
assets held for more than 18 months. INDIVIDUALS SHOULD CONSULT THEIR OWN TAX
ADVISORS WITH RESPECT TO THE TAX TREATMENT OF CAPITAL GAINS AND LOSSES.
6. PRICE RANGE OF SHARES; NO CASH DIVIDENDS. The Shares are listed and
traded on the Nasdaq National Market under the symbol "MTWO". The following
table sets forth, for the quarters indicated, the high and low sales prices per
Share on the Nasdaq National Market as reported in the Company's Annual Reports
on Form 10-K for the fiscal years ended June 30, 1996 and June 30, 1997 (the
"1996 Annual Report" and the "1997 Annual Report," respectively) with respect to
the fiscal years covered by such Annual Reports, respectively, and as reported
by the Dow Jones News Service thereafter. According to the 1997 Annual Report,
the Company has not paid cash dividends on the Shares since March, 1992 and has
no plans to do so.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
Fiscal Year Ended
June 30, 1996:
First Quarter..... $10 1/4 $ 8 1/2
Second Quarter.... $10 1/4 $ 8 1/4
Third Quarter..... $ 9 1/2 $ 7 5/8
Fourth Quarter.... $ 9 3/4 $ 7 49/64
Fiscal Year Ended
June 30, 1997:
First Quarter..... $ 9 $ 6 1/4
Second Quarter.... $ 8 3/4 $ 6 1/4
Third Quarter..... $11 3/4 $ 7 5/8
Fourth Quarter.... $14 1/2 $10 1/2
Fiscal Year Ending
June 30, 1998:
First Quarter..... $16 1/2 $13 3/4
Second Quarter
(through October
14, 1997)....... $20 15/16 $16
</TABLE>
On June 27, 1997, the last full trading day prior to the Company's
announcement that it had received an unsolicited takeover proposal from Ashland
Inc. ("Ashland"), the closing sale price per
10
<PAGE>
Share reported on the Nasdaq National Market was $12.00. On July 15, 1997, the
last full trading day prior to the Company's announcement that it had engaged
Goldman Sachs as its financial advisor, the closing sale price per Share
reported on the Nasdaq National Market was $14.50. On October 9, 1997, the last
full trading day prior to announcement of the Offer on the evening of October 9,
1997, the closing sale price per Share reported on the Nasdaq National Market
was $16.50. On October 14, 1997, the last full trading day before commencement
of the Offer, the closing sale price per Share reported on the Nasdaq National
Market was $20.19. See Section 10. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT
MARKET QUOTATION FOR THE SHARES.
The Rights are currently attached to the outstanding Shares and may not be
traded separately. If a Distribution Date occurs, the Rights could begin trading
separately from the Shares. See Section 12. IN SUCH EVENT, STOCKHOLDERS ARE
URGED TO OBTAIN A CURRENT MARKET QUOTATION, IF ANY, FOR THE RIGHTS. Holders of
Shares are required to tender one Right for each Share tendered in order to
effect a valid tender of such Share. Accordingly, if a Distribution Date occurs,
stockholders who sell their Rights separately from their Shares and do not
otherwise acquire Rights may not be able to satisfy the requirements of the
Offer for a valid tender of Shares.
7. CERTAIN INFORMATION CONCERNING THE COMPANY. The summary information
concerning the Company in this Section 7 and elsewhere in this Offer to Purchase
is derived from the 1996 Annual Report, the 1997 Annual Report, other publicly
available information and other information provided by the Company. The summary
information set forth below is qualified in its entirety by reference to the
publicly available reports of the Company (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 the Purchaser does not have any
knowledge that would indicate that any statements contained herein based upon
such reports are untrue, the Purchaser does not assume any responsibility for
the accuracy or completeness of the information contained in such reports, or
for any failure by the Company to disclose events that may have occurred and may
affect the significance or accuracy of any such information but which are
unknown to the Parent and the Purchaser.
GENERAL. The Company was formed in 1968 as a Delaware corporation by
Ashland and First Mississippi Corporation, the predecessor of ChemFirst, each of
which owned 50% of the Company's outstanding capital stock prior to the
Company's initial public offering in August 1987. Ashland and ChemFirst each
owns approximately 21.3% of the outstanding Shares on a fully-diluted basis. The
Company's principal executive offices are located at Highway 18 West,
Donaldsonville, Louisiana 70341. The telephone number of the Company at such
offices is (504) 473-3121.
The Company is engaged in the production and marketing of melamine crystal,
a specialty chemical having numerous industrial and commercial applications.
FINANCIAL INFORMATION. Set forth below are certain selected consolidated
financial data for the Company's last five fiscal years which were derived from
the 1997 Annual Report. More comprehensive financial information is included in
the reports (including management's discussion and analysis of financial
condition and results of operations) and other documents filed by the Company
with the Commission, and the following financial data are qualified in their
entirety by reference to such reports and other documents including the
financial information and related notes contained therein. Such reports and
other documents may be examined and copies thereof may be obtained from the
offices of the Commission and the Nasdaq National Market in the manner set forth
below.
11
<PAGE>
MELAMINE CHEMICALS, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND OPERATING DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
-----------------------------------------------------
<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
OPERATIONS STATEMENT DATA:
Net sales.............................................. $ 59,978 $ 55,619 $ 45,501 $ 39,085 $ 35,423
Cost of sales.......................................... 51,142 46,976 38,204 41,670 37,353
--------- --------- --------- --------- ---------
Gross profit (loss).................................. 8,836 8,643 7,297 (2,585) (1,930)
Selling, general and administrative expenses........... 3,512 3,293 2,994 2,820 3,285
Research and development costs......................... 250 229 230 182 129
--------- --------- --------- --------- ---------
Operating income (loss).............................. 5,074 5,121 4,073 (5,587) (5,344)
Other income (expense), net............................ 17,844(1) (1,106) 205 1,668 (266)
--------- --------- --------- --------- ---------
Earnings (loss) before income tax expense (benefit).... 22,918 4,015 4,278 (3,919) (5,610)
Income tax expense (benefit)........................... 8,176 1,285 945 (1,411) (2,019)
--------- --------- --------- --------- ---------
Net earnings (loss).................................. $ 14,742 $ 2,730 $ 3,333 $ (2,508) $ (3,591)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Earnings (loss) per common share....................... $ 2.63 $ 0.50 $ 0.60 $ (0.46) $ (0.66)
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Dividends per common share............................. $ -- $ -- $ -- $ -- $ --
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
<CAPTION>
AS OF JUNE 30,
-----------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........................................ $ 34,193 $ 18,364 $ 14,020 $ 9,656 $ 12,678
Total assets........................................... 75,749 47,143 44,289 40,610 46,954
Stockholders' equity................................... 50,044 34,850 32,095 28,760 31,268
<CAPTION>
FISCAL YEAR ENDED JUNE 30,
-----------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
OPERATING DATA (IN MILLION OF POUNDS):
Melamine produced...................................... 107.1 106.0 99.3 84.5 94.5
Domestic sales......................................... 72.2 58.0 62.6 53.9 47.0
Export sales........................................... 41.5 44.5 37.8 51.2 40.4
</TABLE>
- ------------------------
(1) Includes $17.4 million from sale of technology in April 1997.
------------------------
The Shares are registered under the Exchange Act. Accordingly, the Company
is subject to the informational filing requirements of the Exchange Act and in
accordance therewith is obligated to file periodic 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 compensation, options granted to them,
the principal holders of the Company's securities and any material interest of
such persons in transactions with the Company is required to be disclosed in
such proxy statements and 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
located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
should also be available for inspection and copying at prescribed rates at
12
<PAGE>
the regional offices of the Commission located at Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade
Center, Suite 1300, New York, New York 10048. Such reports, proxy statements and
other information may also be obtained at the Web site that the Commission
maintains at http://www.sec.gov. Copies of this material may also be obtained by
mail, upon payment of the Commission's customary fees, from the Commission's
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition,
such material should also be available for inspection at the library of the
Nasdaq Stock Market, 1735 K Street, N.W., Washington, D.C. 20006. Except as
otherwise noted in this Offer to Purchase, all of the information with respect
to the Company set forth in this Offer to Purchase has been derived from
publicly available information.
CERTAIN PROJECTIONS. In connection with the Parent's, the Purchaser's and
Borden's due diligence review of the Company and during the course of
negotiations between the Parent, the Purchaser, Borden and the Company and their
respective advisors described in Section 10 of this Offer to Purchase, the
Company provided the Parent, the Purchaser and Borden with certain projections
of future operating performance of the Company which the Parent, the Purchaser
and Borden believe are not publicly available.
Such projections provided by the Company to the Parent, the Purchaser and
Borden were prepared as part of the Company's effort to sell the Company. While
presented with numerical specificity, such projections are based upon a variety
of assumptions relating to the business of the Company, industry performance,
general business and economic conditions and other matters and are subject to
significant uncertainties and contingencies, many of which are beyond the
Parent's, the Purchaser's, Borden's or the Company's control. Therefore, such
projections are inherently imprecise, and there can be no assurances that any
such projections will be realized or that actual results will not differ
significantly from those set forth below. None of the Parent, the Purchaser,
Borden, the Company, their respective directors or the Company's financial
advisor accepts any responsibility for such projections or the bases or
assumptions on which they were prepared. Such projections were not intended to
be a forecast of financial results by the Company and were not prepared with a
view to public disclosure or compliance with the guidelines established by the
American Institute of Certified Public Accountants regarding projections and
forecasts.
Such projections for the Company's fiscal years 1998 and 1999 are being
summarized below solely because they were furnished to the Parent, the Purchaser
and Borden and the summary below should not be interpreted as suggesting that
the Parent, the Purchaser and Borden relied on such projections in evaluating a
transaction with the Company. Projected data furnished to the Parent, the
Purchaser and Borden with respect to periods after the Company's fiscal year
1999 and as to other scenarios have not been summarized below due to the
necessarily more speculative and even less reliable character of such data.
The principal assumptions underlying the projections are as follows:
(i) a volume increase of melamine produced of 7 million pounds per year
in fiscal year 1999 as compared to fiscal 1997 levels;
(ii)increases in net selling prices per pound believed by the Company's
management to be conservative;
(iii) raw material pricing and utility expenses based on third-party
estimates; and
(iv) capital expenditures at levels deemed appropriate by the Company's
management to maintain fiscal 1997 operating conditions and
performance.
13
<PAGE>
COMPANY SELECTED FINANCIAL PROJECTIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
FY1998E FY1999E
--------- ---------
<S> <C> <C>
Sales revenues............................................................................. $ 56,462 $ 60,480
Operating profit........................................................................... 9,587 13,661
Depreciation............................................................................... 4,300 4,300
</TABLE>
The foregoing summary of such projections is being included herein only
because such information was made available to the Parent by or on behalf of the
Company.
8. CERTAIN INFORMATION CONCERNING THE PARENT, THE PURCHASER AND BORDEN, INC.
THE PURCHASER. The Purchaser is a newly formed Delaware corporation
organized at the direction of the Parent in connection with the Offer and the
Merger. The address of the Purchaser is the same as the address of the Parent.
THE PARENT. The Parent is a Delaware corporation that was incorporated in
November 1995. The Parent produces thermosetting resins for the forest products
industry and for foundry and industrial applications. The Parent also produces
formaldehyde, much of which is used to produce thermosetting resins and the
remainder of which is sold to third parties. The Parent manufactures and
distributes its products worldwide. The Parent's principal executive offices are
located at 180 East Broad Street, Columbus, Ohio 43215. The telephone number of
the Parent at such offices is (614) 225-4000.
BORDEN, INC. Borden is a New Jersey corporation that was incorporated on
April 24, 1899. Borden is engaged primarily in manufacturing, processing,
purchasing and distributing a broad range of products through its chemical,
decorative products, consumer adhesives and business services operating units.
Borden's principal executive offices are located at 180 East Broad Street,
Columbus, Ohio 43215. The telephone number of Borden at such offices is (614)
225-4000. Borden has guaranteed the Parent's obligations under the Merger
Agreement. Set forth below are certain selected consolidated financial data
relating to Borden and its subsidiaries for Borden's last five fiscal years and
the periods ended June 30, 1997 and June 30, 1996, which have been derived from
the financial statements contained in Borden's Annual Report on Form 10-K for
the fiscal year ended December 31, 1996 and Borden's Quarterly Report on Form
10-Q for the quarter ended June 30, 1997. More comprehensive financial
information is included in the reports (including management's discussion and
analysis of financial condition and results of operations) and other documents
filed by Borden with the Commission, and the following financial information is
qualified in its entirety by reference to such reports and other documents,
including the financial information and related notes contained therein.
14
<PAGE>
BORDEN, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)
The following represents selected consolidated financial data for Borden:
<TABLE>
<CAPTION>
CONSOLIDATED FOR THE YEARS
----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1996 1995 1994 1993 1992
---------- ---------- ---------- ---------- ----------
SUMMARY OF EARNINGS
Net sales(1)....................................... $ 3,681.3 $ 4,107.8 $ 4,440.5 $ 4,381.2 $ 4,719.4
Income (loss) from continuing operations(2)........ 75.5 (393.4) (594.4) (153.7) (232.7)
Loss applicable to common stock (3)................ (333.1) (424.9) (597.7) (630.7) (364.4)
Income (loss) per common share from continuing
operations....................................... $ 0.38 $ (2.05) $ (4.14) $ (1.09) $ (1.62)
Loss per common share.............................. (1.67) (2.21) (4.16) (4.47) (2.54)
Dividends per common share......................... $ 0.083 -- $ 0.252 $ 0.90 $ 1.185
Dividends per preferred series A share............. $ 3.125 $ 2.392 -- -- --
Dividends per preferred series B share............. -- -- $ 1.32 $ 1.32 $ 1.32
Average number of common shares outstanding during
the year......................................... 199.0 192.3 143.7 141.0 143.4
FINANCIAL STATISTICS (at period end)
Total assets(4).................................. $ 2,750.9 $ 3,809.2 $ 4,004.4 $ 4,184.0 $ 5,246.0
Long-term debt................................... 567.8 1,211.8 1,379.0 1,240.8 1,329.9
</TABLE>
- ------------------------
(1) The decrease in net sales of $426.5 or 10.4% to $3,681.3 in 1996 from
$4,107.8 in 1995 is primarily a result of the sale of six dairy plants
during 1995, the sale of a wallcovering operation during the second quarter
of 1996, the sale of Borden's salty snacks business during the third quarter
of 1996, and the sale of the packaging and plastic films business in the
fourth quarter of 1996.
(2) Borden reported income from continuing operations of $75.5, an improvement
of $468.9 from the $393.4 loss from continuing operations recorded in 1995.
This improvement is the result of numerous unusual or non-recurring charges
incurred in 1995, including accrued losses for the divestiture of the
packaging and plastic films business and certain other non-food operations,
and an additional charge relating to a 1994 divestiture. The improvement of
$201.0 or 33.8% from the 1994 loss from continuing operations of $594.4 to a
loss of $393.4 in 1995 is primarily the result of merger related expenses
and expenses incurred in conjunction with Borden's 1994 credit line
renegotiation.
(3) The 1996 loss applicable to common stock of $333.1 was primarily the result
of the loss on the sale of the former domestic and international foods
business to Borden Foods Holdings Corporation.
(4) The decrease of $1,058.3 or 27.8% in total assets from $3,809.2 in 1995 to
$2,750.9 in 1996 was primarily caused by the sale of Borden's salty snacks,
packaging and plastic films and the European bakery businesses.
15
<PAGE>
BORDEN, INC.
SELECTED CONSOLIDATED FINANCIAL DATA FOR THE SIX MONTHS ENDING JUNE 30, 1997
UNAUDITED
(IN MILLIONS, EXCEPT PER SHARE DATA)
The following represents selected consolidated financial data for the six
months ended June 30, 1997 for Borden:
<TABLE>
<CAPTION>
CONSOLIDATED FOR THE
SIX MONTHS ENDED
------------------------------
<S> <C> <C>
JUNE 30, 1997 JUNE 30, 1996
-------------- --------------
SUMMARY OF EARNINGS
Net sales......................................................................... $ 946.0 $ 1,522.0
Income (loss) from continuing operations.......................................... 18.5 40.5
Net income (loss) applicable to common stock...................................... (9.5) 2.0
Net income (loss) per common share from continuing operations..................... $ .09 $ .20
Net income (loss) per common share................................................ $ (.05) $ .01
Dividends per common share........................................................ $ .13 $ --
Dividends per preferred series A share............................................ $ 1.5 $ 1.5
Average number of common shares outstanding during the year....................... 199.0 199.0
FINANCIAL STATISTICS (at period end)
Total assets.................................................................... $ 2,526.8
Long-term debt.................................................................. 914.0
</TABLE>
Borden is subject to the informational filing requirements of the Exchange
Act and in accordance therewith is obligated to file periodic reports and other
information with the Commission relating to its business, financial condition
and other matters. Such reports and other information should be available for
inspection at the public reference facilities of the Commission located in
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and should also
be available for inspection and copying at prescribed rates at the regional
offices of the Commission located at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, Suite 1300,
New York, New York 10048. Such reports and other information may also be
obtained at the Web site that the Commission maintains at http://www.sec.gov.
Copies of this material may also be obtained by mail, upon payment of the
Commission's customary fees, from the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. The financial statements set forth in Item
1 of Borden's Quarterly Report on Form 10-Q for the period ended June 30, 1997
and in Item 8 of Borden's Annual Report on Form 10-K for the year ended December
31, 1996 are incorporated herein by reference.
The name, citizenship, business address, present principal occupation or
employment and five year employment history of each of the directors and
executive officers of the Parent, the Purchaser and Borden are set forth on
Schedule I hereto.
CERTAIN TRANSACTIONS. Borden and its subsidiaries have from time to time
purchased melamine crystal from the Company in the ordinary course of business.
The aggregate purchase price for such purchases during the period from July 1,
1994 to June 30, 1995 was $2.3 million, from July 1, 1995 to June 30, 1996 was
$2.4 million and from July 1, 1996 to June 30, 1997 was $2.6 million. Borden and
its subsidiaries may in the future purchase melamine crystal from the Company in
the ordinary course of business.
9. SOURCE AND AMOUNT OF FUNDS. The Purchaser will require approximately $128
million to (i) purchase the Shares (assuming all outstanding options were
exercised) pursuant to the Offer and the Merger and (ii) pay fees and expenses
to be incurred in connection with the completion of the Offer and the Merger.
All of the funds required to finance the foregoing will be furnished to the
Purchaser by the
16
<PAGE>
Parent. The Parent will obtain such funds from its working capital and from the
proceeds of loans to the Parent from Borden pursuant to a loan agreement dated
as of July 1, 1996 (the "Loan Agreement"), which provides for a revolving loan
facility in an aggregate amount not to exceed $75 million and term loans, from
time to time, in amounts and on terms as determined by Borden. Pursuant to a
letter to the Parent dated October 1, 1997, Borden agreed to provide up to
$118.5 million of funding as a term loan under the Loan Agreement to the Parent
in connection with the acquisition of the Company at an annual interest rate to
be determined no later than the time of funding, but not to exceed 10.5%.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. In July 1997,
Goldman Sachs, on behalf of the Company, contacted Joseph M. Saggese, the
Chairman of the Board of Directors, President and Chief Executive Officer of the
Parent, concerning the possibility of an acquisition by the Parent of the
Company. On June 30, 1997, the Company had publicly announced that it had
received an unsolicited proposal from Ashland to acquire the Shares it did not
already own for a purchase price of $12.50 per Share. In response to this
proposal, on July 16, 1997, the Company announced that it had engaged Goldman
Sachs as its financial advisor to assist it in considering the Company's
"alternatives." On August 15, 1997, Ashland publicly announced that it was
raising the price it was willing to pay to acquire the Shares it did not already
own to $14.75 per Share.
On July 24, 1997, the Parent and the Company entered into a confidentiality
and standstill agreement, which provided, among other things, that certain
information furnished by the Company to the Parent or its advisors or other
representatives would not be disclosed, subject to certain exceptions. Shortly
thereafter, Goldman Sachs made available to the Parent certain information and,
on August 6, 1997, representatives of the Parent and the Company met at the
offices of the Company's counsel in New Orleans, Louisiana to discuss the
Company's business and operations, including certain internal estimates
regarding the Company's future performance. See Section 7.
On September 18, 1997, the Board of Directors of the Parent authorized the
Parent to provide an indication of interest to pursue a transaction with respect
to the Company. On September 23, 1997, the Parent indicated to Goldman Sachs the
Parent's interest in pursuing an acquisition of the Company and provided a
written mark-up of the draft merger agreement previously furnished to it by the
Company, as well as a draft tender agreement for ChemFirst. Parent's indication
of interest provided that Parent would need to be satisfied with the definitive
versions of the Company's amended feedstock agreement and site lease agreement
with Triad Nitrogen, Inc.
Between September 23, 1997 and October 9, 1997, representatives of the
Company, Goldman Sachs, the Parent and the Parent's legal and other advisors
completed their due diligence investigations of the Company and held numerous
discussions with respect to a possible acquisition of the Company, including
with respect to the terms of a possible merger agreement. Parent and its
advisors also negotiated the final terms of the Tender Agreement with ChemFirst.
On October 9, 1997, definitive versions of the Company's amended feedstock
agreement and site lease agreement were provided to Parent and, following
Parent's determination that such agreements were satisfactory to it, the Merger
Agreement and Tender Agreement were executed, and public announcement thereof
was made, on October 9, 1997.
11. THE MERGER AGREEMENT; THE TENDER AGREEMENT. The following is a summary
of the Merger Agreement and the Tender Agreement, which summary is qualified in
its entirety by reference to the copies thereof filed as exhibits to the Tender
Offer Statement on Schedule 14D-1.
THE MERGER AGREEMENT
THE OFFER. The Merger Agreement provides that no later than five business
days after the date of the Merger Agreement, the Parent will cause the Purchaser
to, and the Purchaser will, commence the Offer. The Merger Agreement further
provides that the Parent will cause the Purchaser to, and the Purchaser will use
its commercially reasonable best efforts to consummate the Offer as soon as
legally
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permissible. The parties to the Merger Agreement have also agreed in the Merger
Agreement that the obligations of the Parent and the Purchaser to consummate the
Offer, and to accept for payment and pay for Shares tendered pursuant to the
Offer, will be subject only to the conditions described in Section 15 hereof.
Under the Merger Agreement, the Purchaser expressly reserves the right, in its
sole discretion, to waive any such condition (other than the Minimum Condition
or the HSR Act Condition), provided, that, unless previously approved in writing
by the Company's Board of Directors, the Purchaser will not (i) impose
conditions to the Offer in addition to those set forth in Section 15 hereof,
(ii) decrease the Merger Consideration, (iii) change the form of consideration
(other than by adding consideration), (iv) reduce the number of Shares sought to
be purchased in the Offer, (v) extend the Expiration Date other than as
described in the Merger Agreement, or (vi) otherwise change any term of the
Offer in any manner adverse to the holders of Shares. Under the Merger
Agreement, the Purchaser may, without consent of the Company, (i) extend the
Offer (on one or more occasions) beyond the scheduled Expiration Date if at any
such date any of the conditions will not be satisfied or waived, (ii) extend the
Offer to the extent required by any rule or regulation of the Commission or
(iii) extend the Offer (on a one-time basis only) for not more than five
business days beyond the Expiration Date if all of the conditions have been
satisfied or waived and at least 51% but less than 90% of the outstanding Shares
have been validly tendered and not properly withdrawn pursuant to the Offer;
provided further that notwithstanding anything in the foregoing proviso to the
contrary, the Purchaser may not, without the Company's prior written consent,
(A) extend the Expiration Date if the failure to meet any condition was directly
or indirectly caused by an act or omission of the Parent or the Purchaser that
constitutes a breach of the Merger Agreement or (B) effect any individual
extension as described in clause (i) of this sentence in excess of the amount of
time reasonably believed by the Parent to be necessary to satisfy such
condition, but such date will not exceed 10 business days; provided further,
that if the Purchaser does not consummate the Offer on the initial Expiration
Date, or any extension thereof, due to the failure of one or more conditions in
any of paragraph (b) or (c)(i) through (iv) under Section 15 hereof to be
satisfied, the Parent will cause the Purchaser to, and the Purchaser will,
unless the Company has materially breached the Merger Agreement and failed to
cure such breach within 15 days of being notified thereof in writing, extend the
Offer one or more times until the earlier or (i) 11:59 p.m. New York City time
on the sixtieth calendar day after the date of the Merger Agreement or (ii) two
business days after such time as such condition or conditions are satisfied or
waived, provided further, that the Purchaser will not be obligated to extend the
Offer pursuant to the foregoing proviso if the condition that has not been
satisfied is not reasonably capable of being cured or satisfied at or prior to
the sixtieth calendar day after the date of the Merger Agreement. The Merger
Agreement provides that the Parent will provide or cause to be provided to the
Purchaser on a timely basis the funds necessary to accept for payment and pay
for Shares pursuant to this Offer. The Merger Agreement further provides that
the Purchaser may, at any time, transfer or assign to the Parent or to one or
more corporations directly or indirectly wholly-owned by the Parent 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 the Parent or the Purchaser of
its obligations with respect to the Offer or prejudice the rights of tendering
stockholders to receive payment for Shares validly tendered and accepted for
payment in the Offer.
COMPANY BOARD REPRESENTATION. The Merger Agreement provides that, promptly
upon acceptance for payment by the Purchaser of Shares pursuant to the Offer,
the Purchaser will be entitled to designate such number of directors, rounded up
to the next whole number, as will give the Purchaser representation on the Board
of Directors of the Company (the "Board") equal to at least that number of
directors equal to the product of (i) the total number of directors on the Board
and (ii) the percentage that the number of Shares so accepted for payment bears
to the number of Shares outstanding, and the Company will, at such time, at the
election of the Purchaser either increase the size of the Board or use its best
efforts to cause the appropriate number of directors who are members of the
Board as of the date of the Merger Agreement to resign and the Purchaser's
designees to be appointed or elected to fill the vacancies thereby created in
conformity with the DGCL, the Company's certificate of incorporation and
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by-laws and other applicable law. In addition, until the Effective Time, there
will be at least three directors on the Board who are directors on the date of
the Merger Agreement and who are not designees nor officers, directors,
employees or affiliates of Parent or the Purchaser nor employees of the Company
(the "Independent Directors"); provided, however, that if the number of
Independent Directors is reduced below three for any reason, the Board will,
subject to the approval of the remaining Independent Directors, if any,
designate a person or persons to fill the vacancy or vacancies who are directors
on the date of the Merger Agreement and not an officer, director, employee or
affiliate of Parent or the Purchaser nor an employee of the Company, and such
persons will be deemed to be Independent Directors for purposes of the Merger
Agreement. The Merger Agreement further provides that the Company's obligations
to appoint designees to its Board of Directors will be subject to Section 14(f)
of the Exchange Act and Rule 14f-1 thereunder.
The Merger Agreement provides that following the election or appointment of
the Purchaser's designees pursuant to the provisions described in the preceding
paragraph and until the Effective Time, any amendment of the Merger Agreement or
the certificate of incorporation or by-laws of the Company, any termination of
the Merger Agreement by the Company, any extension by the Company of the time
for the performance of any of the obligations or other acts of Parent or the
Purchaser, any waiver of any of the Company's rights thereunder, or any
transaction between Parent (or any affiliate or associate thereof) and the
Company will require the concurrence of a majority of the Independent Directors.
The Independent Directors will have the authority to retain such counsel and
other advisors at the expense of the Company as are reasonably appropriate to
assist them in the exercise of their duties in connection with Merger Agreement.
In addition, the Independent Directors will have the authority to institute any
action on behalf of the Company to enforce performance of the Merger Agreement.
THE MERGER. The Merger Agreement provides, upon the terms and subject to
the conditions thereof, at the Effective Time and in accordance with the DGCL,
the Purchaser will be merged with and into the Company. As a result of the
Merger, the separate corporate existence of the Purchaser will cease and the
Company will continue as the Surviving Corporation.
The Merger Agreement provides that the certificate of incorporation of the
Company, as in effect immediately prior to the Effective Time (as amended
substantially in its entirety as directed in the Merger Agreement), will be the
certificate of incorporation of the Surviving Corporation until thereafter
amended or repealed as provided therein and in accordance with the applicable
law. At the Effective Time, the by-laws of the Purchaser will be the by-laws of
the Surviving Corporation and thereafter may be amended or repealed in
accordance with their terms and as provided by law. The Merger Agreement
provides that the directors of the Purchaser immediately prior to the Effective
Time will be the initial directors of the Surviving Corporation, until their
respective successors are duly elected or appointed and qualified or their
earlier resignation or removal and the officers of the Company immediately prior
to the Effective Time will be the initial officers of the Surviving Corporation,
each to hold office in accordance with the certificate of incorporation and
by-laws of the Surviving Corporation and until the earlier of his resignation or
removal or until his respective successor is duly appointed and qualified, as
the case may be.
At the Effective Time, each Share issued and outstanding immediately prior
to the Effective Time (other than Shares held in the Company's treasury or by
any subsidiary of the Company), Dissenting Shares and Parent Shares (as defined
in the Merger Agreement), will be converted into the right to receive the Merger
Consideration payable to the holder thereof, without interest thereon, upon
surrender of the certificates formerly representing such Share in the manner
described in the Merger Agreement. All treasury Shares immediately prior to the
Effective Time, if any, and all Shares owned by the Parent, the Purchaser or any
other direct or indirect wholly-owned subsidiary of Parent, if any, will be
canceled and retired and cease to exist, and no consideration will be delivered
in exchange therefor.
The Merger Agreement provides that Shares that are issued and outstanding
immediately prior to the Effective Time and which are held by a stockholder who
has not voted in favor of the Merger and who has properly exercised and
perfected appraisal rights under Section 262 of the DGCL will not be
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converted into or exchangeable for the right to receive the Merger
Consideration, but will be entitled to receive such consideration as shall be
determined pursuant to Section 262 of the DGCL; provided however, that if such
holder shall have failed to perfect or shall have effectively withdrawn or lost
its right to appraisal and payment under the DGCL, each Share of such holder
will thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective Time, the right to receive the Merger
Consideration, without any interest thereon, as described above and such Shares
will no longer be Dissenting Shares.
The Merger Agreement provides that each share of common stock of the
Purchaser will, by virtue of the Merger and without any action on the part of
the holder thereof, be converted into one share of common stock of the Surviving
Corporation.
The Merger Agreement provides that under the terms of the Melamine
Chemicals, Inc. Second Amended and Restated Long-Term Incentive Plan, effective
July 31, 1987 (the "Old Incentive Plan"), outstanding options granted under the
Old Incentive Plan will terminate upon the consummation of the Offer and the
holders of such options will be entitled to immediate payment by the Company of,
in exchange for their terminated options, an amount in cash equal to (i) the
excess of the Merger Consideration per share over the per share exercise price
of the option, multiplied by (ii) the number of Shares that would otherwise have
been received upon exercise of the terminated option. The Merger Agreement also
provides that upon the Board's approval of the Offer and the Merger, outstanding
options (the "1996 Plan Options") granted under the Melamine Chemicals, Inc.
1996 Long-Term Incentive Plan, effective September 9, 1996 (the "1996 Incentive
Plan" and, together with the Old Incentive Plan, the "Long-Term Incentive
Plans") will accelerate automatically to become fully exercisable. In accordance
with the terms of the 1996 Incentive Plan, the Company will cause the Personnel
and Compensation Committee of its Board of Directors to cancel the 1996 Plan
Options, and to pay, upon consummation of the Offer, to each holder of such 1996
Plan Options, an amount in cash equal to the product of (i) the excess of the
Merger Consideration per share over the per share exercise price of each of such
holder's 1996 Plan Options, multiplied by (ii) the number of Shares that would
otherwise have been received upon exercise of such holder's 1996 Plan Options.
The Merger Agreement further provides that the Company will be entitled to
deduct and withhold from such payment amounts for taxes as required by the
Internal Revenue Code of 1986, as amended, or any applicable provision of state,
local or foreign tax law.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of the parties thereto including,
without limitation, representations and warranties by the Company as to the
Company's organization and qualifications, subsidiaries, capitalization,
authorization for the agreement, absence of conflicts with governing instruments
or other agreements, governmental approvals and consents, brokers and finders,
filings with the Commission, absence of certain changes or events, legal
proceedings, compliance with laws, taxes, employee benefits and related matters,
environmental matters, real property, labor matters, contracts and certain other
agreements, absence of certain liabilities, opinion of the Company's financial
advisor, the Rights Agreement, intellectual property, and veracity of
information supplied by the Company.
In addition, the Merger Agreement contains representations and warranties of
the Parent and the Purchaser concerning their organization, authorization for
the agreement, absence of conflicts with governing instruments or other
agreements, governmental approvals and consents, brokers and finders, legal
proceedings, financing, and the veracity of the information supplied by the
Parent and the Purchaser.
AGREEMENTS OF THE COMPANY, THE PARENT AND THE PURCHASER.
CONDUCT OF BUSINESS PENDING THE MERGER. Pursuant to the Merger Agreement,
the Company has covenanted and agreed that, prior to the Effective Time, unless
expressly contemplated by the Merger Agreement or the disclosure schedule to the
Merger Agreement (the "Disclosure Schedule"), or the Parent otherwise agrees in
writing:
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(a) the business of the Company will be conducted only in the ordinary
course consistent with past practices;
(b) the Company will use its commercially reasonable best efforts to
preserve intact in all material respects the business organization of the
Company, to keep available the services of its officers and employees and to
preserve the goodwill of those having business relationships with it;
(c) the Company will not (i) amend its certificate of incorporation or
by-laws; (ii) split, combine, reclassify or take similar action with respect to
any of its capital stock; (iii) authorize for issuance, issue, sell, deliver or
agree or commit to issue, sell or deliver any additional shares or rights of any
kind to acquire any shares (whether through the granting or issuance of options,
warrants, commitments, subscriptions, rights to purchase or otherwise), of its
capital stock of any class or any other securities or equity equivalents
(including without limitation stock appreciation rights), other than Shares
issuable upon the exercise of Company Options outstanding on the date of the
Merger Agreement; (iv) purchase, redeem or otherwise acquire any Shares or any
other securities of the Company; (v) declare, set aside or pay any dividend
payable in cash, stock or property or make any other distributions with respect
to Shares or any other shares of its capital stock of any class; (vi) adopt a
plan of complete or partial liquidation or resolutions providing for or
authorizing such a liquidation or a dissolution, merger, consolidation,
restructuring, recapitalization or reorganization of the Company; or (vii) make
any commitment to do any of the foregoing;
(d) the Company will not (i) engage in certain acquisitions or sales or
other dispositions of property or assets; (ii) incur any indebtedness for
borrowed money, subject to specified exceptions; (iii) make capital expenditures
or commitments; (iv) change any assumption underlying, or method of calculating,
any bad debt, contingency or other reserve or change any other material
accounting principles or practices used by it (except changes that may be
necessary or appropriate in order to comply with a change in generally accepted
accounting principles that takes effect after the date of the Merger Agreement);
(v) pay, discharge or satisfy any material claims, liabilities or obligations
(absolute, accrued, contingent or otherwise) other than the payment, discharge
or satisfaction of (A) liabilities in the ordinary course consistent with past
practices and (B) costs relating to the Merger Agreement and the transactions
contemplated thereby; (vi) waive release, grant or transfer any right of
material value or modify or change in any material respect any existing material
license, lease, contract or other document; (vii) make any tax election or
settle or compromise any federal, state, local or foreign tax liability; or
(viii) enter into any contract, agreement, commitment or arrangement with
respect to, or resolve to do, any of the foregoing;
(e) the Company will not (i) enter into any new severance or change of
control or employment agreement; (ii) amend any existing employment or change of
control or severance agreement; (iii) grant any increases in compensation or
benefits, other than in the ordinary course consistent with past practices; (iv)
adopt any new Employee Plan or Benefit Arrangement (as defined in the Merger
Agreement), (v) make any change in or to any existing Employee Plan or Benefit
Arrangement, subject to specified exceptions; (vi) make any grants, awards or
distributions under any Employee Plan or Benefit Arrangement, other than in the
ordinary course consistent with past practices and those grants, awards or
distributions required to be made under such Employee Plans or Benefit
Arrangements as in effect on the date of the Merger Agreement; or (vii) make any
amendment to any provision of any outstanding grant or award that materially
increases the potential cost thereof to the Company except as provided in the
Merger Agreement; and
(f) the Company will use its commercially reasonable best efforts not to
cause any of its representations or warranties to become untrue.
NO SOLICITATION OF TRANSACTIONS. The Merger Agreement provides that the
Company will not, and will not permit any of its directors, officers, employees,
attorneys, financial advisors, agents or other representatives to, directly or
indirectly, solicit, initiate, encourage (including by way of furnishing
information), or take any other action to facilitate, any inquiry or the making
of any proposal or offer that
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constitutes, or may reasonably be expected to lead to, any Takeover Proposal (as
defined below) from any person, or engage or participate in, enter into or
continue discussions or negotiations relating to, or agree to or endorse, any
Takeover Proposal, or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing. In addition, the Company will, and
will cause its directors, officers, employees, attorneys, financial advisors,
agents and other representatives to, immediately upon execution of the Merger
Agreement cease any existing discussions or negotiations, or other activities
referred to in the immediately preceding sentence, with any person conducted
theretofore with respect to any of the foregoing matters referred to in the
immediately preceding sentence. Notwithstanding the foregoing, the Company may
(i) furnish information pursuant to a customary confidentiality agreement
concerning the Company and its businesses, properties or assets to a third party
who has made an unsolicited Superior Proposal (as defined below) after the date
of the Merger Agreement, (ii) engage in discussions or negotiations with such a
third party who has made an unsolicited Superior Proposal after the date
thereof, and/or (iii) following receipt of an unsolicited Superior Proposal
after the date of the Merger Ageement, take and disclose to its stockholders a
position contemplated by Rule 14e-2(a) under the Exchange Act or otherwise make
disclosure to its stockholders, but in each case referred to in the foregoing
clauses (i) through (iii) only to the extent that the Board of Directors of the
Company shall have concluded in good faith, after consultation with its outside
counsel, that such action is required to prevent the Board of Directors of the
Company from breaching its fiduciary duties to the stockholders of the Company
under Delaware law; provided that the Board of Directors of the Company will not
take any of the actions referred to in clauses (i) through (iii) above until the
second business day after it has delivered the Notice of Superior Proposal with
respect thereto as described in the next paragraph. As used in the Merger
Agreement: "Takeover Proposal" means any proposal or offer, or any expression of
interest by any person relating to the Company's willingness or ability to
receive or discuss any proposal or offer (other than a proposal or offer by
Parent or the Purchaser), for any tender or exchange offer, merger,
consolidation, recapitalization or other business combination involving the
Company or the acquisition in any manner of a substantial equity interest in
(10% or more), or a substantial portion of the assets of, the Company or any
other transaction the consummation of which would or could reasonably be
expected to impede, interfere with, prevent or materially delay the Offer, the
purchase of Shares pursuant to the Offer or the Merger; and "Superior Proposal"
means a bona fide written proposal or offer made by any person to acquire the
Company pursuant to any tender or exchange offer, merger, consolidation,
recapitalization or other business combination or acquisition of all or
substantially all of the assets of the Company on terms that the Board
determines in good faith, and in the exercise of sound and reasonable judgment
(after consultation with outside legal counsel and independent financial
advisors), to be more favorable to the Company and its stockholders than the
transaction contemplated by the Merger Agreement (taking into account any fees
or expenses payable under the Merger Agreement and conditions to consummation)
and for which any required financing is committed or that, in the good faith and
sound and reasonable judgment of the Board (after consultation with independent
financial advisors), is reasonably capable of being financed by such person.
The Merger Agreement provides that the Company will promptly advise Parent
orally and in writing of the receipt of any Takeover Proposal or any inquiry
that could reasonably be expected to lead to a Takeover Proposal, the material
terms and conditions thereof, and the identity of the person making any such
proposal or inquiry (the "Notice of Superior Proposal"). The Company will keep
Parent fully informed of the status and details of any such proposal or inquiry.
Pursuant to the Merger Agreement, the Company agrees not to release any
third party from, or waive any provisions of, any confidentiality or standstill
agreement to which the Company is a party.
PROXY STATEMENT. The Merger Agreement provides that promptly after
consummation of the Offer, the Company will prepare and file with the
Commission, if required by federal securities laws, a preliminary form of the
proxy statement (the "Proxy Statement") to be mailed to the stockholders of the
Company in connection with the meeting of such stockholders to consider and vote
upon the Merger
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(the "Special Meeting"). The Company will cause the Proxy Statement to comply as
to form in all material respects with the applicable provisions of the Exchange
Act. As promptly as practicable after the Proxy Statement has been cleared by
the Commission, the Company will mail the Proxy Statement to the stockholders of
the Company.
STOCKHOLDERS MEETING. The Merger Agreement provides that the Company will
take all action necessary in connection with applicable law to duly call, give
notice of, convene and hold the Special Meeting as promptly as practicable after
the consummation of the Offer to consider and vote upon the Merger Agreement and
the transactions contemplated thereby. The Company will use its best efforts to
obtain the necessary approval of the Merger Agreement and the Merger by its
stockholders. The Merger Agreement provides that the Company will, through its
Board of Directors, recommend that its stockholders vote in favor of the
adoption of the Merger Agreement and the transactions contemplated thereby,
subject to the Board of Directors' fiduciary duty under applicable law,
exercised after consultation with the Company's outside legal counsel. The
Merger Agreement provides that at the Special Meeting, Parent and the Purchaser
and its direct and indirect subsidiaries will vote, or cause to be voted, all
Shares owned by them in favor of the Merger. The Merger Agreement provides that
in the event that the Purchaser shall acquire at least 90% of the outstanding
Shares in connection with the Offer, the Company agrees, at the request of the
Purchaser, subject to Article VI of the Merger Agreement, to take all necessary
and appropriate action to cause the Merger to become effective as soon as
reasonably practicable after such acquisition, without a meeting of the
Company's stockholders, in accordance with Section 253 of the DGCL.
FILINGS, OTHER ACTIONS. The Merger Agreement provides that the Company and
Parent will: (a) promptly make their respective filings and thereafter make any
other required submissions under the HSR Act; (b) use all reasonable efforts to
cooperate with one another in (i) determining which filings are required to be
made prior to the Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time from, all
Governmental or Regulatory Authorities (as defined in the Merger Agreement) in
connection with the execution and delivery of the Merger Agreement and the
consummation of the transactions contemplated thereby and (ii) timely making all
such filings and timely seeking all such consents, approvals, permits or
authorizations; and (c) use their commercially reasonable best efforts to take,
or cause to be taken, all other action and do, or cause to be done, all other
things necessary, proper or appropriate to consummate and make effective the
transactions contemplated by the Merger Agreement.
INSPECTION; CONFIDENTIALITY; NOTIFICATION. Pursuant to the Merger
Agreement, from the date thereof to the Effective Time, the Company will (i)
allow all officers, attorneys, accountants and other representatives of Parent
reasonable access at all reasonable times to the offices, books, records and
files, correspondence, audits, personnel and properties, as well as to all
information relating to Contracts (as defined in the Merger Agreement), titles
and financial commitments, or otherwise pertaining to the business and affairs,
of the Company, (ii) furnish to Parent's counsel, financial advisors, auditors
and other representatives such financial and operating data and other
information as such persons may reasonably request, (iii) instruct its
employees, counsel and financial advisors to cooperate with Parent in Parent's
investigation of the business of the Company, and (iv) make its personnel
available at reasonable times for discussions with representatives of Parent.
Information obtained pursuant to the immediately preceding sentence will
constitute "Confidential Information" under the Confidentiality Agreement (as
defined in the Merger Agreement).
The Merger Agreement provides that Parent and the Purchaser will, upon
request by the Company, provide the Company, its counsel, accountants and other
authorized representatives with such information concerning Parent or the
Purchaser as may be reasonably requested by the Company and necessary for the
Company to ascertain the accuracy and completeness of the information supplied
by or on behalf of Parent or the Purchaser for inclusion in the Schedule 14D-9
and the Proxy Statement. Except as and to the extent required by law, the
Company will keep confidential any information furnished to it pursuant to the
preceding sentence that is reasonably designated as confidential at the time of
delivery.
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The Merger Agreement provides that the Company will give prompt notice to
Parent, and Parent will give prompt notice to the Company, of (i) the occurrence
or non-occurrence of any event the occurrence or non-occurrence of which would
be likely to cause any representation or warranty contained in the Merger
Agreement to be untrue or inaccurate and (ii) any failure of the Company, Parent
or the Purchaser, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it thereunder;
provided, however, that the delivery of any such notice will not limit or
otherwise effect the remedies available thereunder to the party receiving such
notice.
CONDUCT OF BUSINESS BY THE PURCHASER PENDING THE MERGER. The Merger
Agreement provides that prior to the Effective Time and subject to any
applicable regulatory approvals, the Parent will cause the Purchaser to (a)
perform its respective obligations under the Merger Agreement in accordance with
the terms thereof and take all other actions necessary or appropriate for the
consummation of the transaction contemplated thereby and (b) not engage directly
or indirectly in any business or activities of any kind whatsoever and not enter
into any agreements or arrangement with any person or entity, or be subject to
or be bound by any obligation or undertaking that is not contemplated by the
Merger Agreement.
EMPLOYEE BENEFITS. The Merger Agreement provides that Parent and the
Surviving Corporation will, for a period of not less than two years after the
consummation of the Offer, either (a) make available, or cause to be made
available, for the benefit of employees of the Company, continued participation
in the employee benefit plans maintained by the Company immediately prior to the
Effective Time under terms and conditions substantially similar to those in
effect immediately prior to the Effective Time or (b) make available, or cause
to be made available, under terms and conditions substantially similar to the
terms and conditions under which Parent's employees participate in Parent's
employee benefit plans, participation in (i) employee benefit plans maintained
by Parent or (ii) employee benefit plans established by Parent for the benefit
of employees of the Company that are substantially similar to the employee
benefit plans maintained by Parent; provided, however, nothing described in this
paragraph will be construed to give any employee of Parent or the Company,
either prior to or after the Effective Time, any right to participate in, accrue
or receive any benefit under or receive any equivalent benefit or compensation
that would be or have been accrued or received under, any employee benefit plan
maintained either by the Company or Parent either prior to or after the
Effective Time. The Merger Agreement provides that Parent will honor all change
of control arrangements listed in the Disclosure Schedule. Any employees of the
Company who participate in Parent's employee benefit plans after the
consummation of the Offer will be given credit thereunder for past service with
the Company for participation and vesting purposes.
INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Merger Agreement provides
that the certificate of incorporation and by-laws (or equivalent governing
instruments) of the Surviving Corporation will contain provisions no less
favorable with respect to exculpation and indemnification of directors and
officers than are set forth in the certificate of incorporation and by-laws of
the Company, which provisions will not be amended, repealed or otherwise
modified for a period of six years after the Effective Time in any manner that
would adversely affect the rights thereunder of individuals who at or prior to
the Effective Time were directors, officers, agents or employees of the Company
or who were otherwise entitled to indemnification pursuant thereto.
The Merger Agreement further provides that the Company will and, after the
consummation of the Offer, Parent will cause the Company to maintain in effect
for not less than six years after the Effective Time, and for so long thereafter
as any claim asserted during such time has not been fully adjudicated by a court
of competent jurisdiction, the current policies of directors' and officers'
liability insurance maintained by the Company on the date of the Merger
Agreement with respect to matters occurring through the Effective Time and
covering parties who are covered by such current policies, subject to certain
conditions specified in the Merger Agreement. The Merger Agreement further
provides that
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Parent will cause the Surviving Company to honor in accordance with their
respective terms each of the indemnity agreements between the Company and its
officers and directors as in effect on the date of the Merger Agreement and will
not cause the Company to terminate such agreements prior to or after the
Effective Time.
The Merger Agreement provides that the Company, and from and after the
Effective Time, the Surviving Corporation, will indemnify, defend and hold
harmless the present and former officers, directors, employees and agents of the
Company ("Indemnified Parties") against all losses, expenses, claims, damages,
liabilities, judgments and settlement amounts that are paid or incurred in
connection with actions or omissions occurring on or prior to the Effective Time
to the fullest extent permitted or required under Delaware law and, in the case
of indemnification by the Surviving Corporation, to the fullest extent permitted
under Delaware law, the certificate of incorporation and the by-laws of the
Company in effect at the date of the Merger Agreement, including provisions
relating to advances of expenses incurred in the defense of any action or suit.
The provisions described in this paragraph are intended to be for the benefit
of, and will be enforceable by, each Indemnified Party and each party entitled
to insurance coverage pursuant to the Merger Agreement, respectively, and his or
her heirs and legal representatives, and will be in addition to any other rights
an Indemnified Party may have under the DGCL, any indemnity agreement, the
certificate of incorporation or bylaws of the Surviving Corporation or
otherwise.
CLOSING CONDITIONS. The Merger Agreement provides that each of the Company,
the Purchaser and the Parent will use their commercially reasonable best efforts
to fulfill the conditions specified in Article VI of the Merger Agreement to the
extent the fulfillment of such conditions is within their control, and, subject
to the conditions specified in Article VI of the Merger Agreement, to consummate
the Merger on the earliest date practicable.
SCHEDULES 14D-1 AND 14D-9. The Merger Agreement provides that Parent, the
Purchaser and the Company (as applicable) will promptly correct the Schedule
14D-1, this Offer to Purchase and related documents and the Schedule 14D-9 if
and to the extent that they have become false or misleading in any material
respect. Further, the Merger Agreement provides that the Parent, the Purchaser
and the Company (as applicable) will take all steps necessary to cause the
Schedule 14D-1, this Offer to Purchase and related documents and the Schedule
14D-9 as so corrected to be filed with the Commission and disseminated to the
Company's stockholders to the extent required by applicable federal securities
laws.
CONDITIONS TO THE MERGER. The Merger Agreement provides that the respective
obligation of each party to effect the Merger is subject to the fulfillment, at
or prior to the Effective Time, of each of the following conditions: (1) the
Purchaser shall have purchased all Shares validly tendered pursuant to the
Offer; (2) if required by the DGCL, the Merger and the Merger Agreement shall
have received the Requisite Stockholder Approval (as defined in the Merger
Agreement); (3) no Governmental or Regulatory Authority shall have issued an
order or ruling or taken any other action declaring illegal or otherwise
prohibiting the Merger; provided, that if the foregoing has occurred, each party
will use its commercially reasonable best efforts to cause such action to be
vacated or reversed so that the Merger may be consummated; and (4) any
applicable waiting period under the HSR Act shall have expired or terminated.
TERMINATION; FEES AND EXPENSES. The Merger Agreement provides that it may
be terminated at any time (upon written notice to the other parties to the
Merger Agreement) prior to the Effective Time, whether before or after approval
by the stockholders of the Company:
(a) by the Company, if: (i) the Company receives a Superior Proposal prior
to the consummation of the Offer; provided that, prior to terminating the Merger
Agreement, (A) the Company shall have duly provided the Notice of Superior
Proposal, (B) at least two business days later, the Board of Directors
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shall have redetermined in good faith, and in the exercise of sound and
reasonable judgment (after consultation with outside legal counsel and
independent financial advisors), that the Superior Proposal continues to be a
Superior Proposal after taking into account any improved terms proposed by the
Parent and the Purchaser prior to the expiration of such two business day
period, and (C) the Company shall have paid to the Parent the applicable Fee as
described below; or (ii) the Offer has not been timely commenced in accordance
with the Merger Agreement;
(b) by the Parent and the Purchaser, if: (i) the Board of Directors shall
have withdrawn or modified, in any manner adverse to the Parent and the
Purchaser, the approval or recommendation by the Board of the Merger Agreement,
the Offer or the Merger or approved or recommended any Takeover Proposal, or
shall have resolved to do any of the foregoing; or (ii) if the Company shall
directly or indirectly through agents or representatives continue negotiations
with any Third Party concerning any Takeover Proposal or Superior Proposal for
more than 20 business days after having first furnished information or commenced
negotiations with such Third Party (whichever occurred earlier) with respect
thereto; or (iii) (A) if a Takeover Proposal that is publicly disclosed shall
have been commenced, publicly proposed or communicated to the Company and (B)
the Company shall not have rejected such Takeover Proposal within 15 business
days (or 10 business days if required by the federal securities laws) after the
earlier of its receipt thereof or the date its existence first becomes publicly
disclosed;
(c) by the Parent and the Purchaser or by the Company, if: (i) the Offer is
terminated or expires in accordance with its terms without the purchase of any
Shares pursuant thereto; provided, however, that the Parent and the Purchaser
will not be entitled to terminate for such reason if the cause thereof is a
breach by the Parent or the Purchaser of any of their obligations under the
Merger Agreement and the Company will not be entitled to terminate for such
reason if the cause thereof is a breach by the Company of any of its obligations
under the Merger Agreement; (ii) there occurs a material breach by the other
party of any representation or warranty or covenant or agreement made by the
defaulting party: (A) that by its nature cannot be cured prior to the expiration
of the Offer, or (B) that is curable, but has not been cured prior to the
expiration of the Offer; provided that the terminating party itself is not in
material breach of the Merger Agreement and further provided that the Parent and
the Purchaser may terminate the Merger Agreement after the consummation of the
Offer only if their acts or omissions did not cause or substantially contribute
to the material breach; (iii) no Governmental or Regulatory Authority shall have
issued an Order (as defined in the Merger Agreement) or ruling or taken any
other action declaring illegal or otherwise prohibiting the consummation of the
Offer or the Merger and such Order shall have become final and nonappealable; or
(iv) the Purchaser shall not have purchased all Shares validly tendered pursuant
to the Offer within 120 calendar days following the commencement of the Offer,
and the Merger Agreement has not otherwise been terminated pursuant to the
Merger Agreement; or
(d) by mutual written consent of the Boards of Directors of the Company,
Parent and the Purchaser.
The Merger Agreement provides that if: (i) the Merger Agreement is
terminated (A) by the Company pursuant to clause (a)(i) above or (B) by the
Parent and the Purchaser pursuant to clause (b)(i) above; or (ii)(A) the Merger
Agreement is terminated by (1) the Parent and the Purchaser pursuant to clause
(b)(ii), (b)(iii), or (c)(ii) above, (2) by the Parent and the Purchaser or by
the Company pursuant to clause (c)(iii) above, but only if the Order, ruling or
other action by the Governmental or Regulatory Authority giving rise thereto is
issued or taken as a result of an action, suit or proceeding in which a Third
Party (as defined below) who has made a Takeover Proposal or Superior Proposal
is a participant or which involves issues arising out of a Takeover Proposal or
Superior Proposal, or (3) by the Parent and the Purchaser or by the Company
pursuant to clause (c)(i) or (c)(iv) above, but only if, at the time of such
termination, the Minimum Condition has been satisfied, and (B) within 12 months
thereafter, either (1) the Company enters into an agreement with respect to any
Third Party Acquisition (as defined below) or (2) any Third Party Acquisition
occurs, and (C) after the execution and delivery of the Merger Agreement but
prior to such termination, (1) the Company (or its agents) had discussions with
respect to such Third Party Acquisition, (2) the Company (or its agents)
furnished information with respect to or with a view to
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such Third Party Acquisition, or (3) a Third Party announced an interest
publicly with respect to any Third Party Acquisition, or indicated an interest
or made a proposal with respect to any Third Party Acquisition and thereafter
such indication or proposal became public, or, with respect to any Third Party
that announced an interest publicly with respect to any Third Party Acquisition,
or indicated an interest or made a proposal prior to the date of the Merger
Agreement with respect to any Third Party Acquisition, such Third Party
indicated publicly its continued interest with respect to such Third Party
Acquisition, or indicated its continued interest or amended any previous
proposal with respect to such Third Party Acquisition and thereafter such
indication or amendment became public, then the Company will pay to Parent,
within two business days following any termination under clause (b)(i) above or
within two business days following the occurrence of the earlier of the events
described in clause (b)(ii)(B) above in the event of any such termination under
clause (b)(ii) above, a fee, in cash and in immediately available funds, of $5
million (the "Fee"); provided, however, that the Company in no event will be
obligated to pay more than one Fee with respect to all such terminations; and
provided, further, that the Company will not be obligated to pay the Fee if the
Parent or the Purchaser is in material breach of its covenants or agreements in
the Merger Agreement. The Company will reimburse Parent for its expenses in
collecting a Fee pursuant to the Merger Agreement if it is determined that a Fee
is payable. As used in the Merger Agreement: "Third Party" means any person
other than the Parent, the Purchaser or any affiliate thereof and "Third Party
Acquisition" means the occurrence of any of the following events: (i) the
acquisition of the Company by merger, tender offer, exchange offer or otherwise
by any Third Party; (ii) the acquisition by a Third Party of 30% or more of the
assets of the Company and its subsidiaries, taken as a whole; (iii) the
acquisition by a Third Party or the Company of more than 30% of the outstanding
Shares; or (iv) the adoption by the Company of a plan of liquidation or the
declaration or payment of an extraordinary dividend.
The Merger Agreement provides that in the event of a termination by either
the Company or the Parent and the Purchaser pursuant to the terms of the Merger
Agreement, the Merger Agreement will then become null and void and there will be
no further liability or obligation on the part of either the Company or the
Parent or the Purchaser (or any of their respective representatives or
affiliates) as a result of a breach of any representation, warranty, covenant or
condition of the Merger Agreement, subject to certain exceptions.
The Merger Agreement further provides that except as otherwise specifically
provided therein, each party will bear its own expenses in connection with the
Merger Agreement and the transactions contemplated thereby.
The Merger Agreement provides that Borden will guarantee the obligations of
the Parent thereunder.
TENDER AGREEMENT
Simultaneously with the execution of the Merger Agreement and as a condition
to the willingness of the Parent and the Purchaser to proceed with the Offer and
the Merger, the Parent and the Purchaser entered into a Tender Agreement (the
"Tender Agreement") with ChemFirst, Inc., a Mississippi corporation ("ChemFirst"
or the "Stockholder"), pursuant to which, among other things, ChemFirst agreed
to validly tender (and not withdraw) its Shares to the Purchaser pursuant to the
Offer. As of the date of the Tender Agreement, ChemFirst beneficially owned
1,275,000 Shares (the "Owned Shares"), representing approximately 21.3% of the
outstanding Shares on a fully-diluted basis.
Pursuant to the Tender Agreement, the Stockholder also agreed that during
the period commencing on the date thereof and continuing until the earliest of
(a) the Effective Time, (b) the termination of the Merger Agreement, (c) written
notice of the termination of the Tender Agreement by the Parent to the
Stockholder and (d) the date which is 180 days after the date of the Tender
Agreement, at any meeting of the Company's stockholders or in connection with
any written consent of the Company's stockholders,
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the Stockholder will: (i) vote the Owned Shares in favor of the Merger; (ii)
vote the Owned Shares against any action or agreement that would result in a
breach in any material respect of any covenant, representation or warranty or
any other obligation or agreement of the Company under the Merger Agreement; and
(iii) vote the Owned Shares against any action or agreement (other than the
Merger Agreement or the transactions contemplated thereby) that would impede,
interfere with, delay, postpone or attempt to discourage the Merger or the
Offer, including, but not limited to: (A) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company and its subsidiaries; (B) a sale or transfer of a material
amount of assets of the Company and its subsidiaries or a reorganization,
recapitalization or liquidation of the Company and its subsidiaries; (C) any
change in the management or board of directors of the Company, except as
otherwise agreed to in writing by the Purchaser; (D) any material change in the
present capitalization or dividend policy of the Company; or (E) any other
material change in the Company's corporate structure or business. In addition,
the Stockholder granted to the Parent and to each officer of the Parent, the
Stockholder's irrevocable proxy to vote the Owned Shares of such Stockholder as
indicated in this paragraph. Pursuant to the Tender Agreement, the Stockholder
also agreed not to solicit or take any other action to facilitate, any inquiry
or the making of any proposal or offer which constitutes, or may reasonably be
expected to lead to, any Takeover Proposal from any person and to use reasonable
efforts to prevent any of its directors (in their actions solely on behalf of
the Stockholder), officers (in their actions solely on behalf of the
Stockholder), attorneys and financial advisors from soliciting or taking any
other action to facilitate, any inquiry or the making of any proposal or offer
which constitutes, or may reasonably be expected to lead to, any Takeover
Proposal from any person. The Stockholder also agreed, while the Tender
Agreement is in effect, and except as contemplated thereby, not to sell or enter
into any contract with respect to the sale or other disposition of, any of the
Shares or to grant any proxies, deposit any Shares into a voting trust or enter
into a voting agreement with respect to any Shares.
12. PURPOSE OF THE OFFER; THE MERGER; PLANS FOR THE COMPANY; RIGHTS
AGREEMENT.
PURPOSE. The purpose of the Offer is to acquire control of, and the entire
equity interest in, the Company. The Offer is being made pursuant to the Merger
Agreement. As promptly as practicable following consummation of the Offer and
after satisfaction or waiver of all conditions to the Merger set forth in the
Merger Agreement, the Purchaser intends to acquire the remaining equity interest
in the Company not acquired in the Offer by consummating the Merger.
VOTE REQUIRED TO APPROVE THE MERGER. The Board of Directors of the Company
has approved the Merger Agreement in accordance with the DGCL. If required for
approval of the Merger, the Company has agreed, subject to the satisfaction of
the conditions to the Merger set forth in the Merger Agreement, in accordance
with and subject to the DGCL, to duly convene a meeting of its stockholders as
promptly as practicable following the purchase of Shares pursuant to the Offer
for the purpose of considering and taking action on the Merger Agreement. If
stockholder approval is required, the Merger Agreement must generally be
approved by the vote of the holders of a majority of the outstanding Shares. As
a result, if the Minimum Condition is satisfied, the Purchaser will have the
power to approve the Merger Agreement without the affirmative vote of any other
stockholder.
APPRAISAL RIGHTS. Stockholders do not have appraisal rights as a result of
the Offer. However, if the Merger is consummated, stockholders of the Company at
the time of the Merger who do not vote in favor of the Merger and comply with
all statutory requirements will have the right under the DGCL to demand
appraisal of, and receive payment in cash of the fair value of, their Shares
outstanding immediately prior to the effective date of the Merger in accordance
with Section 262 of the DGCL.
Under the DGCL, stockholders who properly demand appraisal and otherwise
comply with the applicable statutory procedures will be entitled to receive a
judicial determination of the fair value of their Shares (exclusive of any
element of value arising from the accomplishment or expectation of the Merger)
and to receive payment of such fair value in cash. Any such judicial
determination of the fair value of such
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Shares could be based upon considerations other than or in addition to the price
paid in the Offer and the Merger and the market value of the Shares. In
WEINBERGER V. UOP, INC., the Delaware Supreme Court stated, among other things,
that "proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissible in court" should
be considered in an appraisal proceeding. Stockholders should recognize that the
value so determined could be higher than, lower than or equal to the price per
Share paid pursuant to the Offer or the consideration per Share to be paid in
the Merger.
In addition, several decisions by Delaware courts have held that in certain
circumstances a controlling stockholder of a corporation involved in a merger
has a fiduciary duty to other stockholders that requires that the merger be fair
to other stockholders. In determining whether a merger is fair to minority
stockholders, Delaware courts have considered, among other things, the type and
amount of the consideration to be received by the stockholders and whether there
was fair dealing among the parties. The Delaware Supreme Court stated in
WEINBERGER and RABKIN V. PHILIP A. HUNT CHEMICAL CORP. that the remedy
ordinarily available to minority stockholders in a cash-out merger is the right
to appraisal described above. However, a damages remedy or injunctive relief may
be available if a merger is found to be the product of unfairness, including
fraud, misrepresentation or other misconduct.
THE FOREGOING SUMMARY OF THE RIGHTS OF STOCKHOLDERS DOES NOT PURPORT TO BE A
COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS DESIRING TO
EXERCISE ANY AVAILABLE APPRAISAL RIGHTS. THE PRESENTATION AND EXERCISE OF
APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE
DELAWARE LAW.
The foregoing description of certain provisions of the DGCL is not
necessarily complete and is qualified in its entirety by reference to the DGCL.
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 following the purchase of
Shares pursuant to the Offer in which the Purchaser seeks to acquire any
remaining Shares. Rule 13e-3 should not be applicable to the Merger if the
Merger is consummated within one year after the expiration or termination of the
Offer and the price paid in the Merger is not less than the per Share price paid
pursuant to the Offer. However, in the event that the Purchaser is deemed to
have acquired control of the Company pursuant to the Offer and if the Merger is
consummated more than one year after completion of the Offer or an alternative
acquisition transaction is effected whereby stockholders of the Company receive
consideration less than that paid pursuant to the Offer, in either case at a
time when the Shares are still registered under the Exchange Act, the Purchaser
may be required to comply with Rule 13e-3 under the Exchange Act. If applicable,
Rule 13e-3 would require, among other things, that certain financial information
concerning the Company and certain information relating to the fairness of the
Merger or such alternative transaction and the consideration offered to minority
stockholders in the Merger or such alternative transaction, be filed with the
Commission and disclosed to stockholders prior to consummation of the Merger or
such alternative 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. See Section 14. If such registration were terminated,
Rule 13e-3 would be inapplicable to any such future Merger or such alternative
transaction.
PLANS FOR THE COMPANY. If the Purchaser obtains control of the Company
pursuant to the Offer, the Parent expects to conduct a detailed review of the
Company and its businesses, assets, corporate structure, capitalization,
operations, properties, policies, management and personnel and to consider what,
if any, changes would be desirable in light of the circumstances that then
exist. Such changes could include changes in the Company's businesses, corporate
structure, certificate of incorporation, by-laws, capitalization, board of
directors, management or dividend policy.
Except as described in this Offer to Purchase, neither the Parent nor the
Purchaser has any present plans or proposals that would relate to or result in
an extraordinary corporate transaction such as a
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merger, reorganization or liquidation involving the Company or any of its
subsidiaries or a sale or other transfer of a material amount of assets of the
Company or any of its subsidiaries, any material change in the capitalization or
dividend policy of the Company or any other material change in the Company's
corporate structure or business or the composition of its Board of Directors or
management.
RIGHTS AGREEMENT. The following discussion, including the summary of
certain aspects of the Rights, is based in part on information contained in the
Company's Registration Statement on Form 8-A dated November 9, 1990, as amended
by the Company's Registration Statement on Form 8 dated August 20, 1991, Form
8-A/A dated December 4, 1994 and Form 8-A/A dated October 14, 1997 (as so
amended, the "Form 8-A"), and is qualified by reference to such information. The
Form 8-A is incorporated herein by reference. Although the Purchaser and the
Parent do not have any knowledge that would indicate that any statements
contained herein based upon such documents are untrue, neither the Purchaser nor
the Parent assumes any responsibility for the accuracy or completeness of the
information contained in such documents, or for any failure by the Company to
disclose events that may have occurred and may affect the significance or
accuracy of any such information but which are unknown to the Purchaser and the
Parent.
On November 5, 1990, the Board of Directors of the Company declared a
dividend of one Right for each outstanding Share. The dividend was paid on
November 15, 1990 (the "Record Date") to the stockholders of record on that
date. Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Junior Participating Preferred Stock, par
value $1.00 per share (the "Preferred Shares"), of the Company at a price of
$30.00 per one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment.
Until the earlier to occur of (i) 10 days following a public announcement
that a person or group of affiliated or associated persons other than Ashland,
ChemFirst, or any of their affiliates or associates have acquired beneficial
ownership of 10% or more of the outstanding Shares, (ii) 10 days following a
public announcement that Ashland, ChemFirst, or any of their affiliates or
associates has acquired beneficial ownership of any Shares in addition to those
owned by such parties as of the adoption of the Rights Agreement (any such
person or group in foregoing clauses (i) or (ii), an "Acquiring Person"), or
(iii) 10 business days (or such later date as may be determined by action of the
Board of Directors prior to such time as any person or group of affiliated
persons becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 10% or more of the outstanding Shares (the earlier of such dates being
called the "Distribution Date"), the Rights will be evidenced, with respect to
any of the Share certificates outstanding as of the Record Date, by such Share
certificate with a copy of the Summary of Rights attached thereto.
The Rights Agreement provides that, until the Distribution Date (or earlier
redemption or expiration of the Rights), the Rights will be transferred with and
only with the Shares. Until the Distribution Date (or earlier redemption or
expiration of the Rights), new Share certificates issued after the Record Date
upon transfer or new issuance of Shares will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of any
certificates for Shares outstanding as of the Record Date, even without such
notation or a copy of the Summary of Rights being attached thereto, will also
constitute the transfer of the Rights associated with the Shares represented by
such certificate. As soon as practicable following the Distribution Date,
separate Rights Certificates will be mailed to holders of record of the Shares
as of the close of business on the Distribution Date and such separate Right
Certificates alone will evidence the Rights.
The Rights are not exercisable until the Distribution Date. As a result of
the Third Amendment to the Rights Agreement (described below), the Rights will
expire on November 15, 1998 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
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The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the Preferred
Shares, (ii) upon the grant to holders of the Preferred Shares of certain rights
or warrants to subscribe for or purchase Preferred Shares at a price, or
securities convertible into Preferred Shares with a conversion price, less than
the then current market price of the Preferred Shares or (iii) upon the
distribution to holders of the Preferred Shares of evidences of indebtedness or
assets (excluding regular periodic cash dividends paid out of earnings or
retained earnings or dividends payable in Preferred Shares) or of subscription
rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one-hundredths of a
Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Shares or a stock dividend on
the Shares payable in Shares or subdivisions, consolidations or combinations of
the Shares occurring, in any such case, prior to the Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1 per share but will be entitled to an aggregate
dividend of 100 times the dividend declared per Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to a minimum
preferential liquidation payment of $100 per share but will be entitled to an
aggregate payment of 100 times the payment made per Share. Each Preferred Share
will have 100 votes, voting together with the Shares. Finally, in the event of
any merger, consolidation or other transaction in which Shares are exchanged,
each Preferred Share will be entitled to receive 100 times the amount received
per Share. These rights are protected by customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend, liquidation and
voting rights, the value of the one one-hundredth interest in a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Share.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold, proper provision will be made so that each holder of a Right
will thereafter have the right to receive, upon the exercise thereof at the then
current exercise price of the Right, that number of shares of common stock of
the acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the Right. In the event that any person
or group of affiliated or associated persons becomes an Acquiring Person, proper
provision shall be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereafter be void), will
thereafter have the right to receive upon exercise that number of Shares having
a market value of two times the exercise price of the Right.
At any time after any Person becomes an Acquiring Person and prior to the
acquisition by such person or group of 50% or more of the outstanding Shares,
the Board of Directors of the Company may exchange the Rights (other than Rights
owned by such person or group which will have become void), in whole or in part,
at an exchange ratio of one Share, or one one-hundredth of a Preferred Share (or
of a share of a class or series of the Company's preferred stock having
equivalent rights, preferences and privileges), per Right (subject to
adjustment).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are integral multiples of one one-hundredth of a Preferred
Share, which may, at the election of the Company, be evidenced by depositary
receipts) and in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Shares on the last trading day prior to the date
of exercise.
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At any time prior to any person or group of affiliated or associated persons
becoming an Acquiring Person, the Board of Directors of the Company may redeem
the Rights in whole, but not in part, at a price of $.01 per Right (the
"Redemption Price"). The redemption of the Rights may be made effective at such
time on such basis with such conditions as the Board of Directors in its sole
discretion may establish. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the
Company without the consent of the holders of the Rights, except that from and
after such time as any person or group of affiliated or associated persons
becomes an Acquiring Person no such amendment may adversely affect the interests
of the holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no rights
as a stockholder of the company, including, without limitation, the right to
vote or to receive dividends.
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Company's Board of Directors, except pursuant to an
offer conditioned on a substantial number of Rights being acquired. The Rights
should not interfere with any merger or other business combination approved by
the Board of Directors since the Rights may be redeemed by the Company at the
Redemption Price prior to the time that a person or group becomes an Acquiring
Person.
The Rights Agreement, dated as of November 5, 1990 between the Company and
the Rights Agent, specifying the terms of the Rights and including the form of
the Certificate of Designation, Preferences and Rights setting forth the terms
of the Preferred Shares as an exhibit thereto and the form of press release
announcing the declaration of the Rights are incorporated herein by reference to
the Form 8-A. The foregoing description of the Rights is qualified in its
entirety by reference to the Rights Agreement.
The First Amendment to the Rights Agreement (dated as of August 7, 1991),
the Second Amendment to the Rights Agreement (dated as of August 3, 1994) and
the Third Amendment to the Rights Agreement (dated as of October 9, 1997)
extended the Final Expiration Date to November 15, 1994, November 15, 1997 and
November 15, 1998, respectively.
Effective October 9, 1997, the Rights Agreement was amended ("the Fourth
Amendment") to provide that neither Parent nor any of its Subsidiaries,
Affiliates or Associates (as defined therein) (hereinafter, collectively, the
"Borden Entities") will become an Acquiring Person. Further, the Fourth
Amendment provides that the Borden Entities will not be deemed a Beneficial
Owner of, or to beneficially own, any of the Shares (as defined therein) solely
by reason of the Merger Agreement or the Tender Agreement.
In addition, the Rights Agreement was modified by the Fourth Amendment to
provide that a registered holder of any Right Certificate may exercise the
Rights evidenced thereby (except as provided in the Rights Agreement) in whole
or in part at any time after the Distribution Date upon surrender of the Right
Certificate with the form of election to purchase on the reverse side thereof
duly executed, to the Rights Agent, together with payment of the Purchase Price
(as defined therein), at or prior to the earliest of (i) the Final Expiration
Date (as defined therein), (ii) the Redemption Date (as defined therein), (iii)
the time at which such rights are exchanged as provided in Section 24 of the
Rights Agreement, or
(iv) immediately prior to the acceptance for purchase of Shares by a Borden
Entity pursuant to the Offer.
The Fourth Amendment further provides that notwithstanding anything in the
Rights Agreement to the contrary, neither (a) the approval, execution, delivery,
amendment or consummation of any of the transactions contemplated by the Merger
Agreement or the Tender Offer nor (b) the public announcement or the making of a
tender offer by any Borden Entity for Shares of the Company, or the acceptance
for purchase of such shares thereunder, shall cause (i) any Borden Entity to
become an Acquiring Person, (ii) a Shares Acquisition Date to occur, or (iii) a
Distribution Date to occur.
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<PAGE>
13. DIVIDENDS AND DISTRIBUTIONS. As described more fully in Section 11,
pursuant to the Merger Agreement, the Company has covenanted and agreed that,
prior to the Effective Time, unless expressly contemplated by the Merger
Agreement or the Disclosure Schedule, or the Parent otherwise agrees in writing,
the Company will not, among other things, split, combine or otherwise change the
Shares or its capitalization. If the Company should, however, on or after the
date of the Merger Agreement take any such action, or disclose that it has done
so, then without prejudice to the Purchaser's rights under Section 15, the
Purchaser reserves the right to make such adjustments to the purchase price and
other terms of the Offer as it deems appropriate to reflect such action.
Similarly, as described more fully in Section 11, pursuant to the Merger
Agreement, the Company has covenanted and agreed that, prior to the Effective
Time, unless expressly contemplated by the Merger Agreement or the Disclosure
Schedule, or the Parent otherwise agrees in writing, the Company will not, among
other things, declare, set aside or pay any dividend payable in cash, stock or
property or make any other distributions with respect to Shares or any other
shares of its capital stock of any class. If on or after the date of the Merger
Agreement, the Company should nonetheless declare or pay any cash or stock
dividend or other distribution on, or issue any right with respect to, the
Shares that is payable or distributable to stockholders of record on a date
prior to the transfer to the name of the Purchaser or the nominee or transferee
of the Purchaser on the Company's stock transfer records of such Shares that are
purchased pursuant to the Offer, then without prejudice to the Purchaser's
rights under Section 15, (i) the purchase price payable per Share by the
Purchaser pursuant to the Offer will be reduced to the extent any such dividend
or distribution is payable in cash and (ii) any non-cash dividend, distribution
(including additional Shares) or right received and held by a tendering
stockholder shall be required to be promptly remitted and transferred by the
tendering stockholder to the Depositary for the account of the Purchaser,
accompanied by appropriate documentation of transfer. Pending such remittance or
appropriate assurance thereof, the Purchaser will, subject to applicable law, be
entitled to all rights and privileges as owner of any such non-cash dividend,
distribution or right and may withhold the entire purchase price or deduct from
the purchase price the amount or value thereof, as determined by the Purchaser
in its sole discretion.
14. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, NASDAQ NATIONAL MARKET
QUOTATION AND EXCHANGE ACT REGISTRATION. The purchase of Shares pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
will reduce the number of holders of Shares. This could adversely affect the
liquidity and market value of the remaining Shares held by the public. Depending
upon the number of Shares purchased pursuant to the Offer, the Shares may no
longer meet the requirements of the National Association of Securities Dealers,
Inc. (the "NASD") for continued inclusion in the Nasdaq National Market, which
require that an issuer have at least 200,000 publicly held shares, held by at
least 400 stockholders or 300 stockholders of round lots, with a market value of
at least $1,000,000 and have net tangible assets of at least $1,000,000,
$2,000,000 or $4,000,000, depending on profitability levels during the issuer's
four most recent fiscal years. If these standards are not met, the Shares might
nevertheless continue to be included in the NASD's Nasdaq Stock Market (the
"Nasdaq Stock Market") with quotations published in the Nasdaq "additional list"
or in one of the "local lists", but if the number of holders of the Shares were
to fall below 300, or if the number of publicly held Shares were to fall below
100,000 or there were not at least two registered and active market makers for
the Shares, the NASD's rules provide that the Shares would no longer be
"qualified" for Nasdaq Stock Market reporting and the Nasdaq Stock Market would
cease to provide any quotations. Shares held directly or indirectly by
directors, officers or beneficial owners of more than 10% of the Shares are not
considered as being publicly held for this purpose. According to the 1997 Annual
Report, as of September 5, 1997, there were approximately 175 holders of record
and approximately 1,398 beneficial owners of Shares and there were 5,627,934
Shares outstanding. If as a result of the purchase of Shares pursuant to the
Offer or otherwise, the Shares no longer meet the requirements of the NASD for
continued inclusion in the Nasdaq National Market or in any other tier of the
Nasdaq Stock Market and the Shares
33
<PAGE>
are no longer included in the Nasdaq National Market or in any other tier of the
Nasdaq Stock Market, as the case may be, the market for the Shares could be
adversely affected.
In the event that the Shares no longer meet the requirements of the NASD for
continued inclusion in any tier of the Nasdaq Stock Market, it is possible that
such 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 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
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. The Purchaser
cannot predict whether the reduction in the number of Shares that might
otherwise trade publicly would have an adverse or beneficial effect on the
market price for or marketability of the Shares.
The Shares are currently registered under the Exchange Act. The purchase of
Shares pursuant to the Offer may result in the Shares becoming eligible for
deregistration under the Exchange Act. Registration of the Shares may be
terminated upon application of the Company to the Commission if the Shares are
not listed on a national securities exchange and there are fewer than 300 record
holders. The termination of the registration of the Shares under the Exchange
Act would substantially reduce the information required to be furnished by the
Company to holders of the Shares and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), the requirement of furnishing a proxy statement in connection with
stockholders' meetings and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions, no longer applicable to the
Shares. Furthermore, "affiliates" of the Company and persons holding "restricted
securities" of the Company may be deprived of the ability to dispose of the
securities pursuant to Rule 144 under the Securities Act of 1933.
15. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of
the Offer, but subject to the terms and conditions of the Merger Agreement, the
Purchaser shall not be required to accept for payment or pay for any tendered
Shares (subject to any applicable rules and regulations of the Commission,
including Rule 14e-1(c) under the Exchange Act), if:
(a) as of the Expiration Date, there shall not have been validly tendered
and not withdrawn pursuant to the Offer a number of Shares such that, upon
consummation of the Offer, the Purchaser and its affiliates will beneficially
own in the aggregate not less than 51% of the Shares outstanding on a fully
diluted basis (the "Minimum Condition");
(b) any applicable waiting period under the HSR Act shall not have expired
or terminated prior to the Expiration Date;
(c) at any time on or after the date of the Merger Agreement and before the
Expiration Date (or, in the case of conditions related to regulatory matters,
before the acceptance of any of the Shares for payment or the payment thereof),
any of the following events shall have occurred and be continuing:
(i) any Law or Order (each as defined in the Merger Agreement) that (A)
has the effect of making illegal or otherwise restraining, prohibiting or
making materially more costly the making or consummation of the Offer or the
Merger or prohibiting the performance of the Merger Agreement; (B) prohibits
or imposes any material limitation on the ability of the Purchaser or the
Parent effectively to acquire or to hold or exercise full rights of
ownership of the Shares purchased pursuant to the Offer including the right
to vote such Shares on all matters properly presented to the Company's
stockholders; or (C) prohibits or materially limits the ownership or
operation by the Company or any of its subsidiaries, or by the Parent, the
Purchaser or any of the Parent's subsidiaries of all or any material portion
of the business or assets of the Company, or compels the Purchaser, the
Parent or any of the Parent's subsidiaries to dispose of or hold separate
all or any
34
<PAGE>
material portion of the business or assets of the Company, as a result of
the transactions contemplated by the Offer or the Merger Agreement;
(ii) (A) any action or proceeding brought or threatened by any
Governmental or Regulatory Authority that seeks any Order having any effect
set forth in clause (c)(i) above or (B) any action or proceeding brought by
any other person that could reasonably be expected to result in any Order
having any effect set forth in clause (c)(1) above;
(iii) (A) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States or any material limitation
(other than an increase in interest rates) imposed by any Governmental or
Regulatory Authority on the extension of credit by lending institutions in
general, (B) any general suspension of trading in, or limitation on prices
for, securities on any United States national securities exchange or in the
over-the-counter market or (C) a decline of at least 30% in both the Dow
Jones Average of Industrial Stocks and the Standard & Poor's 500 index from
the date of the Merger Agreement; provided that such situation remains in
effect through the date that any party seeks to assert the failure of this
condition;
(iv) a commencement of a war or armed hostilities or other national or
international crisis involving the United States and having a significant
adverse effect on general economic conditions or the functioning of the
financial markets in the United States;
(v) the representations and warranties made by the Company in the Merger
Agreement that are subject to a materiality qualification shall not be true
and correct, or the representations and warranties made by the Company in
the Merger Agreement that are not so qualified shall not be true and correct
in any respect that would have a Material Adverse Effect (as defined in the
Merger Agreement) in each case as of the date of the consummation of the
Offer as though made on and as of such date or, in the case of
representations and warranties made as of a specific date earlier than the
date of the consummation of the Offer, on and as of such earlier date;
provided, however, that if the Parent or the Purchaser discovers such a
breach of a representation or warranty, the Parent or the Purchaser shall
promptly notify the Company of the nature of such breach and the Company
shall be entitled to attempt to cure such breach prior to the Expiration
Date;
(vi) the Company shall not have performed and complied with, in all
material respects (without reference to any materiality qualifications
contained therein), each agreement and covenant required by the Merger
Agreement to be performed or complied with by it; provided, however, that if
the Parent or the Purchaser discovers such a breach of an agreement or
covenant, the Parent or the Purchaser shall promptly notify the Company of
the nature of such breach and the Company shall be entitled to attempt to
cure such breach prior to the Expiration Date; or
(vii) the Merger Agreement shall have been terminated in accordance with
its terms;
which, in the case of paragraphs (a) through (c)(iv) above, makes it
inadvisable, as determined by the Purchaser in good faith, to proceed with the
Offer or with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of the Parent and the
Purchaser and may be asserted by the Parent or the Purchaser regardless of the
circumstances giving rise to any such condition and may be waived by the Parent
or the Purchaser in whole or in part at any time and from time to time in their
sole discretion, except as otherwise provided in the Merger Agreement with
respect to the Minimum Condition and the HSR Act Condition. The Parent's or the
Purchaser's failure at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right, the waiver of any such right with
respect to particular facts and circumstances shall not be deemed a waiver with
respect to any other facts and circumstances and each such right shall be deemed
an ongoing right which may be asserted at any time and from time to time.
35
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16. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
GENERAL. Except as set forth below, neither the Purchaser nor the Parent is
aware of any licenses or other regulatory permits that appear to be material to
the business of the Company and its subsidiaries, taken as a whole, that might
be adversely affected by the Purchaser's acquisition of Shares (and the indirect
acquisition of the stock of the Company's subsidiaries) as contemplated herein,
or of any filings, approvals or other actions by or with any domestic (federal
or state), foreign or supranational governmental authority or administrative or
regulatory agency that would be required prior to the acquisition of Shares (or
the indirect acquisition of the stock of the Company's subsidiaries) by the
Purchaser pursuant to the Offer as contemplated herein. Should any such approval
or other action be required, it is the Parent's present intention to seek such
approval or action. There can be no assurance that any such approval or other
action, if needed, would be obtained without substantial conditions or that
adverse consequences might not result to the business of the Company, the Parent
or the Purchaser or that certain parts of the businesses of the Company, the
Parent or the Purchaser might not have to be disposed of or held separate or
other substantial conditions complied with in order to obtain such approval or
other action or in the event that such approval was not obtained or such other
action was not taken, any of which could cause the Purchaser to elect (subject
to the terms of the Merger Agreement) to terminate the Offer without the
purchase of the Shares thereunder. The Purchaser's obligation under the Offer to
accept for payment and pay for Shares is subject to certain conditions,
including conditions relating to the legal matters discussed in this Section 16.
STATE TAKEOVER LAWS. A number of states have adopted takeover laws and
regulations which purport to varying degrees to be applicable to attempts to
acquire securities of corporations which are incorporated in such states or
which have or whose business operations have substantial economic effects in
such states, or which have substantial assets, security holders, principal
executive offices or principal places of business therein. In 1982, the Supreme
Court of the United States, in EDGAR V. MITE CORP., invalidated on
constitutional grounds the Illinois Business Takeovers Act, which as a matter of
state securities law made takeovers of corporations meeting certain requirements
more difficult, and the reasoning in such decision is likely to apply to certain
other state takeover statutes. However, in 1987, in CTS CORP. V. DYNAMICS CORP.
OF AMERICA, the Supreme Court of the United States held that the State of
Indiana could, as a matter of corporate law and in particular 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, provided that such laws were
applicable only under certain conditions. Subsequently, in TLX ACQUISITION CORP.
V. TELEX CORP., a federal district court in Oklahoma ruled that the Oklahoma
statutes were unconstitutional insofar as they applied to corporations
incorporated outside Oklahoma in that they would subject such corporations to
inconsistent regulations. Similarly, in TYSON FOODS, INC. V. MCREYNOLDS, a
federal district court in Tennessee ruled that four Tennessee takeover statutes
were unconstitutional as applied to corporations incorporated outside Tennessee.
This decision was affirmed by the United States Court of Appeals for the Sixth
Circuit. In December 1988, a federal district court in Florida held in GRAND
METROPOLITAN PLC V. BUTTERWORTH that the provisions of the Florida Affiliated
Transactions Act and the Florida Control Share Acquisition Act were
unconstitutional as applied to corporations incorporated outside of Florida. In
the Merger Agreement, the Company has represented that those portions of the
Louisiana Control Share Acquisition Statute that purport to apply to foreign
corporations with a principal place of business in Louisiana are inapplicable to
the transactions contemplated by the Merger Agreement.
Except as described herein, the Purchaser has not attempted to comply with
any state takeover statutes in connection with the Offer. The Purchaser reserves
the right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer to Purchase nor any action
taken in connection herewith is intended as a waiver of that right. In the event
that any state takeover statute is found applicable to the Offer, the Purchaser
might be unable to accept for payment or purchase Shares tendered pursuant to
the Offer or be delayed in continuing or consummating the Offer.
36
<PAGE>
In such case, the Purchaser may not be obligated to accept for purchase or pay
for, any Shares tendered. See Section 15.
ANTITRUST. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission ("FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the FTC and certain waiting period requirements have been
satisfied.
The Parent intends, as soon as reasonably practicable following the date
hereof, to file with the FTC and the Antitrust Division a Premerger Notification
and Report Form in connection with the purchase of Shares pursuant to the Offer.
Under the provisions of the HSR Act applicable to the Offer, the purchase of
Shares pursuant to the Offer may not be consummated until the expiration of a
15-calendar day waiting period following the filing by the Parent, unless both
the Antitrust Division and the FTC terminate the waiting period prior thereto.
If, within such 15-calendar day waiting period, either the Antitrust Division or
the FTC requests additional information or documentary material from the Parent,
the waiting period would be extended for an additional 10 calendar days
following substantial compliance by the Parent with such request. Thereafter,
the waiting period could be extended only by court order. If the acquisition of
Shares is delayed pursuant to a request by the FTC or the Antitrust Division for
additional information or documentary material pursuant to the HSR Act, the
Offer may, but need not (except as otherwise provided in the Merger Agreement),
be extended and in any event the purchase of and payment for Shares will be
deferred until 10 days after the request is substantially complied with, unless
the waiting period is sooner terminated by the FTC and the Antitrust Division.
See Section 2. 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. Any such extension of the waiting
period will not give rise to any withdrawal rights not otherwise provided for by
applicable law. See Section 4.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
the Purchaser pursuant to the Offer. At any time before or after the purchase by
the Purchaser of Shares pursuant to the Offer, either of the FTC and the
Antitrust Division could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
purchase of Shares pursuant to the Offer or seeking the divestiture of Shares
purchased by the Purchaser or the divestiture of substantial assets of the
Parent, its subsidiaries or the Company. Private parties and state attorneys
general may also bring legal action under federal or state antitrust laws under
certain circumstances.
Based upon an examination of publicly available information relating to the
businesses in which the Company and its subsidiaries are engaged, the Parent and
the Purchaser believe that the acquisition of Shares pursuant to the Offer would
not violate the antitrust laws. There can be no assurance, however, that a
challenge to the Offer on antitrust grounds will not be made or, if such
challenge is made, what the outcome will be. See Section 15 for certain
conditions to the Offer, including conditions with respect to litigation and
certain government actions.
MARGIN CREDIT REGULATIONS. Federal Reserve Board Regulations G, T, U and X
(the "Margin Credit Regulations") restrict the extension or maintenance of
credit for the purpose of buying or carrying margin stock, including the Shares,
if the credit is secured directly or indirectly thereby. Such secured credit may
not be extended or maintained in an amount that exceeds the maximum loan value
of the margin stock. Under the Margin Credit Regulations, the Shares are
presently margin stock and the maximum loan value thereof is generally 50% of
their current market value. The definition of "indirectly secured" contained in
the Margin Credit Regulations provides that the term does not include an
arrangement with a customer if the lender in good faith has not relied upon
margin stock as collateral in extending or maintaining the particular credit.
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17. FEES AND EXPENSES. Chase Securities Inc. is acting as Dealer Manager in
connection with the Offer. As compensation for its services as Dealer Manager,
Chase Securities Inc. will receive a fee of approximately $250,000 if the Offer
is consummated. Parent will also reimburse Chase Securities Inc. for reasonable
out-of-pocket expenses including reasonable attorney's fees and has also agreed
to indemnify Chase Securities Inc. against certain liabilities and expenses in
connection with the Offer, including certain liabilities under the Federal
securities laws.
The Purchaser has retained Mackenzie Partners, Inc. to act as the
Information Agent and IBJ Schroder Bank & Trust Company to act as the Depositary
in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telex, telegraph and personal interview and may
request brokers, dealers and other nominee stockholders to forward the Offer
materials to beneficial owners. The Information Agent and the Depositary will
receive reasonable and customary compensation for services relating to the Offer
and will be reimbursed for certain out-of-pocket expenses. The Purchaser and the
Parent have also agreed to indemnify the Information Agent and the Depositary
against certain liabilities and expenses in connection with the Offer, including
certain liabilities under the federal securities laws.
The Purchaser will not pay any fees or commissions to any broker or dealer
or any other person for soliciting tenders of Shares pursuant to the Offer
(other than to the Dealer Manager, the Information Agent and the Depositary).
Brokers, dealers, commercial banks and trust companies will, upon request, be
reimbursed by the Purchaser for customary mailing and handling expenses incurred
by them in forwarding offering materials to their customers.
18. MISCELLANEOUS. The Offer is being made solely by this Offer to Purchase
and the related Letter of Transmittal and is being made to all holders of
Shares. The 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 the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, the
Purchaser will make a good faith effort to comply with any such state statute.
If after such good faith effort, the Purchaser cannot comply with such state
statute, the Offer will not be made to nor will tenders be accepted from or on
behalf of the holders of Shares in such state. In any jurisdiction where the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by the Dealer Manager or one or more registered brokers or dealers
that are licensed under the laws of such jurisdiction.
The Purchaser and the Parent have filed with the Commission a Schedule 14D-1
(including exhibits) pursuant to Rule 14d-3 under the Exchange Act, furnishing
certain additional information with respect to the Offer. Such statement and any
amendments thereto, including exhibits, may be inspected and copies may be
obtained from the offices of the Commission (except that they will not be
available at the regional offices of the Commission) in the manner set forth in
Section 8 of this Offer to Purchase.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR THE PARENT 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.
MC MERGER CORP.
October 15, 1997
38
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SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF THE PARENT, THE PURCHASER AND BORDEN, INC.
1. DIRECTORS AND EXECUTIVE OFFICERS OF THE PARENT AND THE PURCHASER. The
name, age, present principal occupation or employment and five-year employment
history of each director and executive officer of the Parent and the Purchaser
are set forth below. All directors and executive officers listed below are
citizens of the United States of America. The business address of Messrs.
Saggese, Kidder, Carter, de Ney, Stevning, Ducey and Dieker is 180 East Broad
Street, Columbus, Ohio 43215. The business address of Messrs. Stuart and Robbins
is 9 West 57th Street, New York, New York 10019. The business address of Mr.
Krainer is 610 Meidinger Tower, Louisville, Kentucky 40202. The business address
of Mr. Gerson is 630 Glendale-Milford Road, Cincinnati, Ohio 45215.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME AND OR EMPLOYMENT AND FIVE-YEAR
POSITION EMPLOYMENT HISTORY
- ------------------------------ ---------------------------------------------------------------------------------
<S> <C>
Joseph M. Saggese Joseph M. Saggese (age 66) is Chairman of the Board of Directors and President
Chairman, and Chief Executive Officer of the Parent. He also serves as Chairman of the
President and Board of Directors of Borden Decorative Products Holdings, Inc. and BCP
Chief Executive Management, Inc. Prior to assuming his position with the Company, he served as
Officer Executive Vice President of Borden and President of its Worldwide Packaging and
Industrial Products Division, a position he held since 1990. He has served as
Chairman of the Board of Directors, President and Chief Executive officer of BCP
Management, Inc. since 1990.
C. Robert Kidder C. Robert Kidder (age 53) is a Director of the Parent and a Director, Chairman of
Director the Board and Chief Executive Officer of Borden, a position he has held since
January 10, 1995. He also serves as a Director of Borden Foods Corporation,
Borden Decorative Products Holdings, Inc., Wise Foods Holdings, Inc., Elmer's
Holdings, Inc. and reSource Partner, Inc. He served as Chairman of the Board of
Duracell International Inc. and Duracell, Inc. from August 1991 through October
1994 and was Chairman of the Board and Chief Executive Officer of both companies
from April 1992 through September 30, 1994, Chairman of the Board, President and
Chief Executive Officer of both companies from August 1991 until April 1992, and
President and Chief Executive Officer of both companies from June 1988 until
August 1991. He is also a Director of Electronic Data Systems Corporation, AEP
Industries, Inc. and Morgan Stanley, Dean Witter, Discover & Co.
Scott M. Stuart Scott M. Stuart (age 38) is a Director of the Parent and also serves as Director
Director of Borden, Borden Foods Corporation and Borden Decorative Products Holdings, Inc.
He has been a General Partner of KKR Associates, L.P. since January 1995. He was
a General Partner of Kohlberg Kravis Roberts & Co., L.P. ("KKR") from January
1995 until January 1, 1996 when he became a member of the limited liability
company which serves as the general partner of KKR. He has been an Executive with
KKR since 1986. He is a Director of AEP Industries, Inc., Newsquest Capital, PLC.
and World Color Press, Inc.
</TABLE>
I-1
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME AND OR EMPLOYMENT AND FIVE-YEAR
POSITION EMPLOYMENT HISTORY
- ------------------------------ ---------------------------------------------------------------------------------
<S> <C>
Clifton S. Robbins Clifton S. Robbins (age 39) is a Director of the Parent and also serves as a
Director Director of Borden, Borden Foods Corporation and BCP Management, Inc. He has been
a general partner of KKR Associates, L.P. since January 1995. He was a General
Partner of KKR from January 1995 until January 1, 1996 when he became a member of
the limited liability company which serves as the general partner of KKR. He has
been an Executive with KKR since 1987. He is a Director of AEP Industries, Inc.,
IDEX Corporation, Kindercare Learning Centers, Inc. and Newsquest Capital, PLC.
William H. Carter William H. Carter (age 44) is a Director of the Parent and since April 1995 has
Director been Executive Vice President and Chief Financial Officer of Borden. He is also a
Director of Elmer's Products, Inc., BCP Management, Inc., AEP Industries, Inc.,
reSource Partner, Inc., Borden Foods Corporation, Borden Decorative Products
Holdings, Inc. and Wise Foods Holdings, Inc. Prior to joining Borden in 1995, he
served as the Price Waterhouse LLP engagement partner responsible for Borden.
Richard L. de Ney Richard L. de Ney (age 47) is Director of the Parent. He joined Borden on January
Director 10, 1995 as Executive Vice President-Administration and was elected Executive
Vice President-Corporate Strategy and Development effective February 16, 1995.
Prior thereto he was a Managing Director at Bear, Stearns & Co., Inc. He is also
a Director of reSource Partner, Inc., Elmer's Products, Inc., Borden Foods
Corporation and Wise Foods Holdings, Inc.
Michael E. Ducey Michael E. Ducey (age 48) is Executive Vice President and Chief Operating Officer
Executive Vice of the Parent. Prior to this position, he was an Executive Vice President of the
President and Company, a position he held since 1996. Prior to this position, he was Vice
Chief Operating President and Business Director of the North American Resins operation of the
Officer Packaging and Industrial Products Division of Borden beginning in 1995. From 1992
through 1994, he was Sales and Marketing Director of the Division's Adhesives and
Resins operations.
William T. Gerson William T. Gerson (age 56) is an Executive Vice President of the Parent. Prior to
Executive Vice assuming this position, he served as General Manager of the Coating and Graphics
President operations of the Packaging and Industrial Products Division of Borden, a
position he held since 1986.
Edward F. Krainer Edward F. Krainer (age 58) is an Executive Vice President of the Parent. Prior to
Executive Vice assuming this position, he was Vice President and Group General Manager of
President domestic operations of the Worldwide Resins Group of the Packaging and Industrial
Products Division of Borden. Prior thereto, he was Group General Manager of the
Division's Foundry and Industrial Products operation.
James O. Stevning James O. Stevning (age 38) is Executive Vice President and Chief Financial
Executive Vice Officer of the Parent. Prior to assuming this position, he was Vice President,
President and Chief Financial Officer and Treasurer of BCP Management, Inc., positions held
Chief Financial since 1996. Prior thereto, he was Controller and Principal Accounting Officer of
Officer BCP Management, Inc., since 1994, and Group Controller of Borden's Basic
Chemicals Group since 1992.
</TABLE>
I-2
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME AND OR EMPLOYMENT AND FIVE-YEAR
POSITION EMPLOYMENT HISTORY
- ------------------------------ ---------------------------------------------------------------------------------
<S> <C>
Lawrence L. Dieker Lawrence L. Dieker (age 59) is Vice President, General Counsel and Secretary of
Vice President, the Parent. Prior to assuming these positions, he was Assistant General Counsel
General Counsel of Borden, a position he held since 1982. He is also Vice President, General
and Secretary Counsel and Secretary of BCP Management, Inc., general partner of Borden
Chemicals and Plastics Limited Partnership.
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF BORDEN. The name, age, present
principal occupation or employment and five-year employment history of each
director and executive officer of Borden are set forth below. All directors and
executive officers listed below are citizens of the United States of America.
The business address of Messrs. Kidder, Carter, de Ney, Kesselman, Saggese,
Smith, Starkman and Ms. Reardon is 180 East Broad Street, Columbus, Ohio 43215.
The business address of Messrs. Kravis, Navab, Robbins and Stuart is 9 West 57th
Street, New York, New York 10019. The business address of Mr. Roberts is 2800
Sand Hill Road, Menlo Park, California 94025.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME AND OR EMPLOYMENT AND FIVE-YEAR
POSITION EMPLOYMENT HISTORY
- ------------------------------ ---------------------------------------------------------------------------------
<S> <C>
C. Robert Kidder C. Robert Kidder (age 53) is Chairman of the Board and Chief Executive Officer of
Chairman and Chief Borden, a position he has held since January 10, 1995. He also serves as a
Executive Officer Director of Borden Foods Corporation, Borden Decorative Products Holdings, Inc.,
Borden Chemical, Inc., Wise Foods Holdings, Inc., Elmer's Holdings, Inc. and
reSource Partner, Inc. He served as Chairman of the Board of Duracell
International Inc. and Duracell, Inc. from August 1991 through October 1994 and
was Chairman of the Board and Chief Executive Officer of both companies from
April 1992 through September 30, 1994, Chairman of the Board, President and Chief
Executive Officer of both companies from August 1991 until April 1992, and
President and Chief Executive Officer of both companies from June 1988 until
August 1991. He is also a Director of Electronic Data Systems Corporation, AEP
Industries, Inc. and Morgan Stanley, Dean Witter, Discover & Co.
Henry R. Kravis Henry R. Kravis (age 53) acted as Chairman of the Board of Borden from December
Director 21, 1994 to January 10, 1995. He has been a General Partner of KKR and KKR
Associates, L.P. since their establishment. He is also a Director of AutoZone,
Inc., Bruno's, Inc., Flagstar Companies, Inc., Flagstar Corporation, Gillette
Company, IDEX Corporation, K-III Communications Corp., Merit Behavioral Care
Corporation, Newsquest Capital, PLC., Owens-Illinois, Inc., Owens-Illinois Group,
Inc., Safeway Inc., Sotheby's, Union Texas Petroleum Holdings, Inc. and World
Color Press, Inc. He is a member of the Executive Committee of the Borden Board.
Messrs. Kravis and Roberts are first cousins.
Alexander Navab Alexander Navab (age 31) has been an Executive of KKR since June 1993. He was
Director employed by James D. Wolfensohn Incorporated, an investment banking firm, from
September 1991 to June 1993. He is also a Director of Newsquest Capital, PLC. and
World Color Press, Inc. He is a member of the Audit Committee of the Borden
Board.
</TABLE>
I-3
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME AND OR EMPLOYMENT AND FIVE-YEAR
POSITION EMPLOYMENT HISTORY
- ------------------------------ ---------------------------------------------------------------------------------
<S> <C>
Clifton S. Robbins Clifton S. Robbins (age 39) is a Director of the Borden and also serves as a
Director Director of Borden Chemical, Inc., Borden Foods Corporation and BCP Management,
Inc. He has been a general partner of KKR Associates, L.P. since January 1995. He
was a General Partner of KKR from January 1995 until January 1, 1996 when he
became a member of the limited liability company which serves as the general
partner of KKR. He has been an Executive with KKR since 1987. He is a Director of
AEP Industries, Inc., IDEX Corporation, Kindercare Learning Centers, Inc. and
Newsquest Capital, PLC.
George R. Roberts George R. Roberts (age 54) has been a General Partner of KKR and KKR Associates,
Director L.P. since their establishment. He also a Director of AutoZone, Inc., Bruno's,
Inc., Flagstar Companies, Inc., Flagstar Corporation, IDEX Corporation, K-III
Communications Corp., Merit Behavioral Care Corporation, Newsquest Capital, PLC.,
Owens-Illinois, Inc., Owens-Illinois Group, Inc., Safeway Inc., Union Texas
Petroleum Holdings, Inc. and World Color Press, Inc. Messrs. Kravis and Roberts
and first cousins.
Scott M. Stuart Scott M. Stuart (age 38) is a Director of Borden and also serves as Director of
Director Borden Chemical, Inc., Borden Foods Corporation and Borden Decorative Products
Holdings, Inc. He has been a General Partner of KKR Associates, L.P. since
January 1995. He was a General Partner of KKR from January 1995 until January 1,
1996 when he became a member of the limited liability company which serves as the
general partner of KKR. He has been an Executive with KKR since 1986. He is a
Director of AEP Industries, Inc., Newsquest Capital, PLC. and World Color Press,
Inc.
William H. Carter William H. Carter (age 44) is Executive Vice President and Chief Financial
Executive Vice President Officer of Borden, a position he has held since April 1998. He is also a Director
and Chief Financial of Elmer's Products, Inc., BCP Management, Inc., Borden Chemical, Inc., AEP
Officer Industries, Inc., reSource Partner, Inc., Borden Foods Corporation, Borden
Decorative Products Holdings, Inc. and Wise Foods Holdings, Inc. Prior to joining
Borden in 1995, he served as the Price Waterhouse LLP engagement partner
responsible for Borden.
Richard L. de Ney Richard L. de Ney (age 47) is Executive Vice President--Corporate Strategy and
Executive Vice Development, a position he held since February 16, 1995. He joined Borden on
President--Corporate January 10, 1995 as Executive Vice President-- Administration. Prior thereto he
Strategy and Development was a Managing Director at Bear, Stearns & Co., Inc. He is also a Director of
reSource Partner, Inc., Elmer's Products, Inc., Borden Chemical, Inc., Borden
Foods Corporation and Wise Foods Holdings, Inc.
Ronald C. Kesselman Ronald C. Kesselman (age 53) was elected an Executive Vice President of Borden
Executive Vice President March 5, 1996. He serves as Chairman of Wise Foods, Inc. and Elmer's Products,
Inc. From June 1994 to July 1995 he was President of the Borden North America
Snacks Group. He joined Borden in January 1992 as Group Vice President for Food
Service Products and later that year added responsibility for Seafood Products.
</TABLE>
I-4
<PAGE>
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION
NAME AND OR EMPLOYMENT AND FIVE-YEAR
POSITION EMPLOYMENT HISTORY
- ------------------------------ ---------------------------------------------------------------------------------
<S> <C>
Joseph M. Saggese Executive Joseph M. Saggese (age 66) is an Executive Vice President of Borden. He is also
Vice President Chairman of the Board of Directors and President and Chief Executive Officer of
Borden Chemical, Inc. He also serves as Chairman of the Board of Directors of
Borden Decorative Products Holdings, Inc. and BCP Management, Inc. Prior thereto,
he was President of Borden's Worldwide Packaging and Industrial Products
Division, a position he held since 1990. He has served as Chairman of the Board
of Directors, President and Chief Executive Officer of BCP Management, Inc. since
1990.
Douglas A. Smith Douglas A. Smith (age 50) was elected an Executive Vice President of Borden
Executive Vice President effective November 1, 1995, and serves as Chairman and Chief Executive Officer of
Borden Foods Corporation. Prior to joining Borden, he served as President of
Kraft Canada, Inc., formerly Kraft General Foods Canada, since 1991.
Nancy A. Reardon Nancy A. Reardon (age 44) was elected Senior Vice President, Human Resources and
Senior Vice President, Corporate Affairs effective March 3, 1997. Previously Ms. Reardon was Senior Vice
Human Resources and President--Human Resources and Communications for Duracell International, Inc.
Corporate Affairs from 1991 through February 1997.
Ronald P. Starkman Ronald P. Starkman (age 42) was elected Senior Vice President and Treasurer of
Senior Vice President Borden effective November 20, 1995. He was Senior Managing Director of Claremont
and Treasurer Capital Group, Inc. from December 1994 to November 1995. Prior to that he was
Senior Vice President-- Investment Banking for Lehman Brothers from 1993 to 1994,
and Vice President and Assistant Treasurer at American Express from 1986 to 1993.
William F. Stoll, Jr. Willaim F. Stoll, Jr. (age 48) was elected Senior Vice President and General
Senior Vice President Counsel effective July 1, 1996. Prior to joining Borden he was a Vice President
General Counsel of Westinghouse Electric Corporation since 1993, and served as its Deputy General
Counsel from 1988 to 1996.
</TABLE>
I-5
<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 as follows:
THE DEPOSITARY FOR THE OFFER IS:
IBJ SCHRODER BANK & TRUST COMPANY
FACSIMILE:
(212) 858-2611
CONFIRM BY TELEPHONE:
(212) 858-2103
<TABLE>
<S> <C>
BY MAIL: BY HAND/OVERNIGHT DELIVERY:
P.O. Box 84 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attention: Reorganization Operations Dept.
Attention: Reorganization Securities Processing Window SC-1
Dept.
</TABLE>
Any questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective telephone numbers and addresses
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may also be obtained from the
Information Agent. You may also contact your broker, dealer, commercial bank or
trust company for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect) or
CALL TOLL-FREE (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
(212) 270-3250
(212) 270-3348
<PAGE>
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MELAMINE CHEMICALS, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED OCTOBER 15, 1997
BY
MC MERGER CORP.
A WHOLLY OWNED SUBSIDIARY OF
BORDEN CHEMICAL, INC.
A SUBSIDIARY OF
BORDEN, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, NOVEMBER 13, 1997,
UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
IBJ SCHRODER BANK & TRUST COMPANY
FACSIMILE:
(212) 858-2611
CONFIRM BY TELEPHONE:
(212) 858-2103
<TABLE>
<S> <C>
BY MAIL: BY HAND/OVERNIGHT DELIVERY:
P.O. Box 84 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attention: Reorganization Operations Dept.
Attention: Reorganization Securities Processing Window SC-1
Dept.
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET
FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders, either if
certificates for Shares or Rights (as such terms are defined below) are to be
forwarded herewith or, unless an Agent's Message (as defined in the Offer to
Purchase) is utilized, if tenders of Shares or Rights are to be made by
book-entry transfer into the account of IBJ Schroder Bank & Trust Company, as
Depositary (the "Depositary"), at the Depository Trust Company ("DTC") or the
Philadelphia Depository Trust Company ("PDTC") (each a "Book-Entry Transfer
Facility" and, collectively, the "Book-Entry Transfer Facilities") pursuant to
the procedures set forth in Section 3 of the Offer to Purchase (as defined
below). Stockholders who tender Shares or Rights by book-entry transfer are
referred to herein as "Book-Entry Stockholders".
<PAGE>
Holders of Shares will be required to tender one Right for each Share
tendered in order to effect a valid tender of such Share. Unless and until a
Distribution Date (as defined in the Offer to Purchase) occurs, a tender of
Shares will also constitute a tender of the associated Rights. See Section 3 of
the Offer to Purchase. If the Distribution Date has occurred, and certificates
representing Rights (the "Rights Certificates") have been distributed to holders
of Shares, such holders will be required to tender Rights Certificates
representing a number of Rights equal to the number of Shares being tendered in
order to effect a valid tender of such Shares. Holders of Shares and Rights
whose certificates for such Shares (the "Share Certificates") and, if
applicable, Rights Certificates are not immediately available or who cannot
deliver their Share Certificates or, if applicable, Rights Certificates and all
other required documents to the Depositary prior to the Expiration Date (as
defined in Section 1 of the Offer to Purchase), or who cannot complete the
procedure for book-entry transfer on a timely basis, must tender their Shares
and Rights according to the guaranteed delivery procedure set forth in Section 3
of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A
BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
2
<PAGE>
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
<CAPTION>
NAME(S) & ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS SHARES CERTIFICATE(S) AND SHARE(S)
NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
<S> <C> <C> <C>
<CAPTION>
TOTAL NUMBER
SHARE OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
Total Shares..................
</TABLE>
* Need not be completed by Book-Entry Stockholders.
** Unless otherwise indicated, all Shares represented by certificates
delivered to the Depositary will be deemed to have been tendered. See
Instruction 4.
<TABLE>
<S> <C> <C>
/ / CHECK HERE IF SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY
MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution ______________________________________________
Check box of Book-Entry Transfer Facility (check one):
/ / The Depository Trust Company / / The Philadelphia
Depository Trust Company
Account Number
-------------------------- Transaction Code Number___________________________
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered 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 of Book-Entry Transfer
Facility (check one):
/ / The Depository Trust Company / / The Philadelphia
Depository Trust Company
Account Number
-------------------------- Transaction Code Number___________________________
3
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
DESCRIPTION OF RIGHTS TENDERED
<CAPTION>
NAME(S) & ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS RIGHT(S) CERTIFICATE(S) AND RIGHT(S)
NAME(S) APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
<S> <C> <C>
<CAPTION>
TOTAL NUMBER
RIGHTS OF RIGHTS NUMBER OF
CERTIFICATE REPRESENTED BY RIGHTS
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C>
Total Rights..................
</TABLE>
* Need not be completed if the Distribution Date has not occurred.
** Unless otherwise indicated, all Rights represented by certificates
delivered to the Depositary will be deemed to have been tendered. See
Instruction 4.
<TABLE>
<S> <C> <C>
/ / CHECK HERE IF RIGHTS ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY
MAY DELIVER RIGHTS BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution ______________________________________________
Check box of Book-Entry Transfer Facility (check one):
/ / The Depository Trust Company / / The Philadelphia
Depository Trust Company
Account Number
-------------------------- Transaction Code Number___________________________
/ / CHECK HERE IF RIGHTS ARE BEING TENDERED 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 of Book-Entry Transfer
Facility (check one):
/ / The Depository Trust Company / / The Philadelphia
Depository Trust Company
Account Number
-------------------------- Transaction Code Number___________________________
4
</TABLE>
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to MC Merger Corp., a Delaware corporation
(the "Purchaser"), which is a wholly owned subsidiary of Borden Chemical, Inc.,
a Delaware corporation (the "Parent"), which is itself a subsidiary of Borden,
Inc., a New Jersey corporation ("Borden"), the above-described shares of Common
Stock, par value $.01 per share (the "Shares"), of Melamine Chemicals, Inc., a
Delaware corporation (the "Company"), and the associated preferred share
purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated as
of November 5, 1990, as amended, by and between the Company and Wachovia Bank
and Trust Company, N.A. (now Wachovia Bank, N.A.), as Rights Agent (the "Rights
Agent"), at a purchase price of $20.50 per Share (and associated Right), net to
the seller in cash without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated October 15, 1997 (the "Offer
to Purchase") and in this Letter of Transmittal (which, as amended from time to
time, together constitute the "Offer"). Unless the context requires otherwise,
all references to Shares shall be deemed to refer also to the associated Rights,
and all references to Rights shall be deemed to include all benefits that may
inure to the stockholders of the Company or to holders of the Rights pursuant to
the Rights Agreement. The undersigned understands that the Purchaser reserves
the right to transfer or assign, in whole or from time to time in part, to one
or more of its affiliates, the right to purchase all or any portion of the
Shares and Rights tendered pursuant to the Offer, receipt of which is hereby
acknowledged.
Prior to the occurrence of a Distribution Date (as defined in the Offer to
Purchase), a valid tender of Shares will constitute a tender of the associated
Rights. The undersigned understands that if the Distribution Date has occurred
and certificates representing Rights (the "Rights Certificates") have been
distributed to holders prior to the date of tender of the Shares and Rights
tendered herewith pursuant to the Offer, Rights Certificates representing a
number of Rights equal to the number of Shares being tendered herewith must be
delivered to the Depositary (as defined below) or, if available, a Book-Entry
Confirmation (as defined herein) must be received by the Depositary with respect
thereto in order for such Shares tendered herewith to be validly tendered. If
the Distribution Date has occurred and Rights Certificates have not been
distributed prior to the time Shares are tendered herewith pursuant to the
Offer, the undersigned agrees to deliver Rights Certificates representing a
number of Rights equal to the number of Shares tendered herewith to IBJ Schroder
Bank & Trust Company (the "Depositary") within three business days after the
date such Rights Certificates are distributed. A tender of Shares without Rights
Certificates constitutes an agreement by the tendering shareholder to deliver
Rights Certificates representing a number of Rights equal to the number of
Shares tendered pursuant to the Offer to the Depositary within three business
days after the date such Rights Certificates are distributed. The undersigned
understands that if the Distribution Date occurs prior to the Expiration Date,
the Purchaser reserves the Right to require that the Depositary receive such
Rights Certificates or a Book-Entry Confirmation with respect to such Rights
prior to accepting Shares for payment. In that event, payment for Shares
tendered and accepted for payment pursuant to the Offer will be made only after
timely receipt by the Depositary of, or Book-Entry Confirmation with respect to,
among other things, Rights Certificates, if Rights Certificates have been
distributed to holders of Shares.
5
<PAGE>
Subject to, and effective upon, acceptance for payment for the Shares and
Rights tendered herewith in accordance with the terms of the Offer, the
undersigned hereby sells, assigns and transfers to, or upon the order of, the
Purchaser all right, title and interest in and to all of the Shares and Rights
that are being tendered hereby and any and all dividends, distributions
(including additional Shares) or rights declared, paid or issued with respect to
the tendered Shares and Rights on or after the date hereof and payable or
distributable to the undersigned on a date prior to the transfer to the name of
the Purchaser or nominee or transferee of the Purchaser on the Company's stock
transfer records of the Shares and Rights tendered herewith (collectively, a
"Distribution"), and appoints the Depositary the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares and Rights (and
any Distribution) with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest) to (a) deliver such
Share Certificates (as defined herein) (and any Distribution) or transfer
ownership of such Shares and Rights (and any Distribution) on the account books
maintained by a Book-Entry Transfer Facility, together in either case with
appropriate evidences of transfer, to the Depositary for the account of the
Purchaser, (b) present such Shares and Rights (and any Distribution) for
transfer on the books of the Company and (c) receive all benefits and otherwise
exercise all rights of beneficial ownership of such Shares and Rights (and any
Distribution), all in accordance with the terms and subject to the conditions of
the Offer.
The undersigned irrevocably appoints designees of the Purchaser as such
stockholder's proxy, with full power of substitution, to the full extent of such
stockholder's rights with respect to the Shares and Rights tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
and all other shares or other securities issued or issuable in respect of such
Shares or Rights on or after the date hereof. Such appointment will be effective
when, and only to the extent that, the Purchaser accepts such Shares and Rights
for payment. Upon such acceptance for payment, all prior proxies given by such
stockholder with respect to such Shares and Rights (and such other shares and
securities) will be revoked without further action, and no subsequent proxies
may be given nor any subsequent written consents executed (and, if given or
executed, will not be deemed effective). The designees of the Purchaser will be
empowered to exercise all voting and other rights of such stockholder as they in
their sole discretion may deem proper at any annual or special meeting of the
Company's stockholders or any adjournment or postponement thereof, by written
consent in lieu of any such meeting or otherwise. The Purchaser reserves the
right to require that, in order for Shares and Rights to be deemed validly
tendered, immediately upon the Purchaser's payment for such Shares and Rights
the Purchaser must be able to exercise full voting rights with respect to such
Shares and Rights.
The undersigned hereby represents and warrants that (a) the undersigned has
full power and authority to tender, sell, assign and transfer the Shares and
Rights (and any Distribution) tendered hereby and (b) when the Shares and Rights
are accepted for payment by the Purchaser, the Purchaser will acquire good,
marketable and unencumbered title to the Shares and Rights (and any
Distribution), free and clear of all liens, restrictions, charges and
encumbrances, and the same will not be subject to any adverse claim. The
undersigned, upon request, will execute and deliver any additional documents
deemed by the Depositary or the Purchaser to be necessary or desirable to
complete the sale, assignment and transfer of the Shares and Rights tendered
hereby (and any Distribution). In addition, the undersigned shall promptly remit
and transfer to the Depositary for the account of the Purchaser any and all
Distributions in respect of the Shares and Rights tendered hereby, accompanied
by appropriate documentation of transfer; and pending such remittance or
appropriate assurance thereof, the Purchaser will be, subject to applicable law,
entitled to all rights and privileges as owner of any such Distribution and may
withhold the entire purchase price or deduct from the purchase price the amount
or value thereof, as determined by the Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall not be
affected by and shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Tenders of
Shares and Rights made pursuant to the Offer are irrevocable, except that Shares
and Rights tendered pursuant to the Offer may be withdrawn at any time prior to
the Expiration Date (as defined in the Offer to Purchase) and, unless
theretofore accepted for payment by the Purchaser pursuant to the Offer, may
also be withdrawn at any time after December 13, 1997. See Section 4 of the
Offer to Purchase.
6
<PAGE>
The undersigned understands that tenders of Shares and Rights pursuant to
any 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 the Purchaser upon the terms and subject to the conditions set forth in the
Offer, including the undersigned's representation that the undersigned owns the
Shares and Rights being tendered.
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or issue or return any
certificate(s) for Shares and Rights not tendered or not accepted for payment in
the name(s) of the registered holder(s) appearing under "Description of Shares
Tendered" and "Description of Rights Tendered", respectively. Similarly, unless
otherwise indicated herein under "Special Delivery Instructions", please mail
the check for the purchase price and/or any certificate(s) for Shares and Rights
not tendered or not accepted for payment (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing under
"Description of Shares Tendered" and "Description of Rights Tendered",
respectively. In the event that both the Special Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price and/or any certificate(s) for Shares and Rights not tendered or
accepted for payment in the name of, and deliver such check and/or such
certificates to, the person or persons so indicated. Unless otherwise indicated
herein under "Special Payment Instructions", please credit any Shares and Rights
tendered herewith by book-entry transfer that are not accepted for payment by
crediting the account at the Book-Entry Transfer Facility (as defined herein)
designated above. The undersigned recognizes that the Purchaser has no
obligation, pursuant to the Special Payment Instructions, to transfer any Shares
or Rights from the name(s) of the registered holder(s) thereof if the Purchaser
does not accept for payment any of the Shares or Rights so tendered.
7
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if certificate(s) for Shares and Rights not tendered or
not accepted for payment and/or the check for the purchase price of Shares
and Rights accepted for payment are to be issued in the name of someone
other than the undersigned or if Shares or Rights tendered by book-entry
transfer which are not accepted for payment are to be returned by credit to
an account maintained at a Book-Entry Transfer Facility.
Issue: / / check / / certificates to:
Name _______________________________________________________________________
(Please Print)
Address ____________________________________________________________________
____________________________________________________________________________
(Include Zip Code)
__________________________________________________________________________
(Tax Id. or Social Security No.)
(See Substitute Form W-9)
/ / Credit Shares and Rights tendered by book-entry transfer that are not
accepted for payment to (Check one):
/ / DTC / / PDTC
____________________________________________________________________________
(DTC or PDTC Account No.)
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7)
To be completed ONLY if certificate(s) for Shares and Rights not tendered or
not accepted for payment and/or the check for the purchase price of Shares
and Rights accepted for payment are to be sent to someone other than the
undersigned or to the undersigned at an address other than that shown above.
Mail: / / check / / certificates to:
Name _______________________________________________________________________
(Please Print)
Address ____________________________________________________________________
(Include Zip Code)
____________________________________________________________________________
(Tax Id. or Social Security No.)
(See Substitution Form W-9)
8
<PAGE>
SIGN HERE
SIGN
SIGN
AND COMPLETE SUBSTITUTE FORM W-9
HERE
HERE
X___________________________________________________________________________
c
v
X___________________________________________________________________________
Dated: _______________________________________________________________, 1997
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Share Certificate(s) or Rights Certificate(s) or on a security position
listing or by person(s) authorized to become registered holder(s) by
certificates and documents transmitted herewith. If signature is by
trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity,
please provide the following information and see Instruction 5.)
Name(s) ____________________________________________________________________
(Please Print)
Capacity (full title) ______________________________________________________
Address ____________________________________________________________________
____________________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number _____________________________________________
Tax Identification or Social Security Number _______________________________
COMPLETE SUBSTITUTE FORM W-9
Guarantee of Signature(s)
(See Instructions 1 and 5)
Authorized Signature _______________________________________________________
Name _______________________________________________________________________
Name of Firm _______________________________________________________________
(Please Print)
Address ____________________________________________________________________
(Include Zip Code)
Area Code and Telephone Number _____________________________________________
Dated ________________________________________________________________, 1997
9
<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) of Shares and Rights (which term, for purposes of this
document, shall include any participant in a Book-Entry Transfer Facility whose
name appears on a security position listing as the owner of Shares and/or Rights
tendered) herewith, unless such holder(s) has completed either the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" above, or (b) if such Shares and/ or Rights are tendered for the
account of a firm which is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agents Medallion Program (each of the foregoing being referred to as an
"Eligible Institution"). In all other cases, all signatures on this Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 5 of
this Letter of Transmittal.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
stockholders either if certificates are to be forwarded herewith or, unless an
Agent's Message is utilized, if tenders are to be made pursuant to the procedure
for tender by book-entry transfer set forth in Section 3 of the Offer to
Purchase. Share Certificates evidencing tendered Shares, or timely confirmation
(a "Book-Entry Confirmation") of a book-entry transfer of Shares into the
Depositary's account at a Book-Entry Transfer Facility, as well as this Letter
of Transmittal (or a facsimile hereof), properly completed and duly executed,
with any required signature guarantees, or an Agent's Message in connection with
a book-entry transfer, and any other documents required by this Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth herein prior to the Expiration Date (as defined in Section 1 of the Offer
to Purchase) and, if a Distribution Date occurs, Rights Certificates evidencing
tendered Rights, or timely confirmation of a book-entry transfer of Rights into
the Depositary's account at a Book-Entry Transfer Facility, if available
(together with, if Rights are forwarded separately from Shares, a properly
completed and duly executed Letter of Transmittal (or a facsimile hereof), with
any required signature guarantees, or an Agent's Message in connection with a
book-entry transfer, and any other documents required by this Letter of
Transmittal), must be received by the Depositary at one of its addresses set
forth herein prior to the Expiration Date or, if later, within three business
days after the date such Rights Certificates are distributed. Stockholders whose
Share Certificates or Rights Certificates are not immediately available
(including Rights Certificates that have not yet been distributed by the
Company) or who cannot deliver their Share Certificates or Rights Certificates
and all other required documents to the Depositary prior to the Expiration Date
or who cannot complete the procedure for delivery by book-entry transfer on a
timely basis may tender their Shares and Rights by properly completing and duly
executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such
procedure: (i) such tender must be made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed Delivery,
substantially in the form made available by the Purchaser, must be received by
the Depositary prior to the Expiration Date; (iii) the Share Certificates (or a
Book-Entry Confirmation) representing all tendered Shares, in proper form for
transfer, in each case together with the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required signature
guarantees (or, in the case of a book-entry delivery, an Agent's Message) and
any other documents required by this Letter of Transmittal, must be received by
the Depositary within three Nasdaq National Market trading days after the date
of execution of such Notice of Guaranteed Delivery; and (iv) the Rights
Certificates, if issued, representing the appropriate number of Rights or a
Book-Entry Confirmation, if available, in each case 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 delivery, an
Agent's Message) and any other documents required by this Letter of Transmittal,
must be received by the Depositary within three Nasdaq National Market trading
days after the date of execution of such Notice of Guaranteed Delivery, or if
later, three business days after Rights Certificates are distributed to
shareholders, all as provided in Section 3 of the Offer to Purchase. If Share
Certificates and Rights Certificates are forwarded separately to the Depositary,
a properly completed and duly executed Letter of Transmittal must accompany each
such delivery. Prior to a Distribution Date, a valid tender of Shares will
constitute a tender of the associated Rights.
10
<PAGE>
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES OR
RIGHTS CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH
ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING
STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY
THE DEPOSITARY (INCLUDING, IN THE CASE OF BOOK ENTRY TRANSFER, BY BOOK-ENTRY
CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT
REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares and Rights will be purchased. All tendering stockholders, by
execution of this Letter of Transmittal (or a facsimile hereof), waive any right
to receive any notice of the acceptance of their Shares and Rights for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and Rights and any other
required information should be listed on a separate signed schedule attached
hereto.
4. PARTIAL TENDERS. (Not Applicable to Book-Entry Stockholders) If fewer
than all the Shares evidenced by any Share Certificates submitted are to be
tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered". If fewer than all the Rights evidenced by
any Rights Certificates submitted are to be tendered, fill in the number of
Rights which are to be tendered in the box entitled "Number of Rights Tendered".
In such cases, new Share Certificates or Rights Certificates, as the case may
be, for the Shares or Rights that were evidenced by your old Share Certificates
or Rights Certificates, but were not tendered by you, will be sent to you,
unless otherwise provided in the appropriate box on this Letter of Transmittal,
as soon as practicable after the Expiration Date. All Shares represented by
Share Certificates and all Rights represented by Rights 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
and Rights 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 and Rights tendered hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares and Rights 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 certificates or stock powers are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and proper evidence satisfactory to the
Purchaser of their authority so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares and Rights listed and transmitted hereby, no endorsements of certificates
or separate stock powers are required unless payment is to be made to or
certificates for Shares or Rights not tendered or not purchased are to be issued
in the name of a person other than the registered holder(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed, the certificate(s) must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the certificate(s).
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
If Rights Certificates have been distributed to holders of Shares, such
holders are required to tender Rights Certificate(s) representing a number of
Rights equal to the number of Shares tendered in order to effect a valid tender
of such Shares. It is necessary that shareholders follow all signature
requirements of this Instruction 5 with respect to the Rights in order to tender
such Rights. Prior to a Distribution Date, a valid tender of Shares will
constitute a tender of the associated Rights.
11
<PAGE>
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, the Purchaser will pay any stock transfer taxes with respect to the transfer
and sale of Shares and Rights to it or its order pursuant to the Offer. If,
however, payment of the purchase price is to be made to, or if certificate(s)
for Shares and Rights not tendered or accepted for payment are to be registered
in the name of, any person other than the registered holder(s), or if tendered
certificate(s) are registered in the name of any person other than the person(s)
signing this Letter of Transmittal, the amount of any stock transfer taxes
(whether imposed on the registered holder(s) or such person) payable on account
of the transfer to such person will be deducted from the purchase price unless
satisfactory evidence of the payment of such taxes or an exemption therefrom, is
submitted.
Except as otherwise provided in this Instruction 6, it will not be necessary
for transfer tax stamps to be affixed to the certificate(s) listed in this
Letter of Transmittal.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of, and/or certificates for Shares and Rights not tendered or not
accepted for payment are to be issued or returned to, a person other than the
signer of this Letter of Transmittal or if a check and/or such certificates are
to be returned to a person other than the person(s) signing this Letter of
Transmittal or to an address other than that shown in this Letter of
Transmittal, the appropriate boxes on this Letter of Transmittal must be
completed. A Book-Entry Stockholder may request that Shares and/or Rights not
accepted for payment be credited to such account maintained at a Book-Entry
Transfer Facility as such Book-Entry Stockholder may designate under "Special
Payment Instructions". If no such instructions are given, such Shares or Rights
not accepted for payment will be returned by crediting the account at the
Book-Entry Transfer Facility designated above.
8. WAIVER OF CONDITIONS. Subject to the terms and conditions of the Merger
Agreement (as defined in the Offer to Purchase), the conditions of the Offer
(other than the Minimum Condition and the HSR Act Condition (each as defined in
the Offer to Purchase)) may be waived by the Purchaser in whole or in part at
any time and from time to time in its sole discretion.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income
tax law, a stockholder whose tendered Shares are accepted for payment is
required to provide the Depositary with such stockholder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Depositary is
not provided with the correct TIN, the Internal Revenue Service may subject the
stockholder or other payee to a $50 penalty. In addition, payments that are made
to such stockholder or other payee with respect to Shares purchased pursuant to
the Offer may be subject to 31% 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, the stockholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any such payments made to the stockholder or other payee. 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.
The box in Part 3 of the Substitute Form W-9 may be checked 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. If the box in Part 3 is checked, 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 box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Depositary.
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, 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.
12
<PAGE>
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests for
assistance may be directed to the Dealer Manager or the Information Agent at
their respective addresses and telephone numbers set forth below. Additional
copies of the Offer to Purchase, this Letter of Transmittal and the Notice of
Guaranteed Delivery may also be obtained from the Information Agent or the
Dealer Manager or from brokers, dealers, commercial banks or trust companies.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing
Shares or, if a Distribution Date occurs, Rights has been lost, destroyed or
stolen, the stockholder should promptly notify the Depositary. The stockholder
will then be instructed as to the steps that must be taken in order to replace
the certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates have
been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER WITH
CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER OR THE NOTICE OF GUARANTEED
DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE DEPOSITARY
PRIOR TO THE EXPIRATION DATE.
13
<PAGE>
<TABLE>
<S> <C> <C>
PAYER'S NAME: ------------------------
SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE Social Security Number
FORMW-9 BOX AT RIGHT AND CERTIFY BY SIGNING or
AND DATING BELOW: Employer Identification Number
------------------------------
PART 2--Certification--Under the penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and
DEPARTMENT OF THE
(2) I am not subject to backup withholding because (a) I am exempt from
TREASURY INTERNAL backup withholding, or (b) I have not been notified by the Internal Revenue
REVENUE SERVICE. Service (the "IRS") that I am subject to backup withholding as a result
PAYEE'S REQUEST FOR of a failure to report all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS--You must cross out item (2) above if you have
TAXPAYER IDENTIFICATION been notified by the IRS that you are currently subject to backup
NUMBER ("TIN") withholding because of under-reporting interest or dividends on your tax
return. However, if after being notified by the IRS that you were subject to
backup withholding you received another notification from the IRS that you
are no longer subject to backup withholding, do not cross out such item (2).
SIGN HERE V Signature PART 3--
--------------------------------- Awaiting TIN / /
Date --------------------------------,
1997
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 3 OF THE SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all reportable payments made to me will be withheld.
Signature
- -------------------------------------- Date
- --------------------------------------, 1997
14
<PAGE>
THE INFORMATION AGENT FOR THE OFFER IS:
[LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect) or
CALL TOLL-FREE (800) 322-2885
THE DEALER MANAGER FOR THE OFFER IS:
CHASE SECURITIES INC.
270 Park Avenue
New York, New York 10017
(212) 270-3250
(212) 270-3348
October 15, 1997
15
<PAGE>
NOTICE OF GUARANTEED DELIVERY
TO
TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MELAMINE CHEMICALS, INC.
As set forth in Section 3 of the Offer to Purchase described below, this
instrument or one substantially equivalent hereto must be used to accept the
Offer (as defined below) if certificates for Shares (as defined below) or the
associated preferred share purchase rights (the "Rights") are not immediately
available or the certificates for Shares or Rights and all other required
documents cannot be delivered to IBJ Schroder Bank & Trust Company (the
"Depositary") on or prior to the Expiration Date (as defined in Section 1 of the
Offer to Purchase) or if the procedure for delivery by book-entry transfer
cannot be completed on a timely basis. This instrument may be delivered by hand
or transmitted by facsimile transmission or mailed to the Depositary.
THE DEPOSITARY FOR THE OFFER IS:
IBJ SCHRODER BANK & TRUST COMPANY
FACSIMILE:
(212) 858-2611
CONFIRM BY TELEPHONE:
(212) 858-2103
<TABLE>
<S> <C>
BY MAIL: BY HAND/OVERNIGHT DELIVERY:
P.O. Box 84 One State Street
Bowling Green Station New York, New York 10004
New York, New York 10274-0084 Attention: Reorganization Operations Dept.
Attention: Reorganization Securities Processing Window SC-1
Dept.
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This 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 in the Letter of Transmittal.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tender(s) to MC Merger Corp., a Delaware corporation,
which is a wholly owned subsidiary of Borden Chemical, Inc., a Delaware
corporation, which is itself a subsidiary of Borden, Inc., a New Jersey
corporation ("Borden"), upon the terms and subject to the conditions set forth
in the Offer to Purchase dated October 15, 1997 (the "Offer to Purchase"), and
in the related Letter of Transmittal (which, as amended from time to time,
together constitute the "Offer"), receipt of which is hereby acknowledged, the
number of shares of Common Stock, par value $.01 per share (the "Shares"), of
Melamine Chemicals, Inc., a Delaware corporation, and the associated Rights,
pursuant to the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase.
<TABLE>
<S> <C>
Signature(s) Address(es)
Name(s) of Record Holders Zip Code
Please Type or Print Area Code and Tel. No(s)
Number of Shares and Rights Check one box if Shares and Rights will be
tendered by book-entry transfer)
Certificate Nos. (If Available) / / The Depository Trust Company
/ / The Philadelphia Depository Trust Company
Account Number
Dated , 1997
</TABLE>
2
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program, (a) represents that the above
named person(s) "own(s)" the Shares and Rights tendered hereby within the
meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended
("Rule 14e-4"), (b) represents that such tender of Shares and Rights complies
with Rule 14e-4, (c) guarantees to deliver to the Depositary either the
certificates evidencing all tendered Shares, in proper form for transfer, or to
deliver Shares pursuant to the procedure for book-entry transfer into the
Depositary's account at The Depository Trust Company or The Philadelphia
Depository Trust Company (each a "Book-Entry Transfer Facility"), in either case
together with the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees or an
Agent's Message (as defined in the Offer to Purchase) in the case of a
book-entry delivery, and any other required documents, all within three Nasdaq
National Market trading days after the date hereof and (d) guarantees, if a
Distribution Date (as defined in the Offer to Purchase) occurs, to deliver
certificates representing the Rights ("Rights Certificates") in proper form for
transfer, or to deliver such Rights pursuant to the procedure for book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility,
together with, if Rights are forwarded separately, the Letter of Transmittal (or
a facsimile thereof), properly completed and duly executed with any required
signature guarantees or an Agent's Message (as defined in the Offer to Purchase)
in the case of a book-entry delivery, and any other required documents, all
within the later of (1) three Nasdaq National Market trading days after the date
hereof and (2) three business days after the date the Rights Certificates are
distributed to holders of Shares.
<TABLE>
<S> <C>
Name of Firm Authorized Signature
Name
Address Please Type or Print
Title
Zip Code
Dated , 1997
Area Code and Tel. No.
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES OR, IF A DISTRIBUTION DATE OCCURS,
RIGHTS WITH THIS NOTICE. CERTIFICATES FOR SHARES OR IF A DISTRIBUTION DATE
OCCURS, RIGHTS SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MELAMINE CHEMICALS, INC.
AT
$20.50 NET PER SHARE
BY
MC MERGER CORP.
A WHOLLY OWNED SUBSIDIARY OF
BORDEN CHEMICAL, INC.
A SUBSIDIARY OF
BORDEN, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, NOVEMBER 13, 1997,
UNLESS THE OFFER IS EXTENDED.
October 15, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by MC Merger Corp., a Delaware corporation (the
"Purchaser"), which is a wholly owned subsidiary of Borden Chemical, Inc., a
Delaware corporation (the "Parent"), which is itself a subsidiary of Borden,
Inc., a New Jersey corporation ("Borden"), to act as dealer manager in
connection with the Purchaser's offer to purchase for cash all the outstanding
shares of Common Stock, par value $.01 per share (the "Shares"), of Melamine
Chemicals, Inc., a Delaware corporation (the "Company"), and the associated
preferred share purchase rights ("the Rights") issued pursuant to the Rights
Agreement, dated as of November 5, 1990, as amended, by and between the Company
and Wachovia Bank and Trust Company, N.A. (now Wachovia Bank, N.A.), as Rights
Agent (the "Rights Agent"), at a purchase price of $20.50 per Share (and
associated Right), net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated
October 15, 1997 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer") enclosed herewith. Holders of Shares will be required to tender one
Right for each Share tendered in order to effect a valid tender of such Share.
If the Distribution Date (as defined in the Offer to Purchase) has not occurred
prior to the time Shares are tendered pursuant to the Offer, a tender of Shares
will constitute a tender of the associated Rights. If the Distribution Date has
occurred and the certificates representing such Rights ("Rights Certificates")
have been distributed by the Company to holders of Shares, such holders of
Shares will be required to tender Rights Certificates representing a number of
Rights equal to the number of Shares being tendered in order to effect valid
tender of such Shares. Holders of Shares and Rights whose certificates for such
Shares (the "Share Certificates") and, if applicable, Rights Certificates are
not immediately available or who cannot deliver their Share Certificates and, if
applicable, Rights Certificates and all other required documents to the
Depositary (as defined below) prior to the Expiration Date (as defined in the
Offer to Purchase), or who cannot complete the procedures for book-entry
transfer on a timely basis, must tender their Shares and Rights according to the
guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase.
As used herein, unless the context otherwise requires, the term "Shares"
includes the associated Rights.
<PAGE>
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.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated October 15, 1997.
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of Transmittal may
be used to tender Shares.
3. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if Share Certificates or, if applicable, Rights Certificates are not
immediately available or if such certificates and all other required documents
cannot be delivered to IBJ Schroder Bank & Trust Company (the "Depositary") by
the Expiration Date or if the procedure for book-entry transfer cannot be
completed by the Expiration Date.
4. The Letter to Stockholders of the Company from the President and Chief
Executive Officer of the Company, accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9, which includes the
recommendation of the Board of Directors of the Company that stockholders accept
the Offer and tender their Shares to the Purchaser pursuant to the Offer.
5. 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.
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
7. A return envelope addressed to IBJ Schroder Bank & Trust Company, the
Depositary.
YOUR PROMPT ACTION IS REQUESTED. 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 THURSDAY, NOVEMBER 13, 1997, UNLESS THE
OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn pursuant to the Offer prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) such number of Shares which
constitutes, on a fully-diluted basis, not less than 51% of the Shares on the
date of purchase (the "Minimum Condition"), and (ii) the expiration or
termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
The Board of Directors of the Company (the "Board of Directors") has
approved, by unanimous vote of the directors present, the Merger Agreement (as
defined below) and the transactions contemplated thereby, including the Offer
and the Merger (as defined below) and determined that terms of the Offer and the
Merger are fair to, and in the best interests of, the holders of the Shares and
recommends that the holders of the Shares accept the Offer and tender their
Shares to the Purchaser pursuant to the Offer.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of October 9, 1997 (the "Merger Agreement"), by and among the Parent, the
Purchaser and the Company. The Merger Agreement provides, among other things,
for the making of the Offer by the Purchaser, and further provides that,
following the completion of the Offer, upon the terms and subject to the
conditions of the Merger Agreement, and in accordance with the Delaware General
Corporation Law, the Purchaser will be merged with and into the Company (the
"Merger"). Following the Merger, the Company will continue as the surviving
corporation and become a wholly owned subsidiary of the Parent, and the separate
corporate existence of the Purchaser will cease.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal and any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry delivery of Shares, and other required documents should be
2
<PAGE>
sent to the Depositary, and (ii) either Share Certificates and, if applicable,
Rights Certificates, representing the tendered Shares and, if applicable,
tendered Rights should be delivered to the Depositary, or such Shares and Rights
should be tendered by book-entry transfer into the Depositary's account
maintained at one of the Book-Entry Transfer Facilities (as described in the
Offer to Purchase), all in accordance with the instructions set forth in the
Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or, if applicable, Rights Certificates or other
required documents on or prior to the Expiration Date or to comply with the
book-entry transfer procedures on a timely basis, a tender may be effected by
following the guaranteed delivery procedures specified in Section 3 of the Offer
to Purchase.
The Purchaser will not pay any commissions or fees to any broker, dealer or
other person (other than the Dealer Manager, the Depositary and Mackenzie
Partners, Inc. (the "Information Agent") (as described in the Offer to
Purchase)) for soliciting tenders of Shares pursuant to the Offer. The Purchaser
will, however, upon request, reimburse you for customary clerical and mailing
expenses incurred by you in forwarding any of the enclosed materials to your
clients. The Purchaser will pay or cause to be paid any stock transfer taxes
payable on the transfer of Shares to it, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
Inquiries you may have with respect to the Offer should be addressed to the
Information Agent or the undersigned, at the respective addresses and telephone
numbers set forth on the back cover of the Offer to Purchase. Additional copies
of the enclosed materials may be obtained from the Information Agent.
Very truly yours,
CHASE SECURITIES INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, THE PARENT, THE DEALER MANAGER, THE
COMPANY, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
<PAGE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MELAMINE CHEMICALS, INC.
AT
$20.50 NET PER SHARE
BY
MC MERGER CORP.
A WHOLLY OWNED SUBSIDIARY OF
BORDEN CHEMICAL, INC.
A SUBSIDIARY OF
BORDEN, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, NOVEMBER 13, 1997,
UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated October 15,
1997 (the "Offer to Purchase"), and the related Letter of Transmittal relating
to an offer by MC Merger Corp., a Delaware corporation (the "Purchaser"), which
is a wholly owned subsidiary of Borden Chemicals, Inc., a Delaware corporation
(the "Parent"), which is itself a subsidiary of Borden, Inc., a New Jersey
corporation ("Borden"), to purchase all of the outstanding shares of Common
Stock, par value $.01 per share (the "Shares"), of Melamine Chemicals, Inc., a
Delaware corporation (the "Company"), and the associated preferred share
purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated as
of November 5, 1990, as amended (the "Rights Agreement"), by and between the
Company and Wachovia Bank and Trust Company, N.A. (now Wachovia Bank, N.A.), as
Rights Agent, at a purchase price of $20.50 per Share (and associated Right),
net to the seller in cash without interest thereon, upon the terms and subject
to the conditions set forth in the Offer to Purchase and in the related Letter
of Transmittal (which, as amended from time to time, together constitute the
"Offer"). Unless the context requires otherwise, all references to "Shares"
shall be deemed to refer also to the associated Rights, and all references to
Rights shall be deemed to include all benefits that may inure to the
stockholders of the Company or to the holders of the Rights pursuant to the
Rights Agreement. Holders of Shares and Rights whose certificates for such
Shares (the "Share Certificates") and, if applicable, for such Rights (the
"Rights Certificates") are not immediately available or who cannot deliver their
Share Certificates and, if applicable, Rights Certificates and all other
required documents to IBJ Schroder Bank & Trust Company, the Depositary, prior
to the Expiration Date (as defined in the Offer to Purchase), or who cannot
complete the procedures for book-entry transfer on a timely basis, must tender
their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of such Shares held by us for your account, pursuant to the
terms and subject to the conditions set forth in the Offer to Purchase.
<PAGE>
Your attention is directed to the following:
1. The tender price is $20.50 per share, net to the seller in cash
without interest thereon.
2. The Offer is made for all of the outstanding Shares.
3. The Board of Directors of the Company has approved, by unanimous
vote of the directors present, the Merger Agreement (as defined below) and
the transactions contemplated thereby, including the Offer and the Merger
(as defined below), and determined that the terms of the Offer and the
Merger are fair to, and in the best interests of, the holders of Shares and
recommends that holders of Shares accept the Offer and tender their Shares
to the Purchaser pursuant to the Offer.
4. The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of October 9, 1997 (the "Merger Agreement") by and among the
Parent, the Purchaser and the Company. The Merger Agreement provides, among
other things, that, subject to the terms and conditions of the Merger
Agreement, subsequent to the consummation of the Offer, the Purchaser will
merge with and into the Company.
5. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Wednesday, November 12, 1997, unless the Offer is
extended.
6. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer.
7. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn pursuant to the Offer prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase) such
number of Shares which constitutes, on a fully-diluted basis, not less than
51% of the Shares on the date of purchase (the "Minimum Condition"), and
(ii) the expiration or termination of any applicable waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
The Offer is being made solely by the Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of Shares. The 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 the
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, the Purchaser will make a
good faith effort to comply with any such state statute. If, after such good
faith effort, the Purchaser cannot comply with such state statute, the Offer
will not be made to, nor will tenders be accepted from or on behalf of, the
holders of Shares in such state. In any jurisdiction where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of the Purchaser by Chase
Securities Inc., the Dealer Manager for the Offer, or one or more registered
brokers or dealers that are licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of the Shares held by us for your
account, please instruct us by completing, executing and returning to us the
instruction form contained in this letter. If you authorize a tender of your
Shares, all such Shares will be tendered unless otherwise specified in such
instruction form. 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
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MELAMINE CHEMICALS, INC.
BY
MC MERGER CORP.
The undersigned acknowledge(s) receipt of your letter enclosing the Offer to
Purchase dated October 15, 1997 (the "Offer to Purchase") and the related Letter
of Transmittal pursuant to an offer by MC Merger Corp., a Delaware corporation,
which is a wholly owned subsidiary of Borden Chemical, Inc., a Delaware
corporation, which is itself a subsidiary of Borden, Inc., a New Jersey
corporation, to purchase all outstanding shares of Common Stock, par value $.01
per share (the "Shares"), of Melamine Chemicals, Inc., a Delaware corporation,
and the associated preferred share purchase rights (the "Rights"), at a purchase
price of $20.50 per Share, net to the seller in cash without interest thereon,
upon the terms and subject to the conditions set forth in the Offer to Purchase
and the related Letter of Transmittal.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares which are held by you for the
account of the undersigned), upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal
furnished to the undersigned.
Number of Shares (and Rights)
to be Tendered*
____________Shares (and Rights)
Dated , 1997
SIGN HERE
-------------------------------------------
-------------------------------------------
Signature(s)
-------------------------------------------
Please Print Name(s)
-------------------------------------------
Address
-------------------------------------------
Area Code and Telephone Number
-------------------------------------------
Tax, Identification, or Social
Security Number
- ------------------------
* Unless otherwise indicated, it will be assumed that all of your Shares (and
Rights) held by us for your account are to be tendered. Prior to a
Distribution Date (as defined in the Offer to Purchase), a valid tender of
Shares will constitute a tender of the associated Rights.
3
<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
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- -----------------------------------------------------
<S> <C> <C>
1. An individual's The individual
account
2. Two or more The actual owner of
individuals (joint the account or, if
account) combined funds, the
first individual on
the account(1)
3. Husband and wife The actual owner of
(joint account) the account or, if
joint funds, either
person(1)
4. Custodian account of The minor(2)
a minor (Uniform
Gift to Minors Act)
5. Adult and minor The adult or, if the
(joint account) minor is the only
contributor, the
minor(1)
6. Account in the name The ward, minor, or
of guardian or incompetent
committee for a person(3)
designated ward,
minor or incompetent
person
7. a. The usual The
revocable savings grantor-trustee(1)
trust account
(grantor is also
trustee)
b. So-called trust
account that is The actual owner(1)
not a legal or
valid trust under
State law
8. Sole proprietorship The owner(4)
account
- -----------------------------------------------------
<CAPTION>
GIVE THE
EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
<S> <C> <C>
- -----------------------------------------------------
9. A valid trust, The legal entity (Do
estate or pension not furnish the
trust identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated in
the account
title.)(5)
10. Corporate account The corporation
11. Religious, The organization
charitable, or
educational
organization account
12. Partnership account The partnership
held in the name of
the partnership
13. Association, club, The organization
or other tax-exempt
organization
14. A broker or The broker or
registered nominee nominee
15. Account with the The public entity
Department of
Agriculture in the
name of a public
entity (such as a
State or local
government, school
district, or prison)
that receives
agricultural program
payments
</TABLE>
- ---------------------------------------------
- ---------------------------------------------
1 List first and circle the name of the person whose number you furnish.
2 Circle the minor's name and furnish the minor's social security number.
3 Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
4 Show your individual name. You may also enter your business name. You may use
either your Social Security Number or your Employer Identification Number.
5 List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service (the "IRS") 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) of the Internal
Revenue Code of 1986, as amended (the "Code"), or an individual retirement
plan.
- The United States or any agency or instrumentalities.
- A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality.
- 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) of the Code.
- An exempt charitable remainder trust, or non-exempt trust described in
section 4947(a)(1) of the Code.
- An entity registered at all times under the Investment Company Act of
1940.
- A foreign central bank of issue.
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
of the Code.
- 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 certain 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 of the Code).
- Payments described in section 6049(b)(5) of the Code to nonresident
aliens.
- Payments on tax-free covenant bonds under section 1451 of the Code.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file a 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, SIGN AND DATE THE
FORM AND RETURN IT TO THE PAYER. 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 sections 6041, 6041A(a), 6045, 6050A and 6050N of
the Code and the regulations promulgated therein.
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 the IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividends 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) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you make
a false statement with no reasonable basis that results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION-- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
<PAGE>
EXHIBIT 11(a)(7)(i)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase dated October 15, 1997 and the related Letter of
Transmittal (and any amendments thereto) and is being made to all holders of
Shares. The Purchaser (as defined below) is not aware of any state where the
making of the Offer is prohibited by administrative or judicial action pursuant
to state statute. If the Purchaser becomes aware of any state where the making
of the Offer is prohibited, the Purchaser will make a good faith effort to
comply with any such statute. If, after such good faith effort, the Purchaser
cannot comply with any applicable statute, the Offer will not be made to (nor
will tenders be accepted from or on behalf of) the 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 shall be
deemed to be made on behalf of the Purchaser by Chase Securities Inc. or one or
more registered brokers or dealers licensed under the laws of such
jurisdictions.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MELAMINE CHEMICALS, INC.
AT
$20.50 NET PER SHARE
BY
MC MERGER CORP.
A WHOLLY OWNED SUBSIDIARY OF
BORDEN CHEMICAL, INC.
A SUBSIDIARY OF
BORDEN, INC.
MC Merger Corp., a Delaware corporation (the "Purchaser"), which is a wholly
owned subsidiary of Borden Chemical, Inc., a Delaware corporation (the
"Parent"), which is itself a subsidiary of Borden, Inc., a New Jersey
corporation ("Borden"), is offering to purchase all of the outstanding shares of
Common Stock, par value $.01 per share (the "Shares"), of Melamine Chemicals,
Inc., a Delaware corporation (the "Company"), and the associated preferred share
purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated as
of November 5, 1990, as amended, by and between the Company and Wachovia Bank
and Trust Company, N.A. (now Wachovia Bank, N.A.), as Rights Agent (the "Rights
Agent"), at a purchase price of $20.50 per Share (and associated Right), net to
the seller in cash without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated October 15, 1997 (the "Offer
to Purchase") and in the related Letter of Transmittal (which, as amended from
time to time, together constitute the "Offer"). Unless the context requires
otherwise, all references to Shares shall be deemed to refer also to the
associated Rights, and all references to Rights shall be deemed to include all
- 1 -
<PAGE>
benefits that may inure to the stockholders of the Company or to holders of
Rights pursuant to the Rights Agreement. Holders of Shares will be required to
tender one Right for each Share tendered in order to effect a valid tender of
such Share. If separate certificates for the rights ("Rights Certificates") are
not issued, a valid tender of Shares will also constitute a tender of the
associated Rights.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, NOVEMBER 12, 1997, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn pursuant to the Offer prior to the expiration of the
Offer such number of Shares which constitutes, on a fully diluted basis, not
less than 51% of the Shares on the date of purchase and (ii) the expiration or
termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. Following the consummation of the Offer, the Purchaser
intends to effect the Merger, as described below.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of
October 9, 1997 (the "Merger Agreement"), by and among the Parent, the Purchaser
and the Company. Borden has guaranteed the Parent's obligations under the Merger
Agreement. The Merger Agreement provides, among other things, for the making of
the Offer by the Purchaser, and further provides that, following the completion
of the Offer, upon the terms and subject to the conditions of the Merger
Agreement, and in accordance with the Delaware General Corporation Law ("DGCL"),
the Purchaser will be merged with and into the Company (the "Merger"), and each
Share issued and outstanding immediately prior to the effective time of the
Merger (other than Shares owned by the Company or any subsidiary of the Company
and Shares owned by the Parent, the Purchaser or any other subsidiary of the
Parent, which shall be cancelled, and other than Shares, if any, held by
stockholders who have properly exercised and perfected appraisal rights under
the DGCL) will, by virtue of the Merger and without any action on the part of
the holders of the Shares, be converted into the right to receive $20.50 in
cash, payable to the holder thereof, without interest, upon the surrender of the
certificate formerly representing such Share, less any required withholding
taxes. The Merger Agreement is more fully described in Section 11 of the Offer
to Purchase.
The Board of Directors of the Company has approved, by unanimous vote of the
directors present, the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, and determined that the terms of
the Offer and the Merger are fair to, and in the best interests of, the holders
of Shares and recommends that holders of Shares accept the Offer and tender
their Shares to the Purchaser pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn
- 2 -
<PAGE>
as, if and when the Purchaser gives oral or written notice to IBJ Schroder Bank
& Trust Company (the "Depositary") of the Purchaser's acceptance of such Shares
for payment pursuant to the Offer. Upon the terms and subject to the conditions
of the Offer, payment for Shares accepted for payment pursuant to the Offer will
be made by deposit of the purchase price therefor with the Depositary, which
will act as agent for tendering stockholders for the purpose of receiving
payments from the Purchaser and transmitting such payments to stockholders whose
Shares have been accepted for payment. Under no circumstances will interest on
the purchase price for Shares be paid by the Purchaser, regardless of any
extension of the Offer or any delay in making such payment. In all cases,
payment for Shares tendered and accepted for payment pursuant to the Offer will
be made only after timely receipt by the Depositary of (i) certificates
representing Shares (the "Share Certificates") and, if applicable, Rights
Certificates, or timely confirmation of a book-entry transfer of such Shares
and, if applicable, Rights into the Depositary's account at The Depository Trust
Company or the Philadelphia Depository Trust Company (each a "Book-Entry
Transfer Facility") pursuant to the procedures set forth in Section 3 of the
Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message (as defined in Section 2 of the Offer to Purchase) in
connection with a book-entry transfer, and (iii) any other documents required by
the Letter of Transmittal.
As described in Section 1 of the Offer to Purchase, in the Merger Agreement, the
Purchaser and the Parent have agreed with the Company not to extend, delay
acceptance for payment of, or the payment for, Shares, or to terminate, waive or
amend the Offer, except under certain circumstances or if certain conditions
have been satisfied. In addition, as described in Section 1 of the Offer to
Purchase, in the Merger Agreement, the Purchaser and the Parent have agreed with
the Company that they will extend the Offer under certain circumstances. Subject
to the applicable rules and regulations of the Securities and Exchange
Commission and the terms of the Merger Agreement described above, the Purchaser
expressly reserves the right, in its sole discretion, at any time and from time
to time, and regardless of whether or not any of the events set forth in Section
15 of the Offer to Purchase shall have occurred, to (i) extend the period of
time during which the Offer is open and thereby delay acceptance for payment of,
and the payment for, any Shares, by giving oral or written notice of such
extension to the Depositary and (ii) amend the Offer in any respect by giving
oral or written notice of such amendment to the Depositary. Any extension,
delay, termination, waiver or amendment will be followed as promptly as
practicable by public announcement to be made no later than 9:00 A.M., New York
City time, on the next business day after the previously scheduled Expiration
Date. During any such extension, all Shares previously tendered and not properly
withdrawn will remain subject to the Offer, subject to the rights of a tendering
stockholder to withdraw such stockholder's Shares.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Wednesday,
- 3 -
<PAGE>
November 12, 1997, unless and until the Purchaser in its sole discretion (but
subject to the terms and conditions of the Merger Agreement), shall have
extended the period 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 the Purchaser, shall expire.
Tenders of Shares and Rights made pursuant to the Offer are irrevocable, except
that Shares or Rights tendered pursuant to the Offer may be withdrawn at any
time on or prior to the Expiration Date and, unless theretofore accepted for
payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after December 13, 1997. For a withdrawal to be effective, a written,
telegraphic, telex or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth on the back cover
of the Offer to Purchase. Any notice of withdrawal must specify the name of the
person who tendered such Shares or Rights to be withdrawn, the number of Shares
or Rights to be withdrawn and the name of the registered holder, if different
from that of the person who tendered such Shares or Rights. If Share
Certificates or, if applicable, Rights Certificates to be withdrawn have been
delivered or otherwise identified to the Depositary, then prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution (as defined in Section 3 of the
Offer to Purchase) unless such Shares or Rights have been tendered for the
account of an Eligible Institution. If Shares or Rights have been tendered
pursuant to the procedure for book-entry transfer as set forth in Section 3 of
the Offer to Purchase, any notice of withdrawal must specify the name and number
of the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares or Rights, in which case a notice of withdrawal will be
effective if delivered to the Depositary by any method of delivery described in
the second sentence of this paragraph. A withdrawal of Shares shall also
constitute a withdrawal of the associated Rights. All questions as to the form
and validity (including time of receipt) of any notice of withdrawal will be
determined by the Purchaser, in its sole discretion, which determination will be
final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended, is
contained in the Offer to Purchase and is incorporated herein by reference. The
Company has provided the Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed by the Purchaser to record holders of Shares
and furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares.
- 4 -
<PAGE>
The Offer to Purchase and the related Letter of Transmittal contain important
information which should be read carefully before any decision is made with
respect to the Offer. Questions and requests for assistance may be directed to
the Dealer Manager or the Information Agent as set forth below. Requests for
copies of the Offer to Purchase and the related Letter of Transmittal and all
other tender offer materials may be directed to the Information Agent or the
Dealer Manager, and copies will be furnished promptly at the Purchaser's
expense. The Purchaser will not pay any fees or commissions to any broker or
dealer or any other person (other than the Dealer Manager and the Information
Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
[MacKenzie Logo]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect) or
Call Toll-Free (800) 322-2885
The Dealer Manager for the Offer is:
Chase Securities Inc.
270 Park Avenue
New York, NY 10017
(212) 270-3250 or
(212) 270-3348
October 15, 1997
- 5 -
<PAGE>
EXHIBIT 11(a)(7)(ii)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase dated October 15, 1997 and the related Letter of
Transmittal (and any amendments thereto) and is being made to all holders of
Shares. The Purchaser (as defined below) is not aware of any state where the
making of the Offer is prohibited by administrative or judicial action pursuant
to state statute. If the Purchaser becomes aware of any state where the making
of the Offer is prohibited, the Purchaser will make a good faith effort to
comply with any such statute. If, after such good faith effort, the Purchaser
cannot comply with any applicable statute, the Offer will not be made to (nor
will tenders be accepted from or on behalf of) the 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 shall be
deemed to be made on behalf of the Purchaser by Chase Securities Inc. or one or
more registered brokers or dealers licensed under the laws of such
jurisdictions.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED SHARE PURCHASE RIGHTS)
OF
MELAMINE CHEMICALS, INC.
AT
$20.50 NET PER SHARE
BY
MC MERGER CORP.
A WHOLLY OWNED SUBSIDIARY OF
BORDEN CHEMICAL, INC.
A SUBSIDIARY OF
BORDEN, INC.
MC Merger Corp., a Delaware corporation (the "Purchaser"), which is a wholly
owned subsidiary of Borden Chemical, Inc., a Delaware corporation (the
"Parent"), which is itself a subsidiary of Borden, Inc., a New Jersey
corporation ("Borden"), is offering to purchase all of the outstanding shares of
Common Stock, par value $.01 per share (the "Shares"), of Melamine Chemicals,
Inc., a Delaware corporation (the "Company"), and the associated preferred share
purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated as
of November 5, 1990, as amended, by and between the Company and Wachovia Bank
and Trust Company, N.A. (now Wachovia Bank, N.A.), as Rights Agent (the "Rights
Agent"), at a purchase price of $20.50 per Share (and associated Right), net to
the seller in cash without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated October 15, 1997 (the "Offer
to Purchase") and in the related Letter of Transmittal (which, as amended from
time to time, together constitute the "Offer"). Unless the context requires
otherwise, all references to Shares shall be deemed to refer also to the
associated Rights, and all references to Rights shall be deemed to include all
- 1 -
<PAGE>
benefits that may inure to the stockholders of the Company or to holders of
Rights pursuant to the Rights Agreement. Holders of Shares will be required to
tender one Right for each Share tendered in order to effect a valid tender of
such Share. If separate certificates for the rights ("Rights Certificates") are
not issued, a valid tender of Shares will also constitute a tender of the
associated Rights.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, NOVEMBER 13, 1997, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not withdrawn pursuant to the Offer prior to the expiration of the
Offer such number of Shares which constitutes, on a fully diluted basis, not
less than 51% of the Shares on the date of purchase and (ii) the expiration or
termination of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended.
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. Following the consummation of the Offer, the Purchaser
intends to effect the Merger, as described below.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of
October 9, 1997 (the "Merger Agreement"), by and among the Parent, the Purchaser
and the Company. Borden has guaranteed the Parent's obligations under the Merger
Agreement. The Merger Agreement provides, among other things, for the making of
the Offer by the Purchaser, and further provides that, following the completion
of the Offer, upon the terms and subject to the conditions of the Merger
Agreement, and in accordance with the Delaware General Corporation Law ("DGCL"),
the Purchaser will be merged with and into the Company (the "Merger"), and each
Share issued and outstanding immediately prior to the effective time of the
Merger (other than Shares owned by the Company or any subsidiary of the Company
and Shares owned by the Parent, the Purchaser or any other subsidiary of the
Parent, which shall be cancelled, and other than Shares, if any, held by
stockholders who have properly exercised and perfected appraisal rights under
the DGCL) will, by virtue of the Merger and without any action on the part of
the holders of the Shares, be converted into the right to receive $20.50 in
cash, payable to the holder thereof, without interest, upon the surrender of the
certificate formerly representing such Share, less any required withholding
taxes. The Merger Agreement is more fully described in Section 11 of the Offer
to Purchase.
The Board of Directors of the Company has approved, by unanimous vote of the
directors present, the Merger Agreement and the transactions contemplated
thereby, including the Offer and the Merger, and determined that the terms of
the Offer and the Merger are fair to, and in the best interests of, the holders
of Shares and recommends that holders of Shares accept the Offer and tender
their Shares to the Purchaser pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn
- 2 -
<PAGE>
as, if and when the Purchaser gives oral or written notice to IBJ Schroder Bank
& Trust Company (the "Depositary") of the Purchaser's acceptance of such Shares
for payment pursuant to the Offer. Upon the terms and subject to the conditions
of the Offer, payment for Shares accepted for payment pursuant to the Offer will
be made by deposit of the purchase price therefor with the Depositary, which
will act as agent for tendering stockholders for the purpose of receiving
payments from the Purchaser and transmitting such payments to stockholders whose
Shares have been accepted for payment. Under no circumstances will interest on
the purchase price for Shares be paid by the Purchaser, regardless of any
extension of the Offer or any delay in making such payment. In all cases,
payment for Shares tendered and accepted for payment pursuant to the Offer will
be made only after timely receipt by the Depositary of (i) certificates
representing Shares (the "Share Certificates") and, if applicable, Rights
Certificates, or timely confirmation of a book-entry transfer of such Shares
and, if applicable, Rights into the Depositary's account at The Depository Trust
Company or the Philadelphia Depository Trust Company (each a "Book-Entry
Transfer Facility") pursuant to the procedures set forth in Section 3 of the
Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message (as defined in Section 2 of the Offer to Purchase) in
connection with a book-entry transfer, and (iii) any other documents required by
the Letter of Transmittal.
As described in Section 1 of the Offer to Purchase, in the Merger Agreement, the
Purchaser and the Parent have agreed with the Company not to extend, delay
acceptance for payment of, or the payment for, Shares, or to terminate, waive or
amend the Offer, except under certain circumstances or if certain conditions
have been satisfied. In addition, as described in Section 1 of the Offer to
Purchase, in the Merger Agreement, the Purchaser and the Parent have agreed with
the Company that they will extend the Offer under certain circumstances. Subject
to the applicable rules and regulations of the Securities and Exchange
Commission and the terms of the Merger Agreement described above, the Purchaser
expressly reserves the right, in its sole discretion, at any time and from time
to time, and regardless of whether or not any of the events set forth in Section
15 of the Offer to Purchase shall have occurred, to (i) extend the period of
time during which the Offer is open and thereby delay acceptance for payment of,
and the payment for, any Shares, by giving oral or written notice of such
extension to the Depositary and (ii) amend the Offer in any respect by giving
oral or written notice of such amendment to the Depositary. Any extension,
delay, termination, waiver or amendment will be followed as promptly as
practicable by public announcement to be made no later than 9:00 A.M., New York
City time, on the next business day after the previously scheduled Expiration
Date. During any such extension, all Shares previously tendered and not properly
withdrawn will remain subject to the Offer, subject to the rights of a tendering
stockholder to withdraw such stockholder's Shares.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Thursday,
- 3 -
<PAGE>
November 13, 1997, unless and until the Purchaser in its sole discretion (but
subject to the terms and conditions of the Merger Agreement), shall have
extended the period 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 the Purchaser, shall expire.
Tenders of Shares and Rights made pursuant to the Offer are irrevocable, except
that Shares or Rights tendered pursuant to the Offer may be withdrawn at any
time on or prior to the Expiration Date and, unless theretofore accepted for
payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after December 13, 1997. For a withdrawal to be effective, a written,
telegraphic, telex or facsimile transmission notice of withdrawal must be timely
received by the Depositary at one of its addresses set forth on the back cover
of the Offer to Purchase. Any notice of withdrawal must specify the name of the
person who tendered such Shares or Rights to be withdrawn, the number of Shares
or Rights to be withdrawn and the name of the registered holder, if different
from that of the person who tendered such Shares or Rights. If Share
Certificates or, if applicable, Rights Certificates to be withdrawn have been
delivered or otherwise identified to the Depositary, then prior to the physical
release of such certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution (as defined in Section 3 of the
Offer to Purchase) unless such Shares or Rights have been tendered for the
account of an Eligible Institution. If Shares or Rights have been tendered
pursuant to the procedure for book-entry transfer as set forth in Section 3 of
the Offer to Purchase, any notice of withdrawal must specify the name and number
of the account at the Book-Entry Transfer Facility to be credited with the
withdrawn Shares or Rights, in which case a notice of withdrawal will be
effective if delivered to the Depositary by any method of delivery described in
the second sentence of this paragraph. A withdrawal of Shares shall also
constitute a withdrawal of the associated Rights. All questions as to the form
and validity (including time of receipt) of any notice of withdrawal will be
determined by the Purchaser, in its sole discretion, which determination will be
final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended, is
contained in the Offer to Purchase and is incorporated herein by reference. The
Company has provided the Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed by the Purchaser to record holders of Shares
and furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares.
- 4 -
<PAGE>
The Offer to Purchase and the related Letter of Transmittal contain important
information which should be read carefully before any decision is made with
respect to the Offer. Questions and requests for assistance may be directed to
the Dealer Manager or the Information Agent as set forth below. Requests for
copies of the Offer to Purchase and the related Letter of Transmittal and all
other tender offer materials may be directed to the Information Agent or the
Dealer Manager, and copies will be furnished promptly at the Purchaser's
expense. The Purchaser will not pay any fees or commissions to any broker or
dealer or any other person (other than the Dealer Manager and the Information
Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
[MacKenzie Logo]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect) or
Call Toll-Free (800) 322-2885
The Dealer Manager for the Offer is:
Chase Securities Inc.
270 Park Avenue
New York, NY 10017
(212) 270-3250 or
(212) 270-3348
October 15, 1997
- 5 -
<PAGE>
FOR IMMEDIATE RELEASE
Contacts
For Borden Chemical, Inc.
Peter Loscocco
614-225-4127
For Melamine Chemicals, Inc.
Fred Huber or Wayne D. DeLeo
504-473-3121
BORDEN CHEMICAL, INC.
TO ACQUIRE
MELAMINE CHEMICALS, INC.
COLUMBUS, OHIO and DONALDSONVILLE, LA. (OCTOBER 9, 1997) -- Borden, Inc. and
Melamine Chemicals, Inc. (NASDAQ: MTWO) today announced that Borden Chemical,
Inc., a subsidiary of Borden, Inc., has agreed to acquire Melamine Chemicals for
$20.50 per share in a cash tender offer, pursuant to a definitive merger
agreement that has been approved by the boards of directors of both companies.
ChemFirst Inc., which owns approximately 23 percent of the outstanding
Melamine Chemicals shares, has agreed to support the acquisition, including by
tendering its shares in the tender offer.
Joseph Saggese, chairman, president and chief executive officer of Borden
Chemical, said: "The acquisition of Melamine Chemicals adds a complementary
product to Borden Chemical's forest products and specialty resin business
portfolio. Melamine Chemicals' strong industry position in melamine offers us a
unique opportunity to leverage our technologies and solidify Borden Chemical's
leadership in key specialty resin market segments."
Fred Huber, president and chief executive officer of Melamine Chemicals,
said: "We believe that the proposed merger with Borden Chemical provides
excellent value for our stockholders, security for our employees and solid
growth opportunities for both Borden and Melamine Chemicals."
Under the merger agreement, a wholly owned subsidiary of Borden Chemical
will commence, within five business days, an all-cash tender offer for all of
Melamine Chemicals outstanding shares for a purchase price of $20.50 per share.
Following successful completion of the tender offer, Borden Chemical will
acquire for the same cash price any shares that are not tendered by means of a
merger of Melamine Chemicals with a wholly owned subsidiary of Borden Chemical.
The tender offer will be subject to, among other things, the valid tender of at
least 51 percent of the outstanding Melamine Chemicals shares on a fully diluted
basis, the expiration or termination of the waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and certain
other conditions. The tender offer will be made only through definitive tender
offer documents, which will be filed with the Securities and Exchange Commission
and mailed to the stockholders.
Melamine Chemicals, based in Donaldsonville, La., is engaged in the
production and marketing of melamine crystal. Melamine Chemicals is also active
in the development of new melamine process and application technology. The
company is one of only two producers of melamine in North America and one of the
three largest worldwide.
Based in Columbus, Ohio, Borden Chemical is a leading global producer and
supplier of formaldehyde, resins, coatings and other chemical products used in
forest products, foundry and other industrial applications.
<PAGE>
EXHIBIT 11(A)(9)
FOR IMMEDIATE RELEASE
Contact:
For Borden Chemical, Inc.
Peter Loscocco
Telephone: (614) 225-4127
Fax: (614) 225-4465
BORDEN CHEMICAL, INC.
ANNOUNCES COMMENCEMENT OF CASH TENDER OFFER FOR
MELAMINE CHEMICALS, INC.
-----------------------------------------------
COLUMBUS, OH -- OCTOBER 15, 1997 -- Borden Chemical, Inc., a
subsidiary of Borden, Inc., announced today that it has commenced its
previously announced tender offer for all outstanding shares of common stock
of Melamine Chemicals, Inc. (NASDAQ: MTWO) at $20.50 per share in cash,
pursuant to its October 9, 1997 definitive merger agreement with Melamine
Chemicals.
The tender offer and withdrawal rights thereunder will expire at
12:00 Midnight, New York City time, on Thursday, November 13, 1997, unless
the tender offer is extended.
<PAGE>
Exhibit 11(b)(1)
LOAN AGREEMENT
BETWEEN
BORDEN CHEMICAL, INC.
AS BORROWER
AND
BORDEN, INC.
AS LENDER
JULY 1, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
Section 1. Definition and Accounting Terms................................. 1
1.1 Certain Defined Terms.............................................. 1
1.2 Computation of Time Periods........................................ 10
1.3 Accounting Terms................................................... 10
Section 2. Revolving Credit Loans.......................................... 10
2.1 Revolving Credit Commitment........................................ 10
2.2 Revolving Credit Loans............................................. 10
2.3 Revolving Credit Note.............................................. 10
2.4 Commitment Fee..................................................... 12
2.5 Additional Amounts................................................. 12
Section 3. Term Loans...................................................... 13
3.1 Term Loans......................................................... 13
3.2 Term Note.......................................................... 13
3.3 Prepayments of Term Notes.......................................... 13
3.4 Additional Amounts................................................. 14
Section 4. Conditions of Borrowing......................................... 14
4.1 Conditions Precedent to the Initial Loans.......................... 14
4.2 Conditions Precedent to Each Loan.................................. 15
Section 5. Warranties...................................................... 15
5.1 Representations and Warranties of the Borrower..................... 15
Section 6. Covenants of the Borrower....................................... 16
6.1 Affirmative Covenants.............................................. 16
6.2 Negative Covenants................................................. 18
6.3 Reporting Requirements............................................. 22
Section 7. Events of Default............................................... 25
7.1 Events of Default.................................................. 25
i
<PAGE>
Page
----
Section 8. Miscellaneous.................................................. 28
8.1 Amendments, Etc................................................... 28
8.2 Notices, Etc...................................................... 28
8.3 No Waiver; Remedies............................................... 28
8.4 Indemnification................................................... 29
8.5 Governing Law..................................................... 30
8.6 Execution in Counterparts......................................... 30
8.7 Waiver of Jury Trial.............................................. 30
8.8 Amendments to the Credit Agreement................................ 30
ii
<PAGE>
LOAN AGREEMENT
This Loan Agreement dated as of July 1, 1996 ("Agreement") is made in
Columbus, Ohio by and between Borden Chemical, Inc., a Delaware corporation (the
"Borrower"), and Borden, Inc., a New Jersey corporation (the "Lender"), who
agree as hereinafter set forth.
BACKGROUND
The Borrower is a recently formed Subsidiary of the Lender. In order
to provide funding for anticipated capital expenditures and to provide funding
for Borrower's long-term and short-term working capital requirements, Borrower
has requested the Lender to lend to it: (i) certain amounts on a revolving
credit basis (individually a "Revolving Credit Loan" and collectively the
"Revolving Credit Loans") and (ii) certain amounts on a term loan basis
(individually a "Term Loan" and collectively the "Term Loans"). The Lender is
willing to make the Revolving Credit Loans and the Term Loans upon the terms and
conditions herein.
SECTION 1. DEFINITION AND ACCOUNTING TERMS
1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"ADDITIONAL TERM LOANS" means Term Loans made after the date hereof,
if any, in such principal amounts as determined by Lender.
"AFFILIATE" means, as to any Person (other than a Subsidiary), any
other Person that, directly or indirectly, controls, is controlled by or is
under common control with such Person or is a director or officer of such
Person. For purposes of this definition, the term "control" (including the
terms "controlling," "controlled by" and "under common control with") of a
Person means the possession, direct or indirect, of the power to vote ten
percent (10%) or more of the Voting Stock of such Person or to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of Voting Stock, by control or otherwise.
"APPLICABLE PERCENTAGE" means, as of any date, a percentage per annum
determined by reference to the Public Debt Rating of Lender in effect on
such date as set forth below:
<PAGE>
============================== =====================
PUBLIC DEBT RATING APPLICABLE
S&P/MOODY'S PERCENTAGE
------------------------------ ---------------------
Level 1
-------
BBB or Baa2 or above .20%
------------------------------ ---------------------
Level 2
-------
below BBB or Baa2 but at least
BBB- or Baa3 .25%
------------------------------ ---------------------
Level 3
-------
below BBB- or Baa3 but at
least BB or Ba2 .375%
------------------------------ ---------------------
Level 4
-------
below BB and Ba2 .50%
============================== =====================
"BORROWER" has the meaning specified in the recital of parties to this
Agreement.
"BORROWER'S SUBSIDIARY(IES)" means the Subsidiary(ies) of the parent
(i.e., holding) company of Borrower.
"BORROWING DATE" has the meaning specified in Section 2.3 (e).
"BUSINESS DAY" means a day of the year on which banks are not required
or authorized to close in New York City.
"BUSINESS YEAR" means a year of three hundred sixty (360) days.
"CAPITAL EXPENDITURES" means for any period, the aggregate of all
expenditures (whether paid in cash or accrued as liabilities and including
in all events all amounts expended or capitalized under Capital Leases but
excluding any amount representing capitalized interest) by the Borrower,
its parent company and its Subsidiaries during such period that, in
conformity with GAAP, are or are required to be included as additions
during such period to property, plant or equipment reflected in the
Consolidated balance sheet of the Borrower, its parent company and its
Subsidiaries; provided that Capital Expenditures shall in any event exclude
(a) expenditures made in connection with the replacement, substitution or
restoration of assets (i) to the extent financed from insurance proceeds
paid on account of the loss of or damage to the assets being replaced or
restored
2
<PAGE>
or (ii) with awards of compensation arising from the taking by eminent
domain or condemnation of the assets being replaced, (b) the purchase price
of equipment that is purchased simultaneously with the trade-in of existing
equipment to the extent that the gross amount of such purchase price is
reduced by the credit granted by the seller of such equipment for the
equipment being traded in at such time, (c) the purchase of plant, property
and equipment made within two hundred seventy (270) days of the sale of a
similar asset, and (d) any acquisition of stock or assets constituting a
business unit which is approved by Lender pursuant to Section 5.02 (e) of
the Credit Agreement.
"CAPITAL PREFERRED STOCK" means the junior and senior capital
preferred stock issued by the Borrower or its parent company.
"CAPITALIZED LEASES" means all obligations of a Person as lessee under
leases that have been, in accordance with GAAP, recorded as capital leases.
"COMMITMENT" means the maximum aggregate amount which Lender is
obligated to lend hereunder pursuant to its Revolving Credit Loans.
"CONSOLIDATED" refers to the consolidation of accounts in accordance
with GAAP.
"CONSOLIDATED NET DEBT" means for any fiscal period of Borrower, the
Total Debt of the Borrower, its parent company and its Subsidiaries on a
Consolidated basis net of all cash on deposit (or cash equivalents) and
intercompany loans made by the Borrower, its parent company and its
Subsidiaries to other Affiliates of Lender.
"CONSOLIDATED NET INTEREST EXPENSE" means for any fiscal period of the
Borrower, the interest on all Debt of the Borrower, its parent company and
its Subsidiaries on a Consolidated basis, net of interest income, in
accordance with GAAP (excluding, in any event, interest expense, if any, on
overdue tax assessments and amortization of financing fees and debt
discount).
"CREDIT AGREEMENT" means that Credit Agreement dated December 15, 1994
as amended and re-stated on May 8, 1996 among Borden, Inc., Borden Foods
Holdings, Inc., Wise Foods Holdings, Inc., the Banks and certain other
lender parties thereto, BT Securities Corporation, Chase Securities, Inc.,
Citicorp Securities, Inc. and Credit Suisse as arrangers and Citibank N.A.
as Administrative Agent for such other Lenders.
"DEBT" of any Person means, without duplication, (a) all indebtedness
of such Person for borrowed money, (b) all obligations of such Person for
the deferred purchase price of property or services (other than trade
payables and accrued expenses arising in the ordinary course of business),
(c) all obligations of such Person evidenced by notes, bonds, debentures or
other similar instruments, (d) all obligations of such Person created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of
default are limited to repossession or sale of
3
<PAGE>
such property), (e) all obligations of such Person as lessee under leases
that have been, in accordance with GAAP, recorded as capital leases
("Capitalized Leases") and (f) all Debt referred to in clauses (a) through
(e) above, secured by any Lien on property owned by such Person, even
though such Person has not assumed or become liable for the payment of such
Debt, but only to the extent that, in accordance with GAAP, such Debt would
be reflected on the financial statements of such Person.
"DEFAULT" means any Event of Default or any event that would
constitute an Event of Default but for the requirement that notice be given
or time elapse or both.
"EBITDA" means, for any period, net income (or net loss) of the
Borrower, its parent company and its Subsidiaries plus the sum, without
duplication, of (a) Consolidated Net Interest Expense, (b) income tax
expense, (c) depreciation expense, (d) amortization expense, (e)
extraordinary or unusual losses included in net income (net of taxes to the
extent not already deducted in determining such losses and net of
extraordinary or unusual gains included in net income) including, without
limitation, cumulative effects of accounting changes, discounted
operations, restructuring charges and non-cash charges, (f) amortization of
any deferred financing fees and debt discount, (g) other non-cash charges,
(h) gains or losses on asset sales (including sales of accounts
receivable), (i) severance and similar expenses, and (j) dividends accrued
on securities other than common stock, in each case determined in
accordance with GAAP for such period.
"ENVIRONMENTAL CLAIMS" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigations or proceedings relating in any
way to any Environmental Law (hereafter "Claims") or any permit issued
under any such law, including without limitation (a) any and all Claims by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law and (b) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from
alleged injury or threat or injury to health, safety or the environment.
"ENVIRONMENTAL LAW" means any federal, state, provincial or local
statute, law, rule, regulation, ordinance, code, policy or rule of common
law now or hereafter in effect and in each case as amended, and any
judicial or administrative interpretation thereof, including any judicial
or administrative order, consent, decree or judgment, relating to the
environment, health, safety or Hazardous Materials.
"ERISA" means the Employment Retirement Income Security Act of 1974,
as amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA AFFILIATE" means each person (as defined in Section 3(9) of
ERISA) which together with the Borrower or any Subsidiary of the Borrower
would be deemed to be a
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"single employer" within the meaning of Section 414(b), (c), (m) or (o) of
the Internal Revenue Code.
"EVENTS OF DEFAULT" has the meaning specified in Section 7.1.
"EXISTING INDEBTEDNESS" means Indebtedness of the Borrower, its parent
company and its Subsidiaries outstanding on the date hereof.
"EURODOLLAR RATE" means, an interest rate per annum equal to the rate
per annum obtained by the sum of LENDER'S cost of funds for LIBOR-based
borrowings PLUS twenty-five (25) basis points.
"EURODOLLAR RATE ADVANCE" means an advance that bears interest at the
Eurodollar Rate.
"FAIR MARKET VALUE" means, (a) with respect to any asset sold to any
Person that is an Affiliate of the Borrower or the Affiliate Guarantor for
consideration of Ten Million and 00/100 Dollars ($10,000,000.00) or more,
the appraised fair market value of such asset as determined by a nationally
recognized investment banker selected by the Borrower and (b) with respect
to any other asset, the value that the Board of Directors of the Person
owning such asset or the stock or assets determines to be the fair market
value of such asset; provided, in each case that the consideration so
determined to equal such fair market value may include notes or other
evidence of indebtedness unless the Borrower shall have obtained an
appraisal of the fair market value of such asset from a nationally
recognized investment banker selected by the Borrower.
"GAAP" has the meaning specified in Section 1.3.
"HAZARDOUS MATERIALS" means (a) petroleum or petroleum products,
radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation, transformers or other equipment
that contained electric fluid containing levels of polychlorinated
biphenyls and radon gas, (b) any chemicals, materials or substances defined
as or included in the definition of "hazardous substances," "hazardous
wastes," "hazardous materials," "extremely hazardous wastes," "restricted
hazardous wastes," "toxic substances," "toxic pollutants," "contaminants"
or "pollutants," or words of similar import, under any applicable
Environmental Law and (c) any other chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental
authority.
"HEDGE AGREEMENTS" means interest rate swap, cap or collar agreements,
interest rate future or option contracts, currency swap agreements,
currency future or options contracts and other similar agreements including
specifically foreign exchange agreements, but excluding commodity
agreements.
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"INDEBTEDNESS" of any Person means, without duplication, (a) all Debt
of such Person, (b) all obligations, contingent or otherwise, of such
Person under acceptance, letter of credit or similar facilities, (c) all
obligations of such Person in respect of Hedge Agreements and (d) all
Indebtedness of others referred to in clauses (a) through (c) above
guaranteed directly or indirectly in any manner by such Person, or in
effect guaranteed directly or indirectly by such Person through an
agreement (i) to pay or purchase such Indebtedness or to advance or supply
funds for the payment or purchase of such Indebtedness, (ii) to purchase,
sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment
of such Indebtedness or to assure the holder of such Indebtedness against
loss, (iii) to supply funds to or in any manner invest in the debtor
(including any agreement to pay for property or services irrespective of
whether such property is received or such services are rendered) or (iv)
otherwise to assure a creditor against loss; provided, however, that
amounts so guaranteed shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of
any such guarantee obligation shall be deemed to be an amount equal to the
stated or determinable amount of the primary obligation in respect of which
such guarantee obligation is made or, if not stated or determinable, the
maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by such Person in
good faith.
"INDEMNIFIED PARTY" has the meaning specified in Section 8.4 (a).
"INITIAL TERM LOAN" has the meaning specified in Section 3.1.
"INTEREST PAYMENT DATE" means the first business day of each April,
July, October and January.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"LENDER" has the meaning specified in the recital of parties to this
Agreement.
"LIEN" means any lien, security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement,
including, without limitation, the lien or retained security title of a
conditional vendor.
"LOAN DOCUMENTS" means this Agreement, the Notes and the other
certificates and documents delivered by Borrower to Lender hereunder.
"MATERIAL ADVERSE CHANGE" means any change in the business, condition
(financial or otherwise), operations, performance or properties of the
Borrower and its parent company, its parent company and its Subsidiaries
taken as a whole that would materially adversely affect the ability of the
Borrower to perform its obligations under this Agreement and the other Loan
Documents (taken as a whole).
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"MATERIAL ADVERSE EFFECT" means a circumstance or condition affecting
the business, condition (financial or otherwise), operations, performance
or properties of the Borrower, its parent company and its Subsidiaries
taken as a whole which would materially adversely affect (a) the ability of
the Borrower to perform its obligations under this Agreement, the Notes and
the other Loan Documents (taken as a whole) or (b) the rights and remedies
of the Lender under this Agreement and the other Loan Documents (taken as a
whole).
"MATERIAL SUBSIDIARY" means each Subsidiary of the Borrower AND/OR its
parent company now existing or hereafter acquired or formed by the Borrower
AND/OR its parent company which (x) for the most recent fiscal year of the
Borrower accounted for more than three percent (3%) of the Consolidated
revenues of the Lender and Borrower AND/OR ITS PARENT COMPANY or (y) as at
the end of such fiscal year, was the owner of more than four percent (4%)
of the Consolidated assets of the Lender and the Borrower in each case as
shown on the Consolidated financial statements of the Lender and the
Borrower AND/OR its parent company for such fiscal year.
"Note(s)" means a Revolving Credit Note and/or a Term Note(s).
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereof.
"PERMITTED LIENS" means (a) Liens for taxes, assessments or
governmental charges or claims not yet due or which are being contested in
good faith and by appropriate proceedings for which appropriate reserves
have been established in accordance with GAAP; (b) Liens in respect of
property or assets of the Borrower, ITS PARENT COMPANY or any of its
Subsidiaries imposed by law which are incurred in the ordinary course of
business, such as carriers', warehousemen's and mechanics' Liens and other
similar Liens arising in the ordinary course of business, and which do not
individually or in the aggregate have a Material Adverse Effect; (c) Liens
on assets of the Borrower, its parent company or any of its Subsidiaries
existing on the date hereof securing Indebtedness in an aggregate principal
amount not to exceed One Million and 00/100 Dollars ($1,000,000.00) or
arising pursuant to any of the Loan Documents; (d) Liens arising from
judgments or decrees in circumstances not constituting an Event of Default
under Section 7.1 (g); (e) Liens incurred or deposits made in connection
with workers' compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
incurred in the ordinary course of business; (f) leases or subleases
granted to others not interfering in any material respect with the business
of the Borrower , its parent company and its Subsidiaries taken as a whole;
(g) ground leases in respect of real property on which facilities owned or
leased by the Borrower, its parent company or any of its Subsidiaries are
located; (h) easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the business of the Borrower, its
parent company and its Subsidiaries taken as a
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whole; (i) any interest or title of a lessor or secured by a lessor's
interest under any lease permitted by this Agreement; (j) Liens in favor of
customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of goods; (k)
Liens on goods the purchase price of which is financed by a documentary
letter of credit issued for the account of the Borrower, its parent company
or any of its Subsidiaries where such Lien secures the obligations of the
Borrower, ITS PARENT COMPANY or such Subsidiaries in respect of such letter
of credit to the extent permitted under Section 6.2 (b); (l) Liens arising
pursuant to purchase money mortgages securing Indebtedness financing the
purchase price of assets acquired after the date hereof; provided that any
such Liens attach only to the assets so purchased to the extent permitted
under Section 6.2 (b); (m) Liens on assets permitted to be acquired
hereunder; provided that such Liens were existing at the time of such
acquisition and were not created in anticipation thereof; and (n) Liens
granted in connection with any foreign contract option, futures contract or
similar agreement designed to protect the Borrower, its parent company or
any of its Subsidiaries from fluctuations in the price of commodities;
provided that such Liens attach solely to the commodities which are the
subject of such options, contracts or agreements.
"PERSON" means an individual, partnership, corporation (including a
business trust), limited liability company, joint stock company, trust,
unincorporated association, joint venture or other entity, or a government
or any political subdivision or agency thereof.
"PLAN" means any multi-employer or single-employer plan as defined in
Section 4001 of ERISA and which is covered by Title IV of ERISA which is
maintained or contributed to (or to which there is an obligation to
contribute), by the Borrower, its parent company or any of its Subsidiaries
or any ERISA Affiliate.
"PREFERRED DIVIDENDS" means for any fiscal period of the Borrower the
dividends required to be paid on Preferred Stock of the Borrower, its
parent company and its Subsidiaries on a Consolidated basis.
"PREFERRED STOCK" means, with respect to any corporation, capital
stock issued by such corporation that is entitled to a preference or
priority over any other capital stock issued by such corporation upon any
distribution of such corporation's assets, whether by dividend or upon
liquidation.
"PRINCIPAL PROPERTY" means the manufacturing or processing plants or
warehouses owned or leased by the Borrower, the parent company or any
Restricted Subsidiary as of the date hereof, as listed on Exhibit C
attached hereto and incorporated herein by reference.
"REAL PROPERTY" of any Person means all of the right, title and
interest of such Person in and to land, improvements and fixtures,
including leaseholds.
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"RESTRICTED SUBSIDIARY" means any Subsidiary of the Borrower (and/or
the Borrower's parent company) which owns, operates or leases one or more
Principal Properties and shall not include any other Subsidiary.
"REVOLVING CREDIT LOAN(S)" has the meaning specified in the recital of
the parties to this Agreement.
"REVOLVING CREDIT NOTE" has the meaning specified in Section 2.3.
"SENIOR PREFERRED STOCK" means, with respect to any corporation,
capital stock issued by such corporation that is entitled to a preference
or priority over any other Preferred Stock issued by such corporation upon
any distribution of such corporation's assets.
"SENIOR PREFERRED DIVIDENDS" means for any fiscal period of the
Borrower, the dividends required to be paid on Senior Preferred Stock
permitted by Section 5.02(f)(ii) of the Credit Agreement.
"SUBSIDIARY" of any Person shall mean and include (i) any corporation
more than fifty percent (50%) of whose stock of any class or classes having
by the terms thereof ordinary voting power to elect a majority of the
directors of such corporation (irrespective of whether or not at the time
stock of any class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time
owned by such Person directly or indirectly through Subsidiaries and (ii)
any partnership, association, joint venture or other entity in which such
Person directly or indirectly through Subsidiaries has more than a fifty
percent (50%) equity interest at the time.
"TERM LOAN(S)" has the meaning specified in the recital of the parties
to this Agreement.
"TERM NOTE(S)" has the meaning specified in Section 3.2.
"THIRD PARTY INDEBTEDNESS" means Indebtedness excluding inter-company
debt.
"TOTAL DEBT" means, without duplication, the aggregate of: (a) Debt
of the Borrower, its parent company and its Subsidiaries described in
clauses (a) through (e) of the definition of "Debt" herein, and (b)
outstanding capital of any receivables interests net of the lesser of the
(1) beginning cash balances existing on January 1, 1996, or (2) average
ending cash balances for each of the four (4) consecutive 1996 fiscal
quarters.
"UNFUNDED CURRENT LIABILITY" of any Plan means the amount, if any, by
which the present value of the accrued benefits under the Plan as of the
close of its most recent plan year, based upon the actuarial assumptions
which would be required to be used by the Plan's actuary in connection with
the determination of the Plan's accrued benefits
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pursuant to its termination, exceeds the fair market value of the assets
allocable thereto, determined in accordance with Section 412 of the
Internal Revenue Code.
"UNUSED COMMITMENT" has the meaning specified in Section 2.4.
"VARIABLE RATE" shall mean a fluctuating per annum rate of interest
equal to the rate of interest announced publicly by Citibank in New York,
New York from time to time as Citibank's base rate.
"VOTING STOCK" means capital stock issued by a corporation, or
equivalent interests in any other Person, the holders of which are
ordinarily, in the absence of contingencies, entitled to vote for the
election of directors (or persons performing similar functions) of such
Person, even though the right so to vote has been suspended by the
happening of such a contingency (but excluding in any event convertible or
exchangeable Preferred Stock prior to conversion or exchange, as the case
may be).
1.2 COMPUTATION OF TIME PERIODS. In this Agreement in the computation
of periods of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" each mean "to
but excluding."
1.3 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles ("GAAP").
SECTION 2. REVOLVING CREDIT LOANS
2.1 REVOLVING CREDIT COMMITMENT. Upon the terms and subject to the
conditions of this Agreement, the Lender agrees to make Revolving Credit Loans
to the Borrower as provided for at Section 2.2. The maximum aggregate amount
which Lender is obligated to lend hereunder pursuant to its Revolving Credit
Loans (the "Commitment") is Forty Million and 00/100 Dollars ($40,000,000.00).
2.2 REVOLVING CREDIT LOANS. The Lender agrees to lend to the Borrower
an amount up to the Commitment as Revolving Credit Loans provided that no
borrowings can be made if amounts may be borrowed under the Term Note except as
provided in Section 2.3(g) herein. Such credit shall be available to the
Borrower, subject to the limitations herein, in whole or part and from time to
time until December 31, 1997. Any Revolving Credit Loan may be repaid in whole
or in part and re-borrowed until December 31, 1997 or the earlier cancellation
of the Commitment subject to the limitations herein. Each borrowing under the
Revolving Credit Loans shall be as provided for under Section 2.3 and shall be
in increments of Fifty Thousand and 00/100 Dollars ($50,000.00) or in integral
multiples thereof.
2.3 REVOLVING CREDIT NOTE. The obligation of the Borrower to repay
the unpaid principal amount of each Revolving Credit Loan shall be evidenced by
a properly executed Revolving Credit Note (the "Revolving Credit Note") in the
form of Exhibit A attached hereto
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and incorporated herein by this reference. The Revolving Credit Note shall have
the following terms:
(a) AMOUNT. The Revolving Credit Note shall be in the amount of the
Commitment and shall be payable to the order of the Lender. Each Revolving
Credit Loan made by the Lender and each payment made on account of
principal on each Revolving Credit Note shall be recorded and endorsed by
the Lender on the Schedule attached to the Revolving Credit Note; provided,
however, that the failure of the Lender or any holder to make such notation
shall not limit or otherwise affect the obligation of the Borrower
thereunder or under this Agreement; and shall be conclusively deemed to be
correct in the absence of manifest error.
(b) TERM. The Revolving Credit Note shall be dated as of January 1,
1996 and shall be due and payable on December 31, 1997.
(c) INTEREST RATE. From its date the Revolving Credit Note shall bear
interest (computed on the basis of the actual number of days elapsed over a
Business Year) on the unpaid principal balance thereunder at a fluctuating
rate per annum equal to the Variable Rate. Any change in the interest rate
on the Revolving Credit Loans due to a change in the Variable Rate shall
take effect on the date of change in the Variable Rate.
(d) INTEREST TENDER DATES. Interest on the Revolving Credit Note
shall be payable in arrears daily commencing January 1, 1996.
(e) LOAN DISBURSEMENTS. Revolving Credit Loan disbursements shall be
made to the Borrower pursuant to Borrower's request therefor which shall be
written, telegraphic or oral and delivered to the Lender no later than
10:45 a.m. Columbus time on the Business Day on which such Loan is to be
made (the "Borrowing Date"). Any such requests received after 10:45 a.m.
Columbus time shall not obligate Lender to make such Revolving Credit Loan
disbursements on the Borrowing Date and shall bear a penalty charge of one
percent (1%) of the amount requested to be disbursed, if the disbursement
is made on the same day as the request is made.
(f) OPTIONAL REPAYMENTS. The Revolving Credit Note may be repaid, at
the Borrowers' option, in whole or in part at any time or from time to
time, without premium or penalty, in minimum principal amounts of Fifty
Thousand and 00/100 Dollars ($50,000.00) or such additional amounts as
required to pay the outstanding balance in full, by giving written,
telegraphic or oral notice to the Lender not later than 10:45 a.m. Columbus
time on the Business Day on which repayment is to be made. When such
notice of repayment has been given the Lender, the applicable principal
amounts of the Revolving Credit Note shall become due and payable on the
designated repayment date. Interest on the principal of the Revolving
Credit Note repaid, accrued to such repayment date, shall be due and
payable on the next following Interest Payment Date unless the Revolving
Credit Note is paid in full, in which event accrued interest thereon shall
become due and payable on the repayment date.
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(g) MANDATORY REPAYMENTS. The Borrower shall repay in full the
Revolving Credit Note, prior to making any principal payments on its Term
Note or redeeming, repurchasing or otherwise reducing the aggregate
liquidation preference of its Capital Preferred Stock. However, in the
event of any such repayment or repurchase, up to Five Million and 00/100
Dollars ($5,000,000.00) may be borrowed under the Revolving Credit Note
provided such amount is repaid within ten (10) BUSINESS DAYS.
2.4 COMMITMENT FEE. The Borrower agrees to pay to the Lender, as
compensation for its Commitment, a commitment fee based on the daily average
amount of the Commitment of the Lender against which Revolving Credit Loans are
not outstanding (the "Unused Commitment") for the period beginning January 1,
1996 and ending December 31, 1997, or on the sooner termination in full of the
Commitment, payable on each Interest Payment Date or, if the Commitment is fully
terminated, on the date of such termination. The amount of the commitment fee
payable to the Lender shall be equal to product derived by multiplying the
Unused Commitment by the Applicable Percentage.
2.5 ADDITIONAL AMOUNTS. In connection with each Revolving Credit Loan
made by Lender hereunder, Borrower shall from time to time upon the written
request of Lender pay Lender such additional amounts as shall be sufficient to
compensate Lender for all fees, assessments and costs of borrowing incurred by
Lender relating directly to such Revolving Credit Loan. All amounts payable
pursuant to this Section 2.5 shall be based upon Lender's reasonable allocation
of the aggregate of such costs and shall be set forth in reasonable detail in
the written request for payment, which written request shall be prima facie
evidence, absent manifest error, as to the amount thereof.
2A.(1) ADVANCES. Upon the terms and subject to the conditions of
this Agreement, the Lender agrees to make to the Borrower as provided for in
this Section 2A Eurodollar Rate Advances. Each Eurodollar Rate Advance will be
treated as a Revolving Credit Loan and, therefore, included in the Borrower's
aggregate Revolving Credit Commitment made by the Lender to the Borrower under
the Loan Agreement. Each advance shall be in increments of Fifty Thousand and
00/100 Dollars ($50,000.00) or in integral multiples thereof. However, the
Borrower may have no more than five (5) advances outstanding simultaneously.
(2) MAKING THE ADVANCE. Each advance shall be made on notice, given
not later than 10:30 a.m. New York City time on the third Business Day prior to
the date of the proposed advance. Each notice of an advance shall be by
telephone, telex, telecopier or cable confirmed immediately in writing in
substantially the form of Exhibit 2A hereto, specifying therein the requested
(i) date of such advance, (ii) aggregate amount of such advance, and (iii) the
interest period for each such advance (i.e., the period commencing on the date
of the advance and ending on the last day of a thirty (30) day period). Each
notice of advance shall be irrevocable and binding on the Borrower.
(3) INTEREST. The Borrower shall pay interest on the unpaid principal
amount of each advance owed to the Lender from the date of such Advance until
such principal amount shall be paid in full, at the Eurodollar Rate.
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(4) PAYMENT. The Borrower shall repay any outstanding Eurodollar Rate
Advance in full on the last Business Day of the corresponding thirty (30) day
period. However, Borrower may not prepay any Eurodollar Rate Advance prior to
the end of this interest period.
SECTION 3. TERM LOANS
3.1 TERM LOANS. Upon the terms and subject to the conditions of this
Agreement, the Lender agrees to make a Term Loan to the Borrower as of the date
of this Agreement and thereafter, in Lender's complete discretion, such
additional Term Loans in increments of not less than One Million and 00/100
Dollars ($1,000,000.00) on such terms and conditions as Lender may determine
upon the request of Borrower (individually a "Term Loan" and collectively the
"Term Loans"). The initial Term Loan shall be in the principal amount of $0.00
(the "Initial Term Loan"). To the extent that any capital Preferred Stock has
been repurchased by Borrower, or its parent company or Subsidiaries the amount
so repurchased will be available for borrowing and included in the available
Term Loan Capacity and in the event of such repurchase, up to Five Million and
00/100 Dollars ($5,000,000.00) may be borrowed under, the Revolving Note
provided such amount is repaid within ten (10) business days. The Term Loans
made after the date hereof, if any, shall be in such principal amounts as
determined by the Lender (the Additional Term Loans).
3.2 TERM NOTE. The obligation of the Borrower to repay the aggregate
unpaid principal amount of each Term Loan shall be evidenced by a properly
executed Term Note (individually a "Term Note" and collectively the "Term
Notes") in the form of Exhibit B attached hereto and incorporated herein by this
reference. The terms of the Term Notes evidencing Additional Term Loans shall
be those terms as are specifically set forth therein. The Term Note evidencing
the Initial Term Loan shall have the following terms:
(a) AMOUNT. The Term Note shall be in the amount of the Initial Term
Loan and shall be payable to the order of the Lender.
(b) TERM. The Term Note shall be dated as of the date of this
Agreement and the unpaid balance thereon shall be due and payable on
November 30, 1999.
(c) INTEREST RATE. The Term Note shall bear interest (computed on the
basis of the actual number of days elapsed over a Business Year) on the
unpaid principal balance thereof at a fixed rate per annum.
(d) INTEREST PAYMENT DATE. Interest on the Term Note shall be payable
in arrears on each Interest Payment Date commencing January 1, 1996.
3.3 PREPAYMENTS OF TERM NOTES. The Term Notes may be prepaid, at the
Borrower's option, in whole or in part on the first business day of each April
and October, without premium or penalty, in principal amounts of One Million and
00/100 Dollars ($1,000,000.00) or in additional amounts which are even multiples
of One Hundred Thousand
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and 00/100 Dollars ($100,000.00), by giving written, telegraphic or oral notice
to the Lender not later than thirty (30) days prior to the date on which such
prepayment is to be made provided that no prepayment may be made under the Term
Note so long as a balance remains outstanding under the Revolving Credit Note.
However, in the event of such repayment, up to Five Million and 00/100 Dollars
($5,000,000.00) may be borrowed under the Revolving Note provided such amount is
repaid within ten (10) business days. When such notice of prepayment has been
given to the Lender, the applicable principal amount of the Term Notes together
with accrued interest thereon to the date of prepayment shall become due and
payable on the designated prepayment date.
3.4 ADDITIONAL AMOUNTS. In connection with each Term Loan made by
Lender hereunder, Borrower shall from time to time upon the written request of
Lender pay Lender such additional amounts as shall be sufficient to compensate
Lender for all fees, assessments and costs of borrowing incurred by Lender
relating directly to such Term Loan. All amounts payable pursuant to this
Section 3.4 shall be based upon Lender's reasonable allocation of the aggregate
of such costs and shall be set forth in reasonable detail in the written request
for payment, which written request shall be prima facie evidence, absent
manifest error, as to the amount thereof.
SECTION 4. CONDITIONS OF BORROWING
4.1 CONDITIONS PRECEDENT TO THE INITIAL LOANS. Unless waived by
Lender in its sole discretion, the obligation of the Lender to make the initial
Revolving Credit Loan and the Initial Term Loan is subject to the fulfillment,
in a manner satisfactory to the Lender and counsel for the Lender, of each of
the following conditions precedent. The Lender shall have received on or before
the day of the disbursement of the proceeds of the initial Revolving Credit Loan
and the Initial Term Loan in form and substance satisfactory to the Lender and
counsel for the Lender:
(a) REVOLVING CREDIT NOTE AND TERM NOTE. The duly executed Revolving
Credit Note and Term Note in the forms attached as Exhibits A and B to this
Agreement, respectively.
(b) RESOLUTIONS OF BOARD. Certified copies of the resolutions of the
board of directors of the Borrower authorizing the execution of this
Agreement, the Revolving Credit Note and the Term Note and all other
documents, instruments and certificates contemplated herein.
(c) SECRETARY'S CERTIFICATE. A signed copy of a certificate of the
Secretary or an Assistant Secretary of the Borrower (which shall be dated
as of the date of this Agreement) which shall certify the names of the
officers of the Borrower authorized to sign this Agreement, the Notes and
the other documents or certificates to be delivered pursuant to this
Agreement together with the true signatures of such officers.
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4.2 CONDITIONS PRECEDENT TO EACH LOAN. The obligation of the Lender
to make the Initial Term Loan, any Revolving Credit Loan and any Additional Term
Loan pursuant to this Agreement shall be subject to the following additional
conditions precedent; namely, that on the date of such loan the following
statements shall be correct and the request for a loan shall constitute a
representation and warranty that such statements are true and correct:
(a) The representations and warranties contained in Section 5 of this
Agreement are correct as of such date as though made on and as of such
date.
(b) No Default or Event of Default has occurred and is continuing or
would result from such Initial Term Loan, Revolving Credit Loan or any
Additional Term Loan.
SECTION 5. WARRANTIES
5.1 REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The Borrower
represents and warrants as follows:
(a) The execution, delivery and performance by the Borrower of this
Agreement, the Notes and each other Loan Document to which it is a party,
and the consummation of the transactions contemplated hereby or thereby are
within the Borrower's corporate powers, have been duly authorized by all
necessary corporate action, and do not (i) contravene the Borrower's
charter or bylaws, (ii) violate any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award, the consequences of
which would be likely to have a Material Adverse Effect, (iii) conflict
with or result in the breach of, or constitute a default under, any loan
agreement, indenture, mortgage, deed of trust, lease or other instrument in
each case involving Debt obligations of the Borrower AND/OR its parent
company and its Subsidiaries of One Million and 00/100 Dollars
($1,000,000.00) or more or (iv) result in or require the creation or
imposition of any Lien upon or with respect to any of the properties of the
Borrower AND/OR its parent company and its Subsidiaries, other than Liens
permitted by Section 6.2 or Liens arising under the Loan Documents. None
of the Borrower AND/OR its parent company or its Subsidiaries is in
violation of any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or in breach of any such
contract, loan agreement, indenture, mortgage, deed of trust, lease or
other instrument, the violation or breach of which would be likely to have
a Material Adverse Effect.
(b) This Agreement has been, and each of the Notes and each other Loan
Document when delivered hereunder will have been, duly executed and
delivered by the Borrower. This Agreement is, and each of the Notes and
each other Loan Document when delivered hereunder will be, the legal, valid
and binding obligation of the Borrower, enforceable against the Borrower in
accordance with its terms except as enforceability
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may be limited by bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or limiting creditors' rights or by equitable
principles generally.
(c) There is no action, suit, investigation, litigation or proceeding
affecting the Borrower, its parent company or any of its Subsidiaries
pending or, to the best of its knowledge, threatened before any court,
governmental agency or arbitrator that would be likely to have a Material
Adverse Effect or (ii) would be likely to materially adversely affect the
legality, validity or enforceability of this Agreement and the other Loan
Documents (taken as a whole) or the consummation of the transactions
contemplated hereby.
(d) The Borrower, the parent company and each of its Subsidiaries are
in material compliance with all material laws and regulations relating to
pollution and environmental control or employee safety in all domestic
jurisdictions in which the Borrower, its parent company and its
Subsidiaries are presently doing business, other than those the
non-compliance with which would not be likely to have a Material Adverse
Effect.
SECTION 6. COVENANTS OF THE BORROWER
6.1 AFFIRMATIVE COVENANTS. So long as any Revolving Credit Loans or
Term Loans shall remain unpaid, or the Lender shall have any Commitment
hereunder, the Borrower will cause to or will, unless the Lender shall otherwise
consent in writing:
(a) COMPLIANCE WITH LAWS, ETC. Pay and discharge, and cause its
parent company and each of its Subsidiaries to comply with all applicable
laws, rules, regulations and orders, except to the extent the failure to do
so would not be likely to have a Material Adverse Effect.
(b) PAYMENT OF TAXES, ETC. Pay and discharge, and cause ITS PARENT
COMPANY AND each of its Subsidiaries to pay and discharge, before the same
shall become delinquent, all taxes, assessments and governmental charges
or levies imposed upon it or upon its property which would by law become a
Lien (other than a Permitted Lien) upon its property; provided, however,
that neither the Borrower, its parent company, NOR any of its Subsidiaries
shall be required to pay or discharge any such tax, assessment, charge or
claim that is being contested in good faith and by appropriate proceedings
for which appropriate reserves have been established in accordance with
GAAP.
(c) COMPLIANCE WITH ENVIRONMENTAL LAWS. Comply, and cause each of its
PARENT COMPANY AND ITS Subsidiaries to comply, with all material laws and
regulations relating to pollution and environmental control or employee
safety which may be imposed in the future in jurisdictions in which the
Borrower, its parent company or any of its Subsidiaries may then be doing
business, other than those the noncompliance with which
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would not be likely to have a Material Adverse Effect; and if required to
do so under any applicable Environmental Law, undertake, and cause each of
its Subsidiaries to undertake, any cleanup, removal, remedial or other
action necessary to remove and clean up any Hazardous Materials from any
Real Property in accordance with the requirements of all such applicable
Environmental Laws and in accordance with orders and directives of all
governmental authorities; provided that neither the Borrower, its parent
company nor any of its Subsidiaries shall be required to take any such
action where the failure to do so would not have a Material Adverse Effect.
(d) MAINTENANCE OF INSURANCE. Maintain, and cause its parent company
and each of its Material Subsidiaries to maintain, insurance with reputable
insurance companies or associations in such amounts, with such retention
and deductibles, and covering such risks as are in accordance with normal
industry practice.
(e) PRESERVATION OF CORPORATE EXISTENCE, ETC. Preserve and maintain,
and cause ITS PARENT COMPANY AND each of its Material Subsidiaries to
preserve and maintain, its corporate existence, rights (charter and
statutory) and franchises except to the extent that the failure to do so
would not be likely to have a Material Adverse Effect; provided, however,
that the Borrower, its parent company and its Subsidiaries may consummate
any transaction permitted under Section 6.2 (e); and provided further that
neither the Borrower, its parent company or any of its Subsidiaries shall
be required to preserve any right or franchise if the Board of Directors of
the Borrower, its parent company or such Subsidiary shall determine that
the preservation thereof is no longer desirable in the conduct of the
business of the Borrower, its parent company or such Subsidiary, as the
case may be, and that the loss thereof is not disadvantageous in any
material respect to the Borrower, its parent company, such Subsidiary or
the Lender.
(f) VISITATION RIGHTS. At any reasonable time and upon prior notice,
permit the Lender or any agents or representatives thereof, to examine and
make copies of and abstracts from the records and books of account of, and
visit the properties of, the Borrower, its parent company and any of its
Subsidiaries, and to discuss the affairs, finances and accounts of the
Borrower, its parent company and any of its Subsidiaries with any of their
officers or, if reasonably requested by the Lender through the officers of
the Borrower, its parent company or such Subsidiary and with their
independent certified public accountants.
(g) MAINTENANCE OF PROPERTIES, ETC. Maintain and preserve, and cause
its parent company and each of its Subsidiaries to maintain and preserve,
all of its properties that are used or useful in the conduct of its
business in good working order and condition, ordinary wear and tear
excepted, and do, or cause to be done, all things necessary to preserve and
keep in full force and effect its material licenses, permits, copyrights,
patents, trademarks, service marks, trade names and rights with respect
thereto, except in
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each case to the extent that the failure to do so would not be likely to
have a Material Adverse Effect.
6.2 NEGATIVE COVENANTS. So long as any Revolving Credit Loans or Term
Loans shall remain unpaid, or the Lender shall have any Commitment hereunder,
the Borrower (and with respect only to (a)(ii), (b)(ii) and (c) herein any
Restricted Subsidiary) will not (or will cause to not), at any time, without the
written consent of the Lender:
(a) LIENS, ETC. (i) Create, incur, assume or suffer to exist, or
permit its parent company and any of its Subsidiaries to create, incur,
assume or suffer to exist, any Lien on or with respect to any of its
properties of any character whether now owned or hereafter acquired other
than:
(A) Permitted Liens;
(B) Liens securing Indebtedness permitted by Sections 6.2 (b) (F),
(G) and (H);
(C) the replacement, extension or renewal of any Lien permitted by
clauses (A) and (B) above upon or in the same property theretofore subject
thereto or the replacement, extension or renewal (without increase in the
amount or change in any direct or contingent obligor) of the indebtedness
secured thereby; or
(D) [Intentionally Deleted.]
(ii) Incur any mortgage, security interest, pledge or lien
("Mortgage") upon any Principal Property, or shares of capital stock or
evidences of indebtedness for borrowed money issued by any Restricted
Subsidiary and owned by the Borrower, its parent company or any Restricted
Subsidiary other than: (a) Mortgages on any Principal Property existing at
the time of the acquisition thereof or arising at the time of acquisition,
construction or improvement, or within one hundred twenty (120) days
thereafter, to secure the purchase price thereof or to secure the cost of
construction or improvement of such Principal Property provided that in the
case of construction or improvement the Mortgage shall not apply to any
property theretofore owned by the Borrower, its parent company or any
Restricted Subsidiary except substantially unimproved real property on
which the property so constructed or the improvement is located; (b)
Mortgages on property of a corporation existing at the time such
corporation is merged or consolidated with the Borrower, its parent company
or a Restricted Subsidiary or at the time of a sale, lease or other
disposition of the properties of such corporation (or a division thereof)
substantially as an entirety to the Borrower or a Restricted Subsidiary;
(c) Mortgages on property of a corporation existing at the time such
corporation becomes a Restricted Subsidiary; (d) Mortgages securing
indebtedness of Borrower's parent company or a Restricted Subsidiary to the
Borrower; (e) Mortgages in favor of the United States of America or any
State thereof, or any department, agency,
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instrumentality or political subdivision of any such jurisdiction to secure
partial, progress, advance or other payments pursuant to any contract or
statute or to secure indebtedness incurred for the purpose of financing all
or any part of the purchase price or the cost of constructing or improving
the property subject to such Mortgages; (f) Mortgages representing the
extension, renewal or replacement of Mortgages existing on the date of the
Mortgages referred to in the foregoing clauses (a) through (e); and (g)
Mortgages imposed by law and similar Mortgages.
(b) INDEBTEDNESS. (i) Create, incur, assume or suffer to exist, or
permit its parent company or any of its Subsidiaries to create, incur,
assume or suffer to exist, any Indebtedness other than:
(A) Indebtedness arising under the Loan Documents;
(B) Unless Lender's Treasurer approves such other amount in
writing: (i) up to One Million and 00/100 Dollars ($1,000,000.00) of
trade letters of credit maturing by their terms, but in any event,
within one year from the dates incurred; and (ii) up to Ten Million
and 00/100 Dollars ($10,000,000.00) of Indebtedness in respect of
acceptances, warehouse receipts or similar facilities, (all maturing
by their terms, but in any event, one year from the dates incurred)
and entered into in the ordinary course of business;
(C) Guaranties in respect of Indebtedness under (E) to the extent
the Indebtedness is short term and incurred in the ordinary course of
business;
(D) Guaranties in the ordinary course of business in respect of
obligations of suppliers, customers, franchisees and licensees of the
Borrower and its Subsidiaries in an amount not to exceed the amount which
Borrower would otherwise be able to incur for such obligations in its own
right;
(E) Third Party Indebtedness of the Borrower's parent company or
its Subsidiaries organized outside the United States in an aggregate
principal amount not exceeding at any time Thirty Million and 00/100
Dollars ($30,000,000.00), unless the Treasurer or Assistant Treasurer of
Lender approves such other amount in writing;
(F) Indebtedness arising under Capitalized Leases incurred in
respect of capital expenditures permitted by Section 6.4 (c);
(G) Indebtedness of the Borrower AND/OR its parent company owed
to any of its Subsidiaries or any Indebtedness of the Borrower's
Subsidiaries AND/OR its parent company owed to the Borrower;
(H) [INTENTIONALLY DELETED.]
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(I) any renewal or extension of the foregoing Indebtedness in an
amount not exceeding the amount outstanding at the time of such renewal or
extension;
(J) the Existing Indebtedness, and any Indebtedness extending the
maturity or refunding, in whole or in part, of any Existing Indebtedness,
provided that the terms of any such extending or refunding of the
Indebtedness, and of any agreement entered into and of any instrument
issued in connection therewith, are otherwise permitted by the Loan
Documents and certain covenants that are no more onerous than the stricter
of those covenants of this Agreement (taken as a whole) or those covenants
applicable to such Existing Indebtedness on the date hereof and further
provided that the principal amount of such Existing Indebtedness shall not
be increased above the principal amount thereof outstanding immediately
prior to such extension or refunding (including additional Indebtedness to
the extent necessary to finance the payment of premiums, make-wholes or
similar payments incurred in connection with such extension or refunding),
and the direct and contingent obligors therefor shall not be changed, as a
result of or in connection with such extension or refunding, and;
(K) Indebtedness WHICH IS SHORT-TERM OR LESS THAN ONE YEAR (up to
an amount of One Million and 00/100 Dollars {$1,000,000.00}, unless
Lender's Treasurer approves such other amount in writing) incurred in the
ordinary course of business in respect of general obligations.
(ii) Issue, ASSUME, GUARANTEE, OR PERMIT ITS PARENT COMPANY
OR ANY OF ITS SUBSIDIARIES to issue assume or guarantee any indebtedness
for borrowed money other than (a) [INTENTIONALLY DELETED], (b) indebtedness
to a Restricted Subsidiary, (c) indebtedness of a corporation existing at
the time such corporation becomes a Restricted Subsidiary or is merged with
or into or consolidated with a Restricted Subsidiary or existing at the
time of a sale or transfer of all or substantially all of the properties of
such corporation to a Restricted Subsidiary and indebtedness incurred to
extend, renew or replace indebtedness of the kind referred to in this
clause outstanding at the time of such extension, renewal or replacement
and (d) [INTENTIONALLY DELETED].
(c) SALE AND LEASEBACK. Enter (or permit ITS parent company or ANY OF
ITS Subsidiaries to ENTER) into any sale and leaseback transactions of any
Principal Property (except for transactions involving temporary leases for
a term of three (3) years or less--but up to five (5) years with the
consent of the Lender and in any event, Borrower shall give Lender
forty-five (45) days prior written notice of any proposed transaction.
(d) HEDGE AGREEMENTS. Enter (or allow its parent company or ANY OF
ITS Subsidiaries to enter) into any Hedge Agreements exceeding at any one
time an aggregate amount of Five Million Dollars ($5,000,000.00) without
the specific written approval of the Treasurer or Assistant Treasurer of
Lender (excluding commodity agreements).
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(e) CHANGE OF CAPITAL STOCK OWNERSHIP/MERGERS, ETC. Permit any change
in the capital stock ownership or merge into or consolidate with any Person
or permit any Person to merge into it, or permit its parent company or any
of its Subsidiaries to do so, except that (i) any Subsidiary of the
Borrower may merge into or consolidate with, or transfer all or a portion
of its assets to, any other Subsidiary of the Borrower and any Subsidiary
or Affiliate of the Lender, provided that, in the case of any such
consolidation, the Person formed by such consolidation shall be a
Subsidiary of the Borrower, (ii) any of the Borrower's Subsidiaries may
merge into the Borrower if the Borrower is the surviving corporation and
(iii) the Borrower may merge into a wholly owned Subsidiary of the Borrower
that (A) is incorporated under the laws of any of the States of Delaware,
New York or Ohio and (B) has no material assets or liabilities, for the
sole purpose of changing the state of incorporation of the Borrower if the
surviving corporation shall expressly assume the liabilities of the
Borrower under the Loan Documents; provided, however, that in each case,
immediately after giving effect thereto, no event shall occur and be
continuing that constitutes a Default.
(f) SALES, ETC. OF ASSETS. Sell, lease, transfer or otherwise dispose
or permit its parent company or any of its Subsidiaries to sell, lease,
transfer or otherwise dispose of any assets or Principal Properties of the
Borrower, its parent company and its Subsidiaries (except equipment and
personal property sold, leased, transferred or otherwise disposed of in the
ordinary course of business) without Lender's consent and for less than
Fair Market Value, except in a transaction authorized above by subsection
(e) of this Section; provided, however, that with respect to any sale,
lease, transfer or other disposition of any assets, immediately after
giving effect thereto, no event shall occur and be continuing that
constitutes an Event of Default under Sections 7.1 (a), (b), (c) or (f).
(g) DIVIDENDS, ETC. Declare or pay any or permit its parent company
or any of its Subsidiaries to declare or pay dividends from foreign
Subsidiaries without the prior approval of Lender's tax department; issue
or permit its parent company or any of its Subsidiaries to issue any
capital stock or, any options or warrants of capital stock; purchase,
redeem, retire, defease or otherwise acquire or permit its parent company
or any of its Subsidiaries to purchase, redeem, retire, defease or
otherwise acquire for value any Preferred Stock so long as there remains a
balance outstanding under the Revolving Credit Note.
(h) CHANGE IN NATURE OF BUSINESS. Make any material change OR PERMIT
ITS PARENT COMPANY OR ANY OF ITS SUBSIDIARIES TO MAKE ANY MATERIAL CHANGE
in the nature of its business taken as a whole as carried on at the date of
the Credit Agreement, other than as a result of (i) dispositions of assets
or businesses approved by the Board of Directors of the Borrower or (ii)
business activities engaged in by the Borrower, its parent company or its
Subsidiaries on or prior to such date and other similar or related
activities.
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(i) ACCOUNTING CHANGES. Make or permit, or permit its parent company
or any of its Material Subsidiaries to make or permit, any change in its
fiscal year any significant change in accounting polices or reporting
practices, except as required or permitted by generally accepted accounting
principles.
6.3 REPORTING REQUIREMENTS. So long as any Revolving Credit Loans or
Term Loans shall remain unpaid, or Lender shall have any Commitment hereunder,
the Borrower will or will cause, unless the Lender shall otherwise consent in
writing, furnish to the Lender:
(a) DEFAULT NOTICE. As soon as possible and in any event within three
Business Days after any officer of the Borrower obtains knowledge of each
Default continuing on the date of such statement, a statement of the chief
financial officer of the Borrower setting forth details thereof and the
action that the Borrower has taken and proposes to take with respect
thereto.
(b) QUARTERLY FINANCIALS. As soon as available and in any event
within twenty (20) days after the end of each of the first three (3) fiscal
quarters of each fiscal year of the Borrower, a Consolidated balance sheet
of the Borrower, its parent company and its Subsidiaries as of the end of
such quarter and Consolidated statements of income and cash flows of the
Borrower, its parent company and its Subsidiaries for the period commencing
at the end of the previous fiscal year and ending with the end of such
quarter, setting forth in each case in comparative form the corresponding
figures for the corresponding period of the preceding fiscal year,
certified (subject to year-end audit adjustments) by the chief financial
officer of the Borrower as having been prepared in accordance with GAAP,
together with (i) a certificate of said officer stating that, to the
knowledge of such officer, no Default has occurred and is continuing or, if
a Default has occurred and is continuing, a statement as to the nature
thereof and the action that the Borrower has taken and proposes to take
with respect thereto and (ii) a schedule setting forth in reasonable detail
the computations used by the Borrower in determining compliance with the
covenants contained in Section 6.4.
(c) ANNUAL FINANCIALS. As soon as available and in any event within
forty-five (45) days after the end of each fiscal year of the Borrower, a
copy of the annual financial report (audited, if otherwise required by
Lender) for such year for the Borrower, its parent company and its
Subsidiaries, including therein a Consolidated balance sheet of the
Borrower, its parent company and its Subsidiaries as of the end of such
fiscal year and Consolidated statements of income and cash flows of the
Borrower, its parent company and its Subsidiaries for such fiscal year, in
each case accompanied by an opinion, acceptable to the Lender, of Deloitte
& Touche or other independent public accountants of recognized standing,
acceptable to Lender together with (i) a certificate of such accounting
firm (if required) to the Lender stating that in the course of the regular
audit of the business of the Borrower, its parent company and its
Subsidiaries, which audit was conducted by such accounting firm in
accordance with generally accepted auditing
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standards, such accounting firm has obtained no knowledge that a Default
has occurred and is continuing, or if, in the opinion of such accounting
firm, a Default has occurred and is continuing, a statement as to the
nature thereof (provided that in no event shall such accountants be liable
as a result of this Agreement by reason of any failure to obtain knowledge
of any Default that would not be disclosed in the course of their audit
examination); (ii) a schedule setting forth in reasonable detail the
computations used by such accountants in determining, as of the end of such
fiscal year, compliance with the covenants contained in Section 6.4 (if
required), and; (iii) a certificate of the chief financial officer of the
Borrower stating that, to the knowledge of such officer, no Default has
occurred and is continuing or, if a Default has occurred and is continuing,
a statement as to the nature thereof and the action that the Borrower has
taken and proposes to take with respect thereto.
(d) BUDGETS. Not more than thirty (30) days after the commencement
of each fiscal year of the Borrower, budgets of the Borrower, its parent
company and its Subsidiaries on a Consolidated Basis in reasonable detail
for each of the four fiscal quarters of such fiscal year as customarily
prepared by Lender's management for its internal use setting forth, with
appropriate discussion, the principal assumptions upon which such budgets
are based.
(e) CASH FLOW FORECASTS. Not more than three (3) business days after
a request from the Lender and in any event five (5) days prior to the start
of each fiscal quarter, cash flow forecasts of Borrower and its parent
company and its Subsidiaries in reasonable detail as customarily provided
by management for its internal use.
(f) LITIGATION. Promptly after the commencement thereof, notice of
all actions, suits, investigations, litigation and proceedings before any
court or governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting the Borrower, its parent
company or any of its Subsidiaries which the Borrower reasonably believes
would be likely to have a Material Adverse Effect.
(g) ENVIRONMENTAL MATTERS. Promptly after obtaining knowledge of any
of the following environmental matters, unless such environmental matters
would not, individually or when aggregated with all other such matters, be
likely to have a Material Adverse Effect, written notice of (i) any pending
or threatened material Environmental Claim against the Borrower, its parent
company or any of its Subsidiaries or any Real Property; (ii) any condition
or occurrence on any Real Property that (x) results in material
noncompliance by the Borrower, its parent company or any of its
Subsidiaries with any applicable Environmental Law or (y) would be likely
to form the basis of a material Environmental Claim against the Borrower,
its parent company of any of its Subsidiaries or any Real Property; (iii)
any condition or occurrence on any material Real Property that could
reasonably be anticipated to cause such Real Property to be subject to any
restrictions on the ownership, occupancy, use or transferability of such
Real Property
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under any Environmental Law; and (iv) the taking of any material removal or
remedial action in response to the actual or alleged presence of any
Hazardous Material on any Real Property. All such notices shall describe
in reasonable detail the nature of the claim, investigation, condition,
occurrence or removal or remedial action and the Borrower's response
thereto.
(h) OTHER INFORMATION. Such other information respecting the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower, its parent company or any of its
Subsidiaries as the Lender may from time to time reasonably request
(including forty-five (45) days prior written notice of any proposed
sale/leaseback transaction).
6.4 FINANCIAL COVENANTS. So long as any Revolving Credit Loans or
Term Loans shall remain unpaid, or Lender shall have any Commitment hereunder,
the Borrower will cause to, unless the Lender otherwise consents in writing:
(a) EBITDA/CONSOLIDATED NET INTEREST EXPENSE AND/OR SENIOR AND JUNIOR
PREFERRED STOCK DIVIDENDS. Maintain a ratio of EBITDA to Consolidated Net
Interest Expense and Senior AND/OR Junior Preferred Dividends of not less
than the amount set forth below for each period of four consecutive fiscal
quarters ended at the dates set forth below:
QUARTER ENDING RATIO
September 30, 1997 1.60:1.00
December 31, 1997 1.60:1.00
March 31, 1998 1.60:1.00
June 30, 1998 1.60:1.00
September 30, 1998 1.60:1.00
December 31, 1998 1.60:1.00
March 31, 1999 1.60:1.00
June 30, 1999 1.67:1.00
September 30, 1999 1.74:1.00
December 31, 1999 1.81:1.00
(b) CONSOLIDATED NET DEBT OR SENIOR AND JUNIOR PREFERRED STOCK AND/OR
ALL DEBT/EBITDA RATIO. Maintain a ratio of Consolidated Net Debt and
Senior and Junior Preferred Stock and/or All Debt/ EBITDA of not more than
the amount set forth below for each period of four consecutive fiscal
quarters ended at the dates set forth below:
QUARTER ENDING RATIO
September 30, 1997 7.42:1.00
December 31, 1997 7.42:1.00
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March 31, 1998 7.11:1.00
June 30, 1998 6.81:1.00
September 30, 1998 6.49:1.00
December 31, 1998 6.19:1.00
March 31, 1999 5.97:1.00
June 30, 1999 5.76:1.00
September 30, 1999 5.54:1.00
December 31, 1999 5.32:1.00
(c) CAPITAL EXPENDITURES. Not make, nor permit its parent company or
any of its Subsidiaries to make, any Capital Expenditures that would cause
the aggregate of all such Capital Expenditures made by the Borrower, its
parent company and its Subsidiaries to exceed One Hundred Twenty-Five
Million and 00/100 Dollars ($125,000,000.00) for the fiscal year ended
December 31, 1996 and thereafter in any fiscal year to exceed the amount as
approved by the Board of Directors of Lender provided that Capital
Expenditures shall not include any portion of any acquisition unless
Borrower elects to include any portion thereof in Capital Expenditures.
SECTION 7. EVENTS OF DEFAULT
7.1 EVENTS OF DEFAULT. If any of the following events ("Events of
Default") shall occur and be continuing:
(a) the Borrower shall fail to pay when due any principal of any
Revolving Credit Loan or Term Loan, or the Borrower shall fail to pay any
interest or other amount due under any Loan Document and such failure shall
continue for three or more Business Days; or
(b) any representation or warranty made by the Borrower under or in
connection with any Loan Document shall prove to have been incorrect in any
material respect when made; or
(c) the Borrower shall fail to perform or observe any term, covenant
or agreement contained in Sections 6.1 (e), 6.2 or 6.4; or
(d) the Borrower shall fail to perform any other term, covenant or
agreement contained in any Loan Document on its part to be performed or
observed if such failure shall remain unremedied for thirty (30) days after
written notice thereof shall have been received by the Borrower from the
Lender; or
(e) the Borrower, its parent company or any of its Subsidiaries shall
default in any payment with respect to any Indebtedness of the Borrower,
its parent company and
25
<PAGE>
its Subsidiaries, when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Indebtedness; or any other event shall occur or condition shall exist under
any agreement or instrument relating to any such Indebtedness and shall
continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such
Indebtedness or otherwise to cause, or to permit the holder thereof to
cause, such Indebtedness to mature; or any such Indebtedness shall be
declared to be due and payable or required to be prepaid or redeemed (other
than by a regularly scheduled required prepayment or redemption), purchased
or defeased, or an offer to prepay, redeem, purchase or defease such
Indebtedness shall be required to be made, in each case prior to the stated
maturity thereof; or
(f) the Borrower, its parent company or any of its Material
Subsidiaries shall generally not pay its debts as such debts become due, or
shall admit in writing its inability to pay its debts generally, or shall
make a general assignment for the benefit of creditors; or any proceeding
shall be instituted by or against the Borrower, its parent company or any
of its Material Subsidiaries seeking to adjudicate it a bankrupt or
insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any
law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of
a receiver, trustee, or other similar official for it or for any
substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it) that is being diligently
contested by it in good faith, either such proceeding shall remain
undismissed or unstayed for a period of sixty (60) days or any of the
actions sought in such proceeding (including, without limitation, the entry
of an order for relief against, or the appointment of a receiver, trustee,
custodian or other similar official for, it or any substantial part of its
property) shall occur; or the Borrower, its parent company or any of its
Material Subsidiaries shall take any corporate action to authorize any of
the actions set forth above in this subsection (f); or
(g) any judgment or order for the payment of money (to the extent not
paid or fully covered by insurance, provided by a carrier that has
acknowledge coverage) shall be rendered against the Borrower, its parent
company nor any of its Subsidiaries and any such judgment, or order shall
not have been vacated, discharged or stayed or bonded pending appeal within
sixty (60) days from the entry thereof; or
(h) from and after the date hereof, the combination of shareholders of
the Borrower and its Affiliates on the date hereof cease to have beneficial
ownership (within
26
<PAGE>
the meaning of Rule 13d-3 of the Securities and Exchange Commission under
the Securities Exchange Act of 1934) directly or indirectly, of Voting
Stock (or other securities convertible into such Voting Stock) representing
one hundred percent (100%) of the combined Voting Stock of the Borrower; or
(i) (i) Any Plan shall fail to satisfy the minimum funding standard
required for any plan year or part thereof or a waiver of such standard or
extension of any amortization period is sought or granted under Section 412
of the Internal Revenue Code; any Plan is, shall have been or is likely to
be terminated or the subject of termination proceedings under ERISA; any
Plan shall have an Unfunded Current Liability; or the Borrower, its parent
company, any Subsidiary or any ERISA Affiliate has incurred or is likely to
incur a liability to or on account of a Plan under Section 409, 502 (i),
502 (1), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971
or 4975 of the Internal Revenue Code; and (ii) there shall result from any
such event or events referred to in clause (i) above the imposition of a
lien, the granting of a security interest, or a liability or a material
risk of incurring a liability, on the part of the Borrower, its parent
company, any of its Subsidiaries or any ERISA Affiliate, which in each case
would be likely to have a Material Adverse Effect;
then, and in any such event, the obligation of the Lender to make Revolving
Credit Loans shall terminate and the Lender may, by notice to the Borrower,
declare the Notes, all interest thereon and all other amounts payable under this
Agreement and the other Loan Documents to be forthwith due and payable and shall
bear interest at an annual rate of eighteen percent (18%) or the maximum amount
allowable by law, whereupon the Notes, all such interest and all such amounts
shall become and be forthwith due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by the Borrower; provided, however, that in the event of an actual or deemed
entry of an order for relief with respect to the Borrower under the Federal
Bankruptcy Code, (x) the obligation of the Lender to make Revolving Credit Loans
shall automatically be terminated and (y) the Notes, all such interest and all
such amounts shall automatically become and be due and payable, and shall bear
interest at an annual rate of eighteen percent (18%) or the maximum amount
allowable by law, without presentment, demand, protest or any notice of any
kind, all of which are hereby expressly waived by the Borrower.
The Lender may take whatever action at law or in equity may appear
necessary or desirable to collect the payments described in section (a) hereof
or other sums due hereunder and thereafter to become due during the term of this
Agreement or enforce performance and observance of any obligation, agreement or
covenant of Borrower under this Agreement.
27
<PAGE>
SECTION 8. MISCELLANEOUS
8.1 AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement or the Notes, nor consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Lender, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
8.2 NOTICES, ETC. All notices and other communications provided for
hereunder shall be in writing (including telegraphic, telecopy, telex or cable
communication) and mailed, telegraphed, telecopied, telexed, cabled or
delivered, if to the Borrower, at its address at 180 East Broad Street,
Columbus, Ohio, 43215-3799, Attention: Chief Financial Officer or Treasurer, Fax
No. (614) 225-3339; if to the Lender at its address at 180 East Broad Street,
Columbus, Ohio 43215-3799, Attention: Cash Manager, Fax No. (614) 225-4930 or at
such other address as shall be designated by such party in a written notice to
the other parties. All such notices and communications shall, when mailed,
telegraphed, telecopied, telexed or cabled, be effective when deposited in the
mails, delivered to the telegraph company, transmitted by telecopier, confirmed
by telex answer-back or delivered to the cable company, respectively.
8.3 NO WAIVER; REMEDIES. No failure on the part of the Lender to
exercise, and no delay in exercising any right hereunder or under any Note shall
operate as a waiver thereof; not shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
8.4 INDEMNIFICATION.
(a) The Borrower agrees to indemnify and hold harmless the Lender and
each of its Affiliates and their respective officers, directors, employees,
agents and advisors (each, an "Indemnified Party") from and against any and
all claim, damages, losses, liabilities and expenses (including, without
limitation, reasonable and documented fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party, in
each case arising out of or in connection with or by reason of, or in
connection with the preparation for a defense of, any investigation,
litigation or proceeding arising out of, related to or in connection with
this Agreement (including, without limitation, the Notes and any of the
transactions contemplated herein or in any other Loan Document or the
actual or proposed use of the proceeds of the Revolving Credit Loans and
Term Loans) whether or not such investigation, litigation or proceeding is
brought by the Borrower, its directors, shareholders or creditors or an
Indemnified Party or any Indemnified Party is otherwise a party thereto and
whether or not the transactions contemplated hereby are
28
<PAGE>
consummated, except to the extent such claim, damage, loss liability or
expense results from such Indemnified Party's gross negligence or willful
misconduct. The Borrower also agrees not to assert any claim against the
Lender or any of its Affiliates or any of their respective directors,
officers, employees, attorneys and agents, on any theory of liability, for
special, indirect, consequential or punitive damages arising out of or
otherwise relating to the Notes, this Agreement, any of the transactions
contemplated herein or in any other Loan Document or the actual or proposed
use of the proceeds of the Revolving Credit Loans or Term Loans.
Each Indemnified Party agrees to notify the Borrower, promptly after
obtaining actual knowledge thereof, of the assertion against it or any
other Person of any claim or the commencement of any action or proceeding
relating to this Agreement (including, without limitation, the Notes and
any of the transactions contemplated herein or in any other Loan Document
or the actual or proposed use of the proceeds of the Revolving Credit Loans
or Term Loans) which such Indemnified Party considers to be a claim, action
or proceeding with respect to which it is entitled to indemnification
hereunder, but failure to so notify will not relieve the Borrower from any
liability under this Section 8.4 (a). Each Indemnified Party will be
entitled to defend any such claim, action or proceeding, and may employ or
retain counsel to represent it in, and to defend, such claim, action or
proceeding and the Borrower will pay the reasonable and documented fees and
out-of-pocket expenses of such counsel; provided, however, that Indemnified
Parties shall, to the extent practicable, choose one counsel to act on
their behalf at the Borrower's expense, which counsel, at the request of
the Borrower, shall also represent and defend the Borrower in such claim,
action or proceeding unless an Indemnified Party reasonably determines
based on an opinion of outside counsel that having common counsel would
present such counsel with a conflict of interest. In the event of such
determination, such Indemnified Party or Parties shall not be required to
share counsel and shall be entitled to full indemnification for such
counsel's fees and expenses as otherwise provided herein.
(b) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower
contained in this Section 8.4 shall survive the payment in full of the
principal and interest hereunder and under the Notes.
8.5 GOVERNING LAW. This Agreement and the Notes shall be governed by,
and construed in accordance with, the laws of the State of Ohio.
8.6 EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so
29
<PAGE>
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Agreement by telecopier shall be effective as delivery of
a manually executed counterpart of this Agreement.
8.7 WAIVER OF JURY TRIAL. The Borrower and the Lender hereby
irrevocably waive all right to trial by jury in any action, proceeding or
counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to any of the Loan Documents, the Revolving Credit Loan, the Term Loan
or the actions of the Lender in the negotiation, administration, performance or
enforcement thereof.
8.8 AMENDMENTS TO THE CREDIT AGREEMENT. Borrower and Lender agree
that this Agreement shall be amended if any modification is made to the Credit
Agreement which modification is specifically applicable to the Borrower and is
approved by the Lender for inclusion in this Agreement.
30
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
BORDEN CHEMICAL, INC.
By: /s/ E. H. Inbusch
---------------------------------
Name: E. H. Inbusch
Title: Treasurer
BORDEN, INC.
By: /s/ Ronald P. Starkman
---------------------------------
Name: Ronald P. Starkman
Title: Senior Vice President
31
<PAGE>
$40,000,000.00 Dated: July 1, 1996
FOR VALUE RECEIVED, the undersigned, Borden Chemical, Inc., a Delaware
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of Borden,
Inc. (the "Lender") (as defined in the Loan Agreement referred to below) the
aggregate principal amount of the Revolving Credit Loans (as defined below)
owing to the Lender by the Borrower pursuant to the Loan Agreement (as defined
below) on December 31, 1997.
The Borrower promises to pay interest on the unpaid principal amount
of each Loan from the date of such Loan until such principal amount is paid in
full, at such interest rates, and payable at such times, as are specified in the
Loan Agreement.
Both principal and interest are payable in lawful money of the United
States of America to Borden, Inc.. Treasury Department, 180 East Broad Street,
Columbus, Ohio 43215-3799, in same day funds. Each Loan owing to the Lender by
the Borrower and the maturity thereof, and all payments made on account of
principal thereof, shall be recorded by the Lender and, prior to any transfer
hereof, endorsed on the grid attached hereto, which is part of this Promissory
Note.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Loan Agreement dated as of July 1, 1996 (as
amended, supplemented or otherwise modified form time to time, the "Loan
Agreement") between the Borrower and the Lender. The Loan Agreement, among
other things, (i) provides for the making of loans (the "Revolving Credit
Loans") by the Lender to the Borrower from time to time in any aggregate amount
not to exceed at any time outstanding the U.S. dollar amount first
above-mentioned, the indebtedness of the Borrower resulting from each Revolving
Credit Loan being evidenced by this Promissory Note, and (ii) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.
BORDEN CHEMICAL, INC.
By: /s/ E. H. Inbusch
------------------------------
Title: Treasurer
32
<PAGE>
REVOLVING CREDIT LOANS AND PAYMENTS OF PRINCIPAL
================================================================================
AMOUNT OF AMOUNT OF UNPAID
REVOLVING PRINCIPAL PAID PRINCIPAL NOTATION
DATE CREDIT LOAN OR PREPAID BALANCE MADE BY
- --------------------------------------------------------------------------------
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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================================================================================
33
<PAGE>
TERM NOTE
$0.00 Dated: July 1, 1996
FOR VALUE RECEIVED, the undersigned Borden Chemical, Inc., a Delaware
corporation (the "Borrower") HEREBY PROMISES TO PAY to the order of Borden, Inc.
(the "Lender") the aggregate principal amount of the Term (as defined below)
owing to the Lender by the Borrower pursuant to the Loan Agreement (as defined
below) on November 30, 1999.
The Borrower promises to pay interest on the unpaid principal amount
of each Term Loan from the date of such Term Loan until such principal amount is
paid in full, at such interest rates, and payable at such times, as are
specified in the Loan Agreement.
Both principal and interest are payable in lawful money of the Unites
States of America to Borden, Inc., Treasury Department, 180 East Broad Street,
Columbus, Ohio 43215-3799, in same day funds. Each Term Loan owing to the
Lender by the Borrower and the maturity thereof, and all payments made on
account of principal thereof, shall be recorded by the Lender and, prior to any
transfer hereof, endorsed on the grid attached hereto, which is part of this
Promissory Note.
This Promissory Note is one of the Notes referred to in, and is
entitled to the benefits of, the Loan Agreement dated as of JANUARY 1, 1996 (as
amended, supplemented or otherwise modified form time to time, the "Loan
Agreement") between the Borrower and the Lender. The Loan Agreement, among
other things, (i) provides for the making of loans (the "Term Loan") by the
Lender to the Borrower in an aggregate amount not to exceed at any time
outstanding the U.S. dollar amount first above-mentioned, the indebtedness of
the Borrower resulting from such Term Loan being evidenced by this Promissory
Note, and (ii) contains provisions for acceleration of the maturity hereof upon
the happening of certain stated events and also for prepayments on account of
principal hereof prior to the maturity hereof upon the terms and conditions
therein specified.
BORDEN CHEMICAL, INC.
By: /s/ E. H. Inbusch
--------------------------------
Title: Treasurer
34
<PAGE>
TERM LOAN AND PAYMENTS OF PRINCIPAL
================================================================================
AMOUNT OF UNPAID
AMOUNT OF PRINCIPAL PAID PRINCIPAL NOTATION
DATE TERM LOAN OR PREPAID BALANCE MADE BY
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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35
<PAGE>
Exhibit 11(b)(2)
[Borden, Inc. Letterhead]
October 1, 1997
Mr. James O. Stevning
Chief Financial Officer
Borden Chemical, Inc.
180 East Broad Street
Columbus, OH 43215
Dear Jim:
This letter will confirm our verbal agreement that Borden, Inc. is prepared to
provide up to $118.5 million of funding to finance the acquisition of Melamine
at a rate not to exceed 10.5% pursuant to the terms of the term loan facility
under the Loan Agreement between Borden, Inc. and Borden Chemical, Inc.
Sincerely,
/s/ Ronald P. Starkman
Ronald P. Starkman
<PAGE>
EXHIBIT 11(c)(1)
- ------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
BORDEN CHEMICAL, INC.,
MC MERGER CORP.
AND
MELAMINE CHEMICALS, INC.
October 9, 1997
- ------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I THE OFFER 1
1.1 The Offer............................................................1
1.2 Company Action.......................................................3
1.3 Directors............................................................5
ARTICLE II THE MERGER 6
2.1 The Merger...........................................................6
2.2 Closing; Effective Time..............................................6
2.3 Certificate of Incorporation.........................................6
2.4 By-laws..............................................................6
2.5 Directors and Officers...............................................6
2.6 Conversion of Securities.............................................7
2.7 Exchange of Certificates.............................................7
2.8 Options..............................................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY 9
3.1 Organization and Qualification; Subsidiaries........................10
3.2 Capitalization......................................................10
3.3 Authority Relative to this Agreement................................10
3.4 Non-Contravention; Approvals and Consents...........................11
3.5 Brokers and Finders.................................................11
3.6 SEC Filings.........................................................12
3.7 Absence of Certain Changes or Events................................12
3.8 Legal Proceedings...................................................12
3.9 Compliance with Law.................................................13
3.10 Taxes...............................................................13
3.11 ERISA and Related Matters...........................................14
3.12 Environmental Matters...............................................16
3.13 Real Property.......................................................17
3.14 Labor Matters.......................................................18
3.15 Contracts; Certain Agreements.......................................18
3.16 Absence of Certain Liabilities......................................19
3.17 Opinion of Financial Advisor........................................19
3.18 Takeover Statute....................................................20
3.19 Rights Agreement....................................................20
3.20 Intellectual Property...............................................20
3.21 Information Supplied................................................21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB 21
4.1 Organization of Parent and Sub......................................21
4.2 Authority Relative to this Agreement................................22
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<PAGE>
PAGE
4.3 Non-Contravention; Approvals and Consents...........................22
4.4 Brokers and Finders.................................................23
4.5 Legal Proceedings...................................................23
4.6 Financing...........................................................23
4.7 Information Supplied................................................23
ARTICLE V COVENANTS 24
5.1 Conduct of Business by the Company Pending the Merger...............24
5.2 No Solicitation.....................................................25
5.3 Proxy Statement; Special Meeting....................................27
5.4 Filings, Other Action...............................................27
5.5 Public Announcements................................................28
5.6 Inspection; Confidentiality; Notification...........................28
5.7 Conduct of Business by Sub Pending the Merger.......................29
5.8 Employee Benefits...................................................29
5.9 Indemnification of Directors and Officers...........................29
5.10 Closing Conditions..................................................31
5.11 Schedule 14D-1......................................................31
5.12 Schedule 14D-9......................................................31
ARTICLE VI CONDITIONS TO THE MERGER 31
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER 32
7.1 Termination.........................................................32
7.2 Effect of Termination...............................................33
7.3 Amendment...........................................................35
7.4 Waiver..............................................................35
ARTICLE VIII GENERAL PROVISIONS 35
8.1 Non-Survival of Representations and Warranties......................35
8.2 Certain Definitions.................................................35
8.3 Notices.............................................................36
8.4 Headings............................................................37
8.5 Applicable Law......................................................37
8.6 No Assignment; Binding Effect.......................................37
8.7 Counterparts........................................................37
8.8 Third Party Beneficiaries...........................................37
8.9 Invalid Provisions..................................................37
8.10 Specific Performance................................................37
8.11 Entire Agreement....................................................38
8.12 Jurisdiction........................................................38
Annex A: Conditions to the Offer
Annex B: Certificate of Incorporation of Surviving Corporation
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<PAGE>
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement"), dated as of October 9,
1997, is by and among Borden Chemical, Inc., a Delaware corporation ("Parent"),
MC Merger Corp., a Delaware corporation and a wholly-owned subsidiary of Parent
("Sub"), and Melamine Chemicals, Inc., a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
have each determined that it is advisable and in the best interests of their
respective stockholders, on the terms and subject to the conditions of this
Agreement, (1) for Sub to make a cash tender offer to purchase all issued and
outstanding shares of the Company's common stock, $.01 par value per share (the
"Common Stock"), and associated share purchase rights (the "Rights") issued
pursuant to the Rights Agreement (defined in Section 1.2) (such shares of Common
Stock and associated Rights, the "Shares") and (2) following the consummation of
the cash tender offer, for Sub to merge with and into the Company (the "Merger")
in accordance with the Delaware General Corporation Law (the "DGCL"), with the
result that the Company will become a wholly-owned subsidiary of Parent; and
WHEREAS, as a condition to their willingness to enter into this Agreement
and consummate the transactions contemplated hereby, Parent and Sub have
required that ChemFirst Inc., a Mississippi corporation (the "Principal
Stockholder"), agree to tender all Shares owned by it, and in order to induce
Parent and Sub to enter into this Agreement the Principal Stockholder has agreed
to tender such Shares pursuant to the terms of a Tender Agreement with Parent
dated as of the date hereof (the "Tender Agreement").
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
THE OFFER
1.1 THE OFFER.
(a) Provided this Agreement shall not have been terminated in
accordance with Section 7.1 and subject to the provisions of this Agreement,
including without limitation ANNEX A, no later than five business days after the
date hereof Parent shall cause Sub to, and Sub shall, commence (within the
meaning of Rule 14d-2 under the Securities Exchange Act of 1934 (the "Exchange
Act")) a tender offer (the "Offer") to purchase all issued and outstanding
Shares, at a price per Share of $20.50 (such amount, or any greater amount per
Share paid pursuant to the Offer, the "Per Share Price") net to each seller in
cash. Subject to the provisions of this Agreement, including without limitation
ANNEX A, Parent shall cause Sub to, and Sub shall, use its commercially
reasonable best efforts to consummate the Offer as soon as legally permissible
and subject to the provisions of this Agreement, including without limitation
ANNEX A, Parent shall cause Sub to, and Sub shall, accept for payment and pay
the Per Share Price for any and all Shares validly tendered and not withdrawn
pursuant to the Offer as soon as practicable after the expiration of the Offer.
The Offer shall be made by means of the Offer to Purchase (as defined in Section
l.l(c)) and related letter
<PAGE>
of transmittal (the "Letter of Transmittal"). Sub expressly reserves the right
to increase the Per Share Price payable in the Offer.
(b) The obligation of Parent and Sub to consummate the Offer, and to
accept for payment and pay for Shares tendered pursuant to the Offer, shall be
subject to only those conditions set forth in ANNEX A. Sub may in its sole
discretion waive any such condition other than the Minimum Condition (defined in
ANNEX A) or the condition relating to the expiration of the waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). Sub shall not, without the prior written consent of the Company's Board
of Directors (the "Board"), (i) impose conditions to the Offer in addition to
those set forth in ANNEX A, (ii) decrease the Per Share Price, (iii) change the
form of consideration (other than by adding consideration), (iv) reduce the
number of Shares sought to be purchased in the Offer, (v) extend the expiration
date of the Offer (except as provided below in this paragraph), or (vi)
otherwise change any term of the Offer in any manner adverse to the holders of
Shares, it being agreed that a waiver by Sub of any condition in whole or in
part (other than the Minimum Condition) at any time and from time to time in its
discretion shall not be deemed to be materially adverse to any holder of Shares.
The Offer initially shall expire on the twentieth business day after its
commencement; PROVIDED, HOWEVER, that Sub may, without the consent of the
Company, (i) extend the Offer (on one or more occasions) beyond the scheduled
expiration date if at any such date any of the conditions to Sub's obligation to
purchase Shares shall not be satisfied or waived, until such time as such
conditions are satisfied or waived, (ii) extend the Offer to the extent required
by any rule or regulation of the Securities and Exchange Commission (the "SEC")
or (iii) extend the Offer (on a one-time basis only) for not more than five
business days beyond the scheduled expiration date if all of the conditions
thereto have been satisfied or waived and at least 51% but less than 90% of the
outstanding Shares have been validly tendered and not properly withdrawn
pursuant to the Offer; PROVIDED FURTHER that, notwithstanding anything in the
foregoing proviso to the contrary, Sub may not, without the Company's prior
written consent, (A) extend the expiration date of the Offer if the failure to
meet any condition to the Offer was directly or indirectly caused by an act or
omission of Parent or Sub that constitutes a breach of this Agreement or (B)
effect any individual extension under clause (i) in excess of the amount of time
reasonably believed by Parent to be necessary to satisfy such condition, which
shall in no event exceed 10 business days; PROVIDED FURTHER that if Sub does not
consummate the Offer on the initial expiration date, or any extension thereof,
due to the failure of one or more conditions in any of paragraphs (b) or (c)(i)
through (iv) of ANNEX A to be satisfied, Parent shall cause Sub to, and Sub
shall, unless the Company shall have materially breached this Agreement and
failed to cure such breach within 15 days of being notified thereof in writing,
extend the Offer one or more times until the earlier of (i) 11:59 p.m. New York
City time on the sixtieth calendar day after the date of this Agreement or (ii)
two business days after such time as such condition or conditions are satisfied
or waived; PROVIDED FURTHER that Sub shall not be obligated to extend the Offer
pursuant to the foregoing proviso if the condition that has not been satisfied
is not reasonably capable of being cured or satisfied at or prior to the
sixtieth calendar day after the date of this Agreement.
(c) On the date of commencement of the Offer, Parent and Sub shall file
with the SEC with respect to the Offer a Tender Offer Statement on Schedule
14D-1 (together with all amendments and supplements thereto, the "Schedule
14D-1"), and shall take such steps as are
- 2 -
<PAGE>
reasonably necessary to cause the Offer to Purchase (defined below) to comply
with applicable requirements of the federal securities laws and to be
disseminated to the holders of Shares as and to the extent required by
applicable federal securities laws. The Schedule 14D-1 shall contain an offer
to purchase (the "Offer to Purchase") and forms of the related Letter of
Transmittal and summary advertisement, as well as all other information and
exhibits required by law (the Offer to Purchase and such other documents,
together with any amendments or supplements thereto, collectively, the "Offer
Documents"). The Company and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-1 and the Offer Documents
prior to their being filed with the SEC or disseminated to the Company's
stockholders. Parent and Sub shall provide the Company and its counsel with a
copy of any written comments that Parent or Sub receives from the SEC or its
staff with respect to the Schedule 14D-1 and the Offer Documents promptly after
receipt of any such comments.
(d) Parent shall provide or cause to be provided to Sub on a timely basis
the funds necessary to accept for payment, and pay for, any Shares that Sub
becomes obligated to accept for payment, and pay for, pursuant to the Offer.
(e) Sub may, at any time, transfer or assign to Parent or to one or more
corporations directly or indirectly wholly-owned by Parent the right to purchase
all or any portion of the Shares tendered pursuant to the Offer, but any such
transfer or assignment shall not relieve Parent or Sub of its obligations with
respect to the Offer or prejudice the rights of tendering stockholders to
receive payment for Shares validly tendered and accepted for payment in the
Offer.
1.2 COMPANY ACTION.
(a) The Company represents and warrants that (i) its Board, at a meeting
duly called and held, by unanimous vote of the directors present (A) has
determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to and in the best interests of the
stockholders of the Company, (B) has duly approved this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, and (C)
has resolved to recommend that the Company's stockholders accept the Offer and
tender their Shares pursuant thereto, subject to the Board's rights to withdraw
or modify such recommendation in connection with a termination of this Agreement
under Section 7.1(a)(i), and that the Company's stockholders adopt and approve
the Merger; (ii) the affirmative vote of the holders of record of at least a
majority of the Shares outstanding on the record date for the Special Meeting
(defined in Section 5.3) and entitled to vote (the "Requisite Stockholder
Approval") is the only vote of the holders of any class or series of the capital
stock of the Company required to adopt this Agreement and approve the Merger;
and (iii) the Company has taken all necessary action so that the provisions of
Article Ninth of the Company's certificate of incorporation and of Section 203
of the DGCL will not apply to this Agreement, the Offer, the Merger, the Tender
Agreement, or the acquisition of Shares by Sub pursuant to this Agreement. In
addition, the Company represents that it has adopted a Fourth Amendment to
Rights Agreement dated as of October 9, 1997 (the "Fourth Amendment") to the
Company's Rights Agreement dated as of November 5, 1990 by and between the
Company and Wachovia Bank and Trust Company, N.A. (now Wachovia Bank of North
Carolina, N.A.) as Rights
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Agent (the "Rights Agent"), as amended by the Amendment to Rights Agreement
dated as of August 7, 1991, the Second Amendment to Rights Agreement dated as of
August 3, 1994, and the Third Amendment to Rights Agreement dated as of October
9, 1997 (as so amended, the "Rights Agreement") and that a copy of the Fourth
Amendment has been delivered by the Company to Parent; that as of the date
hereof and after giving effect to the execution and delivery of this Agreement,
each Right is represented by the certificate representing the associated share
of Common Stock and is not exercisable or transferable apart from the associated
share of Common Stock; that there has not been a "Distribution Date" or "Shares
Acquisition Date," and that the Company has taken all necessary actions so that
the execution and delivery of this Agreement and the Tender Agreement and the
consummation of the transactions contemplated hereby and thereby, including the
Offer, the purchase of Shares pursuant to the Offer or the Merger, will not (i)
trigger the provisions of Section 11 or Section 13 of the Rights Agreement, (ii)
result in the occurrence of a "Distribution Date" (as defined in the Rights
Agreement) or (iii) result in any person becoming an "Acquiring Person" (as
defined in the Rights Agreement). The Company hereby consents to the inclusion
in the Offer Documents of the recommendations referred to above in this Section
1.2(a).
(b) On the date the Schedule 14D-1 is filed with the SEC, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto, the "Schedule
14D-9") and shall take such steps as are reasonably necessary to cause the
Schedule 14D-9 to comply with applicable requirements of the federal securities
laws and to be disseminated to the holders of the Shares as and to the extent
required by applicable federal securities laws. The Offer Documents and the
Schedule 14D-9 shall contain the recommendation of the Board that the Company's
stockholders accept the Offer and tender their Shares pursuant thereto and vote
to adopt this Agreement and approve the Merger, subject to the Board's rights to
withdraw or modify such recommendation in connection with a termination of this
Agreement under Section 7.1(a)(i). Parent and its counsel shall be given a
reasonable opportunity to review and comment on the Schedule 14D-9 prior to its
being filed with the SEC or disseminated to the Company's stockholders. The
Company shall provide Parent and its counsel with a copy of any written comments
that the Company receives from the SEC or its staff with respect to the Schedule
14D-9 promptly after receipt of any such comments.
(c) The Company shall promptly furnish Sub with mailing labels containing
the names and addresses of the record holders of Shares and with lists of
securities positions of Shares held in stock depositories, each as of a recent
date, and shall furnish Sub with such additional information, including updated
lists of stockholders, mailing labels and lists of securities positions, and
with such other assistance as Sub, Parent or their agents may reasonably
request for the purpose of communicating the Offer to the holders of Shares.
Except as and to the extent required by law and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer or the Merger, Parent and Sub shall hold in confidence
the information contained in such labels and listings, and any other information
relating to the holders of Shares received from the Company or its transfer
agent, shall use such information only in connection with the Offer and the
Merger, and, if this Agreement is terminated in accordance with Section 7.1,
shall deliver to the Company all such information, including all copies of and
extracts or summaries from such information, then in their possession or
control.
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1.3 DIRECTORS.
(a) Promptly upon acceptance for payment by Sub of Shares pursuant to the
Offer, Sub shall be entitled to designate such number of directors, rounded up
to the next whole number, as will give Sub representation on the Board equal to
at least that number of directors equal to the product of (i) the total number
of directors on the Board and (ii) the percentage that the number of Shares so
accepted for payment bears to the number of Shares outstanding, and the Company
shall, at such time, at the election of Sub either increase the size of the
Board or use its best efforts to cause the appropriate number of directors who
are members of the Board as of the date hereof to resign and Sub's designees to
be appointed or elected to fill the vacancies thereby created in conformity with
the DGCL, the Company's certificate of incorporation and by-laws and other
applicable law. In addition, until the Effective Time (defined in Section 2.2),
there shall be at least three directors on the Board who are directors on the
date hereof and who are not designees nor officers, directors, employees or
affiliates of Parent or Sub nor employees of the Company (the "Independent
Directors"); PROVIDED, HOWEVER, that if the number of Independent Directors
shall be reduced below three for any reason, the Board shall, subject to the
approval of the remaining Independent Directors, if any, designate a person or
persons to fill the vacancy or vacancies who are directors on the date hereof
and not an officer, director, employee or affiliate of Parent or Sub nor an
employee of the Company, and such persons shall be deemed to be Independent
Directors for purposes of this Agreement.
(b) The Company's obligations to appoint Sub's designees to the Board
shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 thereunder.
Parent and Sub shall supply and shall be solely responsible for all information
with respect to themselves, their officers, directors and affiliates, and Sub's
designees required by Section 14(f) and Rule 14f-1. The Company shall promptly
take all actions required pursuant to Section 14(f) and Rule 14f-1 in order to
fulfill its obligations under this Section 1.3, and shall include in the
Schedule 14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Sub's designees pursuant to
this Section 1.3 and until the Effective Time, any amendment of this Agreement
or the certificate of incorporation or by-laws of the Company, any termination
of this Agreement by the Company, any extension by the Company of the time for
the performance of any of the obligations or other acts of Parent or Sub, any
waiver of any of the Company's rights hereunder, or any transaction between
Parent (or any affiliate or associate thereof) and the Company shall require the
concurrence of a majority of the Independent Directors. The Independent
Directors shall have the authority to retain such counsel and other advisors at
the expense of the Company as are reasonably appropriate to assist them in the
exercise of their duties in connection with this Agreement. In addition, the
Independent Directors shall have the authority to institute any action on behalf
of the Company to enforce performance of this Agreement.
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ARTICLE II
THE MERGER
2.1 THE MERGER. Upon the terms and subject to the conditions of this
Agreement, at the Effective Time (as defined in Section 2.2) and in accordance
with the DGCL, Sub shall be merged with and into the Company, which shall be the
surviving corporation in the Merger (the "Surviving Corporation"). At the
Effective Time (defined in Section 2.2), the separate existence of Sub shall
cease and the other effects of the Merger shall be as set forth in Section 259
of the DGCL.
2.2 CLOSING; EFFECTIVE TIME. Subject to the provisions of Article VI, the
closing of the Merger (the "Closing") shall take place in New York, New York at
the offices of Simpson Thacher & Bartlett, as soon as practicable but in no
event later than 10:00 a.m. New York City time on the tenth business day after
the date on which each of the conditions set forth in Article VI has been
satisfied or waived by the party or parties entitled to the benefit of such
conditions, on a date fixed by Parent upon not less than two business days
notice to the Company or at such other place, at such other time or on such
other date as Parent, Sub and the Company may mutually agree. The date on which
the Closing occurs is hereinafter referred to as the "Closing Date." At the
Closing, Parent, Sub and the Company shall cause a certificate of merger or, if
applicable, a certificate of ownership and merger (the "Certificate of Merger")
to be executed and immediately thereafter filed with the Secretary of State of
the State of Delaware in accordance with the DGCL. The Merger shall become
effective as of the date and time of such filing or as of such subsequent date
or time as Parent and the Company shall agree and as shall be set forth in the
Certificate of Merger (the "Effective Time").
2.3 CERTIFICATE OF INCORPORATION. The certificate of incorporation of the
Company, as in effect immediately prior to the Effective Time, shall be amended
so as to read in its entirety in the form set forth as ANNEX B hereto, and, as
so amended until thereafter amended or repealed as provided therein and in
accordance with applicable law, such certificate of incorporation shall be the
certificate of incorporation of the Surviving Corporation.
2.4 BY-LAWS. The by-laws of Sub, as in effect immediately prior to the
Effective Time, shall become, from and after the Effective Time, the by-laws of
the Surviving Corporation, until thereafter amended or repealed as provided
therein and in accordance with applicable law.
2.5 DIRECTORS AND OFFICERS. The directors of Sub immediately prior to the
Effective Time shall become, from and after the Effective Time, the directors of
the Surviving Corporation, until their respective successors are duly elected or
appointed and qualified or their earlier resignation or removal. The officers
of the Company immediately prior to the Effective Time shall be the officers of
the Surviving Corporation, each to hold office in accordance with the
certificate of incorporation and by-laws of the Surviving Corporation and until
the earlier of his resignation or removal or until his respective successor is
duly appointed and qualified, as the case may be. The Company shall take or
cause to be taken all actions required under the DGCL to give effect to the
matters referenced in this Section.
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2.6 CONVERSION OF SECURITIES. At the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Sub, the Company or any
holder of any of the Shares:
(a) Each Share issued and outstanding immediately prior to the Effective
Time (other than Shares held in the Company's treasury or by any subsidiary of
the Company (collectively, "Treasury Shares"), Dissenting Shares (defined below)
and Parent Shares (defined below)), shall be converted into the right to receive
the Per Share Price payable to the holder thereof, without interest thereon,
upon surrender of the certificates formerly representing such Share in
accordance with Section 2.7.
(b) All Treasury Shares immediately prior to the Effective Time, if any,
and all Shares owned by Parent, Sub or any other direct or indirect wholly-owned
subsidiary of Parent (collectively, "Parent Shares"), if any, shall be canceled
and retired and cease to exist, and no consideration shall be delivered in
exchange therefor.
(c) (i) Notwithstanding anything in this Agreement to the contrary, each
Share that is issued and outstanding immediately prior to the Effective Time and
that is held by a stockholder who has not voted in favor of the Merger and who
has properly exercised and perfected appraisal rights under Section 262 of the
DGCL (the "Dissenting Shares"), shall not be converted into or exchangeable for
the right to receive the Per Share Price, but shall be entitled to receive such
consideration as shall be determined pursuant to Section 262 of the DGCL;
provided, however, that if such holder shall have failed to perfect or shall
have effectively withdrawn or lost its right to appraisal and payment under the
DGCL, each Share of such holder shall thereupon be deemed to have been converted
into and to have become exchangeable for, as of the Effective Time, the right to
receive the Per Share Price, without any interest thereon, in accordance with
this Section 2.6, and such Shares shall no longer be Dissenting Shares.
(ii) The Company shall give Parent (A) prompt notice and a copy of
any written notice of a stockholder's intent to demand payment, of any request
to withdraw a demand for payment and of any other instruments delivered to it
pursuant to Section 262 of the DGCL and (B) the opportunity to direct all
negotiations and proceedings with respect to demands for payment under Section
262 of the DGCL. Except with the prior written consent of Parent, the Company
shall not make any payment with respect to any demand for payment and shall not
settle or offer to settle any such demands or affirmatively approve any
withdrawal of any such demands.
(d) Each share of common stock of Sub issued and outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into one share of common
stock of the Surviving Corporation.
2.7 EXCHANGE OF CERTIFICATES.
(a) On or before the Effective Time, Parent shall deposit or cause to be
deposited in trust with a bank or trust company mutually acceptable to Parent
and the Company (the "Exchange
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Agent") cash in the aggregate amount required to make the cash payments in
respect of the Shares issued and outstanding at the Effective Time (other than
Treasury Shares, Dissenting Shares and Parent Shares) (the "Merger
Consideration"), such sum being hereinafter referred to as the "Exchange Fund."
The Exchange Agent shall, pursuant to irrevocable instructions, make the
payments provided for in this Article II out of the Exchange Fund. If any cash
deposited with the Exchange Agent pursuant to this Section 2.7 remains unclaimed
by the former stockholders of the Company following the expiration of nine
months after the Effective Time, such cash (together with all interest earned
thereon) shall be delivered, upon demand, to the Surviving Corporation by the
Exchange Agent and thereafter any former stockholders of the Company who have
not theretofore complied with this Article II shall be entitled to look only to
the Surviving Corporation (subject to abandoned property, escheat or similar
laws) as general creditors thereof with respect to the payment of their claim
for any Merger Consideration.
(b) As soon as reasonably practicable following the Closing Date, Parent
shall instruct the Exchange Agent to mail to each holder of record of a
certificate or certificates that immediately prior to the Effective Time
represented outstanding Shares (collectively, the "Certificates") (i) a letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates for payment therefor.
(c) After the Effective Time, each holder of Shares shall surrender and
deliver the Certificates to the Exchange Agent together with a duly completed
and executed transmittal letter. Upon such surrender and delivery, following
the Effective Time, the holder shall be entitled to receive in exchange therefor
a check in the amount of the cash payment that such holder is entitled to
receive pursuant to this Article II, less any applicable withholding taxes, and
such Certificates shall forthwith be cancelled. No interest will be paid or
accrued on the cash payable upon the surrender of the Certificates. If the
payment is to be made to a person other than the person in whose name a
Certificate so surrendered is registered, it shall be a condition of payment
that (i) the Certificate so surrendered shall be properly endorsed or otherwise
in proper form for transfer and (ii) the person requesting such payment shall
pay any transfer or other taxes required by reason of the payment to a person
other than the registered holder of the Certificate so surrendered or establish
to the satisfaction of the Parent that such tax has been paid or is not
applicable. Until so surrendered, each outstanding Certificate after the
Effective Time shall be deemed for all purposes to evidence only the right to
receive such payment of cash, without any interest thereon.
(d) At the Effective Time, the stock transfer books of the Company shall
be closed and no transfer of Shares shall be made thereafter. In the event
that, after the Effective Time, Certificates are presented to the Surviving
Corporation or Parent, they shall be canceled and exchanged for cash as provided
in this Article II, subject to applicable law in the case of Dissenting Shares.
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<PAGE>
2.8 OPTIONS.
(a) Under the terms of the Melamine Chemicals, Inc. Second Amended and
Restated Long-Term Incentive Plan, effective July 31, 1987 (the "Old Incentive
Plan"), outstanding options granted under the Old Incentive Plan will terminate
upon the consummation of the Offer and the holders of such options will be
entitled to immediate payment by the Company of, in exchange for their
terminated options, an amount in cash equal to (i) the excess of the Per Share
Price over the per share exercise price of the option, multiplied by (ii) the
number of Shares that would otherwise have been received upon exercise of the
terminated option.
(b) Upon the Board's approval of the Offer and the Merger, outstanding
options (the "1996 Plan Options") granted under the Melamine Chemicals, Inc.
1996 Long-Term Incentive Plan, effective September 9, 1996 (the "1996 Incentive
Plan" and, together with the Old Incentive Plan, the "Long-Term Incentive
Plans") will accelerate automatically to become fully exercisable. In
accordance with the terms of the 1996 Incentive Plan, the Company will cause the
Compensation Committee of its Board to cancel the 1996 Plan Options, and to pay,
upon consummation of the Offer, to each holder of such 1996 Plan Options, an
amount in cash equal to the product of (i) the excess of the Per Share Price
over the per share exercise price of each of such holder's 1996 Plan Options,
multiplied by (ii) the number of Shares that would otherwise have been received
upon exercise of such holder's 1996 Plan Options.
(c) The Company shall be entitled to withhold from the payments made under
this Section 2.8 such amounts as the Company is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the "Code"), or any applicable provision of state, local or
foreign tax law. Such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the options in respect of
which such deduction and withholding was made.
(d) Prior to the Effective Time, the Company and Parent shall cooperate
and take such other action as may be necessary to cancel all outstanding options
granted under the Long-Term Incentive Plans (the "Company Options") in
consideration for the payments described above and to effectuate the
arrangements described in this Section 2.8.
(e) After the consummation of the Offer, the Company shall take all action
necessary to terminate the Long-Term Incentive Plans and any other equity-based
plans of the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of Parent and Sub that except
as set forth on the DISCLOSURE SCHEDULE delivered by the Company to Parent and
Sub concurrently with the execution and delivery hereof (the "DISCLOSURE
SCHEDULE"):
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3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. The Company has no
subsidiaries that have conducted any operations except activities incidental to
their incorporation. The names of all such subsidiaries are listed in Section
3.1 of the DISCLOSURE SCHEDULE. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and operate
its property and carry on its business as now being conducted. The Company is
duly qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary, except
to the extent that any failure to so qualify or be in good standing would not
have a Material Adverse Effect. As used herein, "Material Adverse Effect" means
any change or effect that is materially adverse to the business, condition
(financial or otherwise), assets or results of operations of the Company or to
the ability of the Company to perform its obligations hereunder or to consummate
the transactions contemplated hereby, including the Offer and the Merger. The
Company has made available to Parent correct and complete copies of the
certificate of incorporation and by-laws of the Company.
3.2 CAPITALIZATION. As of the date hereof, the authorized capital stock
of the Company consists of (i) 20,000,000 shares of Common Stock, of which
5,627,934 shares are issued and outstanding as of the date hereof and (ii)
2,000,000 shares of preferred stock, par value $1.00 per share, of which no
shares are issued and outstanding and 200,000 shares are reserved for issuance
pursuant to the Rights Agreement. Except as provided in the Rights Agreement
and except for Shares issuable upon the exercise of Company Options to purchase
an aggregate of 356,986 Shares, there are no options, warrants or other rights,
agreements or commitments obligating the Company to issue, sell or deliver any
shares of its capital stock or any securities convertible into or exchangeable
or exercisable for its capital stock or to repurchase, redeem or otherwise
acquire, any shares of its capital stock. All Shares outstanding are, and all
Shares and other securities of the Company issuable upon exercise of the Company
Options, upon issuance and payment therefor in accordance with the related
option agreements, will be, duly authorized, validly issued, fully paid,
non-assessable and free of preemptive rights. There are no outstanding bonds,
debentures, notes or other indebtedness or other securities 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 stockholders of the Company
may vote. As of the date of this Agreement, the Company and its subsidiaries
have no outstanding indebtedness for borrowed money. Except as disclosed in
Section 3.2 of the DISCLOSURE SCHEDULE, there are no agreements or arrangements
to which the Company is a party pursuant to which the Company is or could be
required to register shares of Common Stock or other securities under the
Securities Act (as defined in Section 3.6).
3.3 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has all requisite
corporate power and authority to enter into this Agreement and, subject to the
receipt of the Requisite Stockholder Approval (as defined in Section 1.2(a))
with respect to the Merger, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by the Company and the consummation by the Company
of the transactions contemplated hereby have been duly authorized by all
necessary corporate (including stockholder) action on the part of the Company,
except for the Requisite Stockholder Approval with respect to the Merger. This
Agreement has been duly and validly
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executed and delivered by the Company. Assuming the due authorization,
execution and delivery of this Agreement by Parent and Sub, this Agreement
constitutes the legal, valid and binding agreement of the Company enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, and general equitable
principles (whether considered in a proceeding in equity or at law).
3.4 NON-CONTRAVENTION; APPROVALS AND CONSENTS.
(a) Except as disclosed in Section 3.4 of the DISCLOSURE SCHEDULE, the
execution and delivery of this Agreement by the Company do not, and the
performance by the Company of its obligations hereunder and the consummation of
the transactions contemplated hereby will not, conflict with, result in a
violation or breach of, constitute (with or without notice or lapse of time or
both) a default under, permit the termination of any provision of, or result in
the termination of or the acceleration of the maturity or performance of, or
result in the creation or imposition of any lien upon any of the assets or
properties of the Company under, any of the terms, conditions or provisions of
(i) the certificate of incorporation or by-laws of the Company, or (ii) subject
to receipt of the Requisite Stockholder Approval with respect to the Merger and
the taking of the actions described in paragraph (b) of this Section 3.4, (A)
any statute, law, rule, regulation or ordinance (together, "Laws"), or any
judgment, decree, order, writ, permit or license (together, "Orders"), of any
court, tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States or any state, county, city or other
political subdivision in the United States, or of any foreign country (a
"Governmental or Regulatory Authority"), applicable to the Company or any of its
assets or properties, (B) any note, bond, mortgage, security agreement,
indenture, license, franchise, contract, lease or other instrument, obligation
or agreement of any kind (together, "Contracts") to which the Company is a party
or by which the Company or any of its assets or properties is bound, or (C) any
Employee Plan or Benefit Arrangement (defined in Section 3.11); except, with
respect to the foregoing clause (ii), those which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect.
(b) Except for (i) the premerger notification requirements of the HSR Act,
(ii) the requirements of the Exchange Act and the Nasdaq Stock Market and (iii)
the filing of appropriate documents relating to the Merger required by the DGCL,
no consent, approval or action of, or filing with or notice to, any Governmental
or Regulatory Authority or other person is required under any Law or Order or
any Contract to which the Company is a party or by which the Company or any of
its assets or properties is bound, for the execution and delivery of this
Agreement by the Company or the performance by the Company of its obligations
hereunder or the consummation by the Company of the transactions contemplated
hereby, except those as to which the failure to make or obtain, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
3.5 BROKERS AND FINDERS. The Company has not employed any broker or finder
to act on its behalf and has not incurred and will not incur any liability for
any brokerage fees or finders' fees in connection with the transactions
contemplated hereby, other than pursuant to the letter agreement
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between the Company and Goldman, Sachs & Co. dated as of July 10, 1997, a copy
of which has been delivered previously to Parent.
3.6 SEC FILINGS. The Company has heretofore made available to Parent and
Sub its (i) Annual Reports on Form 10-K for the fiscal years ended June 30,
1995, 1996 and 1997, (ii) proxy statements relating to all meetings of
stockholders (whether annual or special) held since June 30, 1994 and (iii) each
other registration statement, proxy or information statement, form, report and
other document filed by the Company with the SEC since June 30, 1994
(collectively, the "SEC Filings"). At the time it was made, each SEC Filing
(including all exhibits and schedules thereto and documents incorporated by
reference therein) and, at the time it is made, any SEC Filing made by the
Company with the SEC after the date of this Agreement (A) complied, or with
respect to those not yet made will comply, in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
or the Exchange Act, as appropriate, and (B) did not, or with respect to those
not yet made will not, contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements made, in light of the circumstances under which they were
made, not misleading. The Company has filed all required reports, schedules,
forms, statements and other documents with the SEC since June 30, 1994. The
audited consolidated financial statements and unaudited consolidated interim
financial statements of the Company included in the SEC Filings (including, in
each case, the notes and schedules, if any, thereto) (the "Company Financial
Statements"), were or will be prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated therein or in the notes thereto or, in the case of
the unaudited statements, as permitted by Form 10-Q under the Exchange Act),
complied or will comply as of their respective dates in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, and fairly presented or will fairly present in
all material respects the consolidated financial position of the Company as of
the dates thereof and the consolidated results of its operations and cash flows
for the periods then ended (subject, in the case of any unaudited interim
financial statements, to normal recurring year-end adjustments).
3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in Section
3.7 of the DISCLOSURE SCHEDULE or as reflected in SEC Filings made prior to the
date of this Agreement, since June 30, 1997 (a) there has not been any change,
event or development having, or that could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, (b) the Company has
conducted its business only in the ordinary course consistent with past
practices, and, (c) the Company has not taken any action that, if taken after
the date hereof, would constitute a breach of any provision of Section 5.1.
3.8 LEGAL PROCEEDINGS. (a) There are no actions, suits, arbitrations,
proceedings or investigations pending, or to the knowledge of the Company
threatened, against the Company or any of its assets or properties that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect and (b) the Company is not subject to any Order that,
individually or in the aggregate, is having or could reasonably be expected to
have a Material Adverse Effect.
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3.9 COMPLIANCE WITH LAW. The Company has not violated or failed to comply
with, or received any written notice from any Governmental or Regulatory
Authority asserting a failure to comply with, any Law or Order, except where
such violation or failure to comply would not, individually or in the aggregate,
have a Material Adverse Effect. The Company has and is in compliance with all
permits, licenses and franchises from Governmental or Regulatory Authorities
required to conduct its business as now being conducted, except to the extent
that the failure to have or comply with such permits, licenses and franchises
would not, individually or in the aggregate, have a Material Adverse Effect.
3.10 TAXES.
(a) As used herein, "Taxes" means all taxes of any kind, including those
on, measured by or referred to as income, gross receipts, sales, use, ad
valorem, franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, value added, or property taxes, and all customs
duties and similar fees, assessments and charges of any kind whatsoever,
together with any interest thereon and any penalties, additions to tax and
additional amounts imposed with respect thereto by any Governmental or
Regulatory Authority. As used herein, "Tax Return" means any return, report,
declaration, information statement and other document with respect to Taxes
required to be filed by the Company with the Internal Revenue Service or any
other Governmental or Regulatory Authority, including all accompanying
schedules. For purposes of this Section 3.10, any reference to the Company
shall include any corporation that merged or was liquidated with and into the
Company.
(b) The Company has (i) timely filed all federal and state income Tax
Returns and all other material Tax Returns required to be filed by it and such
Tax Returns are correct and complete in all material respects, and (ii) has paid
all Taxes shown thereon to be due and has provided adequate reserves in its
financial statements for any Taxes that have not been paid, whether or not shown
as being due on any Tax Returns, and all other Taxes for which a notice of
assessment or demand for payment has been received by the Company, except for
such Taxes as to which the failure to pay, individually or in the aggregate,
would not have a Material Adverse Effect. The Company has not granted any
waiver of any statute of limitations with respect to, or any extension of a
period for the assessment of, any Tax.
(c) Except as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect or as disclosed in Section 3.10 of
the DISCLOSURE SCHEDULE: (i) no material claim for unpaid Taxes due and payable
has become a lien against the property of the Company or is being asserted
against the Company nor, to the Company's knowledge, are there pending any
material proposed adjustments to the manner in which any Tax of the Company is
determined; (ii) to the knowledge of the Company, no audit of any Tax Return of
the Company is pending, threatened or being conducted by a Governmental or
Regulatory Authority; (iii) the Company is not a party to any agreement or
arrangement that would, individually or in the aggregate, (A) result in the
actual or deemed payment by the Company of any "excess parachute payments"
within the meaning of Section 280G of the Code, or (B) constitute compensation
in excess of the limitation set forth in Section 162(m) of the Code; (iv) except
with respect to the Company Options, no
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acceleration of the vesting schedule for any property that is substantially
unvested within the meaning of the regulations under Section 83 of the Code will
occur in connection with the transactions contemplated by this Agreement; (v) no
consent under Section 341(f) of the Code has been filed with respect to the
Company; (vi) the Company has not been at any time a member of any partnership
or joint venture or the holder of a beneficial interest in any trust for any
period for which the statute of limitations for any Tax has not expired; (vii)
the Company has not been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code; (viii) the Company has made
all payments of estimated Taxes required to be made under Section 6655 of the
Code and any comparable state, local or foreign Tax provision; (ix) all Taxes
required to be withheld, collected or deposited by or with respect to the
Company and each of its subsidiaries have been timely withheld, collected or
deposited, as the case may be, and, to the extent required, have been paid to
the relevant taxing authority; (x) the Company has not issued or assumed (A) any
obligations described in Section 279(a) of the Code, (B) any applicable high
yield discount obligations, as defined in Section 163(i) of the Code, or (C) any
registration-required obligations, within the meaning of Section 163(f)(2) of
the Code, that are not in registered form; (xi) there are no requests for
information currently outstanding that could affect the Taxes of the Company;
(xii) there are no proposed reassessments of any property owned by the Company
or other proposals that could increase the amount of any Tax to which the
Company would be subject; and (xiii) no power of attorney that is currently in
force has been granted with respect to any matter relating to Taxes that could
materially affect the Tax liability of the Company. No claim has been made by a
Governmental or Regulatory Authority in a jurisdiction where the Company does
not file Tax Returns that the Company is or may be subject to taxation by that
jurisdiction.
(d) The Company has never (i) joined in or been required to join in the
filing of a consolidated or combined federal, state or local income Tax Return
with respect to which the Company could be liable for the Taxes of a person
other than the Company or (ii) been the subject of a Tax ruling or a closing
agreement with respect to Taxes with any Governmental or Regulatory Authority
that has continuing effect. The Company is not a party to any tax sharing or
tax allocation agreement or arrangement pursuant to which it could be liable for
Taxes of a person other than the Company. The Company has not agreed to make
nor is it required to make any adjustment under Section 481 of the Code by
reason of a change in accounting method or otherwise.
3.11 ERISA AND RELATED MATTERS.
(a) Section 3.11 of the DISCLOSURE SCHEDULE contains a true and complete
list of each Employee Plan and Benefit Arrangement (each as defined below). The
Company has made available to Parent a current, accurate and complete copy of
each Employee Plan and Benefit Arrangement and, to the extent applicable, all
related reports (actuarial or otherwise) that materially affect the Tax
liability of the Company.
(b) Each Employee Plan and Benefit Arrangement has been maintained and
administered in compliance with its terms and with the requirements of
applicable Laws, including the Employee Retirement Income Security Act of 1974,
as amended ("ERISA") and the Code, except where the
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failure to comply could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. There is no litigation,
administrative or arbitration proceeding or other dispute pending or, to the
Company's knowledge, threatened that involves any Employee Plan or Benefit
Arrangement (defined below) that could reasonably be expected to have a Material
Adverse Effect or a material adverse effect on any employee or director of the
Company or on any fiduciary (as defined in ERISA Section 3(21)) of such Employee
Plan or Benefit Arrangement.
(c) The Company does not maintain, has never maintained and has never been
required to contribute to an "employee benefit plan" as defined in Section 3 of
ERISA that is or was (i) a plan subject to Title IV of ERISA or (ii) a
"multiemployer plan" as defined in Section 3(37) of ERISA.
(d) Neither the Company nor any of its directors, officers or employees
has engaged in any transaction with respect to an Employee Plan that could
subject the Company to a tax, penalty or liability for a prohibited transaction,
as defined in Section 406 of ERISA or Section 4975 of the Code, or for a
"reportable event" within the meaning of Section 4043 of ERISA, except for such
taxes, penalties or liabilities that could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(e) At June 30, 1997 each Employee Plan that constitutes a defined benefit
pension plan had assets exceeding its liabilities, based on the assumptions
described in the notes to the Company's audited financial statements.
(f) Except as provided in Section 3.11 of the DISCLOSURE SCHEDULE, no
independent contractor or other contract employee has participated or is
entitled to participate in any Employee Plan or Benefit Arrangement.
(g) Each Employee Plan and Benefit Arrangement that is intended to be
qualified within the meaning of Code Sections 401(a) or 501(a) is so qualified
and has received a favorable determination letter as to its qualification.
Nothing has occurred, whether by action or failure to act, that would cause the
loss of such qualification.
(h) Since January 1, 1992, the Company has not received any written notice
from the Pension Benefit Guaranty Corporation ("PBGC") with respect to its
Employee Plans.
(i) As used herein:
(i) "Benefit Arrangement" means any employment, severance or similar
contract, or any other contract, plan, policy or arrangement (whether or not
written) providing for compensation, bonus, profit-sharing, stock option or
other stock related rights or other forms of incentive or deferred compensation,
vacation benefits, insurance coverage (including any self-insured arrangement),
health or medical benefits, cafeteria plan benefits, disability benefits,
severance benefits and post-employment or retirement benefits (including
compensation, pension, health, medical and life insurance benefits), other than
an Employee Plan, that is maintained,
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administered or contributed to by the Company and covers any employee or former
employee of the Company; and
(ii) "Employee Plan" means a plan or arrangement as defined in Section
3(3) of ERISA that (A) is subject to any provision of ERISA, (B) is maintained,
administered or contributed to by the Company or any member of the Company's
control group (past or present), as defined in Code section 1563(a), and (C)
covers any employee or former employee of the Company.
3.12 ENVIRONMENTAL MATTERS. Except as disclosed in Section 3.12 of the
DISCLOSURE SCHEDULE or in SEC Filings made prior to the date hereof:
(a) The Company has obtained all material licenses, permits,
authorizations, approvals and consents ("Environmental Permits") from all
Governmental or Regulatory Authorities that are required in respect of its
business or operations under any applicable Environmental Law (defined below),
and each of such Environmental Permits is in full force and effect.
(b) The Company is in compliance with the terms and conditions of all such
Environmental Permits and with all applicable Environmental Laws, except for
such failures that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
(c) (i) No site or facility now or previously owned, operated or leased
by the Company is listed or proposed for listing on the National Priorities List
or CERCLIS, promulgated pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), and the rules and
regulations thereunder or on any similar state or local list of sites requiring
investigation or Remedial Action (defined below).
(ii) Since June 30, 1994, the Company has not received any written
notice of any actual or alleged material violation of any Environmental Law
with respect to any of its facilities.
(iii) The Company is not subject to any material outstanding
agreements with or Orders of any Governmental or Regulatory Authority or other
person respecting (A) Environmental Laws, (B) Remedial Action or (C) any Release
of a Hazardous Material (defined below).
(iv) Since June 30, 1994, the Company has not received any written
notice or request for information pertaining to a response or removal action (as
defined by CERCLA), with respect to any of its sites or facilities now or
previously owned, operated or leased by it.
(d) No liens have arisen under or pursuant to any Environmental Law on any
site or facility owned, operated or leased by the Company, other than liens that
individually or in the aggregate could not reasonably be expected to have a
Material Adverse Effect.
(e) There have been no material environmental investigations, studies,
audits, tests, reviews or other analyses conducted by, or that are in the
possession of, the Company in relation to
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any site or facility owned, operated or leased by the Company, except those
reports that have been made available to Parent prior to the execution of this
Agreement.
(f) Except as could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, to the Company's knowledge, since
June 30, 1994, no Hazardous Material has been Released, disposed of or arranged
to be disposed of by the Company at or about any site or facility now or
previously owned, operated or leased by the Company, other than Releases or
disposals permitted under Orders issued by any Governmental or Regulatory
Authorities.
(g) As used herein:
(i) "Environmental Law" means any Law or Order relating to the
environment or to emissions, discharges or Releases of pollutants, contaminants,
or chemicals, or industrial, toxic or hazardous substances or wastes, into the
environment (including structures, ambient air, soil, surface water, ground
water, wetlands, land or subsurface strata), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes;
(ii) "Hazardous Material" means (A) any chemicals or other materials
or substances that are defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "pollutants,"
"contaminants," or words of similar import under any Environmental Law,
including petroleum, friable asbestos, PCBs and CFCs; and (B) any other
chemical, material or substance, the presence of or exposure to which is
prohibited, limited or regulated by any Governmental or Regulatory Authority
under any Environmental Law;
(iii) "Release" means any actual or threatened (as defined under
CERCLA) release, spill, effluent, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the
environment or any structure; and
(iv) "Remedial Action" means all actions, including any capital
expenditures, required by a Governmental or Regulatory Authority, required under
any Environmental Law or voluntarily undertaken to (A) clean up, remediate,
remove, treat or in any other way ameliorate or address any Hazardous Materials
Released into the environment; (B) prevent the Release, or minimize the further
Release of any Hazardous Material so it does not endanger or threaten to
endanger public health or the environment; (C) perform pre-remedial studies and
investigations or post-remedial monitoring and care relating to a Release; or
(D) bring the applicable party into compliance with any Environmental Law.
3.13 REAL PROPERTY.
(a) The Company does not own any real property. Section 3.13 of the
DISCLOSURE SCHEDULE contains a list of all real property or interests in real
property leased by the Company. Complete and correct copies of all leases so
listed, including all modifications, amendments and
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supplements thereto, have heretofore been made available to Parent and all such
leases are in full force and effect in accordance with their respective terms.
(b) There are no existing defaults or events that, with notice or lapse of
time or both, would constitute defaults under any such leases, except for
defaults that individually or in the aggregate could not reasonably be expected
to have a Material Adverse Effect. The consummation of the Offer and the Merger
will not cause the termination of any such leases or have a Material Adverse
Effect on the rights of the Company thereunder and no consent of the lessor
thereunder or any third party is required in connection therewith.
(c) The Company enjoys peaceful and undisturbed possession of its leased
properties. The Company has good and valid title to the leasehold estate in
each property leased by it, except for (i) mortgages and encumbrances that
secure indebtedness properly reflected on the Company Financial Statements in
the SEC Filings made prior to the date hereof; (ii) liens for taxes accrued but
not yet payable; (iii) liens arising as a matter of Law in the ordinary course
of business with respect to obligations incurred after June 30, 1997, provided
that the obligations secured by such liens are not delinquent or are being
contested in good faith; and (iv) such imperfections of title and encumbrances,
if any, as do not, individually or in the aggregate, materially detract from the
value or materially interfere with the present use of such property or are
listed in Section 3.13 of the DISCLOSURE SCHEDULE.
(d) The Company is not in violation of any zoning, building or safety Law
or Order applicable to the operation of its leased properties that is likely to
impede the normal operation of the business of the Company or to have,
individually or in the aggregate, a Material Adverse Effect, and the Company has
not received any written notice of any such violation with which it has not
complied.
(e) There are no pending or, to the knowledge of the Company, threatened
condemnation or similar proceedings relating to any of the leased properties of
the Company.
3.14 LABOR MATTERS. There are no strikes or other disputes or
controversies pending or, to the knowledge of the Company, threatened between
the Company and any representatives of its employees and, to the knowledge of
the Company, there are no organizational efforts underway involving employees of
the Company.
3.15 CONTRACTS; CERTAIN AGREEMENTS. Except as disclosed in SEC Filings
made prior to the date hereof or Section 3.15 of the DISCLOSURE SCHEDULE:
(a) There is no (A) Contract that is material to the business, financial
condition or results of operations of the Company, (B) Contract for the future
purchase of materials, supplies, merchandise or equipment under which the
Company is committed to expend more than $100,000 per year, (C) Contract for the
sale or lease of any of the assets of the Company, other than sales of inventory
or manufactured goods in the ordinary course of business, (D) mortgage, pledge,
conditional sales contract, security agreement, factoring agreement or other
similar agreement with
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respect to any material assets of the Company, (E) consulting agreement
providing for annual payments thereunder in excess of $100,000, (F) commitment
for any capital expenditures, other than commitments for any capital
expenditures described in Section 5.1 of the DISCLOSURE SCHEDULE and such other
commitments as do not exceed $250,000 in the aggregate, or (G) non-competition
or similar agreement that restricts or hereafter will restrict the geographic or
operational scope of the Company's business or the ability of the Company to
enter into new lines of business. Neither the Company nor, to the knowledge of
the Company, any other party thereto is in breach or violation of, or in default
in the performance or observance of any term or provision of, and no event has
occurred that, with notice or lapse of time or both, could reasonably be
expected to result in a default under, any Contract to which the Company is a
party or by which the Company or any of its assets or properties is bound,
except for breaches, violations and defaults that, individually or in the
aggregate, are not having and could not reasonably be expected to have a
Material Adverse Effect.
(b) The Company is not a party to any oral or written (i) union or
collective bargaining agreement or (ii) except for the Company Options and
agreements entered into pursuant to the Employee Plans and Benefit Arrangements,
(A) agreement with any officer or other employee of the Company, (B) employment
agreement with respect to any officer or other employee of the Company, or (C)
agreement or plan, including any stock option, stock appreciation right,
restricted stock, stock purchase plan, Employee Plan or Benefit Arrangement, any
of the benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
Agreement.
(c) Correct and complete copies of each material Contract referred to in
Sections 3.15(a) and (b) have been made available to Parent and Sub.
(d) The consummation of the Merger and the other transactions contemplated
by this Agreement will not result in payments (including any gross-up payments
in respect of any "excess parachute payments" within the meaning of Section 280G
of the Code) under the agreements referred to in Section 3.15(b)(ii).
3.16 ABSENCE OF CERTAIN LIABILITIES. Except for matters reflected or
reserved against in the balance sheet as at June 30, 1997 included in the
Company Financial Statements, the Company had not at that date, and has not
since that date, incurred any liabilities or obligations (whether absolute,
accrued, contingent, fixed or otherwise, or whether due or to become due) of any
nature that would be required by generally accepted accounting principles to be
reflected in a consolidated balance sheet of the Company (including the notes
thereto), except liabilities or obligations that (a) were incurred in the
ordinary course of business consistent with past practices and (b) have not had,
and could not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.
3.17 OPINION OF FINANCIAL ADVISOR. The Company has received a written
opinion dated October 9, 1997 from its financial advisor, Goldman, Sachs & Co.,
("Goldman Sachs") that, as of such date, and on the basis of and subject to the
matters set forth therein, the Per Share Price was fair
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to the holders of the Shares from a financial point of view. It is agreed and
understood that such opinion is for the sole benefit of the Company's Board of
Directors and may not be relied upon by Parent or Sub.
3.18 TAKEOVER STATUTE. The execution, delivery and performance of this
Agreement and the Tender Agreement and the consummation of the transactions
contemplated hereby and thereby, including the Offer, the purchase of Shares
pursuant thereto and the Merger will not cause Parent or Sub to be an
"interested stockholder" within the meaning of Section 203 of the DGCL. La.
R.S. 12:140.11-17 is inapplicable to the transactions contemplated by this
Agreement and the Tender Agreement.
3.19 RIGHTS AGREEMENT. The execution and delivery of the Agreement and the
Tender Agreement and the consummation of the transactions contemplated hereby
and thereby, including the Offer, the purchase of Shares pursuant thereto and
the Merger will not result in triggering Section 11 or Section 13 of the Rights
Agreement or the occurrence of a "Distribution Date" or "Shares Acquisition
Date" and will not result in any person becoming an "Acquiring Person" (as such
terms are defined in the Rights Agreement). The Rights will expire at the
Effective Time pursuant to the Fourth Amendment.
3.20 INTELLECTUAL PROPERTY.
(a) The Company, directly or indirectly, owns, licenses or otherwise
possesses (or has applied for), free and clear of all liens and encumbrances,
legally enforceable rights to use as they are currently used in the conduct of
the Company's business all trademarks, trade names, service marks, trade dress,
logos and designs and any and all registrations and applications therefor (and
all goodwill associated therewith), all copyrights, whether or not registered,
all patents and all applications therefor, computer software and tangible or
intangible proprietary information or material (the "Intellectual Property
Rights"), except where the failure to so own, license or otherwise possess
legally enforceable rights to use could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(b) Section 3.20 of the DISCLOSURE SCHEDULE sets forth a complete and
accurate list of the Company's (i) registered trademarks, trade names, service
marks and copyrights, (ii) patent applications or issued patents and (iii)
licenses with respect thereto granted to or by the Company, including applicable
expiration dates in the case of patents. Except as set forth in Section 3.20 of
the DISCLOSURE SCHEDULE, no claims with respect to the Intellectual Property
Rights have been asserted or, to the knowledge of the Company, threatened by any
person (A) that the manufacture, use, sale or licensing by the Company infringes
on any copyright, patent, trademark, trade secret, service mark or other
proprietary right of any person, (B) against the use by the Company of any
material trademarks, service marks, trade names, trade secrets, copyrights,
patents, technology, know-how or computer software programs and applications
used in the business of the Company as currently conducted, or (C) challenging
the ownership, validity or effectiveness of any of the Intellectual Property
Rights. All registered trademarks, service marks, patents, and copyrights owned
or held by the Company are valid and subsisting and not subject to cancellation
or
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abandonment proceedings. No claims or actions have been asserted or are
threatened by the Company against any person with regard to the Intellectual
Property Rights and, to the knowledge of the Company, there is no unauthorized
use, infringement or misappropriation of any of the Intellectual Property Rights
by any third party, including any employee or former employee of the Company,
that could reasonably be expected to have a Material Adverse Effect. No
Intellectual Property Right is subject to any outstanding decree, order,
judgment, or stipulation restricting in any manner the licensing thereof by the
Company.
3.21 INFORMATION SUPPLIED.
(a) The Schedule 14D-9 (and any amendment or supplement thereto) will not,
on the date of its filing with the SEC and the date it is first published, sent
or given to stockholders, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading, except that no representation is made by the
Company with respect to information supplied in writing by or on behalf of
Parent or Sub expressly for inclusion therein and information incorporated by
reference therein from documents filed by Parent or any of its subsidiaries with
the SEC. The Schedule 14D-9 will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
thereunder.
(b) Neither the information supplied or to be supplied in writing by or on
behalf of the Company for inclusion in, nor the information incorporated by
reference from documents filed by the Company with the SEC into, the Schedule
14D-1 and the Offer Documents will, on the date the Schedule 14D-1 and the Offer
Documents (and any amendment or supplement thereto) are filed with the SEC or on
the date they are first published, sent or given to stockholders, 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.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Each of Parent and Sub represents and warrants to the Company as follows:
4.1 ORGANIZATION OF PARENT AND SUB. Parent and Sub are corporations duly
incorporated, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation and have all requisite corporate power
and authority to own their respective properties and carry on their respective
businesses as now being conducted. Parent and Sub are duly qualified as foreign
corporations to do business, and are in good standing, in each jurisdiction
where the character of their properties owned or held under lease or the nature
of their activities makes such qualification necessary, except to the extent
that any failure to so qualify or be in good standing would not have a Parent
Material Adverse Effect. As used herein, "Parent Material Adverse Effect" means
any change or effect that is materially adverse to the ability of Parent or Sub
to perform their respective obligations hereunder or to consummate the
transactions contemplated hereby, including the Offer
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and the Merger. Parent has delivered to the Company correct and complete copies
of the certificates of incorporation and by-laws of Parent and Sub. Sub 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
only such operations as are required for the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby.
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of Parent and Sub has all
requisite corporate power and authority to enter into this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by each of
Parent and Sub and the consummation by each of Parent and Sub of the
transactions contemplated hereby have been duly authorized by all necessary
corporate (including stockholder) action on the part of Parent and Sub. This
Agreement has been duly and validly executed and delivered by each of Parent and
Sub and, assuming the due authorization, execution and delivery of this
Agreement by the Company, constitutes the legal, valid and binding agreement of
Parent and Sub enforceable in accordance with its terms, subject to the effects
of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, and
general equitable principles (whether considered in a proceeding in equity or at
law).
4.3 NON-CONTRAVENTION; APPROVALS AND CONSENTS.
(a) The execution and delivery of this Agreement and the Tender Agreement
by Parent and Sub do not, and the performance by Parent and Sub of their
obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby will not, conflict with, result in a violation
or breach of, constitute (with or without notice or lapse of time or both) a
default under, permit the termination of any provision of or result in the
termination of or the acceleration of the maturity or performance of, or result
in the creation or imposition of any lien upon any of the assets or properties
of the Parent or any of its subsidiaries under, any of the terms, conditions or
provisions of (i) the certificates of incorporation or by-laws (or other
comparable charter documents) of the Parent or any of its subsidiaries, or (ii)
subject to the taking of the actions described in paragraph (b) of this Section
4.3, (A) any Law or Order applicable to Parent or any of its subsidiaries or any
of their respective assets or properties, (B) any Contract to which Parent or
any of its subsidiaries is a party or by which Parent or any of its subsidiaries
or any of their respective assets or properties is bound, or (C) any employee
benefit plan of Parent or any of its subsidiaries; except, with respect to the
foregoing clause (ii) those that, individually or in the aggregate, could not
reasonably be expected to have a Parent Material Adverse Effect.
(b) Except for (i) the premerger notification requirements of the HSR Act,
(ii) the requirements of the Securities Act, the Exchange Act and any relevant
national securities exchange, and (iii) the filing of appropriate documents
relating to the Merger required by the DGCL, no consent, approval or action of,
filing with or notice to any Governmental or Regulatory Authority or other
person is necessary or required under any of the terms, conditions or provisions
of any Law or Order or any Contract to which Parent or any of its subsidiaries
is a party or by which Parent or any of its subsidiaries or any of their
respective assets or properties is bound, for the execution and
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delivery of this Agreement or the Tender Agreement by each of Parent and Sub,
the performance by each of Parent and Sub of its obligations hereunder or
thereunder or the consummation by Parent or Sub of the transactions contemplated
hereby or thereby, except those as to which the failure to make or obtain,
individually or in the aggregate, could not reasonably be expected to have a
Parent Material Adverse Effect.
4.4 BROKERS AND FINDERS. Neither Parent nor Sub has employed any broker
or finder to act on behalf of Parent or Sub, or has incurred or will incur any
liability for any brokerage fees or finders' fees in connection with the
transactions contemplated hereby.
4.5 LEGAL PROCEEDINGS. (i) There are no actions, suits, arbitrations,
proceedings or investigations pending or, to the knowledge of Parent,
threatened, against Parent or any of its subsidiaries or any of their respective
assets or properties that, individually or in the aggregate, could reasonably be
expected to have a Parent Material Adverse Effect, and (ii) neither Parent nor
any of its subsidiaries is subject to any Orders that, individually or in the
aggregate, could reasonably be expected to have a Parent Material Adverse
Effect.
4.6 FINANCING. Parent has or has available to it pursuant to credit
facilities and will provide, or cause to be provided to Sub, the funds necessary
to consummate the Offer and the Merger.
4.7 INFORMATION SUPPLIED.
(a) The Schedule 14D-1 and the Offer Documents (and any amendments or
supplements thereto) will not, on the date filed with the SEC and first
published, sent or given to stockholders of the Company, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading, except that no
representation is made by Parent or Sub with respect to information supplied in
writing by or on behalf of the Company expressly for inclusion therein and
information incorporated by reference therein from documents filed by the
Company with the SEC. The Schedule 14D-1 and the Offer Documents will comply as
to form in all material respects with the requirements of the Exchange Act.
(b) Neither the information supplied or to be supplied in writing by or on
behalf of Parent or Sub for inclusion in, nor the information incorporated by
reference from documents filed by Parent or any of its subsidiaries with the SEC
into, the Schedule 14D-9 (and any amendments or supplements thereto) will, on
the date the Schedule 14D-9 is filed with the SEC and first published, sent or
given to stockholders of the Company, 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.
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ARTICLE V
COVENANTS
5.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER. Except as
described on the DISCLOSURE SCHEDULE or as otherwise expressly contemplated by
this Agreement, prior to the Effective Time, unless Parent shall otherwise agree
in writing:
(a) The business of the Company shall be conducted only in the ordinary
course consistent with past practices.
(b) The Company shall use its commercially reasonable best efforts to
preserve intact in all material respects the business organization of the
Company, to keep available the services of its officers and employees and to
preserve the goodwill of those having business relationships with it.
(c) The Company shall not (i) amend its certificate of incorporation or
by-laws; (ii) split, combine, reclassify or take similar action with respect to
any of its capital stock; (iii) authorize for issuance, issue, sell, deliver or
agree or commit to issue, sell or deliver any additional shares, or rights of
any kind to acquire any shares (whether through the granting or issuance of
options, warrants, commitments, subscriptions, rights to purchase or otherwise),
of its capital stock of any class or any other securities or equity equivalents
(including without limitation stock appreciation rights), other than Shares
issuable upon the exercise of Company Options outstanding on the date hereof;
(iv) purchase, redeem or otherwise acquire any Shares or any other securities of
the Company; (v) declare, set aside or pay any dividend payable in cash, stock
or property or make any other distributions with respect to Shares or any other
shares of its capital stock of any class; (vi) adopt a plan of complete or
partial liquidation or resolutions providing for or authorizing such a
liquidation or a dissolution, merger, consolidation, restructuring,
recapitalization or reorganization of the Company; or (vii) make any commitment
to do any of the foregoing.
(d) The Company shall not (i) acquire (by merger, consolidation or
acquisition of stock or assets) any corporation, partnership or other business
organization or division thereof or make any investment in any other person,
either by purchase of stock or securities, contribution to capital, property
transfer or purchase of any material amount of property or assets; (ii) other
than sales of inventory and manufactured goods in the ordinary course of its
business consistent with past practices, sell, lease, grant any security
interest in or otherwise dispose of or encumber any material amount of its
assets or properties; (iii) incur any indebtedness for borrowed money other than
borrowings in the ordinary course of business under existing lines of credit (or
under any extension or refinancing of such existing lines of credit, PROVIDED
that the aggregate amount available to be borrowed thereunder is not increased
thereby), or issue any debt securities or assume, guarantee, endorse or
otherwise as an accommodation become responsible for the obligations of any
other person; (iv) make any capital expenditure or commitment for additions to
plant, property or equipment constituting capital assets except expenditures
pursuant to commitments existing as of the date of this Agreement and reflected
in Section 5.1 of the DISCLOSURE SCHEDULE and except for such expenditures as do
not exceed $250,000 in the aggregate; (v) change any assumption underlying, or
method of calculating, any bad debt, contingency or other reserve or change any
other
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material accounting principles or practices used by it (except changes that may
be necessary or appropriate in order to comply with a change in generally
accepted accounting principles that takes effect after the date of this
Agreement); (vi) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, contingent or otherwise) other than the payment,
discharge or satisfaction of (A) liabilities in the ordinary course consistent
with past practices and (B) costs relating to this Agreement and the
transactions contemplated hereby; (vii) waive, release, grant or transfer any
rights of material value or modify or change in any material respect any
existing material license, lease, contract or other document (including without
limitation the Contracts listed in Section 3.15 of the DISCLOSURE SCHEDULE);
(viii) make any tax election or settle or compromise any federal, state, local
or foreign tax liability; or (ix) enter into any contract, agreement, commitment
or arrangement with respect to, or resolve to do, any of the foregoing.
(e) The Company shall not (i) enter into any new severance or change of
control or employment agreement; (ii) amend any existing employment or change of
control or severance agreement; (iii) grant any increases in compensation or
benefits other than in the ordinary course consistent with past practices;
(iv) adopt any new Employee Plan or Benefit Arrangement; (v) make any change in
or to any existing Employee Plan or Benefit Arrangement, other than such changes
as are required by Law or that, in the opinion of its counsel, are necessary or
advisable to maintain the tax-qualified status of such Employee Plan or Benefit
Arrangement; (vi) make any grants, awards or distributions under any Employee
Plan or Benefit Arrangement, other than in the ordinary course consistent with
past practices and those grants, awards or distributions required to be made
under such Employee Plans or Benefit Arrangements as in effect on the date of
this Agreement; or (vii) make any amendment to any provision of any outstanding
grant or award that materially increases the potential cost thereof to the
Company except as provided in Section 2.8.
(f) The Company shall use its commercially reasonable best efforts not to
cause any of its representations or warranties to become untrue.
5.2 NO SOLICITATION.
(a) From and after the date hereof, the Company shall not, and shall not
permit any of its directors, officers, employees, attorneys, financial advisors,
agents or other representatives to, directly or indirectly, solicit, initiate,
encourage (including by way of furnishing information), or take any other action
to facilitate, any inquiry or the making of any proposal or offer that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal (as
hereinafter defined) from any person, or engage or participate in, enter into or
continue discussions or negotiations relating to, or agree to or endorse, any
Takeover Proposal, or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing. In addition, the Company shall, and
shall cause its directors, officers, employees, attorneys, financial advisors,
agents and other representatives to, immediately cease any existing discussions
or negotiations, or other activities referred to in the immediately preceding
sentence, with any person conducted heretofore with respect to any of the
foregoing matters referred to in the immediately preceding sentence.
Notwithstanding the foregoing, the Company may (i) furnish information pursuant
to a customary confidentiality agreement concerning the Company and its
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businesses, properties or assets to a third party who has made an unsolicited
Superior Proposal after the date hereof, (ii) engage in discussions or
negotiations with such a third party who has made an unsolicited Superior
Proposal (as hereinafter defined) after the date hereof, and/or (iii) following
receipt of an unsolicited Superior Proposal after the date hereof, take and
disclose to its stockholders a position contemplated by Rule 14e-2 (a) under the
Exchange Act or otherwise make disclosure to its stockholders, but in each case
referred to in the foregoing clauses (i) through (iii) only to the extent that
the Board of Directors of the Company shall have concluded in good faith, after
consultation with its outside counsel, that such action is required to prevent
the Board of Directors of the Company from breaching its fiduciary duties to the
stockholders of the Company under Delaware law; PROVIDED that the Board of
Directors of the Company shall not take any of the actions referred to in
clauses (i) through (iii) above until the second business day after it has
delivered the Notice of Superior Proposal (defined in Section 5.2(b)) with
respect thereto in accordance with the first sentence of Section 5.2(b). As
used in this Agreement: (i) "Takeover Proposal" means any proposal or offer, or
any expression of interest by any person relating to the Company's willingness
or ability to receive or discuss any proposal or offer (other than a proposal or
offer by Parent or Sub), for any tender or exchange offer, merger,
consolidation, recapitalization or other business combination involving the
Company or the acquisition in any manner of a substantial equity interest in
(10% or more), or a substantial portion of the assets of, the Company or any
other transaction the consummation of which would or could reasonably be
expected to impede, interfere with, prevent or materially delay the Offer, the
purchase of Shares pursuant to the Offer or the Merger; and (ii) "Superior
Proposal" means a bona fide written proposal or offer made by any person to
acquire the Company pursuant to any tender or exchange offer, merger,
consolidation, recapitalization or other business combination or acquisition of
all or substantially all of the assets of the Company on terms that the Board
determines in good faith, and in the exercise of sound and reasonable judgment
(after consultation with outside legal counsel and independent financial
advisors), to be more favorable to the Company and its stockholders than the
transaction contemplated hereby (taking into account any fees or expenses
payable hereunder or thereunder and conditions to consummation) and for which
any required financing is committed or that, in the good faith and sound and
reasonable judgment of the Board (after consultation with independent financial
advisors), is reasonably capable of being financed by such person.
(b) The Company shall promptly advise Parent orally and in writing of the
receipt of any Takeover Proposal or any inquiry that could reasonably be
expected to lead to a Takeover Proposal, the material terms and conditions
thereof, and the identity of the person making any such proposal or inquiry (the
"Notice of Superior Proposal"). The Company will keep Parent fully informed of
the status and details of any such proposal or inquiry. The parties understand
and agree that the Company shall be entitled to disclose to its stockholders any
information that is required by applicable Law (including without limitation the
Exchange Act) regarding any such proposal or inquiry.
(c) The Company agrees not to release any third party from, or waive any
provisions of, any confidentiality or standstill agreement to which the Company
is a party.
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5.3 PROXY STATEMENT; SPECIAL MEETING.
(a) Promptly after consummation of the Offer, the Company shall prepare
and file with the SEC, if required by federal securities laws, a preliminary
form of the proxy statement (the "Proxy Statement") to be mailed to the
stockholders of the Company in connection with the meeting of such stockholders
to consider and vote upon the Merger (the "Special Meeting). The Company will
cause the Proxy Statement to comply as to form in all material respects with the
applicable provisions of the Exchange Act. The Company will notify Parent of
the receipt of any comments from the SEC or its staff and of any request by the
SEC or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Parent with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Proxy Statement prior to
its being filed with the SEC and shall give Parent and its counsel the
reasonable opportunity to review all amendments and supplements to the Proxy
Statement and all responses to requests for additional information and replies
to comments prior to their being filed with or sent to the SEC. The Company
agrees to use its commercially reasonable best efforts, after consultation with
the other parties hereto, to respond promptly to all such comments of and
requests 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
stockholders of the Company. If at any time prior to the approval of this
Agreement by the Company's stockholders there shall occur any event that should
be set forth in an amendment or supplement to the Proxy Statement, the Company
will prepare and mail to its stockholders such an amendment or supplement.
(b) The Company shall take all action necessary in connection with
applicable Law to duly call, give notice of, convene and hold the Special
Meeting as promptly as practicable after the consummation of the Offer to
consider and vote upon this Agreement and the transactions contemplated hereby.
The Company shall use its best efforts to obtain the necessary approval of this
Agreement and the Merger by its stockholders.
(c) The Company shall, through its Board, recommend that its stockholders
vote in favor of the adoption of this Agreement and the transactions
contemplated hereby, subject to the Board's fiduciary duty under applicable Law,
exercised after consultation with the Company's outside legal counsel.
(d) At the Special Meeting, Parent and Sub and its direct and indirect
subsidiaries shall vote, or cause to be voted, all Shares owned by them in favor
of the Merger.
(e) Notwithstanding the foregoing, in the event that Sub shall acquire at
least 90% of the outstanding Shares in connection with the Offer, the Company
agrees, at the request of Sub, subject to Article VI, to take all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
stockholders, in accordance with Section 253 of the DGCL.
5.4 FILINGS, OTHER ACTION. Subject to the terms and conditions herein
provided, the Company and Parent shall: (a) promptly make their respective
filings and thereafter make any other
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required submissions under the HSR Act; (b) use all reasonable efforts to
cooperate with one another in (i) determining which filings are required to be
made prior to the Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time from, all
Governmental or Regulatory Authorities in connection with the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby and (ii) timely making all such filings and timely seeking all such
consents, approvals, permits or authorizations; and (c) use their commercially
reasonable best efforts to take, or cause to be taken, all other action and do,
or cause to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated by this Agreement.
If, at any time after the Effective Time, any further action is necessary or
desirable to carry out the purpose of this Agreement, the proper officers and
directors of Parent and the Company shall take all such necessary action.
5.5 PUBLIC ANNOUNCEMENTS. The initial press release or releases with
respect to the transactions contemplated by this Agreement shall be in the form
agreed to by Parent and the Company. Thereafter, for as long as this Agreement
is in effect, Parent and Sub, on the one hand, and the Company, on the other
hand, shall not, and shall cause their subsidiaries and affiliates not to, issue
or cause the publication of any press release or any other announcement
(including without limitation announcements to employees, customers or
suppliers) with respect to the Offer, the Merger or this Agreement without the
consent of the other (which shall not be withheld unreasonably), except where
such release or announcement is required by applicable Law or pursuant to any
listing agreement with, or the rules or regulations of, any securities exchange
or any other regulatory requirements. This Section 5.5 shall supersede the
provisions of paragraph 2 of the Confidentiality Agreement (defined in Section
8.11).
5.6 INSPECTION; CONFIDENTIALITY; NOTIFICATION.
(a) From the date hereof to the Effective Time, the Company shall
(i) allow all officers, attorneys, accountants and other representatives of
Parent reasonable access at all reasonable times to the offices, books, records
and files, correspondence, audits, personnel and properties, as well as to all
information relating to Contracts, titles and financial commitments, or
otherwise pertaining to the business and affairs, of the Company, (ii) furnish
to Parent's counsel, financial advisors, auditors and other representatives such
financial and operating data and other information as such persons may
reasonably request, (iii) instruct its employees, counsel and financial advisors
to cooperate with Parent in Parent's investigation of the business of the
Company, and (iv) make its personnel available at reasonable times for
discussions with representatives of Parent. Information obtained pursuant to
the immediately preceding sentence shall constitute "Confidential Information"
under the Confidentiality Agreement (defined in Section 8.11), subject to
paragraph 4 of that agreement. This Section 5.6(a) shall supersede the
provisions of paragraph 1 of the Confidentiality Agreement.
(b) Parent and Sub shall, upon request by the Company, provide the
Company, its counsel, accountants and other authorized representatives with such
information concerning Parent or Sub as may be reasonably requested by the
Company and necessary for the Company to ascertain the accuracy and completeness
of the information supplied by or on behalf of Parent or Sub for inclusion in
the Schedule 14D-9 and the Proxy Statement. Except as and to the extent
required by
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Law, the Company shall keep confidential any information furnished to it
pursuant to the preceding sentence that is reasonably designated as confidential
at the time of delivery.
(c) The Company shall give prompt notice to Parent, and Parent shall give
prompt notice to the Company, of (i) the occurrence or nonoccurrence of any
event the occurrence or non-occurrence of which would be likely to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate and (ii) any failure of the Company, Parent or Sub, as the case may
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; PROVIDED, HOWEVER, that the delivery
of any notice pursuant to this Section 5.6(c) shall not limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
5.7 CONDUCT OF BUSINESS BY SUB PENDING THE MERGER. Prior to the Effective
Time and subject to any applicable regulatory approvals, Parent shall cause Sub
to (a) perform its respective obligations under this Agreement in accordance
with the terms hereof and take all other actions necessary or appropriate for
the consummation of the transactions contemplated hereby and (b) not engage
directly or indirectly in any business or activities of any kind whatsoever and
not enter into any agreements or arrangements with any person or entity, or be
subject to or be bound by any obligation or undertaking that is not contemplated
by this Agreement.
5.8 EMPLOYEE BENEFITS. Parent and the Surviving Corporation will, for a
period of not less than two years after the consummation of the Offer, either
(a) make available, or cause to be made available, for the benefit of employees
of the Company, continued participation in the "employee benefit plans" (as such
term is defined in Section 3(3) of ERISA) maintained by the Company immediately
prior to the Effective Time under terms and conditions substantially similar to
those in effect immediately prior to the Effective Time or (b) make available,
or cause to be made available, under terms and conditions substantially similar
to the terms and conditions under which Parent's employees participate in
Parent's employee benefit plans, participation in (i) employee benefit plans
maintained by Parent or (ii) employee benefit plans established by Parent for
the benefit of employees of the Company that are substantially similar to the
employee benefit plans maintained by Parent; provided, however, nothing
contained in this Section 5.8 shall be construed to give any employee of Parent
or the Company, either prior to or after the Effective Time, any right to
participate in, accrue or receive any benefit under or receive any equivalent
benefit or compensation that would be or have been accrued or received under,
any employee benefit plan maintained either by the Company or Parent either
prior to or after the Effective Time. Parent shall honor all change of control
agreements listed in Section 3.15 of the DISCLOSURE SCHEDULE. Any employees of
the Company who participate in Parent's employee benefit plans after the
consummation of the Offer shall be given credit thereunder for past service with
the Company for participation and vesting purposes.
5.9 INDEMNIFICATION OF DIRECTORS AND OFFICERS. (a) Notwithstanding
anything herein to the contrary, the certificate of incorporation and by-laws
(or equivalent governing instruments) of the Surviving Corporation shall contain
provisions no less favorable with respect to exculpation and indemnification of
directors and officers than are set forth in the certificate of incorporation
and by-
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laws of the Company, which provisions shall not be amended, repealed or
otherwise modified for a period of six years after the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who at
or prior to the Effective Time were directors, officers, agents or employees of
the Company or who were otherwise entitled to indemnification pursuant thereto.
(b) The Company shall and, after the consummation of the Offer, Parent
shall cause the Company to maintain in effect for not less than six years after
the Effective Time, and for so long thereafter as any claim asserted during such
time has not been fully adjudicated by a court of competent jurisdiction, the
current policies of directors' and officers' liability insurance maintained by
the Company on the date hereof with respect to matters occurring through the
Effective Time (including, without limitation, the transactions contemplated by
this Agreement) and covering parties who are covered by such current policies.
Prior to the consummation of the Offer, the Company shall endeavor to, and shall
be permitted to, satisfy its obligations under the preceding sentence by
extending coverage under such insurance policies pursuant to a six year "tail"
policy (provided that the lump sum payment to purchase such coverage does not
exceed $250,000). If such a "tail" policy cannot be purchased on such terms
prior to the consummation of the Offer, then the Company shall endeavor to
obtain the coverage contemplated by the first sentence of this Section 5.9(b) at
the lowest premium cost reasonably available; PROVIDED, HOWEVER, that the
Company shall not be obligated to make annual payments that exceed 200% of the
annual premium payments in effect as of the date this Agreement (in which case
the Company shall obtain the maximum amount of coverage that may be obtained for
such premium or purchase tail coverage on the terms and conditions specified in
the proviso that follows); and PROVIDED FURTHER that during such six-year period
the Company shall review, not less than annually, the feasibility of purchasing
tail coverage for the balance of such six-year period and shall endeavor to
purchase such coverage if it is available at a cost not exceeding the maximum
amount that the Company would otherwise be obligated to pay under the previous
proviso. The Company represents and warrants that the current annual premium
for such current policies is $80,000. Parent will cause the Surviving Company
to honor in accordance with their respective terms each of the indemnity
agreements between the Company and its officers and directors as in effect on
the date of this Agreement and shall not cause the Company to terminate such
agreements prior to or after the Effective Time.
(c) The Company, and, from and after the Effective Time, the Surviving
Corporation, shall indemnify, defend and hold harmless the present and former
officers, directors, employees and agents of the Company (an "Indemnified
Party") against all losses, expenses, claims, damages, liabilities, judgments
and settlement amounts that are paid or incurred in connection with actions or
omissions occurring on or prior to the Effective Time (including without
limitation the transactions contemplated by this Agreement) to the fullest
extent permitted or required under Delaware law and, in the case of
indemnification by the Surviving Corporation, to the fullest extent permitted
under Delaware law, the certificate of incorporation and the by-laws of the
Company in effect at the date hereof, including provisions relating to advances
of expenses incurred in the defense of any action or suit.
(d) The provisions of this Section are intended to be for the benefit of,
and shall be enforceable by, each Indemnified Party and each party entitled to
insurance coverage under
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paragraph (b) above, respectively, and his or her heirs and legal
representatives, and shall be in addition to any other rights an Indemnified
Party may have under the DGCL, any indemnity agreement, the certificate of
incorporation or bylaws of the Surviving Corporation or otherwise.
5.10 CLOSING CONDITIONS. Following consummation of the Offer, each of the
Company, Sub and Parent shall use their commercially reasonable best efforts to
fulfill the conditions specified in Article VI, to the extent the fulfillment of
such conditions is within their control, and, subject to Article VI, to
consummate the Merger on the earliest date practicable. The foregoing
obligation includes refraining from any actions that would cause the Company,
Parent or Sub's representations and warranties to be inaccurate in any material
respect as of the Closing, executing and delivering the agreements and other
documents referred to in Article VI and preparing all documentation reasonably
requested by the other party.
5.11 SCHEDULE 14D-1. Parent and Sub (and the Company with respect to
written information supplied specifically for use in the Schedule 14D-1 and the
Offer Documents) shall promptly correct the Schedule 14D-1 and the Offer
Documents if and to the extent that they shall have become false or misleading
in any material respect and Parent and Sub shall take all steps necessary to
cause such documents as so corrected to be filed with the SEC and disseminated
to the Company's stockholders to the extent required by applicable federal
securities laws.
5.12 SCHEDULE 14D-9. The Company (and Parent and Sub with respect to
written information supplied specifically for use in the Schedule 14D-9) shall
promptly correct the Schedule 14D-9 if and to the extent that it shall have
become false or misleading in any material respect and the Company shall take
all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with
the SEC and disseminated to the Company's stockholders to the extent required by
applicable federal securities laws.
ARTICLE VI
CONDITIONS TO THE MERGER
The respective obligation of each party to effect the Merger is subject to
the fulfillment, at or prior to the Effective Time, of each of the following
conditions:
(1) Sub shall have purchased all Shares validly tendered pursuant to the
Offer;
(2) If required by the DGCL, the Merger and this Agreement shall have
received the Requisite Stockholder Approval;
(3) No Governmental or Regulatory Authority shall have issued an Order or
ruling or taken any other action declaring illegal or otherwise prohibiting the
Merger; provided, that if the foregoing has occurred, each party will use its
commercially reasonable best efforts to cause such action to be vacated or
reversed so that the Merger may be consummated; and
(4) Any applicable waiting period under the HSR Act shall have expired or
terminated.
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ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. Subject to the requirements of Section 1.3(c) with
respect to terminations by the Company, this Agreement may be terminated at any
time (upon written notice to the other parties hereto) prior to the Effective
Time, whether before or after approval by the stockholders of the Company:
(a) by the Company, if:
(i) the Company receives a Superior Proposal (defined in Section 5.2)
prior to the consummation of the Offer; PROVIDED that, prior to terminating this
Agreement, (A) the Company shall have provided the Notice of Superior Proposal
in accordance with the first sentence of Section 5.2(b), (B) at least two
business days later, the Board shall have re-determined in good faith, and in
the exercise of sound and reasonable judgment (after consultation with outside
legal counsel and independent financial advisors), that the Superior Proposal
continues to be a Superior Proposal after taking into account any improved terms
proposed by Parent and Sub prior to the expiration of such two business day
period and (C) the Company shall have paid to Parent the Fee required pursuant
to Section 7.2(b); or
(ii) the Offer has not been timely commenced in accordance with
Section 1.1; or
(b) by Parent and Sub, if:
(i) the Board shall have withdrawn or modified, in any manner adverse
to Parent and Sub, the approval or recommendation by the Board of this
Agreement, the Offer or the Merger or approved or recommended any Takeover
Proposal (defined in Section 5.2), or shall have resolved to do any of the
foregoing; or
(ii) if the Company shall directly or indirectly through agents or
representatives continue negotiations with any Third Party concerning any
Takeover Proposal or Superior Proposal for more than 20 business days after
having first furnished information or commenced negotiations with such Third
Party (whichever occurred earlier) with respect thereto; or
(iii) (A) If a Takeover Proposal that is publicly disclosed shall
have been commenced, publicly proposed or communicated to the Company and (B)
the Company shall not have rejected such Takeover Proposal within 15 business
days (or 10 business days if required by the federal securities laws) after the
earlier of its receipt thereof or the date its existence first becomes publicly
disclosed; or
(c) by Parent and Sub or by the Company, if:
(i) the Offer shall be terminated or expire in accordance with its
terms without the purchase of any Shares pursuant thereto; provided, however,
that Parent and Sub shall not be
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entitled to terminate for such reason if the cause thereof is a breach by Parent
or Sub of any of their obligations under this Agreement, and the Company shall
not be entitled to terminate for such reason if the cause thereof is a breach by
the Company of any of its obligations under this Agreement; or
(ii) there occurs a material breach by the other party of any
representation or warranty or covenant or agreement made by the defaulting
party:
(A) that by its nature cannot be cured prior to the expiration
of the Offer, or
(B) that is curable, but has not been cured prior to the
expiration of the Offer;
provided that the terminating party itself is not in material breach of this
Agreement and further provided that Parent and Sub may terminate this Agreement
after the consummation of the Offer only if their acts or omissions did not
cause or substantially contribute to the material breach; or
(iii) any Governmental or Regulatory Authority shall have issued
an Order or ruling or taken any other action declaring illegal or otherwise
prohibiting the consummation of the Offer or the Merger and such Order shall
have become final and nonappealable; or
(iv) Sub shall not have purchased all Shares validly tendered pursuant
to the Offer within 120 calendar days following the commencement of the Offer,
and this Agreement has not been terminated under another subsection of this
Section 7.1; or
(d) by mutual written consent of the Boards of Directors of the Company,
Parent and Sub.
7.2 EFFECT OF TERMINATION. (a) In the event of a termination by either the
Company or Parent and Sub pursuant to Section 7.1, this Agreement will forthwith
become null and void and there will be no further liability or obligation on the
part of either the Company or Parent or Sub (or any of their respective
representatives or affiliates) as a result of a breach of any representation,
warranty, covenant or condition of this Agreement, except that:
(i) the provisions of Section 5.5, the second sentence of Section
5.6(a), this Article 7, Article 8 and the Confidentiality Agreement (defined in,
and to the extent set forth in, Section 8.11) shall survive any such
termination; and
(ii) nothing contained herein shall relieve any party hereto of
liability for breach of its representations, warranties, covenants or agreements
contained in this Agreement or in the Confidentiality Agreement (defined in, and
to the extent set forth in, Section 8.11) prior to such termination.
(b) If:
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<PAGE>
(i) this Agreement is terminated (A) by the Company pursuant to
Section 7.1(a)(i) hereof or (B) by Parent and Sub pursuant to 7.1(b)(i) hereof;
or
(ii) (A) this Agreement is terminated (1) by Parent and Sub pursuant
to Section 7.1(b)(ii), 7.1(b)(iii), or 7.1(c)(ii) hereof, (2) by Parent and Sub
or by the Company pursuant to Section 7.1(c)(iii) hereof, but only if the Order,
ruling or other action by the Governmental or Regulatory Authority giving rise
thereto is issued or taken as a result of an action, suit or proceeding in which
a Third Party who has made a Takeover Proposal or Superior Proposal is a
participant or which involves issues arising out of a Takeover Proposal or
Superior Proposal, or (3) by Parent and Sub or by the Company pursuant to
Section 7.1(c)(i) or 7.1(c)(iv) hereof, but only if, at the time of such
termination, the Minimum Condition shall not have been satisfied, AND (B) within
12 months thereafter, either (1) the Company enters into an agreement with
respect to any Third Party Acquisition or (2) any Third Party Acquisition
occurs, AND (C) after the execution and delivery of this Agreement but prior to
such termination, (1) the Company (or its agents) had discussions with respect
to such Third Party Acquisition, (2) the Company (or its agents) furnished
information with respect to or with a view to such Third Party Acquisition or
(3) a Third Party announced an interest publicly with respect to any Third Party
Acquisition, or indicated an interest or made a proposal with respect to any
Third Party Acquisition and thereafter such indication or proposal became
public, or, with respect to any Third Party that announced an interest publicly
prior to the date hereof with respect to any Third Party Acquisition, or
indicated an interest or made a proposal prior to the date hereof with respect
to any Third Party Acquisition, such Third Party indicated publicly its
continued interest with respect to such Third Party Acquisition, or indicated
its continued interest or amended any previous proposal with respect to such
Third Party Acquisition and thereafter such indication or amendment became
public;
then the Company shall pay to Parent, within two business days following any
such termination under paragraph (i) above or within two business days following
the occurrence of the earlier of the events described in paragraph (ii)(B) in
the event of any such termination under paragraph (ii) above, a fee, in cash and
in immediately available funds, of $5 million (the "Fee"); PROVIDED, HOWEVER,
that the Company in no event shall be obligated to pay more than one Fee with
respect to all such terminations; PROVIDED, FURTHER, that the Company shall not
be obligated to pay the Fee pursuant to this Section if Parent or Sub shall be
in material breach of its covenants or agreements in this Agreement, and,
PROVIDED FURTHER, that the Company shall reimburse Parent for all reasonable
attorneys' fees and other out-of-pocket expenses incurred with collecting a Fee
hereunder if it is ultimately determined that a Fee is payable by the Company
hereunder.
For purposes of this Section:
"THIRD PARTY" means any person other than Parent, Sub or any affiliate
thereof.
"THIRD PARTY ACQUISITION" means the occurrence of any of the following
events, in a single transaction or a series of related transactions: (i) the
acquisition of the Company by merger, tender offer, exchange offer or otherwise
by any Third Party; (ii) the acquisition by a Third Party of 30% or more of the
assets of the Company and its subsidiaries, taken as a whole; (iii) the
acquisition by
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<PAGE>
a Third Party or the Company of more than 30% of the outstanding Shares; or
(iv) the adoption by the Company of a plan of liquidation or the declaration or
payment of an extraordinary dividend. The Company acknowledges that the
provisions contained in this subsection 7.2(b) are an integral part of the
transactions contemplated by this Agreement, and that, without these provisions,
Parent would not enter into this Agreement.
(c) Except as otherwise specifically provided herein, each party shall
bear its own expenses in connection with this Agreement and the transactions
contemplated hereby.
7.3 AMENDMENT. Subject to Section 1.3(c), this Agreement may be amended,
supplemented or modified by action taken by the respective Boards of Directors
of the parties hereto at any time prior to the Effective Time, whether prior to
or after the Requisite Stockholder Approval shall have been obtained, but after
such approval only to the extent permitted by applicable Law. No such
amendment, supplement or modification shall be effective unless set forth in a
written instrument duly executed by each party hereto.
7.4 WAIVER. At any time prior to the Effective Time, any party hereto
may, by action of its Board of Directors, to the extent permitted by applicable
Law (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 hereto contained herein or
(c) waive compliance with any of the covenants, agreements or conditions of the
other parties hereto contained herein. No such extension or waiver shall be
effective unless set forth in a written instrument duly executed by the party
extending the time of performance or waiving any such inaccuracy or
non-compliance. No waiver by any party of any term or condition of this
Agreement shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Company in this Agreement shall terminate upon the
consummation of the Offer.
8.2 CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms have the following meanings:
(a) "affiliate" means a person that directly or indirectly, through one or
more intermediaries, controls, is controlled by, or is under common control with
the first mentioned person;
(b) "associate" when used to indicate a relationship with any person, has
the meaning specified in Rule 405 promulgated under the Securities Act;
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<PAGE>
(c) "person" includes an individual, corporation, partnership,
association, trust, other entity or any unincorporated organization; and
(d) a "subsidiary" of a person is any corporation or other incorporated or
unincorporated organization more than 50% of the equity interests of which are
beneficially owned directly or indirectly by such person or with respect to
which such person has the right to exercise control.
8.3 NOTICES. Any notices or other communications hereunder shall be in
writing and shall be deemed to have been duly given when delivered in person or
by a nationally recognized overnight delivery service, or transmitted by
facsimile transmission (with confirmation of receipt), or five days after
dispatch by registered or certified mail, postage prepaid, addressed to the
parties at the following addresses or facsimile numbers:
(a) If to the Company, to: Melamine Chemicals, Inc.
River Road, Hwy. 8
Donaldsonville, LA 70346
Attention: Fred Huber, Chief Executive Officer
Facsimile: (504) 473-0550
with a copy to: Jones, Walker, Waechter, Poitevent,
Carrere & Denegre, L.L.P.
201 St. Charles Avenue
New Orleans, LA 70170
Attention: L. R. McMillan, II
Facsimile: (504) 582-8012
(b) If to Parent or Sub, to: Borden Chemical, Inc.
180 East Broad Street
Columbus, Ohio 43215
Attention: Lawrence L. Dieker, Esq.,
Vice President, General Counsel and Secretary
Facsimile: (614) 225-4238
with copies to: Borden, Inc.
180 East Broad Street
Columbus, Ohio 43215
Attention: William F. Stoll, Jr., Esq., Senior
Vice President and General Counsel
Facsimile: (614) 627-8374
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<PAGE>
and
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: David J. Sorkin, Esq.
Facsimile: (212) 455-2502
or such other address as shall be furnished in writing by any party.
8.4 HEADINGS. The descriptive headings of the several articles and
sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
8.5 APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the Laws of the State of Delaware without giving effect to the
conflict of Laws provisions thereof.
8.6 NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned, by operation of Law or
otherwise, by any party hereto without the prior written consent of the other
parties hereto, and any attempt to do so will be void; PROVIDED that Parent may
assign its rights and obligations or those of Sub to any direct or indirect
wholly owned subsidiary of Parent or Borden, Inc., a Delaware corporation, but
no such assignment shall relieve Parent or Sub, as the case may be, of its
obligations hereunder if such assignee does not perform such obligations.
Subject to the preceding sentence, this Agreement is binding upon, inures to the
benefit of and is enforceable by the parties hereto and their respective
successors and assigns.
8.7 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
8.8 THIRD PARTY BENEFICIARIES. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and except as otherwise expressly
provided in Section 5.9, it is not the intention of the parties to confer
third-party beneficiary rights upon any other person.
8.9 INVALID PROVISIONS. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future Law or Order,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
and (c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom.
8.10 SPECIFIC PERFORMANCE. Nothing in this Agreement shall preclude a
party from seeking specific performance, injunctive relief or any other remedies
not involving the payment of monetary
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<PAGE>
damages in the event of any breach or violation (or threatened breach or
violation) of any provision of this Agreement by the other party and each party
acknowledges that, in light of the unique benefit to it of its rights under this
Agreement, such remedies shall be available in respect of any such breach or
violation by it in any suit properly instituted in a court of competent
jurisdiction and shall be in addition to any other remedies available at Law or
in equity to such party.
8.11 ENTIRE AGREEMENT. The Confidentiality and Standstill Agreement dated
as of July 24, 1997 between Parent and the Company (the "Confidentiality
Agreement") shall remain in full force and effect except as expressly superseded
hereby; provided that if the Company has paid (or is obligated to pay) the Fee,
the standstill provisions of the Confidentiality Agreement shall terminate.
This Agreement (including the Annexes, schedules, documents and instruments
referred to herein) and the Confidentiality Agreement constitute the entire
agreement and supersedes (with prospective effect only) any other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof.
8.12 JURISDICTION. The parties to this Agreement, acting for themselves
and for their respective successors and assigns, hereby irrevocably and
unconditionally consent to submit to the non-exclusive jurisdiction of the
courts of the State of Delaware and of the United States located in such State
for any actions, suits or proceedings arising out of or relating to this
Agreement (and none of such persons shall commence any action, suit or
proceeding relating thereto except in such courts). Each such person hereby
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement in the courts of
the State of Delaware or of the United States located in such State.
* * * * *
- 38 -
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the date first written above.
BORDEN CHEMICAL, INC.
By: /s/ Joseph M. Saggese
----------------------
Name: Joseph M. Saggese
Title: Chairman of the Board, President,
and Chief Executive Officer
MC MERGER CORP.
By: /s/ James O. Stevning
----------------------
Name: James O. Stevning
Title: President
MELAMINE CHEMICALS, INC.
By: /s/ Frederic R. Huber
----------------------
Name: Frederic R. Huber
Title: President and Chief Executive Officer
The undersigned hereby irrevocably and unconditionally guarantees the
obligations of Borden Chemical, Inc. hereunder.
BORDEN, INC.
By: /s/ Ellen German Berndt
------------------------
Name: Ellen German Berndt
Title: Secretary
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<PAGE>
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Sub shall not be required
to accept for payment or pay for any tendered Shares (subject to any applicable
rules and regulations of the SEC, including Rule 14e1(c) under the Exchange
Act), if
(a) as of the expiration of the Offer, there shall not have been
validly tendered and not withdrawn pursuant to the Offer a number of Shares such
that, upon consummation of the Offer, Sub and its affiliates will beneficially
own in the aggregate not less than 51% of the Shares outstanding on a fully
diluted basis (the "Minimum Condition");
(b) any applicable waiting period under the HSR Act shall not have
expired or terminated prior to the expiration of the Offer;
(c) at any time on or after the date of this Agreement and before the
time of the expiration of the Offer (or, in the case of conditions related to
regulatory matters, before the acceptance of any of the Shares for payment or
the payment thereof), any of the following events shall have occurred and be
continuing:
(i) any Law or Order that (A) has the effect of making
illegal or otherwise restraining, prohibiting or making materially more costly
the making or consummation of the Offer or the Merger or prohibiting the
performance of this Agreement, (B) prohibits or imposes any material limitation
on the ability of Sub or Parent effectively to acquire or to hold or exercise
full rights of ownership of the Shares purchased pursuant to the Offer including
the right to vote such Shares on all matters properly presented to the Company's
stockholders; or (C) prohibits or materially limits the ownership or operation
by the Company or any of its subsidiaries, or by Parent, Sub or any of Parent's
subsidiaries, of all or any material portion of the business or assets of the
Company, or compels Sub, Parent or any of Parent's subsidiaries to dispose of or
hold separate all or any material portion of the business or assets of the
Company, as a result of the transactions contemplated by the Offer or this
Agreement;
(ii) (A) any action or proceeding brought or threatened by any
Governmental or Regulatory Authority that seeks any Order having any effect set
forth in clause (i) above or (B) any action or proceeding brought by any other
person that could reasonably be expected to result in any Order having any
effect set forth in clause (i) above;
(iii) (A) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or any material
limitation (other than an increase in interest rates) imposed by any
Governmental or Regulatory Authority on the extension of credit by lending
institutions in general, (B) any general suspension of trading in, or limitation
on prices for, securities on any United States national securities exchange or
in the over-the-counter market or (C) a decline of at least 30% in both the Dow
Jones Average of Industrial Stocks and the Standard & Poor's 500 index from the
date hereof; provided that such situation remains in effect through the date
that any party seeks to assert the failure of this condition;
A-1
<PAGE>
(iv) a commencement of a war or armed hostilities or other
national or international crisis involving the United States and having a
significant adverse effect on general economic conditions or the functioning of
the financial markets in the United States;
(v) the representations and warranties made by the Company in
the Agreement that are subject to a materiality qualification shall not be true
and correct, or the representations and warranties made by the Company in the
Agreement that are not so qualified shall not be true and correct in any respect
that would have a Material Adverse Effect in each case as of the date of the
consummation of the Offer as though made on and as of such date or, in the case
of representations and warranties made as of a specific date earlier than the
date of the consummation of the Offer, on and as of such earlier date; provided,
however, that if Parent or Sub discovers such a breach of a representation or
warranty, Parent or Sub shall promptly notify the Company of the nature of such
breach and the Company shall be entitled to attempt to cure such breach prior to
the expiration of the Offer;
(vi) the Company shall not have performed and complied with,
in all material respects (without reference to any materiality qualifications
contained therein), each agreement and covenant required by the Agreement to be
performed or complied with by it; provided, however, that if Parent or Sub
discovers such a breach of an agreement or covenant, Parent or Sub shall
promptly notify the Company of the nature of such breach and the Company shall
be entitled to attempt to cure such breach prior to the expiration of the Offer;
(vii) the Agreement shall have been terminated in accordance
with its terms,
which, in the case of paragraphs (a) through (c)(vi) above, makes it
inadvisable, as determined by Sub in good faith, to proceed with the Offer or
with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Parent and Sub and may
be asserted by Parent or Sub regardless of the circumstances giving rise to any
such condition and may be waived by Parent or Sub in whole or in part at any
time and from time to time in their sole discretion, except as otherwise
provided in the Merger Agreement with respect to the Minimum Condition and
compliance with the HSR Act. Parent's or Sub's failure at any time to exercise
any of the foregoing rights shall not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and circumstances
and each such right shall be deemed an ongoing right which may be asserted at
any time and from time to time.
A-2
<PAGE>
ANNEX B
RESTATED CERTIFICATE OF INCORPORATION
OF
MELAMINE CHEMICALS, INC.
Pursuant to Section 2.3 of the Merger Agreement, the certificate of
incorporation of the Company shall be amended so as to read in its entirety as
follows:
FIRST: The name of the Corporation is Melamine Chemicals, Inc.
SECOND: The registered office and registered agent of the Corporation is
Corporation Service Company, 1013 Centre Road, New Castle County, Wilmington,
Delaware 19805.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of Delaware.
FOURTH: The total number of shares of stock that the Corporation is
authorized to issue is 100 shares of Common Stock, par value $0.01 per share.
FIFTH: The Board of Directors of the Corporation, acting by majority
vote, may alter, amend or repeal the By-Laws of the Corporation.
SIXTH: No director shall be personally liable to the Company or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director, except (i) for breach of the director's duty of loyalty
to the Corporation or its stockholders, (ii) for acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of law,
(iii) pursuant to Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit. Any repeal or modification of this Article SIXTH shall not adversely
affect any right or protection of a director of the Corporation existing at the
time of such modification or repeal.
* * * * * *
B-1
<PAGE>
Exhibit 11(c)(2)
TENDER AGREEMENT
----------------
TENDER AGREEMENT, dated as of October 9, 1997, among BORDEN CHEMICAL,
INC., a Delaware corporation (the "PARENT"), MC MERGER CORP., a Delaware
corporation and a wholly owned subsidiary of the Parent (the "SUB"), and
CHEMFIRST INC., a Mississippi corporation (the "SELLER").
RECITALS
--------
Concurrently herewith, the Parent, the Sub and Melamine Chemicals,
Inc., a Delaware corporation (the "COMPANY"), are entering into an Agreement and
Plan of Merger dated the date hereof (the "MERGER AGREEMENT"; capitalized terms
used but not defined herein shall have the meanings set forth in the Merger
Agreement), pursuant to which the Sub agrees to make a tender offer (the
"OFFER") for all outstanding shares of common stock, $.01 par value per share
(collectively "COMPANY COMMON STOCK"), of the Company, at $20.50 per share, net
to the seller in cash, to be followed by a merger (the "MERGER") of the Sub with
and into the Company.
As of the date hereof, the Seller beneficially owns directly 1,275,000
shares of Company Common Stock (the "EXISTING SHARES" and, together with any
shares of Company Common Stock acquired after the date hereof and prior to the
termination hereof, whether upon the exercise of options, conversion of
convertible securities or otherwise, the "SHARES").
As a condition to their willingness to enter into the Merger Agreement
and make the Offer, the Parent and the Sub have required that the Seller agree,
and the Seller has agreed, to tender the Shares in the Offer and grant a proxy
to vote all of the Shares owned by the Seller on the terms and conditions
provided for herein.
AGREEMENT
---------
To implement the foregoing and in consideration of the mutual
agreements contained herein, the parties agree as follows:
1. AGREEMENT TO TENDER AND VOTE; PROXY. (a) TENDER. The Seller
hereby agrees to validly tender pursuant to the Offer and not withdraw all
Shares.
(b) VOTING. The Seller hereby agrees that, during the time this
Agreement is in effect, at any meeting of the stockholders of the Company,
however called, or in any written consent in lieu thereof, the Seller shall (i)
vote the Shares in favor of the Merger; (ii) vote the Shares against any action
or agreement that would result in a breach in any material respect of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement; and (iii) vote the Shares against any action
or agreement (other than the Merger Agreement or the transactions
<PAGE>
2
contemplated thereby) that would impede, interfere with, delay, postpone or
attempt to discourage the Merger or the Offer, including, but not limited to:
(A) any extraordinary corporate transaction, such as a merger, consolidation or
other business combination involving the Company and its subsidiaries; (B) a
sale or transfer of a material amount of assets of the Company and its
subsidiaries or a reorganization, recapitalization or liquidation of the Company
and its subsidiaries; (C) any change in the management or board of directors of
the Company, except as otherwise agreed to in writing by the Sub; (D) any
material change in the present capitalization or dividend policy of the Company;
or (E) any other material change in the Company's corporate structure or
business.
(c) PROXY. The Seller hereby grants to the Parent, and to each
officer of the Parent, a proxy to vote the Shares as indicated in Section 1(b).
The Seller intends this proxy to be irrevocable and coupled with an interest and
will take such further action or execute such other instruments as may be
reasonably necessary to effectuate the intent of this proxy and hereby revokes
any proxy previously granted by the Seller with respect to the Shares.
2. EXPIRATION. This Agreement, the Parent's right to vote the Shares
covered hereby and the Seller's obligation to tender pursuant hereto shall
terminate on the Expiration Date. As used herein, the term "EXPIRATION DATE"
means the first to occur of (a) the Effective Time, (b) the termination of the
Merger Agreement, (c) written notice of termination of this Agreement by the
Parent to the Seller and (d) the date which is 180 days after the date hereof.
3. REPRESENTATION. (a) REPRESENTATIONS OF THE PARENT AND THE SUB. The
Parent and the Sub, jointly and severally, hereby represent to the Seller as
follows:
(i) AUTHORITY RELATIVE TO AGREEMENT. Each of the Parent and the Sub
has the necessary corporate power and authority to enter into this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
authorized, executed and delivered by each of the Parent and the Sub and
this Agreement constitutes the legal, valid and binding agreement of the
Parent and the Sub.
(ii) NO CONFLICT. The execution and delivery of this Agreement by
the Parent and the Sub do not, and the performance by the Parent and the
Sub of their obligations hereunder and the consummation of the transactions
contemplated hereby will not, conflict with, result in a violation or
breach of, constitute (with or without notice or lapse of time or both) a
default under, or require any notification or consent or approval under,
any of the terms, conditions or provisions of (A) the certificate of
<PAGE>
3
incorporation or by-laws of the Parent or any of its subsidiaries, or (B)
subject to the premerger notification requirements of the HSR Act, and the
requirements of the Securities Act, the Exchange Act and any relevant
national securities exchange, (1) any Law or Order applicable to the Parent
or any of its subsidiaries or any of their respective assets or properties,
or (2) any Contracts to which the Parent or any of its subsidiaries is a
party or by which the Parent or any of its subsidiaries or any of their
respective assets or properties is bound, except with respect to the
foregoing clause (B), those which, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect (as defined in
Section 7(h)) with respect to the Parent.
(b) REPRESENTATIONS OF THE SELLER. The Seller hereby represents to
the Parent and the Sub as follows:
(i) AUTHORITY RELATIVE TO AGREEMENT. The Seller has the necessary
corporate power and authority to enter into this Agreement and to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. This Agreement has been duly and validly authorized, executed and
delivered by the Seller and this Agreement constitutes the legal, valid and
binding agreement of the Seller.
(ii) OWNERSHIP OF SHARES. On the date hereof, the Existing Shares
are owned of record or beneficially by the Seller and, on the date hereof,
the Existing Shares constitute all of the shares of Company Common Stock
owned of record or beneficially by the Seller. The Seller has sole voting
power and sole power of disposition with respect to all of the Existing
Shares, with no restrictions, subject to applicable federal securities
laws, on the Seller's rights of disposition pertaining thereto.
(iii) NO CONFLICT. The execution and delivery of this Agreement by
the Seller do not, and the performance by the Seller of its obligations
hereunder and the consummation of the transactions contemplated hereby will
not, conflict with, result in a violation or breach of, constitute (with or
without notice or lapse of time or both) a default under, or require any
notification or consent or approval under, any of the terms, conditions or
provisions of (A) the certificate of incorporation or by-laws of the
Seller, or (B) subject to the premerger notification requirements of the
HSR Act, and the requirements of the Securities Act, the Exchange Act and
any relevant national securities exchange, (1) any Law or Order applicable
to the Seller or any of its assets or properties, or (2) any Contracts to
which the Seller is a party or by which the Seller or any of its assets or
properties is bound, except with respect to the foregoing clause (B), those
which, individually or in the
<PAGE>
4
aggregate, could not reasonably be expected to have a Material Adverse
Effect with respect to the Seller.
4. CERTAIN COVENANTS OF THE SELLER. Except in accordance with the
terms of this Agreement, the Seller hereby covenants and agrees as follows:
(a) NO SOLICITATION. From and after the date hereof, the Seller shall
not, directly or indirectly, solicit, initiate, encourage (including by way
of furnishing information), or take any other action to facilitate, any
inquiry or the making of any proposal or offer which constitutes, or may
reasonably be expected to lead to, any Takeover Proposal from any person.
From and after the date hereof, the Seller shall use reasonable efforts to
prevent any of its directors (in their actions solely on behalf of the
Seller), officers (in their actions solely on behalf of the Seller),
attorneys and financial advisors from, directly or indirectly, soliciting,
initiating, encouraging (including by way of furnishing information), or
taking any other action to facilitate, any inquiry or the making of any
proposal or offer which constitutes, or may reasonably be expected to lead
to, any Takeover Proposal from any person.
(b) RESTRICTION ON TRANSFER, PROXIES AND NON-INTERFERENCE. The Seller
hereby agrees, while this Agreement is in effect, and except as
contemplated hereby, not to (i) sell, transfer, pledge, encumber, assign or
otherwise dispose of, or enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer, pledge,
encumbrance, assignment or other disposition of, any of the Shares or (ii)
grant any proxies, deposit any Shares into a voting trust or enter into a
voting agreement with respect to any Shares or (iii) take any action that
would make any representation or warranty of the Seller contained herein
untrue or incorrect or have the effect of preventing or disabling the
Seller from performing its obligations under this Agreement.
(c) ADDITIONAL SHARES. The Seller hereby agrees, while this Agreement
is in effect, to promptly notify the Parent of the number of any new shares
of Company Common Stock acquired by the Seller, if any, after the date
hereof.
5. FURTHER ASSURANCES. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further action as may be
reasonably necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this Agreement.
6. STOP TRANSFER ORDER. In furtherance of this Agreement,
concurrently herewith, the Seller shall and hereby
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5
does authorize the Company's counsel to notify the Company's transfer agent that
there is a stop transfer order with respect to all of the Existing Shares (and
that this Agreement places limits on the voting and transfer of such shares).
7. MISCELLANEOUS. (a) ENTIRE AGREEMENT; ASSIGNMENT. This Agreement
(i) constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (ii) shall not be assigned by the Seller without the
consent of Parent (which consent shall not be unreasonably withheld) or by
Parent or Sub, PROVIDED that the Parent or Sub may assign its rights and
obligations hereunder to any direct or indirect wholly owned subsidiary of the
Parent, but no such assignment shall relieve the Parent of its obligations
hereunder if such assignee does not perform such obligations.
(b) AMENDMENTS. This Agreement may be amended, supplemented or
modified by action taken by the respective Boards of Directors of the parties
hereto at any time prior to the Effective Time. No such amendment, supplement
or modification shall be effective unless set forth in a written instrument duly
executed by each party hereto.
(c) NOTICES. All notices or other communications hereunder shall be
in writing and shall be deemed to have been duly given when delivered in person
or by a nationally recognized overnight delivery service, or transmitted by
facsimile transmission (with confirmation of receipt), or five days after
dispatch by registered or certified mail, postage prepaid, addressed to the
parties at the following addresses or facsimile numbers:
If to the
Seller: ChemFirst Inc.
700 North Street
P.O. Box 1249
Jackson, MS 39215-1249
Attention: General Counsel
Facsimile: 601-949-0292
If to the
Parent or
the Sub: Borden Chemical Holdings, Inc.
180 East Broad Street
Columbus, Ohio 43215
Attention: Lawrence L. Dieker, Esq.,
Vice President, General
Counsel and Secretary
Facsimile: 614-225-4238
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6
with copies
to: Borden, Inc.
180 East Broad Street
Columbus, Ohio 43215
Attention: William F. Stoll, Jr., Esq.,
Senior Vice President and
General Counsel
Facsimile: 614-627-8374
and
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: David J. Sorkin, Esq.
Facsimile: 212-455-2502
or such other address as shall be furnished in writing by any party.
(d) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
the conflict of laws provisions thereof.
(e) SPECIFIC PERFORMANCE. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(f) COUNTERPARTS. This Agreement may be executed in two counterparts,
each of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
(g) DESCRIPTIVE HEADINGS. The descriptive headings used herein are
inserted for convenience only and do not constitute a part of this Agreement.
(h) MATERIAL ADVERSE EFFECT. The term "MATERIAL ADVERSE EFFECT"
means, when used with respect to Parent or Seller, a material adverse effect on
the ability of such party to perform its obligations hereunder or to consummate
the transactions contemplated hereby.
(i) SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law
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7
but if any provision or portion of any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or portion of any provision in such jurisdiction,
and this Agreement will be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision or portion of any
provision had never been contained herein.
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8
IN WITNESS WHEREOF, the Parent, the Sub and the Seller have caused
this Agreement to be duly executed as of the day and year first above written.
BORDEN CHEMICAL, INC.
By:/s/ Joseph M. Saggese
----------------------------------
Name: Joseph M. Saggese
Title: Chairman of the Board,
President and Chief
Executive Officer
MC MERGER CORP.
By: /s/ James O. Stevning
----------------------------------
Name: James O. Stevning
Title: President
CHEMFIRST INC.
By: /s/ J. Kelly Williams
----------------------------------
Name: J. Kelly Williams
Title: Chairman of the Board and
CEO
