<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
----------------
UNDER THE SECURITIES EXCHANGE ACT OF 1934
ARCO CHEMICAL COMPANY
(NAME OF SUBJECT COMPANY)
LYONDELL ACQUISITION CORPORATION
LYONDELL PETROCHEMICAL COMPANY
(BIDDERS)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
001920-10-7
-----------------------
(CUSIP NUMBER OF CLASS OF SECURITIES)
KERRY A. GALVIN, ESQ.
LYONDELL ACQUISITION CORPORATION
C/O LYONDELL PETROCHEMICAL COMPANY
1221 MCKINNEY, SUITE 1600
HOUSTON, TEXAS 77010
(713) 652-7300
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSONS AUTHORIZED TO RECEIVE NOTICES
AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPY TO:
STEPHEN A. MASSAD
BAKER & BOTTS, L.L.P.
ONE SHELL PLAZA
910 LOUISIANA
HOUSTON, TEXAS 77002-4995
(713) 229-1234
JUNE 18, 1998
(DATE OF EVENT WHICH REQUIRES FILING STATEMENT ON SCHEDULE 13D)
CALCULATION OF FILING FEE
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<TABLE>
<CAPTION>
TRANSACTION AMOUNT OF
VALUATION* FILING FEE
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<S> <C>
$5,769,329,645 $1,153,866
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</TABLE>
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*For purposes of calculating amount of filing fee only. The amount assumes
the purchase of 99,901,812 shares of common stock of the subject company, par
value $1.00 per share, (collectively, the "Shares"), at a price per Share of
$57.75 in cash. Such number of Shares represents all the Shares outstanding as
of June 16, 1998, plus the number of Shares issuable upon the exercise of all
outstanding options or other rights to acquire Shares.
[_Check]box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid: None
Form or Registration No.: N/A
Filing Party: N/A
Date Filed: N/A
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<PAGE>
CUSIP NO. 001920-10-7
(1)Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
LYONDELL PETROCHEMICAL COMPANY
I.R.S. No. 95-4160558
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(2)Check the Appropriate Box if a Member of a Group
(a) [_]
(b) [_]
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(3)SEC Use Only
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(4)Source of Funds
BK, OO
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(5)Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f) [_]
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(6)Citizenship or Place of Organization
Delaware
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(7)Aggregate Amount Beneficially Owned by Each Reporting Person:
80,000,001*
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(8)Check if the Aggregate Amount in Row (7) Excludes Certain Shares [_]
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(9)Percent of Class Represented by Amount in Row (7)
Approximately 80.1% of the Shares outstanding on a fully diluted basis.
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(10)Type of Reporting Person
CO
* See Footnote on Next Page.
<PAGE>
CUSIP NO. 001920-10-7
(1)Names of Reporting Persons
S.S. or I.R.S. Identification Nos. of Above Persons
Lyondell Acquisition Corporation
I.R.S. No. Applied For
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(2)Check the Appropriate Box if a Member of a Group
(a) [_]
(b) [_]
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(3)SEC Use Only
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(4)Source of Funds
AF
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(5)Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(e) or 2(f) [_]
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(6)Citizenship or Place of Organization
Delaware
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(7)Aggregate Amount Beneficially Owned by Each Reporting Person:
80,000,001*
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(8)Check if the Aggregate Amount in Row (7) Excludes Certain Shares [_]
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(9)Percent of Class Represented by Amount in Row (7)
Approximately 80.1% of the Shares outstanding on a fully diluted basis.
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(10)Type of Reporting Person
CO
*On June 18, 1998, Lyondell Petrochemical Company ("Lyondell") and Lyondell
Acquisition Corporation (the "Purchaser") entered into a Tender and Voting
Agreement (the "Tender and Voting Agreement") with Atlantic Richfield Company
("ARCO"), a stockholder of ARCO Chemical Company, a Delaware corporation (the
"Company"). ARCO has represented in the Tender and Voting Agreement that it
has sole voting and dispositive power over 80,000,001 shares of common stock,
par value $1.00 per share of the Company ("Shares"). Pursuant to the Tender
and Voting Agreement, ARCO has agreed to tender into the Offer (as hereinafter
defined), and not withdraw as long as the Tender and Voting Agreement remains
in effect, all such Shares as well as any Shares thereafter acquired by it.
Under the Tender and Voting Agreement, ARCO has granted to Lyondell a proxy,
which is irrevocable during the term of the Tender and Voting Agreement, with
respect to the Shares subject to the Tender and Voting Agreement to vote such
Shares under certain circumstances. Lyondell's right to vote the Shares
subject to the Tender and Voting Agreement is reflected in Rows 7 and 9 of
each of the tables above. A copy of the Tender and Voting Agreement is
attached hereto as Exhibit (c)(2), and the Tender and Voting Agreement is
described more fully in Section 12 of the Offer to Purchase dated June 24,
1998 (the "Offer to Purchase") attached hereto as Exhibit (a)(1).
<PAGE>
ITEM 1. SECURITY AND SUBJECT COMPANY.
(A) The name of the subject company is ARCO Chemical Company, a Delaware
corporation (the "Company"), which has its principal executive offices at
3801 West Chester Pike, Newtown Square, Pennsylvania 19073-2387.
(B) This Schedule 14D-1 relates to the offer by the Purchaser to purchase all
the outstanding Shares at a price of $57.75 per Share, net to the seller
in cash (the "Offer Price'), upon the terms and subject to the conditions
set forth in the Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"), copies of which are attached hereto
as Exhibits (a)(1) and (a)(2), respectively. Information concerning the
number of outstanding Shares is set forth in "Introduction" of the Offer
to Purchase and is incorporated herein by reference.
(C) Information concerning the principal market in which the Shares are traded
and the high and low sales prices of Shares for each quarterly period
during the past two years is set forth in Section 6 ("Price Range of the
Shares; Dividends on the Shares") of the Offer to Purchase and is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(A)-(D) AND (G) This Schedule 14D-1 is being filed by the Purchaser, a
Delaware corporation, and Lyondell, a Delaware corporation. The Purchaser
is a wholly owned subsidiary of Lyondell. Information concerning the
principal business and the address of the principal offices of the
Purchaser and Lyondell is set forth in Section 9 ("Certain Information
Concerning the Purchaser and Lyondell") of the Offer to Purchase and is
incorporated herein by reference. Information regarding the names, business
addresses, principal occupation and occupations, positions, offices or
employments during the last five years as well as the other information
required by Item 2 with respect to the directors and executive officers of
the Purchaser and Lyondell is set forth in Schedule I to the Offer to
Purchase and is incorporated herein by reference.
(E) AND (F) None.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(A) AND (B) The information set forth in Section 11 ("Contacts and
Transactions with the Company; Background of the Offer") and Section 12
("Purpose of the Offer; The Merger Agreement; The Tender and Voting
Agreement") of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(A) AND (B) The information set forth in Section 10 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(A)-(E) The information set forth in Section 12 ("Purpose of the Offer; The
Merger Agreement; The Tender and Voting Agreement") of the Offer to
Purchase is incorporated herein by reference.
(F) AND (G) The information set forth in Section 7 ("Effect of the Offer on
the Market for the Shares; Share Quotation; Exchange Act Registration;
Margin Regulations") of the Offer to Purchase is incorporated herein by
reference.
1
<PAGE>
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(A) AND (B) The information set forth in "Introduction", Section 9 ("Certain
Information Concerning the Purchaser and Lyondell") and Section 12
("Purpose of the Offer; The Merger Agreement; The Tender and Voting
Agreement") of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in "Introduction", Section 9 ("Certain Information
Concerning the Purchaser and Lyondell"), Section 11 ("Contacts and
Transactions with the Company; Background of the Offer") and Section 12
("Purpose of the Offer; The Merger Agreement; The Tender and Voting
Agreement") of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in "Introduction" and in Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION.
(A) Not applicable.
(B) AND (C) The information set forth in Section 15 ("Certain Legal Matters")
of the Offer to Purchase is incorporated herein by reference.
(D) The information set forth in Section 7 ("Effect of the Offer on the Market
for the Shares; Share Quotation; Exchange Act Registration; Margin
Regulations") of the Offer to Purchase is incorporated herein by
reference.
(E) Not Applicable.
(F) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Agreement and Plan of Merger dated as of June 18, 1998,
among the Purchaser, Lyondell and the Company and the Tender and Voting
Agreement, copies of which are attached hereto as Exhibits (a)(1), (a)(2),
(c)(1) and (c)(2), respectively, is incorporated herein by reference.
2
<PAGE>
ITEM 11. MATERIALS TO BE FILED AS EXHIBITS.
<TABLE>
<C> <S>
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies
and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated June 24, 1998.
*(a)(8) Text of Press Release dated June 18, 1998 issued by Lyondell
(Incorporated herein by this reference to Exhibit 99 of Lyondell's
Report on Form 8-K dated June 18, 1998).
(a)(9) Text of Press Release dated June 24, 1998, issued by Lyondell.
(b)(1) Commitment Letter dated June 17, 1998, among Lyondell, J.P. Morgan
Securities Inc., Donaldson Lufkin & Jenrette Securities Corporation,
BancAmerica Robertson Stephens, Chase Securities Inc., Morgan Guaranty
Trust Company of New York, DLJ Capital Funding, Inc., Bank of America
National Trust and Savings Association, The Chase Manhattan Bank,
Citibank, N.A. and NationsBank, N.A.
(c)(1) Agreement and Plan of Merger dated as of June 18, 1998, among the
Purchaser, Lyondell and the Company.
*(c)(2) Tender and Voting Agreement dated as of June 18, 1998, among the
Purchaser, Lyondell and ARCO (Incorporated herein by this reference to
Exhibit 10.3 of Lyondell's Report on Form 8-K dated June 18, 1998).
*(c)(3) Tax Agreement dated as of June 18, 1998, among ARCO, the Company and
Lyondell (Incorporated herein by this reference to Exhibit 10.2 of
Lyondell's Report on Form 8-K dated June 18, 1998).
(c)(4) Guaranty by Lyondell dated as of June 18, 1998.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
- --------
* Incorporated by reference as indicated.
3
<PAGE>
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct.
Dated: June 24, 1998
Lyondell Acquisition Corporation
/s/ Kerry A. Galvin
By:
Name:Kerry A. Galvin
Title:Vice President
Lyondell Petrochemical Company
/s/ Kerry A. Galvin
By:
Name:Kerry A. Galvin
Title:Chief Corporate Counsel and Corporate Secretary
4
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
(a)(1) Offer to Purchase.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter to Brokers, Dealers, Banks, Trust Companies and Other Nominees.
(a)(5) Letter to Clients for use by Brokers, Dealers, Banks, Trust Companies
and Other Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Form of Summary Advertisement dated June 24, 1998.
*(a)(8) Text of Press Release dated June 18, 1998 issued by Lyondell
(Incorporated herein by this reference to Exhibit 99 of Lyondell's
Report on Form 8-K dated June 18, 1998).
(a)(9) Text of Press Release dated June 24, 1998, issued by Lyondell.
(b)(1) Commitment Letter dated June 17, 1998, among Lyondell, J.P. Morgan
Securities Inc., Donaldson Lufkin & Jenrette Securities Corporation,
BancAmerica Robertson Stephens, Chase Securities Inc., Morgan Guaranty
Trust Company of New York, DLJ Capital Funding, Inc., Bank of America
National Trust and Savings Association, The Chase Manhattan Bank,
Citibank, N.A. and NationsBank, N.A.
(c)(1) Agreement and Plan of Merger dated as of June 18, 1998, among the
Purchaser, Lyondell and the Company.
*(c)(2) Tender and Voting Agreement dated as of June 18, 1998, among the
Purchaser, Lyondell and ARCO (Incorporated herein by this reference to
Exhibit 10.3 of Lyondell's Report on Form 8-K dated June 18, 1998).
*(c)(3) Tax Agreement dated as of June 18, 1998, among ARCO, the Company and
Lyondell (Incorporated herein by this reference to Exhibit 10.2 of
Lyondell's Report on Form 8-K dated June 18, 1998).
(c)(4) Guaranty by Lyondell dated as of June 18, 1998.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
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* Incorporated by reference as indicated.
5
<PAGE>
EXHIBIT 99(A)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ARCO CHEMICAL COMPANY
AT
$57.75 NET PER SHARE
BY
LYONDELL ACQUISITION CORPORATION,
A WHOLLY OWNED SUBSIDIARY OF
LYONDELL PETROCHEMICAL COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, JULY 22, 1998 UNLESS THE OFFER IS EXTENDED
THE BOARD OF DIRECTORS OF ARCO CHEMICAL COMPANY HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT (AS DEFINED HEREIN) AND THE TRANSACTIONS CONTEMPLATED THEREBY
AND DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST
INTERESTS OF, STOCKHOLDERS OF ARCO CHEMICAL COMPANY AND UNANIMOUSLY RECOMMENDS
THAT STOCKHOLDERS OF ARCO CHEMICAL COMPANY ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH
NUMBER OF SHARES THAT, TOGETHER WITH ANY SHARES OWNED BY PURCHASER, LYONDELL
AND THEIR AFFILIATES, WOULD CONSTITUTE AT LEAST A MAJORITY OF ALL OUTSTANDING
SHARES ON A FULLY DILUTED BASIS AND (2) THE WAITING PERIOD UNDER THE HART-
SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976 APPLICABLE TO THE PURCHASE OF
SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED.
LYONDELL AND THE PURCHASER HAVE ENTERED INTO A TENDER AND VOTING AGREEMENT
DATED AS OF JUNE 18, 1998 WITH ATLANTIC RICHFIELD COMPANY, WHICH HAS
REPRESENTED THAT IT HAS SOLE VOTING AND DISPOSITIVE POWER OVER 80,000,001
SHARES (APPROXIMATELY 80.1% OF THE OUTSTANDING SHARES ON A FULLY DILUTED
BASIS). PURSUANT TO THE TENDER AND VOTING AGREEMENT, AMONG OTHER THINGS,
ATLANTIC RICHFIELD COMPANY HAS AGREED TO TENDER ALL SUCH SHARES PURSUANT TO
THE OFFER AND NOT WITHDRAW SUCH SHARES AS LONG AS THE TENDER AND VOTING
AGREEMENT REMAINS IN EFFECT.
THE DEALER MANAGER FOR THE OFFER IS
J.P. MORGAN & CO.
June 24, 1998
<PAGE>
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) should either (1) complete and sign the Letter of
Transmittal (or a facsimile thereof) in accordance with the instructions in
the Letter of Transmittal, have such stockholder's signature thereon
guaranteed if required by Instruction 1 to the Letter of Transmittal, mail or
deliver the Letter of Transmittal (or such facsimile), and any other required
documents to the Depositary (as defined herein) and deliver the certificates
for such Shares to the Depositary along with the Letter of Transmittal (or
such facsimile) or, in the case of a book-entry transfer effected pursuant to
the procedures described in Section 2, deliver an Agent's Message (as defined
herein) and any other required documents to the Depositary and deliver such
Shares pursuant to the procedures for book-entry transfer described in Section
2, in each case prior to the expiration of the Offer or (2) request such
stockholder's broker, dealer, bank, trust company or other nominee to effect
the transaction for such stockholder. A stockholder having Shares registered
in the name of a broker, dealer, bank, trust company or other nominee must
contact such broker, dealer, bank, trust company or other nominee if such
stockholder desires to tender such Shares.
A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available, or who cannot comply in a timely manner
with the procedure for book-entry transfer, or who cannot deliver all required
documents to the Depositary prior to the expiration of the Offer, may tender
such Shares by following the procedures for guaranteed delivery described in
Section 2.
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to Georgeson & Company Inc. or to J.P. Morgan & Co. at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase.
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
INTRODUCTION............................................................. 1
THE TENDER OFFER......................................................... 3
1. TERMS OF THE OFFER.................................................. 3
2. PROCEDURE FOR TENDERING SHARES...................................... 4
3. WITHDRAWAL RIGHTS................................................... 7
4. ACCEPTANCE FOR PAYMENT AND PAYMENT.................................. 7
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES........................ 8
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES.................. 9
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; SHARE QUOTATION;
EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS...................... 10
8. CERTAIN INFORMATION CONCERNING THE COMPANY.......................... 11
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND LYONDELL........... 12
10. SOURCE AND AMOUNT OF FUNDS.......................................... 13
11. CONTACTS AND TRANSACTIONS WITH THE COMPANY; BACKGROUND OF THE OFFER. 15
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE TENDER AND VOTING
AGREEMENT.......................................................... 17
13. DIVIDENDS AND DISTRIBUTIONS......................................... 29
14. CERTAIN CONDITIONS OF THE OFFER..................................... 30
15. CERTAIN LEGAL MATTERS............................................... 32
16. FEES AND EXPENSES................................................... 34
17. MISCELLANEOUS....................................................... 34
</TABLE>
iii
<PAGE>
To the Holders of Common Stock
of ARCO Chemical Company
INTRODUCTION
Lyondell Acquisition Corporation, a Delaware corporation (the "Purchaser")
and a wholly owned subsidiary of Lyondell Petrochemical Company, a Delaware
corporation ("Lyondell"), hereby offers to purchase all the issued and
outstanding shares (the "Shares") of Common Stock, par value $1.00 per share
(the "Common Stock"), of ARCO Chemical Company, a Delaware corporation (the
"Company"), at a purchase price of $57.75 per Share, net to the seller in
cash, without interest thereon (the "Offer Price"), upon the terms and subject
to the conditions set forth in this Offer to Purchase and in the related
Letter of Transmittal (which, together with any amendments or supplements
hereto or thereto, collectively constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer.
The Purchaser will pay all fees and expenses of J.P. Morgan & Co., which is
acting as Dealer Manager (the "Dealer Manager"), The Bank of New York, which
is acting as the Depositary (the "Depositary"), and Georgeson & Company Inc.,
which is acting as the Information Agent (the "Information Agent"), incurred
in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE OTHER TRANSACTIONS CONTEMPLATED THEREBY AND DETERMINED THAT
THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF,
STOCKHOLDERS OF THE COMPANY AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF
THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE FACTORS CONSIDERED BY THE BOARD OF DIRECTORS OF THE COMPANY IN ARRIVING AT
ITS DECISION TO APPROVE THE MERGER AGREEMENT AND THE OTHER TRANSACTIONS
CONTEMPLATED THEREBY AND TO RECOMMEND THAT STOCKHOLDERS OF THE COMPANY ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER WILL BE DESCRIBED IN
THE COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE
"SCHEDULE 14D-9") TO BE FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE
"COMMISSION").
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED ("MERRILL LYNCH") HAS
ACTED AS THE COMPANY'S FINANCIAL ADVISORS. THE OPINION OF MERRILL LYNCH DATED
JUNE 18, 1998, THAT, AS OF SUCH DATE, THE CONSIDERATION TO BE RECEIVED IN THE
OFFER AND THE MERGER BY THE COMPANY'S STOCKHOLDERS IS FAIR TO THE HOLDERS OF
SHARES (OTHER THAN ARCO (AS DEFINED HEREIN)) FROM A FINANCIAL POINT OF VIEW,
WILL BE SET FORTH IN FULL AS AN ANNEX TO THE SCHEDULE 14D-9. STOCKHOLDERS OF
THE COMPANY ARE URGED TO, AND SHOULD, READ SUCH OPINION CAREFULLY IN ITS
ENTIRETY.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED
IN SECTION 1) SUCH NUMBER OF SHARES THAT, TOGETHER WITH ANY SHARES OWNED BY
THE PURCHASER, LYONDELL AND THEIR AFFILIATES, WOULD CONSTITUTE AT LEAST A
MAJORITY OF ALL OUTSTANDING SHARES ON A FULLY DILUTED BASIS (THE "MINIMUM
CONDITION") AND (II) THE WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976 (THE "HSR ACT") APPLICABLE TO THE PURCHASE OF SHARES
PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED (THE "HSR CONDITION").
Lyondell expects to make the filing pursuant to the HSR Act applicable to
the Offer on June 25, 1998. Accordingly, the waiting period under the HSR Act
would expire on July 10, 1998, unless the waiting period is extended as
described in Section 15.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of June 18, 1998 (the "Merger Agreement"), among Lyondell, 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
consummation of the Offer, upon the terms and subject to the conditions of the
Merger Agreement and the General Corporation Law of the State of Delaware (the
"DGCL"), the Purchaser will be merged with and into
1
<PAGE>
the Company (the "Merger") with the Company surviving the Merger as a wholly
owned subsidiary of Lyondell. In the Merger, each issued Share (other than
Shares owned by Lyondell, the Purchaser or the Company or any other subsidiary
of Lyondell, or by stockholders, if any, who are entitled to and properly
exercise appraisal rights under Delaware law) will be converted into the right
to receive an amount in cash equal to the price per Share paid pursuant to the
Offer, without interest thereon. Consummation of the Merger is subject to a
number of conditions, including approval by stockholders of the Company if
such approval is required under applicable law. See Section 12.
In connection with the execution of the Merger Agreement, Lyondell and
Purchaser entered into a Tender and Voting Agreement dated as of June 18, 1998
(the "Tender and Voting Agreement"), with Atlantic Richfield Company, a
Delaware corporation ("ARCO"). ARCO has represented in the Tender and Voting
Agreement that it has sole voting and dispositive power over 80,000,001
Shares, which represented approximately 80.1% of the outstanding Shares of the
Company on a fully diluted basis as of June 18, 1998. Pursuant to the Tender
and Voting Agreement, among other things, ARCO has agreed to tender all such
Shares pursuant to the Offer, and not withdraw such Shares as long as the
Tender and Voting Agreement remains in effect, and has granted Purchaser a
proxy, which is irrevocable during the term of the Tender and Voting
Agreement, to vote such Shares in favor of the Merger. See Section 12.
The Merger Agreement and the Tender and Voting Agreement are more fully
described in Section 12.
The Company has informed the Purchaser that, as of June 16, 1998, there were
97,393,822 Shares issued and outstanding and 2,507,990 Shares reserved for
issuance upon the exercise of outstanding options or other rights to purchase
Shares from the Company. Based upon the foregoing and assuming that no Shares
are otherwise issued after June 16, 1998, there would be 99,901,812 Shares
outstanding on a fully diluted basis and the Minimum Condition will be
satisfied if at least 49,950,907 Shares are validly tendered and not withdrawn
prior to the Expiration Date. The actual number of Shares required to be
tendered to satisfy the Minimum Condition will depend upon the actual number
of Shares outstanding on the date that the Purchaser accepts Shares for
payment pursuant to the Offer. If ARCO tenders the 80,000,001 Shares over
which it has voting and dispositive power, the Minimum Condition will have
been satisfied. If the Minimum Condition is satisfied and the Purchaser
accepts for payment Shares tendered pursuant to the Offer, the Purchaser will
be able to elect a majority of the members of the Company's Board of Directors
and to effect the Merger without the affirmative vote of any other stockholder
of the Company. See Section 12.
Certain U.S. federal income tax consequences of the sale of Shares pursuant
to the Offer and the conversion of Shares pursuant to the Merger are described
in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
2
<PAGE>
THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the Purchaser
will accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn in accordance with Section 3.
The term "Expiration Date" means 12:00 midnight, New York City time, on
Wednesday, July 22, 1998 unless and until the Purchaser shall have extended
the period of time during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date on which the Offer, as
so extended by the Purchaser, will expire.
In the Merger Agreement, the Purchaser has agreed that it will not, without
the consent of the Company, (a) reduce the number of Shares subject to the
Offer, (b) reduce the Offer Price, (c) add to or modify the conditions to the
Offer (which are set forth in Section 14), (d) except as set forth in the
following sentence, extend the Offer, (e) change the form of consideration
payable in the Offer or (f) amend or alter any other term of the Offer in any
manner adverse to the Company's stockholders. However, the Merger Agreement
provides that, without the consent of the Company, the Purchaser may (i)
extend the Offer for any period required by any rule, regulation,
interpretation or position of the Commission or the staff thereof applicable
to the Offer, (ii) extend the Offer, if at the scheduled or extended
Expiration Date, any of the conditions to the Offer are not satisfied or
waived, until such time as such conditions are satisfied or waived, and (iii)
extend the Offer on one occasion for a period of not more than 10 business
days beyond the latest Expiration Date that would otherwise be permitted under
the terms of clause (i) or (ii) of this sentence, if on such Expiration Date
there shall not have been tendered at least 90% of the outstanding Shares.
Notwithstanding the foregoing, Purchaser may not, without the Company's prior
written consent, extend the Offer pursuant to clause (ii) of the prior
sentence if the failure to satisfy any conditions to the Offer was directly or
indirectly caused by an act or omission of Lyondell or Purchaser that
constitutes a breach of the Merger Agreement. If any of the conditions of the
Offer set forth in Section 14 (other than the Minimum Condition or if the
Merger Agreement has been terminated in accordance with its terms) is not
satisfied on the Expiration Date of the Offer, then the Purchaser must extend
the Offer from time to time until such conditions are satisfied or waived,
provided that (i) any such unsatisfied condition is reasonably capable of
being satisfied, (ii) any Takeover Proposal (as defined in Section 12)
theretofore received by the Company has been rejected by the Company (or, if
not so rejected, was received less than ten days prior to the Expiration
Date), and (iii) Purchaser shall not be required to extend the Offer to a date
later than the Outside Date (as defined in Section 12). As used in this Offer
to Purchase, "business day" has the meaning set forth in Rule l4d-1 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
Subject to the terms of the Merger Agreement (which, as described above,
prohibit certain amendments to the Offer without the consent of the Company)
and the applicable rules and regulations of the Commission, the Purchaser
reserves the right (but shall not be obligated except as described below), at
any time and from time to time, and regardless of whether or not any of the
events or facts set forth in Section 14 shall have occurred, (a) to extend the
period of time during which the Offer is open, and thereby delay acceptance
for payment of and the payment for any Shares, by giving oral or written
notice of such extension to the Depositary and (b) to amend the Offer in any
other respect by giving oral or written notice of such amendment to the
Depositary. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE
FOR TENDERED SHARES, WHETHER OR NOT THE PURCHASER EXERCISES ITS RIGHT TO
EXTEND THE OFFER.
If by 12:00 midnight, New York City time, on Wednesday, July 22, 1998 (or
any date or time then set as the Expiration Date), any or all of the
conditions to the Offer have not been satisfied or waived, the Purchaser
reserves the right (but shall not be obligated except as described below),
subject to the terms and conditions contained in the Merger Agreement and to
the applicable rules and regulations of the Commission, (a) to terminate the
Offer and not accept for payment or pay for any Shares and return all tendered
Shares to tendering stockholders, (b) to waive all the unsatisfied conditions
and accept for payment and pay for all Shares validly tendered prior to the
Expiration Date and not theretofore withdrawn, (c) to extend the Offer and,
subject to the right of stockholders to withdraw Shares until the Expiration
Date, retain the Shares that have been tendered during the period or periods
for which the Offer is extended or (d) to amend the Offer.
3
<PAGE>
Any extension, waiver, amendment or termination will be followed as promptly
as practicable by public announcement thereof. In the case of an extension,
Rule 14e-l(d) under the Exchange Act requires that the announcement be issued
no later than 9:00 a.m., New York City time, on the next business day after
the previously scheduled Expiration Date in accordance with the public
announcement requirements of Rule 14d-4(c) under the Exchange Act. Subject to
applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act,
which require that any material change in the information published, sent or
given to stockholders in connection with the Offer be promptly disseminated to
stockholders in a manner reasonably designed to inform stockholders of such
change) and without limiting the manner in which the Purchaser may choose to
make any public announcement, the Purchaser will not have any obligation to
publish, advertise or otherwise communicate any such public announcement other
than by making a release to the Dow Jones News Service.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment (whether before or after its acceptance
for payment of Shares) for Shares or it is unable to pay for Shares pursuant
to the Offer for any reason, then, without prejudice to the Purchaser's rights
under the Offer, the Depositary may retain tendered Shares on behalf of the
Purchaser, and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to withdrawal rights as described in Section 3.
However, the ability of the Purchaser to delay the payment for Shares that the
Purchaser has accepted for payment is limited by Rule 14e-l(c) under the
Exchange Act, which requires that a bidder pay the consideration offered or
return the securities deposited by or on behalf of holders of securities
promptly after the termination or withdrawal of such bidder's offer, and by
the terms of the Merger Agreement, which require that the Purchaser pay for
Shares accepted for payment as soon as practicable after the Expiration Date.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will disseminate additional tender offer materials and extend
the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and l4e-1 under
the Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of such offer or information
concerning such offer, other than a change in price or a change in the
percentage of securities sought, will depend upon the facts and circumstances
then existing, including the relative materiality of the changed terms or
information. With respect to a change in price or a change in the percentage
of securities sought, a minimum period of 10 business days is generally
required to allow for adequate dissemination to stockholders.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed by the Purchaser to record holders
of Shares, and will be furnished to brokers, dealers, banks, trust companies
and similar persons whose names, or the names of whose nominees, appear on the
stockholder lists, or, if applicable, who are listed as participants in a
clearing agency's security position listing, for subsequent transmittal to
beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (a) a Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, together with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents, must be received by the Depositary at one of its addresses
set forth on the back cover of this Offer to Purchase prior to the Expiration
Date and either certificates for tendered Shares must be received by the
Depositary at one of such addresses or such Shares must be delivered pursuant
to the procedures for book-entry transfer set forth below (and a Book-Entry
Confirmation (as defined below) received by the Depositary), in each case
prior to the Expiration Date, or (b) the tendering stockholder must comply
with the guaranteed delivery procedures described below.
Book-Entry Transfer. The Depositary will establish accounts with respect to
the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after
4
<PAGE>
the date of this Offer to Purchase. Any financial institution that is a
participant of the Book-Entry Transfer Facility's system may make book-entry
delivery of Shares by causing the Book-Entry Transfer Facility to transfer
such Shares into the Depositary's account in accordance with the Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery
of Shares may be effected through book-entry transfer into the Depositary's
account at the Book-Entry Transfer Facility, the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message, and any other required documents,
must, in any case, be transmitted to, and received by, the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase prior
to the Expiration Date, or the tendering stockholder must comply with the
guaranteed delivery procedures described below. The confirmation of a book-
entry transfer of Shares into the Depositary's account at the Book-Entry
Transfer Facility as described above is referred to herein as a "Book-Entry
Confirmation." DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN
ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility
has received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section 2, includes any
participant in the Book-Entry Transfer Facility's system whose name appears on
a security position listing as the owner of the Shares) of Shares tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a financial institution (including most commercial banks,
savings and loan associations and brokerage houses) that is a participant in
the Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
(such participant, an "Eligible Institution"). In all other cases, all
signatures on the Letter of Transmittal must be guaranteed by an Eligible
Institution. See Instructions 1 and 5 to the Letter of Transmittal. If the
certificates for Shares are registered in the name of a person other than the
signer of the Letter of Transmittal, or if payment is to be made or
certificates for Shares not tendered or not accepted for payment are to be
returned to a person other than the registered holder of the certificates
surrendered, the tendered certificates must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name or names
of the registered holders or owners appear on the certificates, with the
signatures on the certificates or stock powers guaranteed as aforesaid. See
Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(i) such tender is made by or through an Eligible Institution;
5
<PAGE>
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for all tendered Shares, in proper form for
transfer (or a Book-Entry Confirmation with respect to all such Shares),
together with a Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or, in
the case of a book-entry transfer, an Agent's Message, and any other
required documents are received by the Depositary within three trading days
after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the New York Stock Exchange, Inc. (the
"NYSE") is open for business.
The Notice of Guaranteed Delivery may be delivered to the Depositary and
must include a guarantee by an Eligible Institution in the form set forth in
such Notice of Guaranteed Delivery.
The valid tender of Shares pursuant to one 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.
Appointment. By executing a Letter of Transmittal (or a facsimile thereof),
a tendering stockholder will irrevocably appoint designees of the Purchaser as
such stockholder's attorneys-in-fact and proxies in the manner set forth in
the Letter of Transmittal, each with full power of substitution, to the full
extent of such stockholder's rights with respect to the Shares tendered by
such stockholder and accepted for payment by the Purchaser and with respect to
any and all other Shares or other securities or rights issued or issuable in
respect of such Shares on or after June 18, 1998. All such proxies will be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts for
payment Shares tendered by such stockholder as provided herein. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will not be
effective). The designees of the Purchaser will thereby be empowered to
exercise all voting and other rights with respect to such Shares and other
securities or rights in respect of any annual, special or adjourned meeting of
the Company's stockholders, actions by written consent in lieu of any such
meeting or otherwise, as they in their sole discretion deem proper. The
Purchaser reserves the right to require that, in order for Shares to be deemed
validly tendered, immediately upon the Purchaser's acceptance for payment of
such Shares, the Purchaser must be able to exercise full voting, consent and
other rights with respect to such Shares and other securities or rights,
including voting at any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which
determination will be final and binding. The Purchaser reserves the absolute
right to reject any or all tenders determined by it not to be in proper form
or the acceptance for payment of or payment for which may, in the opinion of
the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute
right to waive any defect or irregularity in the tender of any Shares of any
particular stockholder whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares will be deemed
to have been validly made until all defects or irregularities relating thereto
have been cured or waived. None of the Purchaser, Lyondell, the Depositary,
the Information Agent, the Dealer Manager 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 Withholding. In order to avoid "backup withholding" of U.S. federal
income tax on payments of cash pursuant to the Offer, a stockholder
surrendering Shares in the Offer must, unless an exemption applies, provide
the Depositary with such stockholder's correct taxpayer identification number
("TIN") on a Substitute
6
<PAGE>
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 such stockholder's correct TIN or fails to provide the
certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such stockholder and 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 main signature form and the Substitute Form W-9 included as part of
the Letter of Transmittal to provide the information and certification
necessary to avoid backup withholding (unless an applicable exemption exists
and is proved in a manner satisfactory to the Purchaser and the Depositary).
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See
Instruction 9 to the Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant
to the procedures set forth below at any time prior to the Expiration Date
and, unless theretofore accepted for payment and paid for by the Purchaser
pursuant to the Offer, may also be withdrawn at any time after August 22,
1998.
For a withdrawal to be effective, a written notice of withdrawal must be
timely received by the Depositary at one of its addresses set forth on the
back cover of this Offer to Purchase and must specify the name of the person
having tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered holder of the Shares to be withdrawn,
if different from the name of the person who tendered the Shares. If
certificates for Shares have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the
serial numbers shown on such certificates must be submitted to the Depositary
and, unless such Shares have been tendered by an Eligible Institution, the
signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been delivered pursuant to the procedures for
book-entry transfer described in Section 2, any notice of withdrawal must also
specify the name and number of the account at the Book-Entry Transfer Facility
to be credited with the withdrawn Shares and otherwise comply with the Book-
Entry Transfer Facility's procedures. Withdrawals of tenders of Shares may not
be rescinded, and any Shares properly withdrawn will thereafter be deemed not
validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered by again following one of the procedures described in Section 2 at
any time prior to the Expiration Date.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Lyondell, the Depositary, the Information Agent, the Dealer Manager
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.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay promptly
after the Expiration Date for all Shares validly tendered prior to the
Expiration Date and not properly withdrawn in accordance with Section 3. The
Purchaser expressly reserves the right to delay acceptance for payment of or
payment for Shares in order to comply in whole or in part with any applicable
law, including, without limitation, the HSR Act. Any such delays will be
effected in compliance with Rule 14e-l(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).
Lyondell expects to file a Notification and Report Form with respect to the
Offer under the HSR Act on June 25, 1998. Accordingly, the waiting period
under the HSR Act with respect to the Offer would expire at 11:59
7
<PAGE>
p.m., New York City time, on July 10, 1998. However, the Antitrust Division of
the Department of Justice (the "Antitrust Division") or the Federal Trade
Commission (the "FTC") may extend the waiting period by requesting additional
information or documentary material from Lyondell. If such a request is made,
such waiting period will expire at 11:59 p.m., New York City time, on the 10th
day after substantial compliance by Lyondell with such request. See Section 15
for additional information concerning the HSR Act and the applicability of
United States antitrust laws to the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates
for (or a timely Book-Entry Confirmation with respect to) such Shares, (b) a
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a book-
entry transfer, an Agent's Message, with respect to such Shares and (c) any
other documents required by the Letter of Transmittal. The per Share
consideration paid to any stockholder pursuant to the Offer will be the
highest per Share consideration paid to any other stockholder pursuant to the
Offer. Accordingly, tendering stockholders may be paid at different times
depending upon when certificates for Shares or Book-Entry Confirmations with
respect to Shares are actually received by the Depositary.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not 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.
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
an agent for tendering stockholders for the purpose of receiving payment from
the Purchaser and transmitting payment to tendering stockholders. UNDER NO
CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE OF THE SHARES TO BE
PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY
IN MAKING SUCH PAYMENT.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares will be returned, without expense to
the tendering stockholder (or, in the case of Shares delivered by book-entry
transfer of such Shares into the Depositary's account at the Book-Entry
Transfer Facility pursuant to the procedures described in Section 2, such
Shares will be credited to an account maintained at the Book-Entry Transfer
Facility), as promptly as practicable after the expiration or termination of
the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Lyondell, or to one or more direct or indirect wholly
owned subsidiaries of Lyondell, the right to purchase Shares tendered pursuant
to the Offer, but any such transfer or assignment will not relieve the
Purchaser of its obligations under the Offer and will in no way prejudice the
rights of tendering stockholders to receive payment for Shares validly
tendered and accepted for payment pursuant to the Offer.
5. CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for U.S. federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be a taxable transaction
under applicable state, local or foreign income or other tax laws. Generally,
for U.S. federal income tax purposes, a stockholder will recognize gain or
loss equal to the difference between the amount of cash received by the
stockholder pursuant to the Offer or the Merger and the aggregate tax basis in
the Shares tendered by the stockholder and purchased pursuant to the Offer or
converted into cash in the Merger, as the case may be. Gain or loss will be
calculated separately for each block of Shares tendered and purchased pursuant
to the Offer or converted into cash in the Merger, as the case may be.
If Shares are held by a stockholder as capital assets, gain or loss
recognized by the stockholder will be capital gain or loss, which will be
long-term capital gain or loss if the stockholder's holding period for the
Shares exceeds one year, and in the case of a noncorporate stockholder, will
be eligible for a maximum federal income tax rate of 28% (if the Shares were
held for more than one year and no more than 18 months) or 20% (if the
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<PAGE>
Shares were held for more than 18 months). In addition, under present law the
ability to use capital losses to offset ordinary income is limited.
A stockholder that tenders Shares may be subject to 31% backup withholding
unless the stockholder provides its TIN and certifies that such number is
correct or properly certifies that it is awaiting a TIN, or unless an
exemption applies. Exemptions are available for stockholders that are
corporations and for certain foreign individuals and entities. A stockholder
that does not furnish a required TIN may be subject to a penalty imposed by
the IRS. See "Backup Withholding" under Section 2.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. Backup withholding is not
an additional tax. Rather, the amount of the backup withholding can be
credited against the U.S. federal income tax liability of the person subject
to the backup withholding, provided that the required information is given to
the IRS. If backup withholding results in an overpayment of tax, a refund can
be obtained by the stockholder by filing a federal income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL
TAX TREATMENT UNDER THE CODE, SUCH AS NON-U.S. PERSONS, LIFE INSURANCE
COMPANIES, TAX-EXEMPT ORGANIZATIONS AND FINANCIAL INSTITUTIONS, AND MAY NOT
APPLY TO A HOLDER OF SHARES IN LIGHT OF INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS
ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM (INCLUDING THE APPLICATION AND EFFECT OF ANY STATE, LOCAL
OR FOREIGN INCOME AND OTHER TAX LAWS) OF THE OFFER AND THE MERGER.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are traded on the NYSE under the symbol "RCM." The following
table sets forth, for each of the periods indicated, the high and low sales
prices per Share on the NYSE Composite Transactions Tape and the amount of
cash dividends paid per Share.
ARCO CHEMICAL COMPANY
<TABLE>
<CAPTION>
COMMON COMMON
STOCK STOCK CASH
HIGH LOW DIVIDENDS
------ ------ ---------
<S> <C> <C> <C>
Fiscal Year Ended December
31, 1996:
First Quarter........... 52 7/8 48 1/2 $.70
Second Quarter.......... 54 50 1/2 $.70
Third Quarter........... 52 1/2 47 1/8 $.70
Fourth Quarter.......... 50 3/4 47 1/2 $.70
Fiscal Year Ended December
31, 1997:
First Quarter........... 50 1/2 43 1/2 $.70
Second Quarter.......... 47 7/8 40 7/8 $.70
Third Quarter........... 47 3/4 42 13/16 $.70
Fourth Quarter.......... 51 1/4 43 1/4 $.70
Fiscal Year Ended December
31, 1998:
First Quarter........... 50 9/16 46 $.70
Second Quarter (through
June 23, 1998)......... 58 1/4 47 3/16 $.70
</TABLE>
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<PAGE>
On June 17, 1998, the last full trading day before the public announcement
of the execution of the Merger Agreement, the last reported sales price of the
Shares on the NYSE Composite Transactions Tape was $50 5/16 per Share. On June
23, 1998, the last full trading day before commencement of the Offer, the last
reported sales price of the Shares on the NYSE Composite Transactions Tape was
$57 3/8 per Share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS
FOR THE SHARES.
The Merger Agreement permits the Company to continue to pay regular
quarterly dividends on the Shares of not more than $0.70 per Share. The
payment of dividends on the Shares is a matter for the discretion of the Board
of Directors of the Company and is subject to customary restrictions thereon.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; SHARE QUOTATION; EXCHANGE
ACT REGISTRATION; MARGIN REGULATIONS
Market for the Shares. The purchase of Shares pursuant to the Offer will
reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public.
Share Quotation. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements of the NYSE for
continued listing. According to the NYSE's published guidelines, the NYSE
would consider delisting the Shares if, among other things, the total number
of stockholders (including both holders of record and beneficial holders of
stock held in the name of NYSE member organizations) were to fall below 400,
or such number of total stockholders were to fall below 1,200 and the average
monthly trading volume of the Shares were to fall below 100,000, the number of
publicly held Shares (exclusive of management or other concentrated holdings)
were to fall below 600,000 or the aggregate market value of publicly held
Shares were to not exceed $8 million. According to the Company, as of June 16,
1998, there were approximately 2,000 holders of record of Shares and there
were 97,393,822 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 NYSE for continued listing and the Shares are no longer listed, the
market for Shares would be adversely affected.
If the NYSE were to delist the Shares, it is possible that the Shares would
continue to trade on other securities exchanges or in the over-the-counter
market and that price quotations would be reported by such exchanges or
through the Nasdaq National Market or other sources. The extent of the public
market for the Shares and the availability of such quotations would, however,
depend upon the number of holders of Shares remaining at such time, the
interests in maintaining a market in Shares on the part of securities firms,
the possible termination of registration of the Shares under the Exchange Act,
as described below, and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more
holders of record. Termination of registration of the Shares under the
Exchange Act would substantially reduce the information required to be
furnished by the Company to its stockholders and to the Commission and would
make certain provisions of the Exchange Act no longer applicable to the
Company, such as the short-swing profit recovery provisions of Section 16(b)
of the Exchange Act, the requirement of furnishing a proxy statement pursuant
to Section 14(a) of the Exchange Act in connection with stockholders' meetings
and the related requirement of furnishing an annual report to stockholders and
the requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act
of 1933 may be impaired or eliminated. The Purchaser intends to seek to cause
the Company to apply for termination of registration of the Shares under the
Exchange Act as soon after the completion of the Offer as the requirements for
such termination are met.
10
<PAGE>
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from all stock exchanges and the registration of
the Shares under the Exchange Act will be terminated following the
consummation of the Merger.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding listing and market
quotations, it is possible that, following the Offer, the Shares would no
longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be used
as collateral for loans made by brokers.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its executive offices at 3801
West Chester Pike, Newtown Square, Pennsylvania 19073-2387. The Company is a
leading manufacturer and marketer in the Americas, Europe and the Asia Pacific
region of intermediate and specialty chemicals used in a broad range of
consumer and industrial products.
Set forth below is certain selected financial information with respect to
the Company and its subsidiaries excerpted from the information contained in
the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997 (the "Company 1997 10-K") and the Company's Quarterly Report on Form
10-Q for the three months ended March 31, 1998 (the "Company 1998 10-Q"). More
comprehensive financial information is included in the Company 1997 10-K, the
Company 1998 10-Q and other documents filed by the Company with the
Commission, and the following summary is qualified in its entirety by
reference to the Company 1997 10-K, the Company 1998 10-Q and such other
documents and all the financial information (including any related notes)
contained therein. The Company 1997 10-K, the Company 1998 10-Q and such other
documents should be available for inspection and copies thereof should be
obtainable in the manner set forth below under "Available Information".
ARCO CHEMICAL COMPANY
SELECTED HISTORICAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------ ----------------------------------
1998 1997 1997 1996 1995 1994 1993
----- ------ ------ ------ ------ ------ ------
($ IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Sales and other operating
revenues...................... $ 934 $1,029 $3,995 $3,955 $4,282 $3,423 $3,192
Gross profit................... 214 185 765 888 1,180 837 739
Income before income taxes..... 135 73 168 487 756 416 311
Provision for income taxes..... 43 25 57 139 248 147 97
Net income..................... 92 48 111 348 508 269 214
BALANCE SHEET DATA:
Working capital................ $ 418 $ 487 $ 387 $ 500 $ 793 $ 579 $ 456
Total assets................... 4,069 4,363 4,116 4,394 4,135 3,737 3,502
Total debt..................... 906 1,024 913 1,019 912 936 959
Stockholders' equity........... 1,802 1,959 1,793 2,014 1,969 1,659 1,576
</TABLE>
Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock
11
<PAGE>
options and other matters, 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 the Company's proxy statements distributed to the
Company's stockholders and filed with the Commission. Such information should
be available for inspection at the public reference facilities of the
Commission at 450 Fifth Street, N.W., Washington, DC 20549, and at the
regional offices of the Commission located at Seven World Trade Center, 13th
Floor, New York, NY 10048 and Citicorp Center, 500 West Madison Street (Suite
1400), Chicago, IL 60661. Copies of such information should be obtainable, by
mail, upon payment of the Commission's customary charges, by writing to the
Commission's principal office at 450 Fifth Street, N.W., Washington, DC 20549.
The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. Such reports, proxy and information
statements and other information may be found on the Commission's Web site
address, http://www.sec.gov. Such material should also be available for
inspection at the library of the NYSE, 20 Broad Street, New York, NY 10005.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the Commission and other publicly
available information. Although the Purchaser and Lyondell do not have any
knowledge that any such information is untrue, neither the Purchaser nor
Lyondell takes any responsibility for the accuracy or completeness of such
information 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.
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND LYONDELL
The Purchaser, a Delaware corporation which is a wholly owned subsidiary of
Lyondell, was organized to acquire the Company and has not conducted any
unrelated activities since its organization. The principal office of the
Purchaser is located at the principal office of Lyondell. All outstanding
shares of capital stock of the Purchaser are owned by Lyondell.
Lyondell is a Delaware corporation with its principal offices located at
1221 McKinney Street, Suite 1600, Houston, Texas 77010. Through its interests
in three joint ventures, Lyondell manufactures a wide variety of
petrochemicals and polymers, refined petroleum products and methanol.
Lyondell provides to the Company a portion of the feedstocks purchased by
the Company for its manufacturing facilities located at Bayport and
Channelview, Texas. Lyondell also provides processing services and products to
the Company, as well as certain plant services at Channelview, Texas. The
Company in turn provides certain products and services to Lyondell. The
Company has granted Lyondell royalty-free, non-exclusive licenses for the
technology necessary to produce methyl tertiary butyl ether and isopropyl
alcohol at Lyondell's petrochemical complex in Channelview, Texas.
Set forth below is certain selected financial information with respect to
Lyondell and its subsidiaries excerpted from the information contained in
Lyondell's Annual Report on Form 10-K for the fiscal year ended December 31,
1997 (the "Lyondell 1997 10-K") and Lyondell's Quarterly Report on Form 10-Q
for the three months ended March 31, 1998 (the "Lyondell 1998 10-Q"). More
comprehensive financial information is included in the Lyondell 1997 10-K,
Lyondell 1998 10-Q and other documents filed by Lyondell with the Commission,
and the following summary is qualified in its entirety by reference to the
Lyondell 1997 10-K, the Lyondell 1998 10-Q and such other documents and all
the financial information (including any related notes) contained therein. The
Lyondell 1997 10-K, the Lyondell 1998 10-Q and such other documents should be
available for inspection and copies thereof should be obtainable in the manner
set forth below under "Available Information".
12
<PAGE>
LYONDELL PETROCHEMICAL COMPANY
SELECTED HISTORICAL FINANCIAL DATA
(IN MILLIONS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH
31, YEAR ENDED DECEMBER 31,
------------- -----------------------------------------------
1998 1997 1997 1996(A) 1996 1995 1994 1993
------ ----- ------ ----------- ------ ------ ------ ------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING DATA:
Sales and other
operating revenues..... $ -- $755 $2,876 2,644 $5,052 $4,936 $3,857 $3,850
Income from equity
investments............ 120 6 132 2 -- -- -- --
Gross profit............ 120 642 534 418 512 910 561 223
Income before income
taxes.................. 104 63 456 196 196 618 349 16
Provision for income
taxes.................. 39 23 170 70 229 426 12 9
Net Income.............. 65 40 407 126 126 -- 223 26
BALANCE SHEET DATA:
Working capital......... (39) 130 (205) 134 60 70 264 224
Total assets............ 1,397 1,423 1,559 1,890 3,276 2,606 1,663 1,231
Total debt.............. 395 964 445 906 1,366 957 717 725
Stockholders' equity
(deficit).............. 652 453 619 431 431 380 63 (88)
</TABLE>
- --------
(a) The unaudited reclassified financial information presents the financial
position and results of operations of Lyondell as of and for the period
ended December 31, 1996 using the equity method of accounting (rather than
consolidation) for Lyondell's investment in Lyondell-Citgo Refining
Company, Ltd. as if the change in accounting method had been effective on
January 1, 1996 rather than on January 1, 1997.
Available Information. Lyondell is subject to the informational requirements
of the Exchange Act and, in accordance therewith, files reports relating to
its business, financial condition and other matters. Information, as of
particular dates, concerning Lyondell's directors and officers, their
remuneration, stock options and other matters, the principal holders of
Lyondell's securities and any material interest of such persons in
transactions with Lyondell is required to be disclosed in proxy statements
distributed to Lyondell's stockholders and filed with the Commission. Such
reports, proxy statements and other information should be available for
inspection at the Commission and copies thereof should be obtainable from the
Commission in the same manner as is set forth with respect to the Company in
Section 8. Such material should also be available for inspection at the
library of the NYSE, 20 Broad Street, New York, NY 10005.
10. SOURCE AND AMOUNT OF FUNDS
The Purchaser estimates that the total amount of funds required to purchase
pursuant to the Offer the number of Shares that are outstanding on a fully
diluted basis and to pay fees and expenses related to the Offer and the Merger
will be approximately $5.9 billion. The Purchaser plans to obtain all funds
needed for the Offer and the Merger through a capital contribution from
Lyondell. The Purchaser's ability to obtain financing is not a condition to
the Purchaser's obligations under the Offer, the Merger Agreement and the
Tender and Voting Agreement. Lyondell plans to obtain funds to advance to the
Purchaser through loans under the credit arrangements described below.
Lyondell expects to obtain through J.P. Morgan Securities Inc., as arranger
("J.P. Morgan"), and Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ"), BancAmerica Robertson Stephens and Chase Securities, Inc., as co-
arrangers, financing in the amount of up to $7.0 billion (the "Credit
Facilities"), which includes amounts to refinance certain indebtedness of the
Company and to meet ongoing needs of Lyondell. Morgan Guaranty Trust Company
of New York, DLJ Capital Funding, Inc., Bank of America National Trust and
Savings Association, The Chase Manhattan Bank, Citibank, N.A. and NationsBank,
N.A., have provided underwriting commitments (the "Commitments") for the full
amount of the Credit Facilities. The
13
<PAGE>
Credit Facilities consist of (i) a revolving credit facility of up to $500
million and (ii) four separate term loans in the amounts of (a) $2.25 billion
("Term Loan A"), (b) $1.0 billion ("Term Loan B"), (c) $1.25 billion ("Term
Loan C") and (d) $2 billion ("Term Loan D"). All of the loans will be
available to Lyondell on the date of the consummation of the Offer. The
revolving credit facility will be a five-year facility. Term Loan A will be a
five-year term loan, with the amortization schedule to be determined. Term
Loan B will be a seven-year term loan, with the amortization schedule to be
determined. Term Loan C will be a one-year term loan, with principal due at
maturity. Term Loan D will be a two-year term loan, with principal due at
maturity.
At the option of Lyondell, the loans will bear interest at (i) the base rate
(which means the higher of the prime rate of Morgan Guaranty Trust Company of
New York or the federal funds rate plus 0.50%) plus a variable margin; or (ii)
the Eurodollar rate. Interest in respect of base rate loans will be payable
quarterly in arrears on the last business day of each fiscal quarter. Interest
on Eurodollar loans will be payable at the end of the applicable interest
period, but not less frequently than quarterly. Eurodollar loans would have
interest periods of 1, 2, 3 or 6 months, with 9 or 12 month periods permitted
if available. All interest and fees will be calculated on the basis of the
number of actual days elapsed in a 360-day year. The Eurodollar loan pricing
will initially be (i) for Term Loan A, the London interbank offered rate
("LIBOR") plus 200 basis points, (ii) for Term Loan B, LIBOR plus 250 basis
points, (iii) for Term Loan C, LIBOR plus 200 basis points, (iv) for Term Loan
D, LIBOR plus 200 basis points and (v) for the revolving credit facility,
LIBOR plus 200 basis points. The variable margin to be added to the base rate
will initially be 100 basis points less than the applicable margin over LIBOR.
Mandatory prepayments will be required under the term loans until (i) the
date Term Loan C and Term Loan D are repaid in full, including accrued
interest and fees and (ii) Lyondell has achieved investment grade ratings of
at least BBB- and Baa3 from Standard & Poor's and Moody's, respectively, from
or as a result of (a) certain equity issuances, (b) certain debt incurrences,
(c) asset sales (with certain exceptions for inventory in the ordinary course
of business and individual asset sales, the proceeds of which do not exceed
$10 million), (d) receipt of proceeds from certain casualty losses unless used
within 18 months to replace the insured assets, or (e) 50% of annual excess
cash flow (to be defined in the credit documentation). Loans may be
voluntarily repaid at any time upon appropriate notice, subject in all cases
to breakage costs if Eurodollar loans are prepaid other than on the last day
of the applicable interest period.
The Commitments are subject to, among other things, (i) the absence of
adverse changes in the market for syndicated bank loans or in the regulatory
environment that would be likely to materially adversely affect the
syndication of the proposed financing, (ii) the absence of material adverse
changes in the financial condition, business, assets, results of operation or
prospects of Lyondell and the Company taken as a whole, (iii) the absence of
any competing offering, placement or arrangement of debt securities or lender
financing on behalf of Lyondell, and (iv) the negotiation, execution and
delivery of mutually acceptable definitive loan documentation within 90 days
of June 17, 1998.
The Credit Facilities will be secured by (i) a pledge of the stock and
intercompany indebtedness of any material subsidiaries directly owned by
Lyondell, including the subsidiaries (the "JV Subsidiaries") that hold
Lyondell's interests in Equistar Chemicals, LP, Lyondell-Citgo Refining
Company, Ltd. and Lyondell Methanol Company, Ltd. (collectively the "JVs") and
(ii) the rights of the JV Subsidiaries to receive distributions from the JVs.
Obligations under the Credit Facilities will be guaranteed by the Purchaser,
the Company, and any other material domestic subsidiaries of Lyondell,
excluding the JVs and the JV Subsidiaries.
The foregoing summary is qualified in its entirety by reference to the text
of the letters evidencing the Commitments, copies of which are filed as
exhibits to the Schedule 14D-1 and incorporated in this Offer to Purchase by
reference and may be inspected in the same manner as set forth under
"Available Information" in Section 9. If and when definitive documentation
providing for the Credit Facilities is executed, copies will be filed with the
Commission. Because the procurement of the facilities is subject to, among
other things, the negotiation, execution and delivery of definitive
documentation on terms satisfactory to the lenders, there can be no assurance
that the terms described above will be the actual or only terms of the Credit
Facilities.
14
<PAGE>
Although no definitive plan or arrangement for repayment of borrowings under
the Credit Facilities has been made, Lyondell expects that it will repay any
amounts borrowed with cash flow from operations and internally generated funds
(including, if the Merger is consummated, those of the Company) and from other
sources which may include the proceeds from future public or private sales of
debt or equity securities. The sources for repayment of such borrowings will
also depend on Lyondell's review from time to time of the advisability of
certain actions, as well as prevailing interest rates, financial and other
economic conditions and such other factors as Lyondell may deem appropriate.
11. CONTACTS AND TRANSACTIONS WITH THE COMPANY; BACKGROUND OF THE OFFER
Lyondell is a former subsidiary of ARCO. Certain of the manufacturing
facilities of Lyondell and the Company were once operated as part of the same
division of ARCO. The Company's manufacturing facilities in Channelview and
Pasadena, Texas are adjacent to facilities held by Lyondell's 41% owned joint
venture, Equistar Chemicals, L.P. ("Equistar").
Lyondell (including Equistar) and the Company are parties to various
commercial contracts pursuant to which Lyondell provides feedstocks for the
Company's propylene oxide, styrene and methyl tertiary butyl ether ("MTBE")
businesses at its Channelview facilities. Lyondell also sells MTBE to the
Company. Pricing arrangements under these contracts are representative of
prevailing market prices. In 1997, Lyondell recorded revenues of approximately
$271 million from sales to the Company, which sales accounted for
approximately 9.6% of Lyondell's total revenues from sales of petrochemical
products for 1997 and approximately 8.3% of Lyondell's total revenues for
1997. Lyondell also provides certain nominal plant services at the Company's
Channelview facilities. The Company sells certain feedstocks and supplies to
Lyondell at market-based prices.
Lyondell and the Company also are parties, along with ARCO, to a Dispute
Resolution Agreement that mandates a procedure for negotiation and binding
arbitration of significant commercial disputes among any two or more of the
parties.
In December 1997, Lyondell began an internal review and assessment of the
desirability and feasibility of acquiring the Company. In February 1998,
Lyondell engaged J. P. Morgan as financial advisor to assist in the evaluation
process.
On February 17, 1998, Dan F. Smith, President and Chief Executive Officer of
Lyondell, called Mike R. Bowlin, Chairman and Chief Executive Officer of ARCO,
to express Lyondell's interest in acquiring the Company. On February 20, 1998,
ARCO and Lyondell entered into a confidentiality agreement regarding any
discussions relating to a possible transaction.
On March 4, 1998, at the initiation of Mr. Smith, a meeting took place
between Mr. Smith and Mr. Bowlin, in which Mr. Smith reiterated Lyondell's
interest in acquiring the Company and potential value ranges were discussed.
Other attendees included Terry G. Dallas, Senior Vice President and Treasurer
of ARCO, Edward Rich, Vice President, Finance and Treasurer of Lyondell, and
representatives from J.P. Morgan. On March 13, 1998, ARCO and Lyondell entered
into a supplemental confidentiality agreement covering evaluation information.
At the invitation of ARCO, on March 17, 1998, Lyondell submitted to ARCO a
written expression of interest with respect to the potential acquisition by
Lyondell or an affiliate of Lyondell of 100% of the Common Stock. Subject to
certain assumptions and conditions, Lyondell expressed an interest in
acquiring all outstanding Shares in an all cash transaction for a purchase
price of $6.5 billion, including the assumption of $913 million of debt.
Lyondell's letter stated that the proposed purchase price was predicated on
the assumption that the Purchaser would receive a tax basis in the assets
equal to the purchase price for the Company and that any tax liabilities
resulting from the transaction would remain with shareholders of the Company.
The letter indicated that financing for the acquisition would be provided by a
group led by J.P. Morgan. The Lyondell expression of interest was also subject
to the satisfactory completion of due diligence, as well as approval by the
Boards of Directors of Lyondell and the Company.
15
<PAGE>
On April 22, 1998, Lyondell entered into a confidentiality agreement with
ARCO and the Company (which superseded the earlier such agreements). On April
27-28, 1998, representatives of Equistar, Lyondell, J.P. Morgan and DLJ, whom
Lyondell had engaged to help secure financing, met with representatives of the
Company and ARCO for a series of due diligence sessions, and representatives
of Lyondell reviewed certain due diligence information concerning the Company
organized in a data room.
On May 6, 1998, Lyondell was invited by ARCO, acting through its financial
advisor, to submit by May 15, 1998 a firm offer for the possible acquisition
of the Company. As part of the process, Lyondell was asked to review and
submit proposed revisions to drafts of a Merger Agreement, a Tender and Voting
Agreement and a Tax Agreement, which were delivered to Lyondell on May 8,
1998.
On May 15, 1998, Lyondell delivered to ARCO a written proposal to purchase
all of the outstanding Shares. In the proposal, Lyondell indicated that it was
prepared to make a cash tender offer for all outstanding Shares at $51 per
Share, with an option for stockholders of the Company (other than ARCO) to
receive, in a second step merger, either (i) $51 in cash per Share or (ii)
Lyondell common stock having a market value at the time of the merger of $56
per Share, subject to a maximum of 15.5 million shares of Lyondell common
stock being issued. Lyondell also proposed that ARCO be responsible for all
liabilities arising out of a Section 338(h)(10) election under the Internal
Revenue Code (a "338(h)(10) Election") and for certain other potential tax
liabilities of the Company. Lyondell also proposed that it be given an option
to purchase the Shares owned by ARCO. The proposal was also accompanied by
markups of the proposed agreements between the parties. The proposal was
subject to approval by the Boards of Directors of each of Lyondell and the
Company, as well as additional due diligence. The proposal was accompanied by
commitment and highly confident letters from J.P. Morgan and DLJ regarding
financing.
On May 18, 1998, Lyondell was informed by ARCO's financial advisor, and Mr.
Smith was informed by Mr. Bowlin, that ARCO was not interested in pursuing a
transaction on the terms proposed. Over the course of the next two weeks,
Lyondell, acting directly and through its financial advisors, continued to
pursue the possibility of a transaction and reiterated to ARCO its interest in
acquiring the Company.
On June 3, 1998, ARCO and the Company publicly announced that they had
agreed to a transaction pursuant to which ARCO would reduce its ownership
interest in the Company from 82% to 50% through a secondary offering of Common
Stock and a simultaneous share repurchase by the Company from ARCO of
additional Common Stock.
On June 4, Lyondell submitted a revised written proposal to purchase all
outstanding Shares for $56.50 per share, with no change from the previous
proposal with respect to responsibilities for tax liabilities. The Lyondell
proposal was subject to approval by the Boards of Directors of Lyondell and
the Company. Between June 4 and June 10, 1998, ARCO and its financial advisors
engaged in discussions with Lyondell and its financial advisors regarding the
proposed purchase price, the potential responsibility for certain tax
liabilities, and other terms. On June 10, 1998, these discussions terminated
due to inability to reach agreement on financial terms.
On June 13, 1998, a Lyondell financial advisor called an ARCO financial
advisor to indicate that Lyondell would consider a revised proposal to
purchase all outstanding Shares for $57.75 per share and confirmed that
Lyondell would have fully committed financing for the entire purchase price.
Under the revised proposal, ARCO would be responsible for liabilities arising
out of a 338(h)(10) Election, but would not be responsible for the other tax
liabilities of the Company as originally proposed by Lyondell. On June 14,
1998, Mr. Bowlin called Mr. Smith to communicate an interest in pursuing
discussions of the revised Lyondell proposal.
During the period June 15 through June 18, 1998, Lyondell and ARCO and their
respective legal and financial advisors met to conduct further negotiations of
the price and other terms of the proposed transaction. Representatives of the
Company participated in certain of such negotiations with respect to the other
terms of the proposed transaction. On June 17, 1998, Lyondell's Board of
Directors met and authorized the execution and delivery of the Merger
Agreement and the related agreements in substantially the form reviewed at the
meeting.
16
<PAGE>
On the morning of June 18, 1998, ARCO and the Company issued press releases
announcing that the parties were conducting negotiations regarding a sale of
the Company and that the Company's Board of Directors was meeting that day to
consider a proposed transaction. Lyondell issued a statement confirming that
negotiations were pending.
On June 18, 1998, Lyondell, the Purchaser and the Company executed the
Merger Agreement, Lyondell, the Purchaser and ARCO executed the Tender and
Voting Agreement, and Lyondell, ARCO and the Company executed the Tax
Agreement (as defined under the heading "Purpose of the Offer; The Merger
Agreement; The Tender and Voting Agreement--The Tax Agreement" in Section 12),
and the parties issued press releases announcing the agreements providing for
the Offer and the Merger.
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE TENDER AND VOTING
AGREEMENT
PURPOSE
The purpose of the Offer is to enable Lyondell to acquire control of the
Company and to acquire the outstanding Shares. The Offer, as the first step in
the acquisition of the Company, is intended to facilitate the acquisition of
all the outstanding Shares. The purpose of the Merger is to acquire all
outstanding Shares not tendered and purchased pursuant to the Offer or
otherwise.
THE MERGER AGREEMENT
The Merger Agreement provides that, following the satisfaction or waiver of
the conditions described below under "Conditions to the Merger", the Purchaser
will be merged with and into the Company, and each issued Share (other than
Shares owned by Lyondell, the Purchaser or the Company or any other subsidiary
of Lyondell, or by stockholders, if any, who are entitled to and who properly
exercise appraisal rights under Delaware law) will be converted into the right
to receive from the Surviving Corporation an amount in cash equal to the price
per Share paid pursuant to the Offer without interest thereon. The "Surviving
Corporation" of the Merger will be the Company.
Vote Required To Approve Merger. The Delaware General Corporation Law
("DGCL") requires, among other things, that the adoption of any plan of merger
or consolidation of the Company must be approved by the Board of Directors
and, if the "short-form" merger procedure described below is not available,
approved by the holders of a majority of the Company's outstanding voting
securities. The Board of Directors of the Company has approved the Offer, the
Merger and the Merger Agreement; consequently, the only additional action of
the Company that may be necessary to effect the Merger is adoption of the
Merger Agreement by the Company's stockholders if such "short-form" merger
procedure is not available. Under the DGCL, if stockholder adoption of the
Merger Agreement is required in order to consummate the Merger, the vote
required is the affirmative vote of the holders of a majority of the
outstanding Shares (including any Shares owned by the Purchaser). If the
Purchaser acquires, through the Offer or otherwise, voting power with respect
to at least majority of the outstanding Shares (which would be the case if the
Minimum Condition were satisfied and the Purchaser were to accept for payment
Shares tendered pursuant to the Offer), it would have sufficient voting power
to effect the Merger without the affirmative vote of any other stockholder of
the Company.
The DGCL also provides that if a parent company owns at least 90% of the
outstanding shares of each class of stock of a subsidiary, the parent company
may merge that subsidiary into the parent company, or the parent company may
merge itself into that subsidiary, pursuant to the "short-form" merger
procedures without prior notice to, or the approval of, the other stockholders
of the subsidiary. In order to consummate the Merger pursuant to these
provisions of the DGCL, the Purchaser would have to own at least 90% of the
outstanding Shares.
Conditions to the Merger. The Merger Agreement provides that the respective
obligations of each of Purchaser, Lyondell and the Company to effect the
Merger are subject to the satisfaction or waiver of certain conditions,
including the following: (a) if required by the DGCL, the Merger Agreement
having been approved
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and adopted by the affirmative vote of the holders of a majority of the
Shares; provided, however, that neither Lyondell nor Purchaser shall be
entitled to assert the failure of this condition if Lyondell breaches its
agreement to cause all Shares purchased in the Offer to be voted in favor of,
or to consent to, the Merger; (b) no statute, rule, regulation, executive
order, decree, temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other Governmental Entity (as defined herein) or other legal restraint or
prohibition preventing the consummation of the Merger being in effect; and (c)
the Purchaser having previously accepted for payment and paid for Shares
pursuant to the Offer; provided, however, that neither Lyondell nor Purchaser
will be entitled to assert the failure of this condition if Purchaser breaches
certain of its obligations in connection with the Offer as set forth in the
Merger Agreement or fails to purchase Shares pursuant to the Offer in breach
of its obligations under the Merger Agreement.
Termination of the Merger Agreement. The Merger Agreement may be terminated
at any time prior to the effective time of the Merger, whether before or after
approval and adoption of the Merger Agreement by the affirmative vote of the
holders of a majority of the Shares:
(1) by mutual written consent of Lyondell and the Company;
(2) by either Lyondell or the Company if: (a) any Federal, state or local
government or any court, tribunal, administrative agency or commission or
other governmental or other regulatory authority or agency, domestic,
foreign or supranational (a "Governmental Entity") shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the acceptance for payment of, or
payment for, Shares pursuant to the Offer or the Merger and such order,
decree or ruling or other action shall have become final and nonappealable;
or (b) the Merger shall not have been consummated by June 30, 1999.
(3) by Lyondell if as the result of a failure of any of the conditions to
the Offer set forth in Section 14, Purchaser shall not have accepted for
payment any Shares pursuant to the Offer on or prior to the Outside Date
(as defined herein); provided, however, that such right to terminate the
Merger Agreement shall not be available to Lyondell if (a) Purchaser shall
have breached its obligation to extend the Offer under certain
circumstances when an Offer condition has not been met or (b) such failure
of such Offer condition is caused by or results from the failure of
Lyondell or Purchaser to perform in any material respect any of its
covenants or agreements contained in the Merger Agreement or the failure of
any representation or warranty of Lyondell or Purchaser contained therein
to be true and correct in any material respect.
(4) by the Company if:
(a) Purchaser shall not have accepted for payment any Shares pursuant
to the Offer on or prior to the Outside Date, provided, however, that
the failure to accept Shares for payment is not caused by or result
from the failure of the Company to satisfy any condition set forth in
paragraphs (c) or (d) of Section 14 hereof; or
(b) prior to the acceptance by Purchaser of Shares for payment
pursuant to the Offer, the Board of Directors of the Company determines
that a Takeover Proposal (as defined below) constitutes a Superior
Proposal (as defined below); provided, however, that at least two
business days prior to such termination the Company shall have given
Lyondell written notice advising Lyondell that the Board of Directors
of the Company has received a Takeover Proposal that it has determined
to be a Superior Proposal, specifying the material terms and conditions
of such Superior Proposal and identifying the person making such
Superior Proposal; and provided, further, however, that (i) prior to
such termination, the Board of Directors of the Company has reaffirmed
its determination that such Takeover Proposal, taking into account any
amendment by Lyondell of the terms of the Offer and Merger or any offer
by Lyondell to amend the terms of the Merger Agreement, the Offer or
the Merger, together with any subsequent amendments or modifications of
such Takeover Proposal, is a Superior Proposal and (ii) no such
termination shall be effective unless concurrently with such
termination a termination fee equal to $140,000,000 is paid in cash by
the Company to Lyondell.
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The term "Outside Date" is defined as the later of (a) the 30th day after
the initial expiration of the Offer (i.e., August 21, 1998) or (b) the date
that the HSR Condition has been satisfied for a period of two business days,
but in no event later than the 60th day after the initial expiration of the
Offer (i.e., September 20, 1998).
Takeover Proposals. For purposes of the Merger Agreement, a "Takeover
Proposal" means any bona fide proposal made by a third party to acquire,
directly or indirectly, more than 30% of the voting power of the Shares or of
the assets of the Company; provided, however, that a change in the terms of a
proposal submitted prior to the date of the Merger Agreement will be deemed a
new "Takeover Proposal." For purposes of the Merger Agreement, a "Superior
Proposal" means any Takeover Proposal having terms which the Board of
Directors of the Company determines in its good faith judgment (based, with
respect to the consideration payable, on the opinion of a financial advisor of
nationally recognized reputation) to be more favorable to the Company's
stockholders than the Offer and the Merger and to be reasonably capable of
being completed (and for which financing has been committed on customary
terms).
The Merger Agreement provides that the Company will, and will direct and use
reasonable efforts to cause its officers, directors, employees,
representatives and agents to, immediately cease any discussions or
negotiations with any parties other than Lyondell and the Purchaser that may
be ongoing with respect to a Takeover Proposal. The Merger Agreement provides
that the Company will not, and will not authorize or permit any of its
officers, directors or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it to, directly or
indirectly, (1) solicit, initiate or encourage any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, any
Takeover Proposal or (2) participate in any discussions or negotiations
regarding any Takeover Proposal; provided, however, that if, at any time prior
to the acceptance for payment of Shares pursuant to the Offer, the Board of
Directors of the Company determines in good faith, after consultation with its
financial advisors, that a Takeover Proposal that has not been solicited,
initiated or encouraged after the date of the Merger Agreement in violation of
either clause (1) above or similar provisions of the Tender and Voting
Agreement, constitutes a Superior Proposal, the Company may (a) furnish
information with respect to the Company and its subsidiaries to the third
party that has made such Takeover Proposal (and to any investment banker,
financial advisor, attorney, accountant or other representative retained by
such party) pursuant to a customary and reasonable confidentiality agreement
and (b) participate in negotiations regarding such Takeover Proposal. In
addition to the obligations of the Company set forth in this paragraph, the
Merger Agreement provides that the Company shall immediately advise Lyondell
orally and in writing of any request for information or of any Takeover
Proposal or any inquiry regarding the making of a Takeover Proposal.
The Merger Agreement provides further that nothing contained in the
provisions summarized under "--Takeover Proposals",will prohibit the Company
from at any time taking and disclosing to its stockholders a position
(including the withdrawal or modification of any recommendation with respect
to the Offer and the Merger) contemplated by Rule 14e-2(a) promulgated under
the Exchange Act or from making any disclosure to the Company's stockholders
if, in the good faith judgment of the Board of Directors of the Company, after
consultation with outside counsel, failure so to disclose would create a risk
of liability for breach of its fiduciary duties to its stockholders under
applicable law; provided, however, that neither the Company nor its Board of
Directors nor any committee thereof will, except as permitted in accordance
with this paragraph or paragraph 4(b) above under "--Termination of the Merger
Agreement", withdraw or modify, or propose to withdraw or modify, its position
with respect to the Offer or the Merger or approve or recommend, or propose to
approve or recommend, a Takeover Proposal.
Fees and Expenses. The Merger Agreement provides that all fees and expenses
incurred in connection with the Offer, the Merger, the Merger Agreement and
the transactions contemplated by the Merger Agreement will be paid by the
party incurring such fees or expenses, whether or not the Offer or the Merger
is consummated.
Conduct of Business. The Merger Agreement provides that, from the date
thereof until such time as Purchaser's designees shall constitute a majority
of the Board of Directors of the Company, except as otherwise contemplated in
the Merger Agreement or to the extent that Lyondell shall otherwise consent in
writing, the
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Company will, and will cause its subsidiaries to, carry on their respective
businesses in the ordinary course consistent with the manner as theretofore
conducted and, to the extent consistent therewith, use commercially reasonable
efforts to preserve intact their current business organization, keep available
the services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees, distributors
and others having significant business dealings with them.
The Merger Agreement further provides that, without limiting the generality
of the foregoing, from the date thereof until such time as Purchaser's
designees shall constitute a majority of the Board of Directors of the
Company, except as expressly contemplated or permitted by the Merger Agreement
or the Disclosure Letter delivered by the Company to Lyondell and Purchaser
concurrently with the execution and delivery of the Merger Agreement, or to
the extent that Lyondell shall otherwise consent in writing, the Company will
(a) use its commercially reasonable efforts to operate and maintain its
business in all material respects only in the usual, regular and ordinary
manner consistent with past practice (including undertaking scheduled or
necessary "turnarounds" or other maintenance work and including offsite
storage, treatment and disposal of chemical substances generated prior to such
time as Purchaser's designees shall constitute a majority of the Board of
Directors of the Company) and, to the extent consistent with such operation
and maintenance, use commercially reasonable efforts to preserve the present
business organization of its business intact, keep available the services of,
and good relations with, the present employees and preserve present
relationships with all persons having business dealings with its business,
except in each case for such matters that, individually and in the aggregate,
do not and are not reasonably likely to have a material adverse effect on the
Company and its subsidiaries taken as a whole and (b) except to the extent
required by clause (a) above, the Company will not, and will not permit any of
its subsidiaries to: (i) (x) other than dividends and distributions by a
direct or indirect wholly owned subsidiary of the Company to its parent and
other than the regular quarterly dividend in respect of the Shares in the
amount of $.70 per Share, declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, (y) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or (z) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its subsidiaries or any
other securities thereof or any rights, warrants or options to acquire any
such shares or other securities (other than in connection with the exercise of
currently outstanding Company Stock Options (as defined herein)); (ii) issue,
deliver, sell, pledge or otherwise encumber any shares of its capital stock,
any other voting securities or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible securities (other than the issuance of Shares upon the exercise of
Company Stock Options outstanding on the date of the Merger Agreement in
accordance with their present terms) or as provided for in the Merger
Agreement; (iii) amend its Certificate of Incorporation or By-Laws or other
comparable organizational documents; (iv) acquire or agree to acquire (y) by
merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation (other than
any subsidiary of the Company), partnership, joint venture, association or
other business organization or division therefor or (z) any assets that are
material, individually or in the aggregate, to the Company and its
subsidiaries taken as a whole, except acquisitions in the ordinary course of
business consistent with past practice and acquisitions permitted by clause
(vii) below; (v) sell, lease, license, mortgage or otherwise encumber or
subject to any lien or otherwise dispose of any of its properties or assets,
that are material, in the aggregate, to the Company and its subsidiaries taken
as a whole, except (x) sales, leases or other dispositions of inventory, or
(y) sales or licenses in the ordinary course of business consistent with past
practice and which, individually, are not in excess of $5 million and, in the
aggregate, are not in excess of $25 million; (vi) (y) incur any indebtedness
for borrowed money other than (1) the issuance or roll-over of commercial
paper in the ordinary course of business and consistent with past practice and
(2) indebtedness to or from ARCO that will be repaid in full prior to the
expiration of the Offer, or guarantee any such indebtedness or issue or sell
any debt securities or warrants or rights to acquire any debt securities of
the Company or any of its subsidiaries or guarantee any debt securities of
others, or (z) make any loans, advances (other than to employees of the
Company and its subsidiaries in the ordinary course of business) or capital
contributions to, or investments in, any other person (other than any
subsidiary of the Company); (vii) make or agree to make any capital
expenditures regarding the BDO-II or PO-11 projects, other than those
reasonably necessary to avoid payment of penalties or cancellation fees, or
make or
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agree to make any other capital expenditure or expenditures with respect to
property, plant or equipment which, individually, is in excess of $10 million
or, in the aggregate, are in excess of $25 million, other than caretaker,
maintenance and turnaround capital expenditures in the ordinary course of
business; (viii) pay, discharge, settle or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction,
in the ordinary course of business consistent with past practice or in
accordance with their terms, of liabilities reflected or reserved against in,
or contemplated by, the most recent consolidated financial statements (or the
notes thereto) of the Company included in the Filed SEC Documents (as defined
in the Merger Agreement) or incurred thereafter in the ordinary course of
business consistent with past practice, or waive any material benefits of, or
agree to modify in any material respect, any confidentiality, standstill or
similar agreements to which the Company is a party; (ix) (a) adopt, enter into
or amend any bonus, profit sharing, compensation, stock option, warrant,
pension, retirement, deferred compensation, employment, consulting,
indemnification, severance, termination or other employee benefit plan,
agreement, trust fund or arrangement for the benefit or welfare of any
officer, director or employee, (b) except as reasonably called for pursuant to
formulas contained in existing employee benefit plans or arrangements and
except for salary increases in the ordinary course of business and consistent
with past practices, agree to any increase in the compensation (including
bonuses) payable or to become payable to any officer, director or employee or
(c) change the performance objective or performance period under any employee
benefit plans; (x) make any tax election that would have a material adverse
effect (as defined in the Merger Agreement) on the Company and its
subsidiaries taken as a whole (and the Company shall, before filing or causing
to be filed any material tax return of the Company or any of its subsidiaries,
consult with Lyondell and its advisors as to the positions and elections that
may be taken or made with respect to such return and to the extent practical
the Company shall defer settlement or compromise of any income tax liability
of the Company or any of its subsidiaries that would have a material adverse
effect on the Company and its subsidiaries taken as a whole until such time as
Purchaser's designees shall constitute a majority of the Board of Directors of
the Company); (xi) waive any material rights or claims relating to the
Company's business; (xii) accelerate vesting or conversion or approve the
acceleration or conversion of any shares of restricted stock, except as
provided in the Merger Agreement, or grant or approve the grant of any
additional shares of restricted stock, phantom stock units, or stock options
under any existing plan, except as provided in the Merger Agreement, or modify
the term of any performance period or the performance objective to be attained
for that performance period under any existing plan; or (xiii) authorize any
of, or commit or agree to take any of, the foregoing actions.
Board of Directors. The Merger Agreement provides that promptly upon the
acceptance for payment of, and payment for, any Shares by Purchaser pursuant
to the Offer and from time to time thereafter, Purchaser will be entitled to
designate such number of directors on the Board of Directors of the Company as
will give Purchaser, subject to compliance with Section 14(f) of the Exchange
Act and subject to the last sentence of this paragraph, representation on the
Board equal to at least that number of directors (rounded up to the next whole
number) equal to the product of (i) the total number of directors on the Board
and (ii) the percentage that the number of Shares owned by Purchaser bears to
the number of Shares outstanding, and the Company shall, at such time, cause
Purchaser's designees to be so elected or appointed to the Board of Directors
of the Company. Subject to applicable law, the Company has agreed to take all
action requested by Lyondell necessary to effect any such election, including
mailing to its stockholders the information statement (as amended from time to
time, the "Information Statement") containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, which
Information Statement is attached as Appendix A to the Schedule 14d-9. See
"Plans for the Company" below. In connection with the foregoing, the Company
has agreed to promptly, at the option of Lyondell, either increase the size of
the Company's Board of Directors and/or use its commercially reasonable
efforts to obtain the resignation of such number of its current directors as
is necessary to enable Purchaser's designees to be elected or appointed to the
Company's Board of Directors as provided above. In addition, the Merger
Agreement provides that, subject to applicable law, at such time as Purchaser
is entitled to designate a number of directors as provided by the Merger
Agreement, at the request of Lyondell, the Company will use its best efforts
to cause individuals designated by Purchaser to constitute the same percentage
as such individuals represent on the Board of Directors of (x) each committee
of the Board of Directors, (y) each board of directors of each subsidiary of
the Company and (z) each committee of each such board.
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Notwithstanding the foregoing, until the effective time of the Merger, there
shall be at least two directors who are directors on the date of the Merger
Agreement and who are not designees nor officers, directors, employees or
affiliates of Lyondell or Purchaser nor officers or employees of the Company
or ARCO ("Independent Directors"), provided that if the number of Independent
Directors shall be reduced below two for any reason, the Board of Directors
shall subject to the approval of the remaining Independent Directors (or
Independent Director, if there be only one remaining), if any, designate a
person or persons to fill the vacancy or vacancies who are not designees nor
officers, directors, employees or affiliates of Lyondell or Purchaser nor
officers or employees of the Company, and such persons shall be deemed to be
Independent Directors for purposes of the Merger Agreement.
Stock Options. The Merger Agreement provides that upon the consummation of
the Offer, as and to the extent provided in the Company's Change of Control
Plan adopted effective on February 19, 1998 (the "Change of Control Plan"),
(a) each outstanding option to purchase Shares (a "Company Stock Option")
heretofore granted under any stock option, stock appreciation rights or stock
purchase plan, program or arrangement of the Company (collectively, the "Stock
Incentive Plans") outstanding immediately prior to the consummation of the
Offer, whether or not then exercisable, will be canceled by the Company in
exchange for an amount in cash, payable at the time of such cancellation,
equal to the product of (i) the number of Shares subject to such Company Stock
Option immediately prior to the consummation of the Offer and (ii) the excess
of the price per Share to be paid in the Offer over the per Share exercise
price of such Company Stock Option (the "Net Amount"); (b) each phantom stock
unit granted under the Company's Value Incentive Plan outstanding immediately
prior to the consummation of the Offer will, whether or not exercisable, be
canceled in exchange for an amount in cash, payable at the time of such
cancellation, equal to (i) the excess of (x) the price per Share paid in the
Offer over (y) the award price assigned to the phantom stock unit, multiplied
by (ii) the number of Shares subject to such unit (the "SAR Amount"); (c) each
dividend share credit ("DSCs") accrued, credited or issued immediately prior
to the consummation of the Offer in connection with a Company Stock Option or
phantom stock unit, and each DSC that would have been accrued, credited or
issued (as determined in accordance with the Company's Change of Control Plan)
through the remainder of the term of each such Company Stock Option or phantom
stock unit, will, whether or not vested, be canceled in exchange for an amount
in cash, payable at the time of such cancellation, equal to the price per
Share paid in the Offer (the "DSC Amount"); (d) each share of contingent
restricted stock issued under the Company's 1998 Long Term Incentive Plan (the
"1998 LTIP") that is eligible for conversion upon achievement of the current
Return on Capital Managed target (the "RCM") performance level established
under the 1998 LTIP will, immediately prior to the consummation of the Offer,
be converted to performance-based restricted stock on a pro-rated basis based
on a calculation of the percentage of the current RCM performance objective
achieved as of the consummation of the Offer (but not to exceed 25% of the
outstanding shares of contingent restricted stock issued under the 1998 LTIP);
(e) the performance supplement related to the contingent restricted stock
referred to in clause (d) above will be calculated immediately prior to the
consummation of the Offer using the price per Share to be paid in the Offer,
and the resulting number of shares of performance-based restricted stock will
be issued to the Company's employees in accordance with the 1998 LTIP; and (f)
each share of performance-based restricted stock outstanding immediately prior
to the consummation of the Offer (including amounts issued under clauses (d)
and (e) above) will, whether or not vested, be canceled in exchange for an
amount in cash, payable at the time of such cancellation, equal to the price
per Share paid in the Offer (the "Restricted Stock Amount").
The Merger Agreement further provides that, subject to the foregoing
paragraph, all Stock Incentive Plans will terminate as of the effective time
of the Merger, but, notwithstanding the foregoing, the Surviving Corporation
will continue to be obligated to pay the Net Amount, the SAR Amount, the DSC
Amount and the Restricted Stock Amount. The Merger Agreement provides that all
calculations required to be made pursuant to the foregoing paragraph will be
made in accordance with Article IV of the Company's Change of Control Plan and
the terms of the relevant Stock Incentive Plan. In the Merger Agreement the
Company represents that ARCO has taken all such actions as are necessary so
that options to acquire ARCO shares and DSCs with respect to ARCO shares held
by or credited to employees of the Company and its subsidiaries are not
forfeited upon consummation of the Offer and remain outstanding for the
duration of their terms.
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Employee Benefits Matters. The Merger Agreement provides that, at and after
the consummation of the Offer, Lyondell will cause the Company and its
subsidiaries to promptly pay or provide when due all compensation and benefits
provided for pursuant to the terms of any compensation arrangements,
employment agreements and employee or director benefit plans (including,
without limitation, deferred compensation and change of control plans),
programs and policies in existence as of the consummation of the Offer for any
employee (and/or former employee) and director (and/or former director) of the
Company and its subsidiaries; provided, however, that Lyondell will not be
precluded by the provisions described in this paragraph from amending or
terminating any such plans, arrangements, programs or policies after the
consummation of the Offer. Lyondell and the Company have agreed that the
Company and its subsidiaries will pay promptly or provide when due all
compensation and benefits required to be paid pursuant to the terms of any
individual agreement with any employee, former employee, director or former
director in effect as of the date of the Merger Agreement.
The Merger Agreement provides that Lyondell will cause the Company, for the
period commencing upon the consummation of the Offer and ending on the end of
the calendar year following the year in which the consummation of the Offer
occurs (the "Continuation Period"), to provide employee benefits under plans,
programs and arrangements which, in the aggregate for all current employees of
the Company and its subsidiaries as a group (other than employees covered by a
collective bargaining agreement), will provide benefits to such employees
which are not materially less favorable than those provided pursuant to the
plans, programs and arrangements of the Company and its subsidiaries in effect
on the date of the Merger Agreement and employees covered by collective
bargaining agreements will be provided with such benefits as shall be required
under the terms of any applicable collective bargaining agreement; provided,
however, that, without limiting the generality of the foregoing, Lyondell
shall not be required to provide compensation which is based upon the equity
of the Company or any of its subsidiaries; and provided, however, that,
without limiting the generality of the foregoing, nothing in the Merger
Agreement will prevent the amendment or termination of any specific plan,
program or arrangement, require that the Surviving Corporation provide or
permit investment in the securities of Lyondell, the Company or the Surviving
Corporation or interfere with the Surviving Corporation's right or obligation
to make such changes as are necessary to conform with applicable law. The
Merger Agreement further provides that, during the Continuation Period,
Lyondell will provide, or cause the Surviving Corporation to provide, post-
retirement health, dental, life insurance and other welfare benefits that are
not materially less favorable than those that are provided by the Company
immediately prior to the consummation of the Offer to those employees or
directors or former employees or directors of the Company and any of its
subsidiaries who at such time (x) were receiving any such benefits, (y) would
have been eligible to receive any of such benefits upon his or her termination
at such time or (z) would have become eligible within one year of such time to
receive any of such benefits upon his or her termination within such one-year
period. The Merger Agreement further provides that employees of the Company
and its subsidiaries will be given credit for all service with ARCO and its
affiliates and with the Company and its subsidiaries, under each employee
benefit plan, program, or arrangement of Lyondell or its affiliates in which
such employees are eligible to participate for purposes of eligibility,
vesting and benefit accrual; provided, however, that in no event will such
employees be entitled to any credit to the extent that it would result in any
duplication of benefits with respect to the same period of service under any
plans of ARCO and its affiliates, the Company and Lyondell. The Merger
Agreement provides that if employees of the Company and its subsidiaries
become eligible to participate in a medical, dental, disability, life
insurance or other welfare plan of Lyondell or its subsidiaries, Lyondell will
cause such plan to (i) waive any preexisting condition limitations for
conditions covered under the applicable plan of ARCO or the Company and its or
their subsidiaries and (ii) give credit for any deductible and out of pocket
expenses incurred by the employees and their beneficiaries under such plans
prior to such participation.
The Merger Agreement provides that nothing in the provisions summarized
under "--Employee Benefits Matters" requires the continued employment of any
person or, subject to the preceding paragraph, prevents the Company and/or the
Surviving Corporation and their subsidiaries from taking any action or
refraining from taking any action which the Company and its subsidiaries prior
to the consummation of the Offer, could have taken or refrained from taking.
The Merger Agreement and the Tender and Voting Agreement provide that promptly
following the execution thereof, the Company and ARCO will enter into an
agreement providing that,
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effective upon the purchase of Shares pursuant to the Offer, all
administrative service agreements and arrangements between ARCO and the
Company relating to the Company's employee benefit plans and payroll services
shall continue for a period no less than the Continuation Period; provided,
however, that ARCO shall have the right to (i) terminate such agreement if
there are any change or changes in such benefit plans or payroll services that
result in any additional costs or burdens to ARCO in performing its
obligations under such agreement and (ii) to remove AIMCO as designated
fiduciary with respect to employee benefit plans within 90 days after the
consummation of the Offer.
Indemnification, Exculpation and Insurance. The Merger Agreement provides
that Lyondell agrees that all rights to indemnification and exculpation
(including the advancement of expenses) from liabilities for acts or omissions
occurring at or prior to the effective time of the Merger (including with
respect to the transactions contemplated by the Merger Agreement) existing as
of the date of the Merger Agreement or at the effective time of the Merger in
favor of the current or former directors or officers of the Company as
provided in its Certificate of Incorporation, its By-Laws (each as in effect
on the date of the Merger Agreement) and indemnification agreements will be
assumed by the Surviving Corporation in the Merger, without further action, as
of the effective time of the Merger and will survive the Merger and will
continue in full force and effect without amendment, modification or repeal in
accordance with their terms for a period of not less than six years after the
effective time of the Merger; provided, however, that if any claims are
asserted or made within such six-year period, all rights to indemnification
(and to advancement of expenses) under the Merger Agreement in respect of any
such claims will continue, without diminution, until disposition of any and
all such claims.
In the Merger Agreement, Lyondell agrees that, for six years after the
effective time of the Merger, it will cause the Surviving Corporation to
indemnify and hold harmless each present and former director and officer of
the Company, determined as of the effective time of the Merger (the
"Indemnified Parties"), against any costs or expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") (but only to the extent such Costs are not otherwise
covered by insurance and paid) incurred in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters existing or occurring
at or prior to the effective time of the Merger, including in connection with
the Merger Agreement and the transactions contemplated thereby, whether
asserted or claimed prior to, at or after the effective time of the Merger, to
the fullest extent permitted under applicable law (and Lyondell will, or will
cause the Surviving Corporation to, also advance expenses as incurred to the
fullest extent permitted under applicable law); provided, however, that, with
respect to any Indemnified Person that is an officer or employee of ARCO as of
the date of the Merger Agreement, such Indemnified Person shall first have
pursued all available rights to indemnification (and advancement of expenses)
from ARCO. Pursuant to the Merger Agreement and the Tender and Voting
Agreement, ARCO has agreed to indemnify and hold harmless any such Indemnified
Person that is at the date of the Merger Agreement an officer or employee of
ARCO against any such Costs (not covered by insurance and paid) to the fullest
extent permitted under applicable law (and ARCO shall also advance expenses as
incurred to the fullest extent permitted under applicable law).
The Merger Agreement provides that, in the event that Lyondell, the
Surviving Corporation or any of their successors or assigns (a) consolidates
with or merges into any other person and is not the continuing or surviving
corporation or entity of such consolidation or merger or (b) transfers or
conveys all or substantially all of its properties and assets to any person,
then, and in each such case, proper provision will be made so that the
successors and assigns of Lyondell or the Surviving Corporation, as the case
may be, shall assume the obligations set forth in the two foregoing
paragraphs. In the event the Surviving Corporation transfers any material
portion of its assets, in a single transaction or in a series of transactions,
Lyondell will either guarantee the indemnification obligations referred to in
the two foregoing paragraphs or take such other action to insure that the
ability of the Surviving Corporation, legal and financial, to satisfy such
indemnification obligations will not be diminished in any material respect.
Pursuant to the Merger Agreement and the Tender and Voting Agreement, ARCO
has agreed, for a period of six years after the effective time of the Merger,
to cause to be maintained in effect policies of directors' and
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officers' liability insurance substantially in the amounts currently
maintained by ARCO and covering the officers, directors and employees of the
Company currently covered by ARCO's directors' and officers' liability
insurance with similar terms and conditions with respect to claims arising
from or related to facts or events which occurred at or before the effective
time of the Merger; provided, however, that ARCO shall not be obligated to
make annual premium payments for such insurance to the extent such premiums
exceed 200% of the annual premiums paid as of the date of the Merger Agreement
by ARCO for such insurance (such 200% amount, the "Maximum Premium"). If such
insurance coverage cannot be obtained at all, or can only be obtained at an
annual premium in excess of the Maximum Premium, ARCO shall maintain the most
advantageous policies of directors' and officers' insurance obtainable for an
annual premium equal to the Maximum Premium; provided further, if such
insurance coverage cannot be obtained at all, ARCO shall purchase extended
reporting periods with respect to such insurance for an amount which, together
with all other insurance purchased pursuant to this paragraph, does not exceed
the Maximum Premium. It is understood that ARCO will not take any action that
would have the effect of limiting the aggregate amount of insurance coverage
required to be maintained for the individuals referred to in this paragraph.
The Merger Agreement provides that the provisions of the four previous
paragraphs (x) are intended to be for the benefit of, and shall be enforceable
by, each indemnified party, his or her heirs and his or her representatives
and (y) are in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such person may have by contract or
otherwise.
Reasonable Efforts; Notification. The Merger Agreement provides that (a)
upon the terms and subject to the conditions set forth therein, each of the
parties to the Merger Agreement will use its commercially reasonable efforts
to take, or cause to be taken, all appropriate action, and to do or cause to
be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
the Merger Agreement as soon as practicable, including but not limited to: (i)
cooperation in the preparation and filing of the Offer Documents, the Schedule
14D-9, the Information Statement, the Proxy Statement, any required filings
under the HSR Act or other foreign filings and any amendments or supplements
to any thereof and (ii) using its commercially reasonable efforts to promptly
make all required regulatory filings and applications including, without
limitation, responding promptly to requests for further information and to
obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of Governmental Entities as are necessary for the
consummation of the transactions contemplated by the Merger Agreement and to
fulfill the conditions to the Offer and the Merger, (b) in case at any time
after the effective time of the Merger any further action is necessary or
desirable to carry out the purposes of the Merger Agreement, the proper
officers and directors of each party to the Merger Agreement will use their
commercially reasonable efforts to take all such necessary action, (c) the
Company and Lyondell each will keep the other apprised of the status of
matters relating to completion of the transactions contemplated in the Merger
Agreement, including promptly furnishing the other with copies of notices or
other communications received by Lyondell or the Company, as the case may be,
or any of their subsidiaries, from any Governmental Entity with respect to the
Offer, the Merger or any of the other transactions contemplated by the Merger
Agreement, and (d) the parties to the Merger Agreement will consult and
cooperate with one another, and consider in good faith the views of one
another in connection with, and will provide each other the opportunity to
review and comment upon, any analyses, appearances, presentations, memoranda,
briefs, arguments, opinions and proposals made or submitted by or on behalf of
any party to the Merger Agreement in connection with proceedings under or
relating to the HSR Act or any other antitrust law. The Merger Agreement
further provides that, without limiting the generality of the foregoing
undertakings, (i) Lyondell agrees that, if necessary to prevent any
Governmental Entity from taking steps to obtain, or from issuing, any order,
injunction, decree, judgment or ruling or the taking of any other action that
would (x) restrain, enjoin or otherwise prohibit the Offer, the Merger or any
of the other transactions contemplated by this Agreement or (y) cause any
Offer Condition not to be satisfied, Lyondell shall (A) offer to accept an
order to divest (and to enter into a consent decree or other agreement giving
effect thereto) such of the Company's or Lyondell's assets and business, and
agree to hold separate such assets and business pending such divestiture, and
(B) enter into any supply, license, tolling, joint venture or other agreement
or take any other action, as may be necessary to forestall such order, decree,
ruling or action; provided, however, that
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notwithstanding the foregoing provisions of this clause (i), Lyondell shall
not be required to take any such action that would have a material adverse
effect on the Company and its Subsidiaries taken as a whole, to waive any
material rights, or to take any action that would result in any of the
consequences referred to in paragraph (a) of Item 14; and (ii) without
limitation of the foregoing clause (i), the Company and Lyondell each agree to
contest and resist any action seeking to have imposed any order, decree,
judgment, injunction, ruling or other order (whether temporary, preliminary or
permanent) (an "Order") that (x) would delay, restrain, enjoin or otherwise
prohibit consummation of the Offer, the Merger or any of the other
transactions contemplated by the Merger Agreement or (y) cause any conditions
to the Offer set forth in Section 14 hereof not to be satisfied and, in the
event that any such temporary or preliminary Order is entered in any
proceeding, to take the steps contemplated by the foregoing clause (i) and to
use its commercially reasonable efforts to take promptly any and all other
steps (including, the appeal thereof and the posting of a bond) necessary to
vacate, modify or suspend such Order so as to permit such consummation as
promptly as practicable after the date of the Merger Agreement.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties.
Amendment; Extension; Waiver. The Merger Agreement provides that: (a) it may
be amended by the parties thereto, by action taken or authorized by their
respective Boards of Directors, at any time before or after obtaining the
approval of the Company's stockholders (if required by the DGCL), but, after
any such approval, no amendment will be made which by law requires further
approval by such stockholders without obtaining such further approval; and (b)
it may not be amended except by an instrument in writing signed on behalf of
each of the parties thereto. The Merger Agreement provides further that, at
any time prior to the effective time of the Merger, the parties thereto, by
action taken or authorized by their respective Boards of Directors, may, to
the extent legally allowed, (a) extend the time for the performance of any of
the obligations or other acts of the other parties thereto, (b) waive any
inaccuracies in the representations and warranties contained therein or in any
document delivered pursuant thereto or (c) subject to the first sentence of
this paragraph, waive compliance with any of the agreements or conditions
contained therein. The Merger Agreement provides that any agreement on the
part of a party thereto to any such extension or waiver will be valid only if
set forth in a written instrument signed on behalf of such party and that the
failure of any party to the Merger Agreement to assert any of its rights
thereunder or otherwise will not constitute a waiver of those rights.
Other. In the Merger Agreement, the terms "material adverse change" or
"material adverse effect" are defined generally to mean any change or effect
that, individually or in the aggregate, with such other changes or effects, is
materially adverse to the business, assets, financial condition or results of
operations of the Company and its subsidiaries taken as a whole, except for
changes or effects relating to the economy in general or resulting from
actions expressly contemplated by the Merger Agreement.
The foregoing summary of the Merger Agreement is qualified in its entirety
by reference to the Merger Agreement, a copy of which is filed as Exhibit
(c)(1) to the Schedule 14D-1. The Merger Agreement should be read in its
entirety for a more complete description of the matters summarized above.
THE TENDER AND VOTING AGREEMENT
Pursuant to the Tender and Voting Agreement, ARCO has agreed that, if
Purchaser commences the Offer, it will tender, or cause to be tendered prior
to the expiration of the Offer, to the Purchaser, and not withdraw as long as
the Tender and Voting Agreement remains in effect, all Shares over which it
has sole voting and dispositive power (consisting of 80,000,001 Shares).
ARCO has further agreed in the Tender and Voting Agreement that while such
agreement is in effect, and except as contemplated thereby, ARCO will not (a)
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 owned by ARCO, (b) grant any proxies, powers of attorney
or other authorization or consent, deposit any shares of capital stock of the
Company
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into a voting trust or enter into a voting agreement with respect to any such
Shares or (c) take any action that would make any representation or warranty
of ARCO contained in the Tender and Voting Agreement untrue or incorrect or
have the effect of preventing or disabling ARCO from performing its
obligations under the Tender and Voting Agreement. ARCO also agreed that,
while the Tender and Voting Agreement is in effect, it will promptly notify
Lyondell and Purchaser of the number of new shares of Company Common Stock
acquired by ARCO, if any, after the date thereof. Under the terms of the
Tender and Voting Agreement, ARCO will, and will direct and use reasonable
efforts to cause its officers, directors, employees, representatives,
subsidiaries and agents to, immediately cease any discussions or negotiations
with any parties other than Lyondell and Purchaser that may be ongoing with
respect to a Takeover Proposal. While the Tender and Voting Agreement is in
effect, ARCO has agreed that it will not, and will not authorize or permit any
of its officers, directors, subsidiaries or employees or any investment
banker, financial advisor, attorney, accountant or other representative
retained by it or any of them to, directly or indirectly, (a) solicit,
initiate or encourage any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal,
or (b) participate in any discussions or negotiations regarding any Takeover
Proposal; provided, however, that if, at any time prior to the acceptance for
payment of shares of Company Common Stock pursuant to the Offer, ARCO
determines in good faith, after consultation with its financial advisers, that
a Takeover Proposal that has not been solicited, initiated or encouraged after
the date thereof in violation of clause (a) above or of similar provisions in
the Merger Agreement constitutes a Superior Proposal (as defined in the Merger
Agreement), ARCO and the Company may (i) furnish information with respect to
the Company and its Subsidiaries to the third party that has made such
Takeover Proposal (and to any investment banker, financial advisor, attorney,
accountant or other representative retained by such party) pursuant to a
customary and reasonable confidentiality agreement and (ii) participate in
negotiations regarding such Takeover Proposal.
In the Tender and Voting Agreement, ARCO agrees that, during the time the
Tender and Voting Agreement is in effect, at any meeting of the stockholders
of the Company, however called, and at every adjournment or postponement
thereof, and in any action by written consent of the stockholders of the
Company, it shall (a) appear at the meeting or otherwise cause the Shares to
be counted as present thereat for purposes of establishing a quorum; (b) vote
its Shares in favor of the Merger and approval and adoption of the Merger
Agreement, and any action required in furtherance thereof; (c) vote its Shares
against any action or agreement that would result in a breach in any material
respect of any representation, warranty or covenant of the Company in the
Merger Agreement; and (d) vote its 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 any other extraordinary corporate
transaction, such as a merger, reorganization or liquidation involving the
Company and a third party or any other proposal of a third party to acquire
the Company. In furtherance of the foregoing, under the Tender and Voting
Agreement, ARCO irrevocably constitutes and appoints Lyondell as its attorney
and proxy pursuant to the provisions of Section 212(c) of the DGCL, with full
power of substitution and resubstitution, to vote the Shares at any meeting of
stockholders of the Company, however called, or in connection with any action
by written consent by the stockholders of the Company, in each case only as
and to the extent provided in clauses (a), (b) and (c) of the preceding
sentence, provided, however, that, without limiting the foregoing, in any such
vote or other action pursuant to such proxy, Lyondell will not in any event
have the right (and such proxy will not confer the right) to vote against the
Merger, to vote to reduce the Offer Price or the Merger consideration or
otherwise modify or amend the Merger Agreement to reduce the rights or
benefits of the Company or any stockholders of the Company (including ARCO)
under the Offer or the Merger Agreement or to reduce the obligations of
Lyondell thereunder; and provided, further, that the proxy granted pursuant to
this paragraph will irrevocably cease and will be of no further force or
effect upon (x) any breach by Lyondell of any of its obligations under Section
1.1(a) of the Merger Agreement, (y) any violation by Lyondell of any of the
terms of the Tender and Voting Agreement or (z) the termination of the Merger
Agreement or the Tender and Voting Agreement in accordance with its terms.
The Tender and Voting Agreement provides that the Tender and Voting
Agreement will terminate on the earliest of (i) payment to ARCO of the full
purchase price for the Shares, (ii) the consummation of the Merger, and (iii)
the termination of the Merger Agreement in accordance with its terms. The
Tender and Voting
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Agreement also provides that it may be terminated by ARCO if Lyondell fails to
comply with certain of its obligations in connection with the making of the
Offer pursuant to the Merger Agreement. The Tender and Voting Agreement
provides that, in the event of a termination thereof, the Tender and Voting
Agreement will forthwith become void and there will be no liability or
obligation on the part of Lyondell, Purchaser or ARCO or their respective
officers or directors under the Tender and Voting Agreement thereafter, except
as specifically provided in the Tender and Voting Agreement.
The foregoing summary of the Tender and Voting Agreement is qualified in its
entirety by reference to the Tender and Voting Agreement, a copy of which is
filed as Exhibit (c)(2) to the Schedule 14D-1. The Tender and Voting Agreement
should be read in its entirety for a more complete description of the matters
summarized above.
THE TAX AGREEMENT
In connection with the negotiation of the Merger Agreement and the Tender
and Voting Agreement, ARCO, the Company and Lyondell also entered into a Tax
Agreement dated as of June 18, 1998 (the "Tax Agreement"), and ARCO and
Lyondell entered into a related Guaranty dated as of June 18, 1998, pursuant
to which Lyondell, as of the date of the consummation of the Offer, will
guarantee the obligations of the Company under the Tax Agreement and previous
tax agreements between the Company and ARCO.
The Tax Agreement provides that the parties will make a Section 338(h)(10)
Election for federal income tax purposes and a similar election for certain
state income tax purposes to treat the disposition of the Shares pursuant to
the Offer and the Merger as, in effect, a sale of assets by the Company and
its subsidiaries ("Company Group"). As a result, Lyondell will have a basis in
the assets of the Company Group for such federal and state income tax purposes
equal to the amount paid by Lyondell for the Shares plus the amount of Company
Group liabilities ("Gross Purchase Price"), and the Company Group will
recognize taxable gain equal to the excess of the Gross Purchase Price over
its adjusted tax basis in the assets ("Sale Gain"). Because ARCO owns more
than 80% of the outstanding Shares, the Company Group is currently a part of
the affiliated group of corporations headed by ARCO that file a consolidated
return ("ARCO Group"). Accordingly, the entire Sale Gain will be included in
the consolidated tax return filed by the ARCO Group, and ARCO will be liable
for the tax attributable thereto, even though ARCO owns less than 100% of the
outstanding Shares.
The Tax Agreement also provides that, other than taxes attributable to the
Sale Gain, the Company and Lyondell will be responsible for the tax
liabilities of the ARCO Group that are attributable to the Company Group. The
Company and Lyondell will also indemnify ARCO against any taxes attributable
to the recapture of dual consolidated losses incurred by the Company Group and
reflected on an ARCO Group consolidated return. Lyondell does not expect the
taxes for which it and the Company Group are liable to be materially different
from the amounts previously paid or provided for.
PLANS FOR THE COMPANY
If a majority of the outstanding Shares are purchased by the Purchaser
pursuant to the Offer, Lyondell currently intends to request the Company to
reduce the number of its directors and to designate Lyondell representatives
as a majority of the Company's Board of Directors. Following completion of the
Offer and the Merger, Lyondell intends to integrate the Company's operations
with those of Lyondell under the direction of Lyondell's management. Lyondell
believes that, because of the strategic fit of the Company's operations with
Lyondell's operations, the combination of Lyondell and the Company will serve
to maximize Lyondell shareholder value. While Lyondell does not have any
current plans with respect to the sale or other disposition of any other
significant assets of the Company or any other material change in the
Company's business, Lyondell
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may determine to do so after further review. Lyondell currently intends to
relocate the corporate headquarters of the Company to Houston, Texas.
APPRAISAL RIGHTS
The holders of Shares do not have appraisal rights as a result of the Offer.
However, if the Merger is consummated, holders of Shares at the effective time
of the Merger will have certain rights pursuant to the provisions of Section
262 of the DGCL ("Section 262") to dissent and demand appraisal of their
Shares. Under Section 262, dissenting stockholders who comply with the
applicable statutory procedures will be entitled to receive a judicial
determination of the fair value of their Shares (exclusive of any element of
value arising from the accomplishment or expectation of the Merger) and to
receive payment of such fair value in cash, together with a fair rate of
interest, if any. Any such judicial determination of the fair value of Shares
could be based upon factors other than, or in addition to, the price per Share
to be paid in the Merger or the market value of the Shares. The value so
determined could be more or less than the price per Share to be paid in the
Merger.
The foregoing summary of Section 262 does not purport to be complete and is
qualified in its entirety by reference to Section 262. FAILURE TO FOLLOW THE
STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR PERFECTING APPRAISAL RIGHTS MAY
RESULT IN THE LOSS OF SUCH RIGHTS.
GOING PRIVATE TRANSACTIONS
The Commission has adopted Rule 13e-3 under the Exchange Act, which is
applicable to certain "going private" transactions. The Purchaser does not
believe that Rule 13e-3 will be applicable to the Merger unless the Merger is
consummated more than one year after the termination of the Offer. If
applicable, Rule 13e-3 requires, among other things, that certain financial
information concerning the fairness of the Merger and the consideration
offered to minority stockholders in the Merger be filed with the Commission
and disclosed to stockholders prior to the consummation of the Merger.
Except as otherwise described in this Offer to Purchase, the Purchaser and
Lyondell have no current plans or proposals that would relate to, or result
in, an extraordinary corporate transaction involving the Company, such as a
merger, reorganization or liquidation involving the Company or any of its
subsidiaries, a sale or transfer of a material amount of assets of the Company
or any of its subsidiaries, any change in the present Board of Directors or
management of the Company including, but not limited to, any plans or
proposals to change the number or term of directors or to fill any existing
vacancies on the Board of Directors, any material change in the Company's
present capitalization or dividend policy, any other material change in the
Company's corporate structure or business, causing a class of securities of
the Company to be delisted from a national securities exchange or to cease to
be authorized to be quoted in an inter-dealer quotation system of a registered
national securities association or a class of equity securities of the Company
becoming eligible for termination of registration pursuant to Section 12(g)(4)
of the Exchange Act.
13. DIVIDENDS AND DISTRIBUTIONS
Pursuant to the terms of the Merger Agreement, the Company is prohibited
from taking any of the actions described in the two succeeding paragraphs, and
nothing herein shall constitute a waiver by the Purchaser or Lyondell of any
of its rights under the Merger Agreement or a limitation of remedies available
to the Purchaser or Lyondell for any breach of the Merger Agreement, including
termination thereof.
If the Company should (a) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, (b)
purchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities
(other than in connection with the exercise of currently outstanding Company
Stock Options), or (c) issue, deliver, sell,
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pledge or otherwise encumber any shares of its capital stock, any other voting
securities or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities (other than the issuance of Shares upon the exercise of Company
Stock Options outstanding on the date of the Merger Agreement in accordance
with their present terms) or as provided for in the Merger Agreement; then,
subject to the provisions described in Section 14, the Purchaser may, subject
to the terms of the Merger Agreement (which restrict the Purchaser from taking
certain actions without the consent of the Company), make such adjustments as
it deems appropriate in the Offer Price and other terms of the Offer,
including, without limitation, the number or type of securities offered to be
purchased.
If, on or after June 18, 1998, the Company should declare, set aside or pay
any dividends on, or make any other distributions in respect of, any of its
capital stock (other than the dividends permitted under the Merger Agreement
as described in clause (b)(i) under the heading "The Merger Agreement--Conduct
of Business" in Section 12), then, subject to the provisions described in
Section 14 and subject to the terms of the Merger Agreement (which restrict
the Purchaser from taking certain actions without the consent of the Company),
(a) the Offer Price may be reduced by the amount of any such cash dividend or
cash distribution and (b) the whole of any such noncash dividend, distribution
or issuance to be received by the tendering stockholders will (i) be received
and held by the tendering stockholders for the account of the Purchaser and
will be required to be promptly remitted and transferred by each tendering
stockholder to the Depositary for the account of the Purchaser, accompanied by
appropriate documentation of transfer, or (ii) at the direction of the
Purchaser, be exercised for the benefit of the Purchaser, in which case the
proceeds of such exercise will promptly be remitted to the Purchaser. Pending
such remittance and subject to applicable law, the Purchaser will be entitled
to all rights and privileges as owner of any such noncash dividend,
distribution, issuance or proceeds and may withhold the entire Offer Price or
deduct from the Offer Price the amount or value thereof, as determined by the
Purchaser in its sole discretion.
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer but subject to the terms and
conditions of the Merger Agreement, Purchaser will not be required to accept
for payment or, subject to any applicable rules and regulations of the
Commission, including Rule 14e-l(c) under the Exchange Act (relating to
Purchaser's obligation to pay for or return tendered Shares after the
termination or withdrawal of the Offer), to pay for any Shares tendered
pursuant to the Offer if (i) the Minimum Condition shall not have been
satisfied or (ii) the HSR Condition shall not have been satisfied.
Furthermore, Purchaser will not be required to accept for payment or, subject
as aforesaid, to pay for any Shares not theretofore accepted for payment or
paid for, and may terminate the Offer if after the date of the Merger
Agreement and before acceptance of such Shares for payment or the payment
therefor pursuant to the Offer, any of the following conditions has occurred
and continues to exist as of a scheduled expiration date of the Offer (as
extended, if required, pursuant to the Merger Agreement), other than as a
result of a breach by Lyondell or Purchaser of any of their obligations under
the Merger Agreement:
(a) there shall have been entered and then in effect any order,
preliminary or permanent injunction, decree, judgment or ruling in any
action or proceeding before any court or governmental, administrative or
regulatory authority or agency, or any statute, rule or regulation enacted,
entered, enforced, promulgated, amended or issued that is applicable to
Lyondell, Purchaser, the Company or any subsidiary or affiliate of
Purchaser or the Company or the Offer or the Merger, by any legislative
body, court, government or governmental, administrative or regulatory
authority or agency that: (i) makes illegal or otherwise restrains or
prohibits the consummation of the Offer in accordance with the terms of the
Merger Agreement, the acceptance for payment of, or payment for, the Shares
by Purchaser or any of its affiliates, or the consummation of the Merger;
(ii) prohibits the ownership or operation by the Company or any of its
subsidiaries, or Lyondell or any of its subsidiaries, of all or any
material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or Lyondell or its subsidiaries, taken as a
whole, or materially limits the ownership or operation by the Company or
any of its subsidiaries, or Lyondell or any of its subsidiaries, of all or
any material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or Lyondell and its subsidiaries, taken as
a whole, or compels Lyondell or
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any of its subsidiaries to dispose of or hold separate all or any material
portion of the businesses or assets of the Company and its subsidiaries,
taken as a whole, or Lyondell and its subsidiaries, taken as a whole, in
any such case as a result of the transactions contemplated by the Offer or
the Merger Agreement; (iii) imposes substantial limitations on the ability
of Lyondell, Purchaser or any of Lyondell's affiliates effectively to
acquire or hold or to exercise full rights of ownership of Shares; or (iv)
requires divestiture by Lyondell or Purchaser or any of their affiliates of
any material portion of the Shares; provided, however, that this paragraph
(a) will not apply to or include any consent decree or agreement entered
into by Lyondell, or any other action taken by Lyondell, in connection with
satisfying its obligations under the Merger Agreement that are summarized
under the heading "Purpose of the Offer; The Merger Agreement; The Tender
and Voting Agreement--The Merger Agreement--Reasonable Efforts;
Notification" in Section 12;
(b) there shall have occurred any material adverse change (as defined in
the Merger Agreement) in the Company and its subsidiaries taken as a whole;
(c) any of the representations and warranties of the Company set forth in
the Merger Agreement that are qualified by reference to a material adverse
effect (as defined in the Merger Agreement) shall not be true and correct,
or any such representations and warranties 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) on the Company and its
subsidiaries taken as a whole, in each case as if such representations and
warranties were made at the time of such determination;
(d) the Company shall not have performed and complied with in all
material respects any material agreement or covenant of the Company to be
performed or complied with by it under this Agreement and shall not have
cured such default after having been given five business days written
notice of such default by Lyondell; or
(e) the Merger Agreement shall have been terminated in accordance with
its terms;
(f) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Lyondell or
Purchaser its approval or recommendation of the Offer, the Merger or the
Merger Agreement or (ii) the Company shall have entered into any agreement
with respect to any Superior Proposal or (iii) the Board of Directors of
the Company or any committee thereof shall have resolved to take any of the
foregoing actions; provided, however, that clauses (i) and (iii) of this
paragraph (f) shall not apply to or include (x) a determination that a
Takeover Proposal is a Superior Proposal or (y) giving notice of a Superior
Proposal to Purchaser as contemplated by the Merger Agreement; or
(g) there shall have occurred and continued to exist for at least three
business days (i) any general suspension of trading in, or limitation on
prices for, securities on a national securities exchange in the U.S.
(excluding any coordinated trading halt triggered solely as a result of a
specified decrease in a market index), (ii) a declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, (iii) a mandatory limitation by a U.S. federal Governmental Entity
or a change in the general financial, banking or capital markets which
results in a general inability of major financial institutions in the
United States to fulfill their obligations under commitments to extend
credit, or (iv) or in case of any of the foregoing existing on the date of
the Merger Agreement, material acceleration or worsening thereof;
which, in the sole judgment of Purchaser in any such case, and regardless of
the circumstances (including any action or omission by Purchaser) giving rise
to any such condition, makes it inadvisable to proceed with such acceptance
for payment or payments.
The foregoing conditions in paragraphs (a) through (g) are for the sole
benefit of Purchaser and Lyondell and may, subject to the terms of the Merger
Agreement be waived by Purchaser and Lyondell in whole or in part at any time
and from time to time in their sole discretion. The failure by Lyondell or
Purchaser at any time to exercise any of the foregoing rights will not be
deemed a waiver of any such right, the waiver of any such
31
<PAGE>
right with respect to particular facts and circumstances will not be deemed a
waiver with respect to any other facts and circumstances and each such right
will be deemed an ongoing right that may be asserted at any time and from time
to time.
15. CERTAIN LEGAL MATTERS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the Commission and other publicly
available information concerning the Company and discussions of
representatives of Lyondell with representatives of the Company, none of the
Purchaser, Lyondell or the Company is aware of any license or regulatory
permit that appears to be material to the business of the Company and its
subsidiaries, taken as a whole, that might be adversely affected by the
Purchaser's acquisition of Shares (and the indirect acquisition of the stock
of the Company's subsidiaries) as contemplated herein or of any approval or
other action by any Governmental Entity that would be required or desirable
for the acquisition or ownership of Shares by the Purchaser as contemplated
herein. Should any such approval or other action be required or desirable, the
Purchaser and Lyondell currently contemplate that such approval or other
action will be sought, except as described below under "State Takeover Laws".
While (except as otherwise expressly described in this Section 15) the
Purchaser does not presently intend to delay the acceptance for payment of or
payment for Shares tendered pursuant to the Offer pending the outcome of any
such matter, there can be no assurance that any such approval or other action,
if needed, would be obtained or would be obtained without substantial
conditions or that failure to obtain any such approval or other action might
not result in consequences adverse to the Company's business or that certain
parts of the Company's business might not have to be disposed of if such
approvals were not obtained or such other actions were not taken or in order
to obtain any such approval or other action. If certain types of adverse
action are taken with respect to the matters discussed below, the Purchaser
could decline to accept for payment or pay for any Shares tendered. See
Section 14 for a description of certain conditions to the Offer.
State Takeover Laws. A number of states throughout the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable
to attempts to acquire securities of corporations that are incorporated or
have assets, stockholders, executive offices or places of business in such
states. In Edgar v. MITE Corp., the Supreme Court of the United States held
that the Illinois Business Takeover Act, which involved state securities laws
that made the takeover of certain corporations more difficult, imposed a
substantial burden on interstate commerce and therefore was unconstitutional.
In CTS Corp. v. Dynamics Corp. of America, however, the Supreme Court of the
United States held that a state may, as a matter of corporate law and, in
particular, those laws concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without prior approval of the remaining stockholders, provided
that such laws were applicable only under certain conditions. Subsequently, a
number of Federal courts ruled that various state takeover statutes were
unconstitutional insofar as they apply to corporations incorporated outside
the state of enactment.
Section 203 of the DGCL, in general, prohibits a Delaware corporation such
as the Company from engaging in a "Business Combination" (defined as a variety
of transactions, including mergers) with an "Interested Stockholder" (defined
generally as a person that is the beneficial owner of 15% or more of a
corporation's outstanding voting stock) for a period of three years following
the time that such person became an Interested Stockholder unless, among other
things, prior to the time such person became an Interested Stockholder, the
board of directors of the corporation approved either the Business Combination
or the transaction that resulted in the stockholder becoming an Interested
Stockholder. The Company's Board of Directors has approved the Merger
Agreement and the transactions contemplated thereby. Therefore, Section 203 of
the DGCL is inapplicable to the Merger.
In addition, Pennsylvania has adopted a Takeover Disclosure Law which
purports to regulate attempts to acquire a corporation which (i) is
incorporated in Pennsylvania or (ii) has its principal place of business and
substantial assets located in Pennsylvania. The Company's executive offices
are located in Newtown Square, Pennsylvania. Because the Company Board has
recommended acceptance of the Offer, the Offer is exempt from
32
<PAGE>
the registration requirements of such law provided that certain information is
filed with the Pennsylvania Securities Commission and Purchaser undertakes to
notify the Company's shareholders that such filing must be made with the
Pennsylvania Securities Commission, must include substantial information about
the Offer and must be available for inspection at the offices of the
Pennsylvania Securities Commission, 1010 N. 7th Street, 2nd Floor, Harrisburg,
Pennsylvania 17102 during normal business hours. Purchaser intends to make
such filing, and the distribution of this Offer to Purchase to the Company's
shareholders constitutes the required notification to them.
Based on information supplied by the Company, the Purchaser does not believe
that any other state takeover statutes or similar laws purport to apply to the
Offer or the Merger. Neither the Purchaser nor Lyondell has currently complied
with any other state takeover statute or regulation. The Purchaser reserves
the right to challenge the applicability or validity of any state law
purportedly applicable to the Offer or the Merger and nothing in this Offer to
Purchase or any action taken in connection with the Offer or the Merger is
intended as a waiver of such right. If it is asserted that any state takeover
statute is applicable to the Offer or the Merger and an appropriate court does
not determine that it is inapplicable or invalid as applied to the Offer or
the Merger, the Purchaser might be required to file certain information with,
or to receive approvals from, the relevant state authorities, and the
Purchaser might be unable to accept for payment or pay for Shares tendered
pursuant to the Offer, or be delayed in consummating the Offer or the Merger.
In such case, the Purchaser may not be obligated to accept for payment or pay
for any Shares tendered pursuant to the Offer. See Section 14.
Antitrust. Under the provisions of the HSR Act applicable to the Offer, the
acquisition of Shares under the Offer may be consummated after the expiration
of a 15-calendar day waiting period commenced by the filing by Lyondell of a
Notification and Report Form with respect to the Offer, unless Lyondell
receives a request for additional information or documentary material from the
Antitrust Division or the FTC or unless early termination of the waiting
period is granted. Lyondell expects to make such filing on June 25, 1998. If,
within the initial 15-day waiting period, either the Antitrust Division or the
FTC requests additional information or material from Lyondell concerning the
Offer, the waiting period will be extended and would expire at 11:59 p.m., New
York City time, on the tenth calendar day after the date of substantial
compliance by Lyondell with such request. Only one extension of the waiting
period pursuant to a request for additional information is authorized by the
HSR Act. Thereafter, such waiting period may be extended only by court order
or with the consent of Lyondell. In practice, complying with a request for
additional information or material can take a significant amount of time. In
addition, if the Antitrust Division or the FTC raises substantive issues in
connection with a proposed transaction, the parties frequently engage in
negotiations with the relevant governmental agency concerning possible means
of addressing those issues and may agree to delay consummation of the
transaction while such negotiations continue. Expiration or termination of the
applicable waiting period under the HSR Act is a condition to the Purchaser's
obligation to accept for payment and pay for Shares tendered pursuant to the
Offer.
The Merger will not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed
acquisition of the Company. At any time before or after the Purchaser's
acquisition of Shares pursuant to the Offer, the Antitrust Division or the FTC
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or the consummation of the Merger or seeking the
divestiture of Shares acquired by the Purchaser or the divestiture of
substantial assets of the Company or its subsidiaries or Lyondell or its
subsidiaries. Private parties may also bring legal action under the antitrust
laws under certain circumstances. There can be no assurance that a challenge
to the Offer on antitrust grounds will not be made or, if such a challenge is
made, of the result thereof.
Other Foreign Laws. The Company and certain of its subsidiaries conduct
business in several foreign countries where regulatory filings or approvals
may be required or desirable in connection with the
33
<PAGE>
consummation of the Offer. Certain of such filings or approvals, if required
or desirable, may not be made or obtained prior to the expiration of the
Offer. The Purchaser is seeking further information regarding the
applicability of any such laws and currently intends to take such action as
may be required or desirable. If any foreign Governmental Entity takes any
action prior to the completion of the Offer that might have certain adverse
effects, the Purchaser will not be obligated to accept for payment or pay for
any Shares tendered. See Section 14.
16. FEES AND EXPENSES
J.P. Morgan is acting as Dealer Manager in connection with the Offer and is
acting as financial advisor to Lyondell in connection with its efforts to
acquire the Company. Pursuant to an engagement letter dated February 17, 1998,
between Lyondell and J.P. Morgan, Lyondell paid J.P. Morgan a fee of $250,000.
In addition, Lyondell will pay J.P. Morgan a fee of $7,500,000 upon the
earlier to occur of (i) consummation of the Merger and (ii) six months
following consummation of the Offer. Lyondell has also agreed to reimburse
J.P. Morgan for its expenses, including the fees and expenses of its counsel,
in connection with its engagement, and to indemnify J.P. Morgan and certain
related persons against certain liabilities and expenses, including certain
liabilities under federal securities laws.
J.P. Morgan has rendered various investment banking and other advisory
services to Lyondell and its affiliates in the past and is expected to
continue to render such services for which it has received and will continue
to receive customary compensation from Lyondell and its affiliates.
The Purchaser and Lyondell have retained Georgeson & Company Inc. to act as
the Information Agent and The Bank of New York to serve as the Depositary in
connection with the Offer. The Information Agent and the Depositary each will
receive reasonable and customary compensation for their services, be
reimbursed for certain reasonable out-of-pocket expenses and be indemnified
against certain liabilities and expenses in connection therewith, including
certain liabilities and expenses under the U.S. federal securities laws.
Neither the Purchaser nor Lyondell will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager and the
Information Agent) in connection with the solicitation of tenders of Shares
pursuant to the Offer. Brokers, dealers, banks and trust companies will be
reimbursed by the Purchaser upon request for customary mailing and handling
expenses incurred by them in forwarding material to their customers.
17. MISCELLANEOUS
The Offer is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the making of the
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. Neither the Purchaser nor Lyondell is aware of any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction. To the extent the
Purchaser or Lyondell becomes aware of any state law that would limit the
class of offerees in the Offer, the Purchaser will amend the Offer and,
depending on the timing of such amendment, if any, will extend the Offer to
provide adequate dissemination of such information to holders of Shares prior
to the expiration of the Offer. In any jurisdiction the securities, blue sky
or other laws of which require the Offer to be made by a licensed broker or
dealer, the Offer is being made on behalf of the Purchaser by the Dealer
Manager or one or more registered brokers or dealers licensed under the laws
of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR LYONDELL 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.
34
<PAGE>
The Purchaser and Lyondell have filed with the Commission the Schedule 14D-1
pursuant to Rule 14d-3 under the Exchange Act, together with exhibits,
furnishing certain additional information with respect to the Offer, and may
file amendments thereto. In addition, the Company has filed the Schedule 14D-9
pursuant to Rule 14d-9 under the Exchange Act, together with exhibits, setting
forth its recommendation with respect to the Offer and the reasons for such
recommendation and furnishing certain additional related information. Such
Schedules and any amendments thereto, including exhibits, should be available
for inspection and copies should be obtainable in the manner set forth in
Section 8 (except that such material will not be available at the regional
offices of the Commission).
Lyondell Acquisition Corporation
June 24, 1998
35
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
LYONDELL AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF LYONDELL. The name, business address,
present principal occupation or employment and employment history of each of
the directors and executive officers of Lyondell are set forth below. All such
directors and executive officers listed below are citizens of the United
States. Unless otherwise indicated, the principal business address of each
director or executive officer is Lyondell Petrochemical Company, 1221
McKinney, Suite 1600, Houston, Texas 77010
PRESENT PRINCIPAL OCCUPATION OR
EMPLOYMENT; MATERIAL POSITIONS HELD
DURING THE PAST FIVE YEARS
NAME, AGE AND BUSINESS
ADDRESS ---------------------------
- --------------------------
William T. Butler, 65............ Chiarman of the Board of Directors of
Baylor College of Medicine Lyondell since June 30, 1997. Director of
One Baylor Plaza Lyondell since January 1989. Chancellor
Room 177A of Baylor College of Medicine since
Houston, Texas 77030 January 1996. President and Chief
Executive Officer of Baylor College of
Medicine from 1979 until January 1996.
Director of C. R. Bard, Inc. and
Browning-Ferris Industires Inc.
Travis Engen, 53................. Director of Lyondell since April 1995.
ITT Industries, Inc. Chairman, President and Chief Executive
4 West Red Oak Lane of ITT Industries, Inc. (a diversified
White Plains, New York 10604 manufacturing company) since December
1995. Executive Vice President and a
member of the Management Policy Committee
of ITT Corporation from 1991 to December
1995. Director of Alcan Aluminium
Limited.
Stephen F. Hinchliffe, Jr., 64... Director of Lyondell since March 1991.
445 South Figueroa, Suite 3250 Chairman of the Board and Chief Executive
Los Angeles, California 90071 Officer of BHH Management, Inc., the
managing partner of Leisure Group, Inc.
(a manufacturer of consumer products)
since 1988.
Dudley C. Mecum II, 63........... Director of Lyondell since January 1989.
Managing Director of Capricorn Holdings
LLC (a firm specializing in leveraged
buyouts) since July 1997. Partner with
the merchant banking firm of G. L.
Ohrstrom & Company from August 1989 until
January 1997. Director of The Travelers
Group, Dynacorp, VICORP Restaurants,
Inc., Fingerhut Companies, Inc.,
Travelers Property Casualty Corporation,
Metris Companies, Inc. and Suburban
Propane LLP.
Dan F. Smith, 52................. Chief Executive Officer of Lyondell since
December 1996, President of Lyondell
since August 1994 and Director of
Lyondell since October 1988. Chief
Executive Officer of Equistar Chemicals,
LP ("Equistar"), a petrochemicals and
polymers joint venture owned 57 percent
by Lyondell, since December 1, 1997.
Chief Operating Officer of Lyondell from
May 1993 to December 1996.
Paul R. Staley, 68...............
Director of Lyondell since January 1989.
Chairman of the National Vision
Foundation since August 1994. Chairman of
the Executive Committee of the Board of
Directors of P.
36
<PAGE>
PRESENT PRINCIPAL OCCUPATION OR
NAME, AGE AND BUSINESS EMPLOYMENT; MATERIAL POSITIONS HELD
ADDRESS DURING THE PAST FIVE YEARS
- -------------------------- ---------------------------
Q. Corporation (an industry supplier of
silicates) from January 1991 until August
1994.
T. Kevin DeNicola, 44............ Vice President, Corporate Development of
Lyondell since May 1998. Director,
Investor Relations of Lyondell from March
1996 until May 1998. Product Manager of
Lyondell from March 1993 until March
1996.
Kerry A. Galvin, 37.............. Chief Corporate Counsel and Corporate
Secretary of Lyondell since December
1997. Finance and Securities Counsel and
Assistant Secretary of Lyondell prior
thereto.
Allen C. Holmes, 50.............. Vice President, Tax and Business Systems
of Lyondell since May 1998. Vice
President and General Tax Officer of
Atlantic Richfield Company from March
1991 through December 1997.
Jeffrey R. Pendergraft, 50....... Senior Vice President and Chief
Administrative Officer of Lyondell since
December 1997. Senior Vice President of
Lyondell since May 1993. Vice President,
General Counsel and Secretary of Lyondell
since 1988.
Edward W. Rich, 48............... Vice President, Finance and Treasurer of
Lyondell since February 1998. Treasurer
of Dow Corning Corporation from February
1993 through January 1998.
2. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The name, business
address, present principal occupation or employment and five-year employment
history of each of the directors and executive officers of the Purchaser are
set forth below. The business address of each such director and executive
officer is Lyondell Acquisition Corporation in care of Lyondell, 1221
McKinney, Suite 1600, Houston, Texas 77010. All such directors and executive
officers listed below are citizens of the United States. Further information
concerning the directors and executive officers listed below, each of whom
also serves as an executive officer of Lyondell, is provided above.
PRESENT PRINCIPAL OCCUPATION OR
NAME, AGE AND BUSINESS EMPLOYMENT; MATERIAL POSITIONS HELD
ADDRESS DURING THE PAST FIVE YEARS
- -------------------------- ---------------------------
Dan F. Smith, 51................. Chairman, President, Chief Executive
Officer and Director of Purchaser
T. Kevin DeNicola, 44............ Vice President of Purchaser
Kerry A. Galvin, 37.............. Vice President, Secretary and General
Counsel of Purchaser
Jeffrey R. Pendergraft, 50....... Executive Vice President and Director of
Purchaser
Edward W. Rich, 48............... Vice President and Treasurer of Purchaser
37
<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:
THE BANK OF NEW YORK
By Mail: By Facsimile By Hand or Overnight
Transmission: Delivery:
(for Eligible
Institutions only)
Tender & Exchange Tender & Exchange
Department (212) 815-6213 Department
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and Deliver
New York, New York 10286- Window
1248 New York, New York 10286
For Information
Telephone:
(800) 507-9357
Questions and requests for assistance or for additional copies of this Offer
to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery
may be directed to the Information Agent or to the Dealer Manager at their
respective telephone numbers and location listed below. You may also contact
your broker, dealer, bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
----------------
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
CALL TOLL FREE: 1-800-223-2064
THE DEALER MANAGER FOR THE OFFER IS:
J.P. MORGAN & CO.
60 WALL STREET
NEW YORK, NEW YORK 10260
(212) 648-9827
38
<PAGE>
EXHIBIT 99(A)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
ARCO CHEMICAL COMPANY
PURSUANT TO THE OFFER TO PURCHASE DATED JUNE 24, 1998
BY
LYONDELL ACQUISITION CORPORATION,
A WHOLLY OWNED SUBSIDIARY OF
LYONDELL PETROCHEMICAL COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME ON WEDNESDAY, JULY 22, 1998, UNLESS THE OFFER IS EXTENDED.
TO: THE BANK OF NEW YORK
By Mail: By Facsimile By Hand or Overnight
Transmission: Delivery:
(for Eligible
Institutions only)
Tender & Exchange
Department Tender & Exchange
Department
P.O. Box 11248
Church Street Station (212) 815-6213 101 Barclay Street
New York, New York 10286- Receive and Deliver Window
1248 New York, New York 10286
For Information Telephone:
(800) 507-9357
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT
CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used either if certificates for Shares
(as defined below) are to be forwarded herewith or, unless an Agent's Message
(as defined in Section 2 of the Offer to Purchase (as defined below)) is
utilized, if delivery of Shares is to be made by book-entry transfer to an
account maintained by the Depositary at the Book-Entry Transfer Facility as
defined in and pursuant to the procedures described in Section 2 of the Offer
to Purchase. Stockholders who deliver Shares by book-entry transfer are
referred to herein as "Book-Entry Stockholders" and other stockholders are
referred to herein as "Certificated Stockholders". Stockholders whose
certificates for Shares are not immediately available or who cannot deliver
either the certificates for, or a Book-Entry Confirmation (as defined in
Section 2 of the Offer to Purchase) with respect to, their Shares and all
other documents required hereby to the Depositary prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) must tender their Shares in
accordance with the guaranteed delivery procedures described in Section 2 of
the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK--
ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE>
DESCRIPTION OF SHARES TENDERED
- --------------------------------------------------
NAME(S) AND
ADDRESS(ES) OF
REGISTERED
HOLDER(S)
(PLEASE FILL IN
EXACTLY AS
NAME(S)
APPEAR(S)
ON SHARES
TENDERED
CERTIFICATE(S)
(ATTACH LIST IF
NECESSARY)
- ----------------
<TABLE>
<CAPTION>
SHARE NUMBER OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
- --------------------------------------------------
<S> <C> <C> <C>
------------
------------
------------
------------
------------
------------
------------
TOTAL SHARES
- --------------------------------------------------
</TABLE>
(1)Need not be completed by Book-Entry Stockholders.
(2)Unless otherwise indicated, it will be assumed that all Shares described
above are being tendered. See Instruction 4.
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution__________________________________________________
Account Number_________________________________________________________________
Transaction Code Number________________________________________________________
[_] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Owners(s)________________________________________________
Date of Execution of Notice of Guaranteed Delivery_____________________________
Name of Institution that Guaranteed Delivery___________________________________
If delivered by book-entry transfer:
Account Number at Book-Entry Transfer Facility_________________________________
Transaction Code Number________________________________________________________
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Lyondell Acquisition Corporation, a
Delaware corporation (the "Purchaser"), which is a wholly owned subsidiary of
Lyondell Petrochemical Company, a Delaware corporation, the above-described
shares of common stock, par value $1.00 per share (the "Shares"), of ARCO
Chemical Company, a Delaware corporation (the "Company"), upon the terms and
subject to the conditions set forth in the Purchaser's Offer to Purchase dated
June 24, 1998 (the "Offer to Purchase"), and this Letter of Transmittal
(which, together with any amendments or supplements thereto or hereto,
collectively constitute the "Offer"), receipt of which is hereby acknowledged.
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of, and payment for, the Shares tendered herewith in accordance with
the terms of the Offer, the undersigned hereby sells, assigns and transfers
to, or upon the order of, the Purchaser all right, title and interest in and
to all the Shares that are being tendered hereby (and any and all other Shares
or other securities or rights issued or issuable in respect thereof on or
after June 18, 1998), and irrevocably constitutes and appoints The Bank of New
York (the "Depositary"), the true and lawful agent and attorney-in-fact of the
undersigned, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to the full
extent of the undersigned's rights with respect to such Shares (and any such
other Shares or securities or rights), (a) to deliver certificates for such
Shares (and any such other Shares or securities or rights) or transfer
ownership of such Shares (and any such other Shares or securities or rights)
on the account books maintained by the Book-Entry Transfer Facility together,
in any such case, with all accompanying evidences of transfer and authenticity
to, or upon the order of, the Purchaser, (b) to present such Shares (and any
such other Shares or securities or rights) for transfer on the Company's books
and (c) to receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares (and any such other Shares or securities
or rights), all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the tendered Shares
(and any and all other Shares or other securities or rights issued or issuable
in respect of such Shares on or after June 18, 1998 and, when the same are
accepted for payment by the Purchaser, the Purchaser will acquire good title
thereto, free and clear of all liens, restrictions, claims and encumbrances,
and the same will not be subject to any adverse claim. The undersigned will,
upon request, execute any additional documents deemed by the Depositary or the
Purchaser to be necessary or desirable to complete the sale, assignment and
transfer of the tendered Shares (and any and all such other Shares or
securities or rights).
All authority conferred or agreed to be conferred pursuant to this Letter of
Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators and legal representatives of the undersigned and shall not be
affected by, and shall survive, the death or incapacity of the undersigned.
Except as stated in the Offer to Purchase this tender is irrevocable.
The undersigned hereby irrevocably appoints Dan F. Smith, Jeffrey R.
Pendergraft, Edward W. Rich and Kerry A. Galvin, and each of them, and any
other designees of the Purchaser, the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to vote at any annual,
special or adjourned meeting of the Company's stockholders or otherwise in
such manner as each such attorney-in-fact and proxy or his substitute shall in
his sole discretion deem proper with respect to, to execute any written
consent concerning any matter as each such attorney-in-fact and proxy or his
substitute shall in his sole discretion deem proper with respect to, and to
otherwise act as each such attorney-in-fact and proxy or his substitute shall
in his sole discretion deem proper with respect to, the Shares tendered hereby
that have been accepted for payment by the Purchaser prior to the time any
such action is taken and with respect to which the undersigned is entitled to
vote (and any and all other Shares or other securities or rights issued or
issuable in respect of such Shares on or after June 18, 1998).
3
<PAGE>
This appointment is effective when, and only to the extent that, the Purchaser
accepts for payment such Shares as provided in the Offer to Purchase. This
power of attorney and proxy are irrevocable and are granted in consideration
of the acceptance for payment of such Shares in accordance with the terms of
the Offer. Upon such acceptance for payment, all prior powers of attorney,
proxies and consents given by the undersigned with respect to such Shares (and
any such other Shares or securities or rights) will, without further action,
be revoked and no subsequent powers of attorney, proxies, consents or
revocations may be given (and, if given, will not be effective) by the
undersigned.
The undersigned understands that the valid tender of Shares pursuant to any
of the procedures described in Section 2 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 of
the Offer.
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or return any certificates
for Shares not tendered or accepted for payment in the name(s) of the
registered holder(s) appearing under "Description of Shares Tendered".
Similarly, unless otherwise indicated under "Special Delivery Instructions",
please mail the check for the purchase price and/or return any certificates
for Shares not tendered or accepted for payment (and accompanying documents,
as appropriate) to the address(es) of the registered holder(s) appearing under
"Description of Shares Tendered". In the event that both "Special Delivery
Instructions" and "Special Payment Instructions" are completed, please issue
the check for the purchase price and/or return any certificates for Shares not
tendered or accepted for payment (and any accompanying documents, as
appropriate) in the name of, and deliver such check and/or return such
certificates (and any accompanying documents, as appropriate) to, the person
or persons so indicated. Please credit any Shares tendered herewith by book-
entry transfer that are not accepted for payment by crediting the account at
the Book-Entry Transfer Facility designated above. The undersigned recognizes
that the Purchaser has no obligation pursuant to "Special Payment
Instructions" to transfer any Shares from the name of the registered holder
thereof if the Purchaser does not accept for payment any of the Shares so
tendered.
[_] CHECK HERE IF ANY OF THE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST OR DESTROYED AND SEE INSTRUCTION 11.
Number of Shares represented by the lost or destroyed certificates:____________
4
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if
certificates for Shares not
tendered or not accepted for
payment and/or the check for the
purchase price of Shares accepted
for payment are to be issued in
the name of someone other than the
undersigned.
Issue [_] Check
[_] Certificate(s) to:
Name ______________________________
(Please Print)
Address ___________________________
-----------------------------------
-----------------------------------
(Include Zip Code)
-----------------------------------
(Taxpayer Identification or Social
Security Number)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 5, 6 AND 7)
To be completed ONLY if
certificates for Shares not
tendered or not accepted for
payment and/or the check for the
purchase price of Shares accepted
for payment are to be sent to
someone other than the
undersigned, or to the undersigned
at an address other than that
above.
Mail [_] Check [_] Certificate(s)
to:
Name ______________________________
(Please Print)
Address ___________________________
-----------------------------------
-----------------------------------
(Include Zip Code)
-----------------------------------
(Taxpayer Identification or Social
Security Number)
5
<PAGE>
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated:_______________________________________________________________________
(Must be signed by registered holder(s) as name(s) appear(s) on the
Certificate(s) for the Shares 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)
Daytime Area Code and Telephone No.__________________________________________
Taxpayer Identification or Social Security Number____________________________
(SEE SUBSTITUTE FORM W-9)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED--SEE INSTRUCTIONS 1 AND 5)
-----------------------------------------------------------------------------
AUTHORIZED SIGNATURE
-----------------------------------------------------------------------------
NAME (PLEASE PRINT)
-----------------------------------------------------------------------------
NAME OF FIRM
-----------------------------------------------------------------------------
ADDRESS
-----------------------------------------------------------------------------
(INCLUDE ZIP CODE)
-----------------------------------------------------------------------------
DAYTIME AREA CODE AND TELEPHONE NO.
Dated:_______________________________________________________________________
6
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES.
No signature guarantee is required on this Letter of Transmittal (a) if this
Letter of Transmittal is signed by the registered holder(s) (which term, for
purposes of this Instruction 1, includes any participant in the Book-Entry
Transfer Facility's system whose name appears on a security position listing
as the owner of the Shares) of Shares tendered herewith, unless such
registered holder(s) has completed either the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions" on this
Letter of Transmittal or (b) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (such
participant, an "Eligible Institution"). In all other cases, all signatures on
this Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 5.
2. 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 (as
defined below) is utilized, if delivery of Shares is to be made pursuant to
the procedures for book-entry transfer set forth in Section 2 of the Offer to
Purchase. For a stockholder validly to tender Shares pursuant to the Offer,
either (a) a Letter of Transmittal (or a facsimile thereof), property
completed and duly executed, together with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message, and any other
required documents, must be received by the Depositary at one of its addresses
set forth herein prior to the Expiration Date and either certificates for
tendered Shares must be received by the Depositary at one of such addresses or
Shares must be delivered pursuant to the procedures for book-entry transfer
described herein (and a Book-Entry Confirmation received by the Depositary),
in each case prior to the Expiration Date, or (b) the tendering stockholder
must comply with the guaranteed delivery procedures described below and in
Section 2 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer prior to the
Expiration Date may tender their Shares by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed
delivery procedures described in Section 2 of the Offer to Purchase. Pursuant
to such procedures, (a) such tender must be made by or through an Eligible
Institution, (b) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, must be
received by the Depositary prior to the Expiration Date and (c) the
certificates for all tendered Shares in proper form for transfer (or a Book-
Entry Confirmation with respect to all such Shares), together with a Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or, in the case of a book-entry
transfer, an Agent's Message, and any other required documents, must be
received by the Depositary within three trading days after the date of
execution of such Notice of Guaranteed Delivery as provided in Section 2 of
the Offer to Purchase. A trading day is any day on which the New York Stock
Exchange is open for business.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation which states that such Book-Entry Transfer Facility
has received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against the participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER.
7
<PAGE>
SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED,
PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted. All
tendering stockholders, by execution of this Letter of Transmittal (or
facsimile hereof), waive any right to receive any notice of the acceptance of
their Shares for payment.
3. INADEQUATE SPACE.
If the space provided herein is inadequate, the certificate numbers and/or
the number of Shares should be listed on a separate schedule attached hereto.
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY).
If fewer than all the Shares evidenced by any certificate submitted are to
be tendered, fill in the number of Shares that are to be tendered in the box
entitled "Number of Shares Tendered". In any case, new certificate(s) for the
remainder of the Shares that were evidenced by the old certificate(s) will be
sent to the registered holder, unless otherwise provided in the appropriate
box on this Letter of Transmittal, as soon as practicable after the acceptance
for payment of, and payment for, the Shares tendered herewith. All Shares
represented by certificates delivered to the Depositary will be deemed to have
been tendered unless otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS.
If this Letter of Transmittal is signed by the registered holder of the
Shares tendered hereby, the signature must correspond with the name as written
on the face of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any 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.
When this Letter of Transmittal is signed by the registered owner(s) of the
Shares 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 not tendered or accepted for payment are to be issued
to, a person other than the registered owner(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 owner(s) of the certificates listed, the certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name or names of the registered owner or owners appear on the
certificates. Signatures on such certificates or stock powers must be
guaranteed by an Eligible Institution.
6. STOCK TRANSFER TAXES.
The Purchaser will pay any stock transfer taxes with respect to the transfer
and sale of Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price is to be made to, or if certificates for
8
<PAGE>
Shares not tendered or accepted for payment are to be registered in the name
of, any person(s) other than the person(s) signing this Letter of Transmittal,
the amount of any stock transfer taxes (whether imposed on the registered
owner(s) or such person(s)) payable on account of the transfer to such
person(s) will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or exemption therefrom is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES 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
not accepted for payment are to be returned to, a person other than the signer
of this Letter of Transmittal or if a check is to be sent and/or such
certificates are to be returned to a person other than the signer of this
Letter of Transmittal or to an address other than that shown above, the
appropriate boxes on this Letter of Transmittal should be completed.
8. WAIVER OF CONDITIONS.
The Purchaser reserves the right, subject to the terms and conditions
contained in the Merger Agreement and to the applicable rules and regulations
of the Commission, to waive any of the specified conditions of the Offer, in
whole or in part, in the case of any Shares tendered.
9. 31% BACKUP WITHHOLDING.
In order to avoid backup withholding of Federal income tax on payments of
cash pursuant to the Offer, a stockholder surrendering Shares in the Offer
must, unless an exemption applies, provide the Depositary with such
stockholder's correct taxpayer identification number ("TIN") on Substitute
Form W-9 below in this Letter of Transmittal and certify under penalties of
perjury that such TIN is correct and that such stockholder is not subject to
backup withholding. If a stockholder does not provide such stockholder's
correct TIN or fails to provide the certifications described above, the
Internal Revenue Service (the "IRS") may impose a $50 penalty on such
stockholder and payment of cash to such stockholder pursuant to the Offer may
be subject to backup withholding of 31%.
Backup withholding is not an additional income tax. Rather, the amount of
the backup withholding can be credited against the U.S. federal income tax
liability of the person subject to the backup withholding, provided that the
required information is given to the IRS. If backup withholding results in an
overpayment of tax, a refund can be obtained by the stockholder upon filing an
income tax return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held in more than one name or are not in the name of
the actual owner, consult the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for additional guidance
on which number to report.
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. Notwithstanding that the box in Part 3
is checked and the Certificate of Awaiting Taxpayer Identification Number is
completed, the Depositary may withhold 31% on all payments made prior to the
time a properly certified TIN is provided 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 the main
9
<PAGE>
signature form and a Form W-8, Certificate of Foreign Status, a copy of which
may be obtained from the Depositary, in order to avoid backup withholding. See
the enclosed "Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9" for more instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES.
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery and
the Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 may be directed to the Information Agent at its address
set forth below.
11. LOST, DESTROYED OR STOLEN CERTIFICATES.
If any certificate representing Shares has been lost, destroyed or stolen,
the stockholder should promptly notify the Depositary by checking the box
immediately preceding the special payment/special delivery instructions and
indicating the number of Shares lost. The stockholder will then be instructed
as to the steps that must be taken in order to replace the 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
ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER,
AN AGENT'S MESSAGE, AND ANY OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR TENDERED
SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED PURSUANT
TO THE PROCEDURES FOR BOOK-ENTRY TRANSFER, IN EACH CASE PRIOR TO THE
EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES
FOR GUARANTEED DELIVERY.
10
<PAGE>
PAYOR'S NAME: THE BANK OF NEW YORK
PART 1--PLEASE PROVIDE YOUR ----------------------
TIN IN THE BOX AT RIGHT AND Social Security
CERTIFY BY SIGNING AND Number(s)
DATING BELOW. or
----------------------
SUBSTITUTE Taxpayer
Identification
Number(s)
--------------------------------------------------------
FORM W-9 PART 2--CERTIFICATIONS--Under penalties of perjury, I
certify that:
DEPARTMENT OF THE
TREASURY (1) The number shown on this form is my correct
INTERNAL REVENUE Taxpayer Identification Number (or I am waiting
SERVICE for a number to be issued to me) and
PAYER'S REQUEST FOR (2) I am not subject to backup withholding because
TAXPAYER (a) I am exempt from backup withholding or (b) I
IDENTIFICATION have not been notified by the Internal Revenue
NUMBER ("TIN") Service ("IRS") that I am subject to backup
withholding as a result of a failure to report
all interest or dividends or (c) the IRS has
notified me that I am no longer subject to
backup withholding.
Certification Instructions--You must cross out item
(2) in Part 2 above if you have been notified by the
IRS that you are subject to backup withholding
because of under reporting interest or dividends on
your tax returns. However, if after being notified
by the IRS that you were subject to backup
withholding you received another notification from
the IRS stating that you are no longer subject to
backup withholding, do not cross out such item (2).
If you are exempt from backup withholding, check the
box in Part 4 above.
--------------------------------------------------------
PART 3
Awaiting TIN [_]
SIGNATURE ____________________DATE
PART 4
Exempt TIN [_]
NOTE: FAILURE TO COMPLETE AND RETURN THIS SUBSTITUTE FORM W-9 MAY RESULT IN
BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
INFORMATION.
11
<PAGE>
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 3 OF 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 (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver such an application in the near future. I
understand that, if I do not provide a taxpayer identification number to the
Depositary, all reportable payments made to me may be subject to a 31%
backup withholding tax.
Signature ______________________________ Date _______________________________
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
----------------
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
CALL TOLL FREE: 1-800-223-2064
THE DEALER MANAGER FOR THE OFFER IS:
J.P. MORGAN & CO.
60 WALL STREET
NEW YORK, NEW YORK 10260
(212) 648-9827
JUNE 24, 1998
12
<PAGE>
EXHIBIT 99(A)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
ARCO CHEMICAL COMPANY
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer
(as defined below) if certificates for shares of Common Stock, par value $1.00
per share (the "Shares"), of ARCO Chemical Company, a Delaware corporation
(the "Company"), are not immediately available or if the procedure for book-
entry transfer cannot be completed on a timely basis or time will not permit
all required documents to reach the Depositary prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase). This form may be delivered
by hand to the Depositary or transmitted by telegram, facsimile transmission
or mail to the Depositary and must include a guarantee by an Eligible
Institution (as defined in Section 2 of the Offer to Purchase). See Section 2
of the Offer to Purchase.
The Depositary for the Offer is:
THE BANK OF NEW YORK
By Mail: By Facsimile By Hand or Overnight
Transmission: Delivery:
(for Eligible
Institutions only)
(212) 815-6213
Tender & Exchange
Department Tender & Exchange
P.O. Box 11248 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, New York 10286-1248 New York, New York 10286
For Information Telephone:
(800) 507-9357
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A
VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE>
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Lyondell Acquisition Corporation, a
Delaware corporation (the "Purchaser"), which is a wholly owned subsidiary of
Lyondell Petrochemical Company, a Delaware corporation, upon the terms and
subject to the conditions set forth in the Purchaser's Offer to Purchase dated
June 24, 1998 (the "Offer to Purchase"), and the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer"), receipt of which is hereby acknowledged, the number
of Shares set forth below, all pursuant to the guaranteed delivery procedures
described in Section 2 of the Offer to Purchase.
Number of Shares ____________________ Signature(s): _______________________
Name(s) of Record Holder(s) _________ -------------------------------------
- ------------------------------------- Dated:_______________________________
Please Print If Shares will be tendered by book-
Address(es) _________________________ entry transfer:
- -------------------------------------
Zip Code Account Number at Book-Entry
Daytime Area Code and Tel. No.:______ Transfer Facility ___________________
Certificate Nos. (if available): ____
2
<PAGE>
GUARANTEE
(Not To Be Used For Signature Guarantee)
The undersigned, a participant in the Security Transfer Agents Medallion
Program, the New York Stock Exchange Medallion Signature Guarantee Program or
the Stock Exchange Medallion Program, hereby guarantees to deliver to the
Depositary either the certificates representing the Shares tendered hereby, in
proper form for transfer, or a Book-Entry Confirmation (as defined in the
Offer to Purchase) with respect to such Shares, in any such case together with
a properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, or an Agent's Message (as
defined in the Offer to Purchase), and any other required documents, within
three trading days (as defined in the Offer to Purchase) after the date
hereof.
The Eligible Institution that completes this form must communicate this
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible
Institution.
Name of Firm:__________________________________________________________________
- -------------------------------------------------------------------------------
Authorized Signature
Name:__________________________________________________________________________
Please Print
Title:_________________________________________________________________________
Address:_______________________________________________________________________
- -------------------------------------------------------------------------------
Zip Code
Area Code and Tel No.:_________________________________________________________
Dated:_________________________________________________________________________
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
EXHIBIT 99(A)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ARCO CHEMICAL COMPANY
AT
$57.75 NET PER SHARE
BY
LYONDELL ACQUISITION CORPORATION,
A WHOLLY OWNED SUBSIDIARY OF
LYONDELL PETROCHEMICAL COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JULY 22, 1998, UNLESS EXTENDED.
June 24, 1998
To Brokers, Dealers, Banks,
Trust Companies and Other Nominees:
We have been appointed by Lyondell Acquisition Corporation, a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Lyondell
Petrochemical Company, a Delaware corporation ("Lyondell"), to act as
financial advisor and Dealer Manager in connection with the Purchaser's offer
to purchase all outstanding shares of common stock, par value $1.00 per share
(the "Shares"), of ARCO Chemical Company, a Delaware corporation (the
"Company"), at $57.75 per Share, net to the seller in cash, upon the terms and
subject to the conditions set forth in the Purchaser's Offer to Purchase dated
June 24, 1998 (the "Offer to Purchase"), and the related Letter of Transmittal
(which, together with any supplements or amendments thereto, collectively
constitute the "Offer").
Please furnish copies of the enclosed materials to those of your clients for
whom you hold Shares registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase dated June 24, 1998;
2. Letter of Transmittal to be used by stockholders of the Company
accepting the Offer;
3. 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;
4. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of a nominee, with
space provided for obtaining such client's instructions with regard to the
Offer;
5. Notice of Guaranteed Delivery;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope address to The Bank of New York, the Depositary.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH
NUMBER OF SHARES THAT, TOGETHER WITH ANY SHARES OWNED BY PURCHASER, LYONDELL
AND THEIR AFFILIATES, WOULD REPRESENT AT LEAST A MAJORITY OF ALL OUTSTANDING
SHARES ON A FULLY DILUTED BASIS AND (2) ANY
<PAGE>
WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976
APPLICABLE TO THE PURCHASE OF SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR
BEEN TERMINATED.
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER AND
WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
WEDNESDAY, JULY 22, 1998, UNLESS EXTENDED.
The Board of Directors of the Company has unanimously approved the Merger
Agreement (as defined below) and the transactions contemplated thereby and
determined that the Offer and the Merger are fair to, and in the best
interests of, stockholders of the Company and unanimously recommends that
stockholders of the Company accept the Offer and tender their Shares pursuant
to the Offer.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of June 18, 1998 (the "Merger Agreement"), among Lyondell, the Purchaser
and the Company pursuant to which, following the consummation of the Offer and
the satisfaction or waiver of certain conditions, the Purchaser will be merged
with and into the Company, with the Company surviving the merger as a wholly
owned subsidiary of Lyondell (the "Merger"). In the Merger, each outstanding
Share (other than Shares owned by stockholders, if any, who are entitled to
and who properly exercise appraisal rights under Delaware law) will be
converted into the right to receive $57.75 per Share, without interest, as set
forth in the Merger Agreement and described in the Offer to Purchase.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by The Bank of New York (the
"Depositary") of (a) certificates for (or a timely Book-Entry Confirmation (as
defined in the Offer to Purchase) with respect to) such Shares, (b) a Letter
of Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees, or, in the case of a book-entry
transfer effected pursuant to the procedures described in Section 2 of the
Offer to Purchase, an Agent's Message (as defined in the Offer to Purchase),
and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
Shares are actually received by the Depositary. THE PURCHASER SHALL NOT HAVE
ANY OBLIGATION TO PAY INTEREST ON THE PURCHASE PRICE FOR TENDERED SHARES,
WHETHER OR NOT THE PURCHASER EXERCISES ITS RIGHT TO EXTEND THE OFFER.
Neither the Purchaser nor Lyondell will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager (as defined in
the Offer to Purchase) and the Information Agent as described in the Offer to
Purchase) in connection with the solicitation of tenders of Shares pursuant to
the Offer. You will be reimbursed upon request for customary mailing and
handling expenses incurred by you in forwarding the enclosed offering
materials to your customers.
2
<PAGE>
Questions and requests for additional copies of the enclosed material may be
directed to the Information Agent or the Dealer Manager at their respective
addresses and telephone numbers set forth on the back cover of the enclosed
Offer to Purchase.
Very truly yours,
J.P. MORGAN & CO.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, LYONDELL, THE DEALER MANAGER, THE
DEPOSITARY, THE INFORMATION AGENT OR ANY AFFILIATE THEREOF OR AUTHORIZE YOU OR
ANY OTHER PERSON TO GIVE ANY INFORMATION OR USE ANY DOCUMENT OR MAKE ANY
STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENT CONTAINED THEREIN.
3
<PAGE>
EXHIBIT 99(A)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ARCO CHEMICAL COMPANY
AT
$57.75 NET PER SHARE
BY
LYONDELL ACQUISITION CORPORATION,
A WHOLLY OWNED SUBSIDIARY OF
LYONDELL PETROCHEMICAL COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JULY 22, 1998, UNLESS EXTENDED.
June 24, 1998
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated June 24, 1998
(the "Offer to Purchase"), and a related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute
the "Offer") relating to an offer by Lyondell Acquisition Corporation, a
Delaware corporation (the "Purchaser") and a wholly owned subsidiary of
Lyondell Petrochemical Company, a Delaware corporation ("Lyondell"), to
purchase shares of common stock, par value $1.00 per share (the "Shares"), of
ARCO Chemical Company, a Delaware corporation (the "Company"), at $57.75 per
Share, net to the seller in cash, upon the terms and subject to the conditions
set forth in the Offer. Also enclosed is 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.
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 TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish to tender any of or all the
Shares held by us for your account, pursuant to the terms and conditions set
forth in the Offer.
Your attention is directed to the following:
1. The tender price is $57.75 per Share, net to the seller in cash, upon
the terms and subject to the conditions set forth in the Offer.
2. The Board of Directors of the Company has unanimously approved the
Merger Agreement (as defined below) and the transactions contemplated
thereby and determined that the Offer and the Merger are fair to, and in
the best interests of, stockholders of the Company and unanimously
recommends that stockholders of the Company accept the Offer and tender
their Shares pursuant to the Offer.
3. The Offer is being made for all outstanding Shares.
4. The Offer is being made pursuant to the Agreement and Plan of Merger
dated as of June 18, 1998 (the "Merger Agreement"), among Lyondell, the
Purchaser and the Company pursuant to which, following
<PAGE>
the consummation of the Offer and the satisfaction or waiver of certain
conditions, the Purchaser will be merged with and into the Company, with
the Company surviving the merger as a wholly owned subsidiary of Lyondell
(the "Merger"). In the Merger, each outstanding Share (other than Shares
owned by stockholders, if any, who are entitled to and who properly
exercise appraisal rights under Delaware law) will be converted into the
right to receive $57.75 per Share, without interest, as set forth in the
Merger Agreement and described in the Offer to Purchase.
5. The Offer is conditioned upon, among other things, (1) there being
validly tendered and not properly withdrawn prior to the expiration of the
Offer such number of Shares that, together with any Shares owned by
Purchaser, Lyondell and their affiliates, would represent at least a
majority of all outstanding Shares on a fully diluted basis and (2) the
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 applicable to the purchase of Shares pursuant to the Offer having
expired or been terminated.
6. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Thursday, July 23, 1998, unless the Offer is extended by
the Purchaser.
7. The Purchaser will pay any stock transfer taxes with respect to the
transfer and sale of Shares to it or its order pursuant to the Offer,
except as otherwise provided in Instruction 6 of the Letter of Transmittal.
If you wish to have us tender any of or all your Shares, please so instruct
us by completing, executing, detaching and returning to us the instruction
form set forth below. An envelope to return your instructions to us is
enclosed. If you authorize tender of your Shares, all such Shares will be
tendered unless otherwise specified below. Your instructions to us should be
forwarded promptly to permit us to submit a tender on your behalf prior to the
expiration of the Offer.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by The Bank of New York (the
"Depositary"), of (a) certificates for (or a timely Book-Entry Confirmation
(as defined in the Offer to Purchase) with respect to) such Shares, (b) a
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or, in the case of a book-
entry transfer effected pursuant to the procedures described in Section 2 of
the Offer to Purchase, an Agent's Message (as defined in the Offer to
Purchase), and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering shareholders may be paid at different times depending
upon when certificates for Shares or Book-Entry Confirmations with respect to
Shares are actually received by the Depositary. THE PURCHASER SHALL NOT HAVE
ANY OBLIGATION TO PAY INTEREST ON THE PURCHASE PRICE FOR TENDERED SHARES,
WHETHER OR NOT THE PURCHASER EXERCISES ITS RIGHT TO EXTEND THE OFFER.
The Offer is not being made to, nor will tenders be accepted from or on
behalf of, holders of Shares in any jurisdiction in which the making or
acceptance of the Offer would not be in compliance with the laws of such
jurisdiction.
2
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ARCO CHEMICAL COMPANY
BY
LYONDELL ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
LYONDELL PETROCHEMICAL COMPANY
The undersigned acknowledges receipt of your letter enclosing the Offer to
Purchase, dated June 24, 1998 of Lyondell Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of Lyondell Petrochemical Company, a
Delaware corporation, and the related Letter of Transmittal, relating to
shares of common stock, par value $1.00 per share of ARCO Chemical Company, a
Delaware corporation (the "Shares").
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned on the terms and conditions set
forth in such Offer to Purchase and the related Letter of Transmittal.
Dated: , 1998 -------------------------------------
-------------------------------------
Number of Shares SIGNATURE(S)
to be Tendered* -------------------------------------
-------------------------------------
Shares PLEASE PRINT NAME(S)
Address
-------------------------------------
-------------------------------------
-------------------------------------
-------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.
-------------------------------------
Taxpayer Identification or Social
Security No._________________________
- --------
* Unless otherwise indicated, it will be assumed that all your Shares are to
be tendered.
3
<PAGE>
EXHIBIT 99(A)(6)
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>
1. An individual's account The individual
2. Two or more individuals The actual owner
(joint account) of the account
or, if combined
funds, any one of
the
individuals(1)
3. Husband and wife (joint The actual owner
account) of the account
or, if
joint funds,
either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult or, if
account) the minor is the
only contributor,
the minor(1)
6. Account in the name of The ward, minor,
guardian or committee for a or incompetent
designated ward, minor, or person(3)
incompetent person
7. a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also
trustee)
b. So-called trust account The actual
that is not a legal or owner(1)
valid trust under State
law
8. Sole proprietorship The owner(4)
account
</TABLE>
<TABLE>
<CAPTION>
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
--------
<S> <C>
9. A valid trust, estate, or The legal entity
pension trust (Do not furnish
the identifying
number of the
personal
representative or
trustee unless
the legal entity
itself is not
designated in the
account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, The organization
educational or other exempt
organization account
12. Partnership account held The partnership
in the name of the business
13. Association, club, or The organization
other tax-exempt
14. A broker or registered The broker or
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 all names first and circle the name of the person whose number you
furnish. If only one person on a joint account has a Social Security
number, that person's number must be furnished.
(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) You must show your individual name, but you may also enter your business
or "doing business as" name. You may use either your Social Security
number or employer identification number (if you have one).
(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
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or
Form SS-4, Application for Employer Identification Number (for business and
all other entities), at the local office of the Social Security Administration
or the Internal Revenue Service and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding 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, or a custodial account under
Section 403(b)(7), if the account satisfies the requirements of Section
401(f)(7).
. The United States or any agency or instrumentalities. A State, the District
of Columbia, a possession of the United States, or any political
subdivision or instrumentality thereof.
. A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
. An international organization or any agency, or instrumentality thereof. A
registered dealer in securities or commodities registered in the U.S., the
District of Columbia 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 entity registered at all times under the Investment Company Act of 1940.
. A foreign central bank of issue.
Exempt payees described above should file Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, 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 A PAYER A
COMPLETED INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS). Certain
payments other than interest, dividends, and patronage dividends that are not
subject to information reporting are also not subject to backup withholding.
For details, see the regulations under sections 6041, 6041A(a), 6045, and
6050(A) of the Code and the regulations promulgated thereunder. PRIVACY ACT
NOTICE.--Section 6109 requires most recipients of dividends, 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.
2
<PAGE>
Exhibit 99(a)(7)
This announcement is neither an offer to purchase nor a solicitation of an
offer to sell Shares. The Offer is made solely by the Offer to Purchase dated
June 24, 1998, and the related Letter of Transmittal, and is not being made to
(nor will tenders be accepted from or on behalf of) holders of Shares in any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction. In any jurisdictions
where 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 J.P. Morgan 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
OF
ARCO CHEMICAL COMPANY
AT
$57.75 NET PER SHARE
BY
LYONDELL ACQUISITION CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
LYONDELL PETROCHEMICAL COMPANY
Lyondell Acquisition Corporation, a Delaware corporation (the "Purchaser"),
which is a wholly owned subsidiary of Lyondell Petrochemical Company, a
Delaware corporation ("Lyondell"), is offering to purchase all outstanding
shares of Common Stock, par value $1.00 per share (the "Shares"), of ARCO
Chemical Company, a Delaware corporation (the "Company"), at a price of $57.75
per Share, net to the seller in cash (the "Offer Price"), without interest
thereon, upon the terms and subject to the conditions set forth in the Offer
to Purchase dated June 24, 1998, and in the related Letter of Transmittal
(which, together with any amendments or supplements thereto, collectively
constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JULY 22, 1998, UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to an Agreement and Plan of Merger dated as
of June 18, 1998 (the "Merger Agreement"), among Lyondell, the Purchaser and
the Company pursuant to which, following the consummation of the Offer and the
satisfaction or waiver of certain conditions, the Purchaser will be merged
with the Company (the "Merger"). In the Merger, each issued Share (other than
Shares owned by Lyondell, the Purchaser or the Company or any of their wholly
owned subsidiaries, or by stockholders, if any, who are entitled to and
properly exercise appraisal rights under Delaware law) will be converted into
$57.75 in cash, without interest.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH
NUMBER OF SHARES THAT, TOGETHER WITH ANY SHARES OWNED BY PURCHASER, LYONDELL
AND THEIR AFFILIATES, WOULD CONSTITUTE AT LEAST A MAJORITY OF ALL OUTSTANDING
SHARES ON A FULLY DILUTED BASIS AND (2) THE WAITING PERIOD UNDER THE HART-
SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976 APPLICABLE TO THE PURCHASE OF
SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED.
LYONDELL AND THE PURCHASER HAVE ENTERED INTO A TENDER AND VOTING AGREEMENT
DATED AS OF JUNE 18, 1998 WITH ATLANTIC RICHFIELD COMPANY, WHICH HAS
REPRESENTED THAT IT HAS SOLE VOTING AND DISPOSITIVE POWER OVER 80,000,001
SHARES (APPROXIMATELY 80.1% OF THE OUTSTANDING SHARES ON A FULLY DILUTED
<PAGE>
BASIS). PURSUANT TO THE TENDER AND VOTING AGREEMENT, AMONG OTHER THINGS,
ATLANTIC RICHFIELD COMPANY HAS AGREED TO TENDER ALL SUCH SHARES PURSUANT TO
THE OFFER AND NOT WITHDRAW SUCH SHARES AS LONG AS THE TENDER AND VOTING
AGREEMENT REMAINS IN EFFECT.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, STOCKHOLDERS
OF THE COMPANY AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
For purposes of the Offer, the Purchaser will be deemed to have accepted for
payment, and thereby purchased, Shares properly tendered to the Purchaser and
not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary set forth below of the Purchaser's acceptance for payment of
such Shares. Upon the terms and subject to the conditions of the Offer,
payment for Shares accepted for payment pursuant to the Offer will be made by
deposit of the purchase price therefor with the Depositary, which will act as
an agent for tendering stockholders for the purpose of receiving payment from
the Purchaser and transmitting payment to tendering stockholders. In all
cases, payment for Shares accepted for payment pursuant to the Offer will be
made only after timely receipt by the Depositary of (a) certificates for such
Shares or timely confirmation of book-entry transfer of such Shares into the
Depositary's account at a Book-Entry Transfer Facility (as defined in the
Offer to Purchase) pursuant to the procedures described in Section 2 of the
Offer to Purchase, (b) a Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees,
or, in the case of a book-entry transfer, an Agent's Message (as defined in
the Offer to Purchase) and (c) any other documents required by the Letter of
Transmittal. Under no circumstances will interest be paid on the purchase
price of the Shares to be paid by the Purchaser, regardless of any extension
of the Offer or any delay in making such payment.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Wednesday, July 22, 1998, unless and until the Purchaser, in its sole
discretion (but subject to the terms of the Merger Agreement), shall have
extended the period of time during which the Offer is open, in which event the
term "Expiration Date" shall mean the latest time and date on which the Offer,
as so extended by the Purchaser, shall expire. Subject to the terms of the
Merger Agreement (which prohibits amendments to the Offer to (a) reduce the
number of Shares subject to the Offer, (b) reduce the Offer Price, (c) add to
or modify the conditions of the Offer, (d) except as set forth in the Merger
Agreement, extend the Offer, (e) change the form of consideration payable in
the Offer or (f) amend or alter any other term of the Offer in any manner
adverse to the Company's stockholders, without the consent of the Company) and
the applicable rules and regulations of the Securities and Exchange
Commission, the Purchaser reserves the right (but shall not be obligated), at
any time and from time to time, and regardless of whether or not any of the
events or facts set forth in Section 14 of the Offer to Purchase shall have
occurred, (i) to extend the period of time during which the Offer is open, and
thereby delay acceptance for payment of and the payment for any Shares, by
giving oral or written notice of such extension to the Depositary and (ii) to
amend the Offer in any other respect by giving oral or written notice of such
amendment to the Depositary. Under no circumstances will interest be paid on
the purchase price for tendered Shares, whether or not the Purchaser exercises
its right to extend the Offer. Any such extension will be followed by a public
announcement thereof no later than 9:00 A.M., New York City time, on the next
business day after the previously scheduled Expiration Date. During any such
extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the right of a tendering stockholder to
withdraw such stockholder's Shares.
Except as otherwise provided below, tenders of Shares are irrevocable.
Shares tendered pursuant to the Offer may be withdrawn pursuant to the
procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after August 22, 1998. For a
withdrawal to be effective, a written 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 and must
<PAGE>
specify the name of the person having tendered the Shares to be withdrawn, the
number of Shares to be withdrawn and the name of the registered holder of the
Shares to be withdrawn, if different from the name of the person who tendered
the Shares. If certificates for Shares have been delivered or otherwise
identified to the Depositary, then, prior to the physical release of such
certificates, the serial numbers shown on such certificates must be submitted
to the Depositary and, unless such Shares have been tendered by an Eligible
Institution (as defined in Section 2 of the Offer to Purchase), the signatures
on the notice of withdrawal must be guaranteed by an Eligible Institution. If
Shares have been delivered pursuant to the procedures for book-entry transfer
described in Section 2 of the Offer to Purchase, any notice of withdrawal must
also specify the name and number of the account at the appropriate Book-Entry
Transfer Facility to be credited with the withdrawn Shares and otherwise
comply with such Book-Entry Transfer Facility's procedures. Withdrawals of
tenders of Shares may not be rescinded, and any Shares properly withdrawn will
thereafter be deemed not validly tendered for purposes of the Offer. However,
withdrawn Shares may be retendered by again following one of the procedures
described in Section 2 of the Offer to Purchase at any time prior to the
Expiration Date. All questions as to the form and validity (including time of
receipt) of notices of withdrawal will be determined by the Purchaser in its
sole discretion, which determination will be final and binding.
The Company has provided the Purchaser with the Company's stockholder lists
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase, the related Letter of Transmittal
and other relevant materials will be mailed to record holders of Shares and
will be furnished to brokers, dealers, banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
lists or, if applicable, who are listed as participants in a clearing agency's
security position listing for subsequent transmittal to beneficial owners of
Shares.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
Securities Exchange Act of 1934, as amended, is contained in the Offer to
Purchase and is incorporated herein by reference.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
Requests for copies of the Offer to Purchase, the Letter of Transmittal and
other tender offer materials may be directed to the Information Agent or the
Dealer Manager as set forth below, and copies will be furnished promptly at
the Purchaser's expense. No fees or commissions will be payable to brokers,
dealers or other persons other than the Dealer Manager and the Information
Agent for soliciting tenders of Shares pursuant to the Offer. Brokers,
dealers, banks and trust companies will be reimbursed by the Purchaser upon
request for customary mailing and handling expenses incurred by them in
forwarding material to their customers.
The Information Agent for the Offer is:
GEORGESON
& COMPANY INC.
------------------
Wall Street Plaza
New York, New York 10005
Banks and Brokers call collect (212) 440-9800
CALL TOLL FREE: 1-800-223-2064
THE DEALER MANAGER FOR THE OFFER IS:
J.P. MORGAN & CO.
60 WALL STREET
NEW YORK, NEW YORK 10260
(212) 648-9827
JUNE 24, 1998
<PAGE>
EXHIBIT (a)(9)
[LYONDELL LOGO APPEARS HERE]
<TABLE>
<CAPTION>
<S> <C>
NEWS
- ----------------------------------------------------------------------------------------------
One Houston Center, 1221 McKinney Ave., P.O. Box 3646, Houston, Texas 77253-3646 (713)652-7200
</TABLE>
LYONDELL COMMENCES ALL-CASH TENDER OFFER
FOR ARCO CHEMICAL COMPANY COMMON SHARES
HOUSTON, June 24, 1998 -- Lyondell Petrochemical Company (NYSE:LYO) today
commenced its previously announced all-cash tender offer for all outstanding
shares of ARCO Chemical Company (NYSE:RCM) common stock at a price of $57.75 per
share. The offer is scheduled to expire at 12:00 midnight, Eastern Daylight
Time, on Wednesday, July 22, 1998, unless extended.
A notice of the tender offer appears in today's Wall Street Journal. A
Schedule 14 D-1 and related documents are being filed today with the Securities
and Exchange Commission. Offer documents will be mailed to all ARCO Chemical
shareholders promptly.
ARCO Chemical has approximately 97 million shares outstanding. Atlantic
Richfield Company (ARCO), which owns over 80 percent of the outstanding shares
of ARCO Chemical, has agreed to tender its shares to Lyondell.
As previously announced, the offer has been approved by the ARCO Chemical
Company Board of Directors.
J.P. Morgan & Co. is acting as dealer-manager for the offer. Georgeson &
Company Inc. is acting as the information agent. Copies of the offering
documents may be obtained by calling Georgeson & Company at (toll-free) 1-800-
223-2064.
LYONDELL PETROCHEMICAL COMPANY-headquartered in Houston, Texas- is a major
chemical and refining company, with majority ownership positions in the premier
olefins, polymers and refining companies in North America. Lyondell is:
. The largest producer of ethylene, propylene and polyethylene in North America
and a leading producer of high value-added specialty polymers, color
concentrates and polymeric powder through its 41% interest in Equistar
Chemicals, LP.
. One of the largest and most profitable refiners in the United States,
processing very heavy Venezuelan crude oil to produce gasoline, low sulfur
diesel and jet fuel, through its 58.75% interest in LYONDELL-CITGO Refining
Company Ltd.
. The third largest methanol producer in the U.S., through its 75% interest in
Lyondell Methanol Company L.P.
# # #
For information, contact:
Media - Jackie Wilson (713) 652-4596
Investors - Kevin DeNicola (713) 652-4590
<PAGE>
EXHIBIT (b)(1)
June 17, 1998
Lyondell Petrochemical Company
One Houston Center, Suite 1600
1221 McKinney Street
Houston, TX 77253-3646
Attention: Mr. Dan F. Smith
Ladies and Gentlemen:
You have requested J.P. Morgan Securities Inc. ("JPMSI") as Arranger,
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJSC"), BancAmerica
Robertson Stephens and Chase Securities, Inc., as Co-Arrangers (collectively the
"Co-Arrangers"), to arrange financing in the amount of $7.0 billion for Lyondell
Petrochemical Company (the "Borrower"). Attached is an outline of the principal
terms and conditions of proposed loans to be made by Morgan Guaranty Trust
Company of New York, DLJ Capital Funding, Inc. ("DLJCF"), Bank of America
National Trust and Savings Association, Citibank, N.A. ("Citibank"), The Chase
Manhattan Bank and NationsBank, N.A. (collectively the "Co-Underwriters") and
other Lenders acceptable to the Co-Underwriters and the Borrower (the
Co-Underwriters and such other Lenders being herein called the "Lenders"),
pursuant to loan documentation mutually acceptable to the Lenders and the
Borrower. You have advised us that this financing would provide sufficient
funds to support your offer of up to $57.75 per share for ARCO Chemical Company,
as well as to effect refinancing of certain debt in connection therewith and
meet ongoing working capital needs.
Each Co-Underwriter hereby severally commits to lend up to the amount
set forth opposite its name on the signature pages hereof on the attached terms
and conditions. All commitments will be subject to (i) the absence of adverse
changes in the market for syndicated bank loans or in the regulatory environment
that are likely to materially and adversely affect the syndication of the
proposed financing; (ii) representations by the Borrower to us of its
willingness to cooperate with us in structuring and syndication an appropriate
credit facility, including its willingness to make reasonable changes to the
documents as requested by participants; (iii) our current understanding of the
proposed capital structure of the Borrower after giving effect to the financing
referred to herein; (iv) the absence of adverse changes in the financial
condition, business, assets, results of operations, or prospects of the Borrower
and the business to be acquired by the Borrower taken as a whole; (v) our
satisfaction that prior to and during the syndication of the
<PAGE>
credit facility there shall be no competing offering, placement or arrangement
of debt securities or lender financing on behalf of the Borrower and (vi) the
negotiation, execution and delivery of mutually acceptable definitive loan
documentation (to be prepared by the Co-Underwriters' counsel, Davis Polk and
Wardwell) within 90 days of the date hereof.
It is the Co-Underwriters' intention to syndicate the Credit Facility to
a group of lenders acceptable to the Co-Underwriters, the Co-Arrangers and the
Borrower. The Borrower agrees to provide such assistance in the Syndication
effort as may be reasonably requested, including making members of management of
the Company and its subsidiaries available to meet with the prospective
syndicate members and assisting the Co-Arrangers in the preparation of a
financing memorandum.
The Borrower acknowledges its obligation to pay an underwriter fee as
specified in the Underwriting Fee Letter of even date signed by the parties
hereto.
The Borrower by signing below agrees to indemnify and defend the
Co-Underwriters, the Co-Arrangers and each other Lender, their respective
affiliates and the respective directors, officers, agents and employees of the
foregoing from, and hold each of them harmless against, any and all losses,
liabilities, claims, damages or expenses of any kind, including without
limitation the reasonable fees and disbursements of counsel, incurred by any of
them arising out of or by reason of their role hereunder or any investigation,
litigation or other proceeding brought or threatened relating to any loan made
or proposed to be made to the Borrower in connection with the matters herein
referred to (including, but without limitation, any use made or proposed to be
made by the Borrower or any of its affiliates of the proceeds of such loans, but
excluding any such losses, liabilities, claims, damage or expenses incurred by
reason of the gross negligence or willful misconduct of the indemnitee as
determined by a final judgment of a court of competent jurisdiction).
Finally, the Borrower hereby agrees to pay the Co-Arrangers' and
Co-Underwriters' reasonable out-of-pocket costs and reasonable expenses in
connection herewith, including reasonable fees and disbursements of the
Arranger's counsel, regardless of whether any loan documents are agreed to and
signed by the Lenders and the Borrower and regardless of whether any loans are
actually made.
This letter is intended solely for the use of the Borrower and not any
other person and may not be used or relied upon by, or disclosed, referred to or
communicated by you (in whole or in part) to any third party for any purpose
whatsoever (except, upon acceptance, to your professional advisors and to ARCO
2
<PAGE>
Chemical Company, Atlantic Richfield Company and their professional advisors for
their purposes in evaluating the Borrower's bid and as may otherwise be required
by law) except with our prior written permission.
This letter agreement may be executed in counterparts which, taken
together, shall constitute an original. This letter agreement shall be governed
by and construed in accordance with laws of the State of New York.
If you accept and agree to this proposal, please so indicate by signing
in the space provided below and returning a copy of this letter to us. This
proposal will expire at the close of business on June 18, 1998 if not accepted
by you in writing by that time.
Very truly yours,
Commitment Amount
- -----------------
$1,400,000,000 MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
By: /s/ CHRISTOPHER C. KUNHARDT
----------------------------
Name: CHRISTOPHER C. KUNHARDT
Title: VICE PRESIDENT
60 Wall Street
New York, New York 10260-0060
3
<PAGE>
$1,400,000,000 DLJ CAPITAL FUNDING, INC.
By: /s/ ERIC SWANSON
---------------------------
Name: ERIC SWANSON
Title: MANAGING DIRECTOR
277 Park Avenue
New York, New York 10172
4
<PAGE>
$1,100,000,000 BANK OF AMERICA NATIONAL
TRUST AND SAVINGS
ASSOCIATION
BY: /s/ J. STEPHEN MERRICK
---------------------------
Name: J. STEPHEN MERRICK
Title: MANAGING DIRECTOR
Address: 335 Madison Avenue
New York, NY 10017
5
<PAGE>
$1,100,000,000 THE CHASE MANHATTAN
BANK
BY: /s/ LAWRENCE PALUMBO, JR.
---------------------------
Name: LAWRENCE PALUMBO, JR.
Title: VICE PRESIDENT
Address:
6
<PAGE>
$1,000,000,000 CITIBANK, N.A.
BY: /s/ E. OGIMACHI
---------------------------
Name: EILEEN G. OGIMACHI
Title: Attorney-In-Fact
399 Park Avenue
New York, New York 10043
7
<PAGE>
$1,000,000,000 NATIONSBANK, N.A.
BY: /s/ JAMES R. ALLRED
---------------------------
Name: JAMES R. ALLRED
Title: SENIOR VICE PRESIDENT
Address:
8
<PAGE>
J.P. MORGAN SECURITIES INC.
By: /s/ J. E. C.
---------------------------
Name: JAMES E. CONDOR
Title: VICE PRESIDENT
60 Wall Street
New York, New York 10260-0060
9
<PAGE>
DONALDSON, LUFKIN &
JENRETTE SECURITIES
CORPORATION
By: /s/ ERIC SWANSON
---------------------------
Name: ERIC SWANSON
Title: MANAGING DIRECTOR
277 Park Avenue
New York, New York 10172
10
<PAGE>
BANCAMERICA ROBERTSON
STEPHENS
By: /s/ Keith C. Barnisto
---------------------------
Name: Keith C. Barnisto
Title: SR. MANAGING DIRECTOR
Address:
11
<PAGE>
CHASE SECURITIES INC.
By: /s/ MICHEAL J. MCGOVERN
---------------------------
Name: MICHEAL J. MCGOVERN
Title: MANAGING DIRECTOR
Address: 270 Park Avenue
New York, NY 10017
12
<PAGE>
ACCEPTED AND AGREED TO
this 17th day of June, 1998:
LYONDELL PETROCHEMICAL COMPANY
By: /s/ E.W. RICH
- -----------------------------
Name: EDWARD W. RICH
Title: VP FINANCE & TREASURER
One Houston Center, Suite 1600
1221 McKinney Street
P.O. Box 3646
Houston, TX 77253-3646
13
<PAGE>
SUMMARY OF TERMS AND CONDITIONS
FOR LYONDELL PETROCHEMICAL COMPANY
BORROWER: Lyondell Petrochemical Company
AMOUNT: $7,000,000,000 divided into five
tranches:
Revolving Credit $ 500,000,000
Term Loan A $2,500,000,000
Term Loan B $ 750,000,000
Term Loan C $1,250,000,000
Term Loan D $2,000,000,000
The Arranger and the Co-Arrangers,
with the consent of the Borrower,
may increase the size of Term Loan B
up to $1,000,000,000 with a
comparable decrease in the size of
the Term Loan A.
Term Loan C and Term Loan D are
bridges to the capital markets.
CO-UNDERWRITERS' As set forth in the Commitment
INITIAL COMMITMENTS: Letter each pro-rated across the
Revolving Credit, Term Loan A, Term
Loan B, Term Loan C, and Term Loan
D.
PURPOSE:
Term Loans: Fund the acquisition of Berlin.
Revolving Credit: General Corporate Purposes.
ARRANGER: J.P. Morgan Securities Inc.
("JPMSI").
CO-ARRANGERS: Donaldson, Lufkin & Jenrette
Securities Corporation, BancAmerica
Robertson Stephens and Chase
Securities, Inc.
ADMINISTRATIVE AGENT: Morgan Guaranty Trust Company of New
York ("Morgan").
<PAGE>
SYNDICATION AGENT: DLJ Capital Funding, Inc.
DOCUMENTATION AGENTS: Bank of America National Trust and
Savings Association, Citibank, N.A.
("Citibank"), The Chase Manhattan
Bank and NationsBank, N.A.
LENDERS: Syndicate of lenders acceptable to
the Borrower and Co-Underwriters.
FACILITY DESCRIPTION:
Revolver: 5 years on a fully revolving basis.
Term Loan A: 5-year term loan. Single drawdown
concurrent with the closing of the
Berlin acquisition. Amortization
schedule to be determined.
Term Loan B: 7-year term loan. Single drawdown
concurrent with the closing of the
Berlin acquisition. Amortization
schedule to be determined.
Term Loan C: 1-year term loan with a bullet
maturity. Single drawdown concurrent
with the closing of the Berlin
acquisition.
Term Loan D: 2-year term loan with a bullet
maturity. Single drawdown concurrent
with the closing of the Berlin
acquisition.
PARTICIPATION FEE: At rates to be determined according
to each Lender's initial commitment
and payable upon final allocation
amounts [timing of payments due to
participants to be determined].
BORROWING OPTIONS: LIBOR and Base Rate.
LIBOR adjustments for Regulation D
will be charged by Lenders
individually.
2
<PAGE>
Base Rate means the higher of
Morgan's prime rate or the federal
funds rate + 0.50%.
PRICING: See attached Pricing Schedule.
COLLATERAL: The credit facilities shall be
secured by a perfected first
priority security interest in (i)
substantially all the assets
directly owned by the Borrower
including the stock and inter-
company indebtedness of any material
subsidiaries, including Acquisition
Co., Berlin and the subsidiaries
(the "JV Subsidiaries") that hold
the Borrower's interests in Equistar
Chemicals, LP ("Equistar"), Lyondell
Citgo Refining Company, Ltd.
("LCR"), and Lyondell Methanol
Company, Ltd. ("LMC", and together
with Equistar and LCR, the "JVs"),
and (ii) the rights of the JV
Subsidiaries to receive
distributions from the JVs.
GUARANTORS: Acquisition Co., Berlin and any
other material domestic
subsidiaries, excluding the JVs and
the JV Subsidiaries.
INTEREST PAYMENTS: At the end of each applicable
Interest Period or quarterly, if
earlier.
INTEREST PERIODS: LIBOR Loans - 1, 2, 3, or 6 months;
9 or 12 months if available.
REVOLVER DRAWDOWNS: Minimum amounts of $20 million with
additional increments of $1 million.
Drawdowns are at the Borrower's
option with same day notice for Base
Rate Loans and three business days
for LIBOR Loans.
PREPAYMENTS: Base Rate and LIBOR Loans may be
prepaid at any time on one or three
business day's notice, respectively,
3
<PAGE>
without premium or penalty, but
subject, in the case of LIBOR Loans
to compensation for breakfunding
costs.
TERMINATION OR REDUCTION OF
COMMITMENTS: The Borrower may terminate the
commitments in their entirety or
reduce the commitments in amounts of
at least $25 million at any time on
three business days' notice.
MANDATORY PREPAYMENTS: Until the Mandatory Prepayment
Release Date, defined as the date
Term Loan C and Term Loan D are
repaid in full, including accrued
interest and fees, and the Borrower
has achieved investment grade
ratings of at least BBB-and Baa3
from Standard & Poors and Moody's,
respectively, Mandatory Prepayments
will apply according to the
following schedule:
1. 100 percent of the net proceeds
from the issuance of any
equity, preferred or
convertible debt security
(subject to customary
exceptions, including the net
cash proceeds form the issuance
of stock in connection with
employee benefit plans and
dividend reinvestment plans).
2. 100 percent of the net proceeds
from the issuance of any debt
security with a maturity in
excess of one year.
3. 100 percent of the net cash
proceeds of any sale or other
disposition of any assets
(excluding (i) the sale of
inventory in the ordinary
course of business, and (ii)
individual asset sales, the
proceeds of which do not exceed
$10 million).
4. 100 percent of the proceeds
from any property or casualty
insurance unless such proceeds
are committed within
4
<PAGE>
six months of receipt and used
within 18 months of receipt to
replace the insured assets.
5. 50 percent of any Excess Cash
Flow, to be defined.
Mandatory repayments related to
items 1. and 2. above will be
applied first to Term Loan C and
Term Loan D in order of maturity,
and related to items 3., 4., and 5.
above will be applied first to Term
Loan A and Term Loan B pro rata with
Term Loan B having the right to
refuse prepayment.
REPRESENTATIONS AND
WARRANTIES: Customary for credit agreements of
this nature, with respect to the
Borrower, its subsidiaries and the
JVs, including but not limited to:
1. Corporate existence.
2. Corporate and governmental
authorization; no
contravention; binding effect.
3. Financial information.
4. No material adverse change.
5. Environmental matters.
6. Compliance with laws, including
ERISA.
7. No material litigation.
8. Existence, incorporation, etc.
of subsidiaries.
9. Payment of taxes.
10. Full disclosure.
11. Regulatory restrictions on
borrowing.
12. Acquisition documents.
13. Lien perfection and priority.
CONDITIONS TO BORROWING: Customary in credit agreements of
this nature, including but not
limited to:
1. Absence of default.
5
<PAGE>
2. Accuracy of representations and
warranties.
3. Negotiation and execution of
satisfactory closing
documentation.
4. Closing of the Berlin
acquisition on terms acceptable
to the Lenders.
5. Deal-specific requirements if
any; regulatory approvals,
licenses.
COVENANTS: Customary in credit agreements of
this nature, with respect to the
Borrower and its subsidiaries
(excluding except as specifically
indicated the JVs) including but not
limited to:
1. Information.
2. Payment of taxes and similar
claims.
3. Maintenance of property;
insurance.
4. Conduct of business and
maintenance of existence.
5. Compliance with laws.
6. Inspection of property, books
and records.
7. Mergers and sales of assets.
8. Use of proceeds.
9. Negative pledge.
10. Debt to Adjusted EBITDA.
11. Subsidiary debt limitation.
12. Minimum consolidated tangible
net worth. [Step-up for Net
Income and Equity Issuances]
13. Fixed charge coverage ratio.
14. Restricted payments.
15. Lease payments.
16. Investments.
17. Transactions with affiliates.
18. The Borrower will use its best
efforts, including exercising
its right to vote at meetings
of the governing bodies, to
limit investments in fixed
assets of joint ventures to
incremental levels, to be
agreed upon, over the annual
6
<PAGE>
investment levels in the five
year plans of LCR, LMC, and
Equistar.
19. The Borrower will use its best
efforts, including the
exercise, through its
subsidiaries, of the right to
vote at meetings of the
governing bodies of Equistar,
LCR, and LMC, to maintain
without material change the
current cash distribution
policy at Equistar, LCR (as may
be adjusted related to the
currently contemplated
financing), and LMC as stated
in the partnership agreements
for Equistar (dated October 10,
1997 and last amended and
restated on May 15, 1998) and
LMC (dated December 12, 1996)
and in the limited liability
company regulations for LCR
(dated July 1, 1993 and last
amended on January 27, 1997).
20. The Borrower will use its best
efforts, including the
exercise, through its
subsidiaries, of the right to
vote at meetings of the
governing bodies of Equistar,
LCR, and LMC, to limit debt
incurred at Equistar, LCR and
LMC to amounts to be agreed
upon.
21. The Borrower will use its best
efforts, including the
exercise, through its
subsidiaries, of the right to
vote at meetings of the
governing bodies of Equistar,
LCR, and LMC, to prohibit
Equistar, LCR, and LMC from
entering into any contract that
would be materially more
restrictive on their ability to
make distributions than
currently exist.
22. The Borrower will use its best
efforts, including the
exercise, through its
subsidiaries, of the right to
vote at meetings of the
governing bodies of Equistar,
LCR, and LMC, to maintain the
right of Lyondell
7
<PAGE>
Petrochemical G.P. Inc to
appoint the Chief Executive
Officer of Equistar as
currently stated in the
partnership agreement for
Equistar, and the right,
jointly held with CITGO
Refining Investment Company, to
appoint the Chief Executive
Officer of LCR, as currently
stated in the company
regulations for LCR, and the
right to act as managing
partner of LMC, as currently
stated in the company
regulations for LMC.
23. The Borrower must issue equity
or equity equivalents for gross
proceeds of at least $1.25
billion within 1 year of the
effective date.
EVENTS OF DEFAULT: Customary in credit agreements of
this nature, including but not
limited to the following:
1. Failure to pay any interest,
principal, or fees payable
under the Credit Agreement when
due, with a grace period of 5
days for interest and fees.
2. Failure to meet covenants (with
grace periods, when
appropriate).
3. Representations or warranties
false in any material respect
when made.
4. Cross default to other debt
(exceeding an agreed amount) of
the Borrower and its
Subsidiaries as well as of
Equistar, LCR, and LMC which is
triggered by an event which
permits or, with the giving of
notice or lapse of time (or
both), would permit the holder
to accelerate its debt or
terminate its commitment.
5. Change of ownership or control.
6. Loss of lien perfection or
priority.
7. Other usual defaults with
respect to the Borrower and
Subsidiaries, as well as
Equistar, LCR, and LMC,
8
<PAGE>
including but not limited to
insolvency, bankruptcy, ERISA,
and judgment defaults.
INCREASED COSTS/CHANGE OF
CIRCUMSTANCES: The credit agreement will contain
customary provisions protecting the
Lenders in the event of
unavailability of funding,
illegality, increased costs and
funding losses.
Capital adequacy compensation will
be required only with respect to
capital requirements adopted after
the date hereof.
INDEMNIFICATION: The Borrower will indemnify the
Lenders against all losses,
liabilities, claims, damages, or
expenses relating to their loans,
the Borrower's use of loan proceeds
or the commitments, including but
not limited to reasonable attorneys'
fees and settlement costs (except
such as result from the indemnitee's
gross negligence or willful
misconduct).
TRANSFERS AND PARTICIPATIONS: Lenders will have the right to
transfer or sell participations in
their loans or commitments with the
transferability of voting rights in
the case of participations limited
to changes in principal, rate, fees
and term. Assignments, which must be
in amounts of at least $5 million,
will be allowed with the consent
of the Borrower, such consent not
to be unreasonably withheld.
Assignment will be allowed within
the Lender group and the Lenders'
affiliates.
EXPENSES: Borrower will pay all reasonable
legal and other out-of-pocket
expenses of Co-Underwriters related
to this transaction and any
subsequent amendments or
9
<PAGE>
waivers, including the reasonable
fees and expenses of Davis Polk &
Wardwell, special counsel to the Co-
Underwriters.
GOVERNING LAW: State of New York.
10
<PAGE>
PRICING GRID
. Initial LIBOR margins will be as follows:
Revolving Credit L + 200
Term Loan A L + 200
Term Loan B L + 250
Term Loan C L + 200
Term Loan D L + 200
. LIBOR margins will be the higher of the initial margins or the grid-
based margins for a minimum of six months; grid will commence on the
later of the retirement of Term Loans C and D or six months following
the effective date of the Credit Agreement.
. GRID:
- -------------------------------------------------------------------------------
Senior Debt Revolver, Term
Level Rating Loans A, C and D Term Loan B
- -------------------------------------------------------------------------------
I B1 or B+ or 2.50% 3.00%
lower/*/
- -------------------------------------------------------------------------------
II Ba3 and BB-/*/ 2.00% 2.50%
- -------------------------------------------------------------------------------
III Ba2 and BB/*/ 1.75% 2.25%
- -------------------------------------------------------------------------------
IV Ba1 or BB+/**/ 1.50% 2.00%
- -------------------------------------------------------------------------------
V Baa3 or BBB- or 1.25% 2.00%
higher/**/
- -------------------------------------------------------------------------------
- -------------------
/*/ In the event of split ratings from S&P and Moody's, the lower
rating governs.
/**/ In the event of split ratings from S&P and Moody's, the higher
rating governs; provided that if the split is more than one full rating
category, the rating at the midpoint (or the higher of two intermediate ratings)
governs.
11
<PAGE>
EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
among
LYONDELL PETROCHEMICAL COMPANY,
LYONDELL ACQUISITION CORPORATION
and
ARCO CHEMICAL COMPANY
Dated as of June 18, 1998
<PAGE>
TABLE OF CONTENTS
AGREEMENT AND PLAN OF MERGER
Page
----
ARTICLE I
OFFER
SECTION 1.1. The Offer
SECTION 1.2. Company Actions
SECTION 1.3. Directors
ARTICLE II
THE MERGER
SECTION 2.1. The Merger
SECTION 2.2. Closing
SECTION 2.3. Effective Time
SECTION 2.4. Effects of the Merger
SECTION 2.5. Certificate of Incorporation and By-laws
SECTION 2.6. Directors
SECTION 2.7. Officers
ARTICLE III
CONVERSION OF SECURITIES
SECTION 3.1. Effect on Capital Stock
SECTION 3.2. Exchange of Certificates
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.1. Organization
SECTION 4.2. Subsidiaries
SECTION 4.3. Capitalization
SECTION 4.4. Authority
SECTION 4.5. Consents and Approvals; No Violations
SECTION 4.6. SEC Documents; Financial Statements
SECTION 4.7. Information Supplied
SECTION 4.8. Absence of Certain Changes or Events
SECTION 4.9. Litigation
SECTION 4.10. Benefit Plans and Matters
SECTION 4.11. Compliance with Laws
SECTION 4.12. Environmental Matters
SECTION 4.13. Taxes
SECTION 4.14. Technology and Intellectual Property
SECTION 4.15. Opinion of Financial Advisor
SECTION 4.16. Brokers; Schedule of Fees and Expenses
SECTION 4.17. Affiliated Written Transactions
SECTION 4.18. State Takeover Statutes
SECTION 4.19. Title
<PAGE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB
SECTION 5.1. Organization
SECTION 5.2. Authority
SECTION 5.3. Consents and Approvals; No Violations
SECTION 5.4. Information Supplied
SECTION 5.5. Financing
SECTION 5.6. Ownership of Shares
SECTION 5.7. Brokers
ARTICLE VI
COVENANTS
SECTION 6.1. Conduct of Business
SECTION 6.2. No Solicitation
SECTION 6.3. Use of Names and Logos
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. Company Stockholder Approval
SECTION 7.2. Access to Information; Confidentiality
SECTION 7.3. Reasonable Efforts; Notification
<PAGE>
SECTION 7.4. Stock Incentive Plans
SECTION 7.5. Indemnification, Exculpation and Insurance
SECTION 7.6. Fees and Expenses
SECTION 7.7. Public Announcements
SECTION 7.8. Employee Benefits Matters
SECTION 7.9. Termination of Other Agreements
SECTION 7.10. Insurance
ARTICLE VIII
CONDITIONS
SECTION 8.1. Conditions to Each Party's Obligation to Effect the Merger
ARTICLE IX
TERMINATION AND AMENDMENT
SECTION 9.1. Termination
SECTION 9.2. Effect of Termination
SECTION 9.3. Amendment
SECTION 9.4. Extension; Waiver
SECTION 9.5. Procedure for Termination, Amendment, Extension or Waiver
<PAGE>
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Nonsurvival of Representations, Warranties and Agreements
SECTION 10.2. Notices
SECTION 10.3. Interpretation
SECTION 10.4. Counterparts
SECTION 10.5. Entire Agreement; Third Party Beneficiaries
SECTION 10.6. Governing Law
SECTION 10.7. Assignment
SECTION 10.8. Enforcement
EXHIBIT A CONDITIONS OF THE OFFER
<PAGE>
-7-
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of
June 18, 1998, among Lyondell Petrochemical Company, a Delaware corporation
("Purchaser"), Lyondell Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of Purchaser ("Merger Sub"), and ARCO Chemical Company,
a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Purchaser, Merger Sub
and the Company have approved the acquisition of the Company by Purchaser upon
the terms and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Purchaser proposes to
cause Merger Sub to make a tender offer to purchase all the outstanding shares
of Common Stock, par value $1.00 per share, of the Company (the "Company Common
Stock"; all the outstanding shares of Company Common Stock being hereinafter
collectively referred to as the "Shares") at a purchase price of $57.75 per
Share (the "Offer Price"), net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in this Agreement (as it
may be amended from time to time as permitted under this Agreement, the
"Offer"); and the Board of Directors of the Company has adopted resolutions
approving the Offer, the Merger (as defined below), the Tax Agreement (as
defined below) and, for purposes of Section 203 of the DGCL (defined in Section
1.2), the Tender and Voting Agreement (as defined below), recommending that the
Company's stockholders accept the Offer and approving the acquisition of Shares
by Merger Sub pursuant to the Offer;
WHEREAS, the respective Boards of Directors of Purchaser, Merger Sub
and the Company have each approved the merger of Merger Sub into the Company
(the "Merger"), upon the terms and subject to the conditions set forth in this
Agreement, whereby each Share, other than Dissenting Shares (as defined in
Section 3.1(d) hereof), shall be converted into the right to receive the price
per Share paid in the Offer, and the Company shall become a wholly-owned
subsidiary of Purchaser;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Purchaser to enter into this Agreement, Purchaser and Atlantic
Richfield Company, a Delaware corporation and the majority stockholder of the
Company ("Parent"), are entering into a Tender and Voting Agreement of even date
herewith (the "Tender and Voting Agreement") pursuant to which Parent has
agreed, upon the terms and subject to the conditions set therein, to tender all
of the Shares owned by Parent to Merger Sub pursuant to the Offer; and
WHEREAS, concurrently with the execution of this Agreement, Purchaser,
Parent and the Company are entering into a Tax Agreement of even date herewith
relating to certain tax matters;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, Purchaser, Merger Sub and the Company hereby agree as
follows:
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ARTICLE I
OFFER
SECTION 1.1. The Offer. (a)__As promptly as practicable but in no
event later than five business days after the date of the public announcement
(on the date hereof or the following day) by Purchaser and the Company of this
Agreement, Merger Sub shall, and Purchaser shall cause Merger Sub to, commence
the Offer (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")). The obligation of Merger Sub to, and of
Purchaser to cause Merger Sub to, commence the Offer, conduct and consummate the
Offer and accept for payment, and pay for, any Shares tendered and not withdrawn
pursuant to the Offer shall be subject only to the conditions set forth on
Exhibit A hereto (the "Offer Conditions") (any of which (other than the Minimum
Condition and the Antitrust Condition (as such terms are defined in Exhibit A))
may be waived in whole or in part by Merger Sub in its sole discretion). Merger
Sub expressly reserves the right, subject to compliance with the Exchange Act,
to modify the terms of the Offer, except that, without the express written
consent of the Company, Merger Sub shall not (i)__reduce the number of Shares
subject to the Offer, (ii)__reduce the Offer Price, (iii)__add to or modify the
Offer Conditions, (iv)__except as provided in the following sentence, extend the
Offer, (v)__change the form of consideration payable in the Offer or (vi)__amend
or alter any other term of the Offer in any manner adverse to the holders of the
Shares. Notwithstanding the foregoing, Merger Sub may, without the consent of
the Company, (A) extend the Offer for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or the staff thereof applicable to the Offer, (B) extend the Offer,
if at the scheduled or extended expiration date of the Offer, any of the Offer
Conditions shall not be satisfied or waived, until such time as such conditions
are satisfied or waived and (C) extend the Offer on one occasion for a period of
not more than 10 business days beyond the latest expiration date that would
otherwise be permitted under clause (A) or (B) of this sentence, if on such
expiration date there shall not have been tendered at least 90% of the
outstanding Shares. Notwithstanding the foregoing, Merger Sub may not, without
the Company's prior written consent, extend the Offer pursuant to clause (B) of
the prior sentence if the failure to satisfy any of the Offer Conditions was
directly or indirectly caused by an act or omission of Purchaser or Merger Sub
that constitutes a breach of this Agreement. Purchaser and Merger Sub agree that
if any Offer Condition (other than the Minimum Condition and the Offer Condition
set forth in paragraph (e) of Exhibit A) is not satisfied on any scheduled
expiration date of the Offer, then Merger Sub shall extend the Offer from time
to time until all the Offer Conditions have been satisfied or waived, provided
that (i)__any such unsatisfied condition is reasonably capable of being
satisfied, (ii)__any Takeover Proposal theretofore received by the Company has
been rejected by the Company (or, if such Takeover Proposal has not been
rejected by the Company as of such scheduled expiration date, such Takeover
Proposal was received by the Company less than ten days prior to such scheduled
<PAGE>
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expiration date), as confirmed in writing by the Company to Purchaser setting
forth the date any such Takeover Proposal was received, and (iii) Merger Sub
shall not be required to extend the Offer to a date that is later than the
Outside Date (as defined in 9.1(c)). Subject to the terms and conditions of the
Offer and this Section 1.1(a), Merger Sub shall, and Purchaser shall cause
Merger Sub to, accept for payment, and pay for, all Shares validly tendered and
not withdrawn pursuant to the Offer as soon as practicable after the expiration
of the Offer.
(b) On the date of commencement of the Offer, Purchaser and Merger Sub
shall file with the SEC a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with respect to the Offer, which shall contain an offer to
purchase and a related letter of transmittal, a summary advertisement and such
other documents as are customarily filed with a Schedule 14D-1 (such Schedule
14D-1 and the documents included therein pursuant to which the Offer shall be
made, together with any supplements or amendments thereto, being hereinafter
collectively referred to as the "Offer Documents"). Each of Purchaser, Merger
Sub and the Company agrees promptly to correct any written information provided
by it for use in the Offer Documents if and to the extent that such information
shall have become false or misleading in any material respect, and Purchaser and
Merger Sub further agree to take all steps necessary to cause the Schedule 14D-1
as so corrected to be filed with the SEC and the other Offer Documents as so
corrected to be disseminated to holders of Shares, in each case as and to the
extent required by applicable Federal securities laws. The Company and its
counsel shall be given reasonable opportunity to review and comment upon the
Offer Documents prior to their filing with the SEC or dissemination to
stockholders of the Company. Purchaser and Merger Sub agree to provide the
Company and its counsel any comments Purchaser, Merger Sub or their counsel may
receive from the SEC or its staff with respect to the Offer Documents promptly
after the receipt of such comments.
(c) Purchaser shall provide or cause to be provided to Merger Sub on a
timely basis the funds sufficient to accept for payment and pay for, any and all
Shares that Merger Sub becomes obligated to accept for payment, and pay for,
pursuant to the Offer.
SECTION 1.2. Company Actions. (a)__The Company hereby approves of and
consents to the Offer and represents that the Board of Directors of the Company,
at a meeting duly called and held, duly adopted resolutions (i) approving this
Agreement, the Offer, the Merger, the Tax Agreement, and, for purposes of
Section 203 of the Delaware General Corporation Law (the "DGCL"), the Tender and
Voting Agreement, (ii) determining that the terms of the Offer and the Merger
are fair to, and in the best interests of, the Company's stockholders and (iii)
recommending that the Company's stockholders accept the Offer, tender their
Shares pursuant to the Offer and (if required by the DGCL) approve and adopt
this Agreement. The Company represents that the foregoing action of the Board
of Directors of the Company in approving this Agreement, the Offer, the Merger
and the Tender and Voting Agreement is sufficient to render inapplicable to this
Agreement (and the transactions provided
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for herein) and the Tender and Voting Agreement the restrictions on "business
combinations" (as defined in Section 203 of the DGCL) set forth in Section 203
of the DGCL.
(b) On the date the Offer Documents are filed with the SEC, or
promptly thereafter, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (such Schedule 14D-9, as amended from time to time, being hereinafter
referred to as the "Schedule 14D-9") containing the recommendation described in
Section 1.2(a) hereof and shall mail the Schedule 14D-9 to the stockholders of
the Company. Each of the Company, Purchaser and Merger Sub agrees promptly to
correct any written information provided by it for use in the Schedule 14D-9 if
and to the extent that such information shall have become false or misleading in
any material respect, and the Company further agrees to take all steps necessary
to amend or supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so
amended or supplemented to be filed with the SEC and disseminated to the
Company's stockholders, in each case as and to the extent required by applicable
Federal securities laws. Purchaser and its counsel shall be given reasonable
opportunity to review and comment upon the Schedule 14D-9 prior to its filing
with the SEC or dissemination to stockholders of the Company. The Company
agrees to provide Purchaser and its counsel any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments.
(c) In connection with the Offer and the Merger, the Company shall
cause its transfer agent to furnish Merger Sub promptly with mailing labels
containing the names and addresses of the record holders of Shares as of a
recent date and of those persons becoming record holders subsequent to such
date, together with copies of all lists of stockholders, security position
listings and computer files and all other information in the Company's
possession regarding the beneficial owners of Shares, and shall furnish to
Merger Sub such information and assistance (including updated lists of
stockholders, security position listings and computer files) as Purchaser may
reasonably request in communicating the Offer to the Company's stockholders.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Purchaser and Merger Sub and their agents shall hold
in confidence the information contained in any such labels, listings and files,
shall use such information only in connection with the Offer and the Merger and,
if this Agreement shall be terminated, shall, upon request, promptly deliver,
and shall cause their agents promptly to deliver, to the Company all copies of
such information then in their possession or control.
SECTION 1.3. Directors. Promptly upon the acceptance for payment of,
and payment for, any Shares by Merger Sub pursuant to the Offer and, from time
to time thereafter, Merger Sub shall be entitled to designate such number of
directors on the Board of Directors of the Company as will give Merger Sub,
subject to compliance with Section 14(f) of the Exchange Act and subject to the
final sentence of this Section 1.3, representation on the Board equal to at
<PAGE>
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least that number of directors (rounded up to the next whole number) equal to
the product of (i) the total number of directors on the Board and (ii) the
percentage that the number of Shares owned by Merger Sub bears to the number of
Shares outstanding, and the Company shall, at such time, cause Merger Sub's
designees to be so elected or appointed to the Board of Directors of the
Company. Subject to applicable law, the Company shall take all action requested
by Purchaser necessary to effect any such election, including mailing to its
stockholders the information statement (as amended from time to time, the
"Information Statement") containing the information required by Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder, and the Company agrees
to make such mailing with the mailing of the Schedule 14D-9 (provided that
Merger Sub shall have provided to the Company on a timely basis in writing all
information required to be included in the Information Statement with respect to
Merger Sub's designees). In connection with the foregoing, the Company will
promptly, at the option of Purchaser, either increase the size of the Company's
Board of Directors and/or use its commercially reasonable efforts to obtain the
resignation of such number of its current directors as is necessary to enable
Merger Sub's designees to be elected or appointed to the Company's Board of
Directors as provided above. In addition, subject to applicable law, at such
time as Merger Sub shall be entitled to designate a number of directors as
provided by this Section 1.3, at the request of Purchaser, the Company will use
its best efforts to cause individuals designated by Merger Sub to constitute the
same percentage as such individuals represent on the Board of Directors of
(x)__each committee of the Board of Directors, (y)__each board of directors of
each Subsidiary (as defined below) of the Company and (z)__each committee of
each such board. Notwithstanding the foregoing, until the Effective Time (as
defined in Section 2.3 hereof), there shall be at least two directors who are
directors on the date hereof and who are not designees nor officers, directors,
employees or affiliates of Purchaser or Merger Sub nor officers or employees of
the Company or Parent ("Independent Directors"), provided that if the number of
Independent Directors shall be reduced below two for any reason, the Board of
Directors shall, subject to the approval of the remaining Independent Directors
(or Independent Director, if there be only one remaining), if any, designate a
person or persons to fill the vacancy or vacancies who are not designees nor
officers, directors, employees or affiliates of Purchaser or Merger Sub nor
officers or employees of the Company, and such persons shall be deemed to be
Independent Directors for purposes of this Agreement.
ARTICLE II
THE MERGER
SECTION 2.1. The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL, Merger Sub shall
be merged with and into the Company at the Effective Time (as defined in Section
2.3). Following the Effective Time, the separate corporate existence of Merger
Sub shall cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and
<PAGE>
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assume all the rights and obligations of Merger Sub in accordance with the DGCL.
At the election of Purchaser, any direct or indirect wholly owned subsidiary of
Purchaser may be substituted for Merger Sub as a constituent corporation in the
Merger, provided that no such substitution shall be made if it would materially
delay or impede the transactions contemplated hereby. In such event, the parties
agree to execute an appropriate amendment to this Agreement in order to reflect
the foregoing.
SECTION 2.2. Closing. The closing of the Merger will take place at
10:00 a.m. (Houston time) on a date to be specified by Purchaser or Merger Sub,
which shall be no later than the second business day after satisfaction or
waiver of the conditions set forth in Article VIII (the "Closing Date"), at the
offices of Baker & Botts, L.L.P., One Shell Plaza, 910 Louisiana Street,
Houston, Texas, unless another date, time or place is agreed to in writing by
the parties hereto.
SECTION 2.3. Effective Time. Subject to the provisions of this
Agreement, on the Closing Date the parties shall file a certificate of merger
or, if applicable, certificate of ownership and merger (in any such case, the
"Certificate of Merger") executed in accordance with the relevant provisions of
the DGCL and shall make all other filings or recordings required under the DGCL
and other applicable law. The Merger shall become effective at such time as the
Certificate of Merger is duly filed with the Delaware Secretary of State, or at
such other time specified in the Certificate of Merger as Merger Sub and the
Company shall agree (the time the Merger becomes effective being hereinafter
referred to as the "Effective Time").
SECTION 2.4. Effects of the Merger. The Merger shall have the effects
set forth in Section 259 of the DGCL.
SECTION 2.5. Certificate of Incorporation and By-laws. (a) The
Certificate of Incorporation of the Company (the "Certificate of
Incorporation"), as in effect immediately prior to the Effective Time, shall be
the certificate of incorporation of the Surviving Corporation until thereafter
changed or amended as provided therein or by applicable law.
(b) The By-laws of Merger Sub as in effect immediately prior to the
Effective Time shall be the by-laws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law.
SECTION 2.6. Directors. The directors of Merger Sub immediately prior
to the Effective Time shall be the directors of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
SECTION 2.7. Officers. The officers of Merger Sub immediately prior
to the Effective Time shall be the officers of the Surviving Corporation, until
the earlier of their resignation or removal or until their respective successors
are duly elected and qualified, as the case may be.
<PAGE>
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ARTICLE III
CONVERSION OF SECURITIES
SECTION 3.1. Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of Purchaser, Merger Sub
or the Company or any holder of any of the following securities:
(a) Capital Stock of Merger Sub. Each share of capital stock of
Merger Sub which is issued and outstanding immediately prior to the Effective
Time shall be converted into and become one fully paid and nonassessable share
of Common Stock, par value $1.00 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Purchaser Owned Stock. Each
Share which immediately prior to the Effective Time is held in the treasury of
the Company or owned by Purchaser, Merger Sub or any other subsidiary of
Purchaser shall automatically be canceled and retired and shall cease to exist,
and no consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section 3.1(d)
hereof, each Share issued and outstanding immediately prior to the Effective
Time (other than Shares to be canceled in accordance with Section 3.1(b) hereof)
shall be converted into the right to receive from the Surviving Corporation an
amount in cash equal to the price per Share paid in the Offer, without interest
thereon (the "Merger Consideration"). As of the Effective Time, all such Shares
shall no longer be outstanding and shall automatically be canceled and shall
cease to exist, and each holder of a certificate representing any such Shares
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration, without interest.
(d) Shares of Dissenting Stockholders. Notwithstanding anything in
this Agreement to the contrary, each Share issued and outstanding immediately
prior to the Effective Time and held by a person (a "Dissenting Stockholder")
who has neither voted in favor of the Merger nor consented in writing thereto
and who otherwise complies with all the applicable provisions of the DGCL
concerning the right of holders of Company Common Stock to require appraisal of
their Shares ("Dissenting Shares") shall not be converted as described in
Section 3.1(c) hereof but shall become the right to receive such consideration
as may be determined to be due to such Dissenting Stockholder pursuant to the
laws of the State of Delaware. If, after the Effective Time, such Dissenting
Stockholder withdraws his demand for appraisal or fails to perfect or otherwise
loses his right of appraisal, in any case pursuant to the DGCL, his Shares shall
be deemed to be converted as of the Effective Time into the right to receive the
Merger Consideration. The Company shall give Purchaser (i)__prompt notice of any
demands for appraisal of Shares received by the Company and (ii)__the
opportunity to participate in and direct all negotiations and proceedings with
respect to any such demands. The Company shall not, without the prior written
consent of Purchaser, make any payment with respect to, or settle, offer to
settle or otherwise negotiate, any such demands.
(e) Withholding Tax. The right of any stockholder to receive a
distribution of the Merger Consideration shall be subject to and reduced by the
amount of any required tax withholding obligation.
<PAGE>
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SECTION 3.2. Exchange of Certificates. (a)__Paying Agent. Prior to
the Effective Time, Purchaser shall (with the approval of the Company, which
approval shall not be unreasonably withheld) designate a bank or trust company
to act as paying agent in the Merger (the "Paying Agent"). Purchaser shall
deposit or cause the Surviving Corporation to deposit with the Paying Agent in
separate trust for holders of the Certificates (as hereinafter defined)
immediately available funds in an amount sufficient for the payment of the
aggregate Merger Consideration upon surrender of Certificates (as hereinafter
defined) representing Shares converted pursuant to Section 3.1(c) hereof (it
being understood that any and all interest earned on funds made available to the
Paying Agent pursuant to this Agreement shall be turned over to Purchaser).
(b) Exchange Procedure. Promptly after the Effective Time, Purchaser
shall cause to be mailed to each holder of record of a certificate or
certificates that immediately prior to the Effective Time represented Shares
(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 Paying Agent and shall be in
a form and have such other provisions as Purchaser may reasonably specify) and
(ii)__instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Paying Agent or to such other agent or agents as may be
appointed by Purchaser, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor,
and the Paying Agent shall pay pursuant to irrevocable instructions given by
Merger Sub or Purchaser, the Merger Consideration for each Share formerly
evidenced by such Certificate, and such Certificate shall thereupon be canceled.
If payment of the Merger Consideration is to be made to a person other than the
person in whose name the surrendered Certificate is registered on the stock
transfer books of the Company, it shall be a condition of payment to the holder
of a Certificate that it be endorsed properly or otherwise be in proper form for
transfer and that the person requesting such payment shall have paid all
transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder thereof or shall have
established to the satisfaction of the Surviving Corporation that such taxes are
not applicable. Until surrendered as contemplated by this Section 3.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration into
which the Shares theretofore represented by such Certificate shall have been
converted pursuant to Section 3.1 hereof. No interest will be paid or will
accrue on the cash payable upon the surrender of any Certificate.
(c) Stock Transfer Books. At the close of business on the day of the
Effective Time, the stock transfer books of the Company shall be closed and,
thereafter, there shall be no
<PAGE>
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further registration of transfers of Shares on the records of the Company. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation or the Paying Agent for any reason, they shall be canceled and
exchanged as provided in this Article III. All cash paid upon the surrender of
Certificates in accordance with the terms of this Article III shall be deemed to
have been paid in full satisfaction of all rights pertaining to the Shares
theretofore represented by such Certificates.
(d) No Liability. None of Purchaser, Merger Sub, the Company or the
Paying Agent shall be liable to any person in respect of any cash delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each of Purchaser and Merger
Sub that, except as set forth in the Disclosure Letter delivered by the Company
to Purchaser and Merger Sub concurrently with the execution and delivery of this
Agreement (the "Disclosure Letter"):
SECTION 4.1. Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to carry on its
business as now being conducted. The Company is duly qualified to do business
and in good standing in each jurisdiction where qualification as a foreign
corporation is necessary, except in such jurisdictions where the failure to be
so duly qualified and in good standing, when taken together with all other such
failures of the Company and its Subsidiaries (as defined in Section 4.2 hereof),
would not have a material adverse effect (as defined in Section 10.3 hereof) on
the Company and its Subsidiaries taken as a whole or prevent or materially delay
the consummation of the Offer and/or the Merger. The Company has made available
to Purchaser complete and correct copies of its Certificate of Incorporation and
By-laws, as amended to the date of this Agreement.
SECTION 4.2. Subsidiaries. Each "significant subsidiary" (as defined
in Rule 1-02(v) of Regulation S-X of the SEC) of the Company (a "Subsidiary") is
listed in the Disclosure Letter. Each of the Subsidiaries is a corporation,
partnership or other business entity (as the case may be) duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization, as applicable, and has all requisite corporate,
partnership or similar (as the case may be) power and authority to carry on its
business as now being conducted. Each of the Subsidiaries is duly qualified to
do business and in good standing in each jurisdiction where qualification as a
foreign corporation, partnership or other business entity (as the case may be)
is necessary, except in such jurisdictions where the failure to be so duly
qualified and in good standing, when taken together with all other such failures
of the Company and its Subsidiaries, would not have a material adverse effect on
the Company and its Subsidiaries taken as a whole or prevent or materially delay
the consummation of the Offer and/or the Merger.
<PAGE>
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SECTION 4.3. Capitalization. (a) The authorized capital stock of the
Company consists of 250,000,000 shares of Company Common Stock. At the close of
business on June 16, 1998, (i) 97,393,822 Shares were issued and outstanding,
(ii) 2,156,179 shares of Company Common Stock were held by the Company in its
treasury, and (iii) 2,507,990 shares of Company Common Stock were reserved for
issuance under outstanding Company Stock Options (as defined in Section 7.4
hereof), and contingent and performance-based restricted stock. All outstanding
Shares are, and all Shares which may be issued will be, when issued, duly
authorized, validly issued, fully paid and nonassessable. There are no bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which stockholders of the Company may vote. Except for the
Company Stock Options, DSCs (as defined in Section 7.4 hereof) and contingent
and performance-based restricted stock granted on or prior to March 31, 1998
under any stock option or incentive plan of the Company, and outstanding as of
the date of this Agreement, there are not any securities, options, warrants,
calls, rights, commitments, agreements, arrangements or undertakings of any kind
to which the Company or any of its Subsidiaries is a party or by which it is
bound obligating the Company or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other voting securities of the Company or any of its Subsidiaries or
obligating the Company or any of its Subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. As of the date of this Agreement, there
are not any outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or any of its Subsidiaries.
(b) The Company will make available immediately following the date of
this Agreement the certificates of incorporation and by-laws or other
organizational documents of its Subsidiaries, in each case as amended to the
date of this Agreement. The respective certificates of incorporation and by-
laws or other organizational documents of the Subsidiaries of the Company do not
contain any provision limiting or otherwise restricting the ability of the
Company to control such Subsidiaries. Except as set forth in the Disclosure
Letter, all of the outstanding shares of capital stock of the Subsidiaries are
beneficially owned by the Company (or by another wholly owned Subsidiary of the
Company or by the Company and another wholly owned subsidiary of the Company)
free and clear of any lien, charge, encumbrance or claim of whatever nature and
are duly authorized, validly issued, fully paid and nonassessable. There are
not any securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which any Subsidiary is a party or
by which any Subsidiary is bound obligating such Subsidiary to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other voting securities of such Subsidiary or obligating such
Subsidiary to issue, grant, extend or enter into any such security, option,
warrant, call, right, commitment, agreement, arrangement or undertaking.
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SECTION 4.4. Authority. The Company has the requisite corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a majority of the
Shares (the "Company Stockholder Approval"), if any such approval is required by
the DGCL). The execution, delivery and performance of this Agreement and the
consummation by the Company of the Merger and of the other transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions so contemplated (in each case, other than, with respect to the
Merger, the Company Stockholder Approval, if required by the DGCL). This
Agreement has been duly executed and delivered by the Company and, assuming this
Agreement constitutes a valid and binding obligation of Purchaser and Merger
Sub, constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, subject to the effect of any
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject, as to enforceability, to the
effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 4.5. Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Exchange Act (including the
filing with the SEC of the Schedule 14D-9 and a proxy or information statement
relating to any required approval by the Company's stockholders of this
Agreement (the "Proxy Statement")), the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), the DGCL, foreign and state antitrust
and competition laws (as set forth in the Disclosure Letter) of jurisdictions in
which the Company or any of its Subsidiaries is qualified to do or is doing
business, state takeover laws, and the rules of the New York Stock Exchange
("NYSE"), neither the execution, delivery or performance of this Agreement by
the Company nor the consummation by the Company of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision of the
Certificate of Incorporation or By-laws of the Company or any of its
Subsidiaries, (ii) require any filing with, or permit, authorization, consent or
approval of, any Federal, state or local government or any court, tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency, domestic, foreign or supranational (a "Governmental
Entity") (except where the failure to obtain such permits, authorizations,
consents or approvals or to make such filings would not have a material adverse
effect on the Company and its Subsidiaries taken as a whole or prevent or
materially delay the consummation of the Offer and/or the Merger), (iii) result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination,
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amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which it or any of its properties or assets may be
bound or (iv) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company, any of its Subsidiaries or any of their
respective properties or assets, except in the case of clauses (iii) or (iv) for
violations, breaches, defaults or terminations that would not have a material
adverse effect on the Company and its Subsidiaries taken as a whole or prevent
or materially delay the consummation of the Offer and/or the Merger.
SECTION 4.6. SEC Documents; Financial Statements. The Company has
filed with the SEC all reports, forms, schedules and statements and other
documents required to be filed by it since January 1, 1996 (the "SEC
Documents"). As of their respective filing dates, (i) the SEC Documents complied
in all material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to such SEC
Documents, and (ii) none of the SEC Documents contained any untrue statement of
a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present, in all material respects, the consolidated
financial position of the Company as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
SECTION 4.7. Information Supplied. None of the information supplied
or to be supplied by the Company in writing for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement, will, in the case of the
Offer Documents, the Schedule 14D-9 and the Information Statement at the
respective times the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's stockholders, or in the case of the Proxy Statement, at the time the
Proxy Statement is first mailed to the Company's stockholders or at the time of
the Stockholders Meeting (as defined in Section 7.1 hereof), as such Proxy
Statement may be amended or supplemented, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Schedule 14D-9,
the Information Statement and the Proxy
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Statement will comply as to form in all material respects with the requirements
of the Exchange Act and the rules and regulations thereunder, except that no
representation or warranty is made by the Company with respect to statements
made or incorporated by reference therein based on information supplied by
Purchaser or Merger Sub specifically for inclusion or incorporation by reference
therein.
SECTION 4.8. Absence of Certain Changes or Events. Except as
disclosed in the SEC Documents (including exhibits thereto) filed and publicly
available prior to the date of this Agreement and the proof dated June 13, 1998
of Amendment No. 1 to the Registration Statement on Form S-3 of the Company
(Registration No. 333-55883) (the "S-3 Amendment") in the form heretofore
delivered to Purchaser (the "Filed SEC Documents"), or in the Disclosure Letter,
from the date of the most recent audited financial statements included in the
Filed SEC Documents to the date of this Agreement, the Company and each of its
Subsidiaries has conducted its business only in the ordinary course and there
has not been (i) any material adverse effect on the Company and its Subsidiaries
taken as a whole, (ii) any event or occurrence that would have a material
adverse effect on the Company and its Subsidiaries taken as a whole, (iii) any
declaration, setting aside or payment of any dividends or distributions in
respect of the Shares other than the regular quarterly dividend in the amount of
$0.70 per Share, (iv) any split, combinations or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, (v) except as contemplated by Section 7.4 hereof, (A) any
granting by the Company or any of its Subsidiaries to any executive officer of
the Company or any of its Subsidiaries of any increase in compensation, except
as was required under employment agreements or benefit plans in effect as of the
date of the most recent audited financial statements included in the Filed SEC
Documents, (B) any granting by the Company or any of its Subsidiaries to any
such officer of any increase in severance or termination pay, except as was
required under employment, severance or termination agreements in effect as of
the date of the most recent audited financial statements included in the Filed
SEC Documents, (C) any entry by the Company or any of its Subsidiaries into any
employment, severance or termination agreement or arrangement with any officer
or employee or (D) any increase in benefits available under or establishment of
any Benefit Plan (as defined in Section 4.10) (including the granting of stock
options, stock appreciation rights, performance awards or restricted stock
awards or the amendment or acceleration of vesting of any existing stock
options, stock appreciation rights, performance awards or restricted stock
awards), except in the ordinary course of business consistent with past
practice, (vi) any damage, destruction or loss to physical properties owned or
used by the Company, whether or not covered by insurance, that would have a
material adverse effect on the Company and its Subsidiaries, taken as a whole,
(vii) any revaluation by the Company of any of its material assets,
(viii) except as provided in Section 7.4, any actual or approved acceleration of
vesting or conversion of contingent restricted shares of stock or other
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amendment to or modification of outstanding Company Stock Options, DSCs, phantom
stock units or contingent of performance-based restricted stock, or (ix) any
material change by the Company in its accounting principles or practices except
insofar as may have been required by a change in generally accepted accounting
principles. Except as and to the extent set forth in the Company's Annual
Report on Form 10-K for the year ended December 31, 1997, or in any subsequent
Filed SEC Document or the Disclosure Letter, neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by generally accepted
accounting principles to be reflected on a consolidated balance sheet of the
Company and its Subsidiaries (including the notes thereto), except for
liabilities or obligations incurred in the ordinary course of business since
December 31, 1997, that would not, individually or in the aggregate, have a
material adverse effect.
SECTION 4.9. Litigation. Except as disclosed in the Filed SEC
Documents, there is no suit, action or proceeding pending or, to the knowledge
of the Company, threatened against or affecting the Company or any of its
Subsidiaries that, individually or in the aggregate, would have a material
adverse effect on the Company and its Subsidiaries taken as a whole, or prevent
or materially delay the consummation of the Offer and/or the Merger, nor is
there any judgment, decree, injunction, rule or order of any Governmental Entity
or arbitrator outstanding against the Company or any of its Subsidiaries having
any such effect.
SECTION 4.10. Benefit Plans and Matters. (a) (i) Each employee
benefit plan as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), maintained by the Company which is
required to comply with ERISA ("Employee Plans") complies in all material
respects with all applicable requirements of ERISA and of the Internal Revenue
Code of 1986, as amended (the "Code"), and other applicable laws. To the
knowledge of the Company, no "reportable event" or "prohibited transaction" (as
such terms are defined in ERISA) or termination has occurred with respect to any
such plan which may result in liability to any Governmental Entity or other
person which would have a material adverse effect on the Company and its
Subsidiaries taken as a whole. Each Employee Plan that is intended to be
qualified under Section 401(a) of the Code currently has a favorable
determination letter from the Internal Revenue Service as to that Plan's
qualification under Section 401(a) of the Code and nothing has occurred since
the date of such letter that could reasonably be expected to cause the loss of
such qualification.
(ii) The Company has in all material respects performed all
obligations required to be performed by it under ERISA, the Code and any
other applicable legal requirements and under the terms of each Employee
Plan. The Company has not received any written notice of the existence of
any material default or violation by any other party of any of such legal
requirements or terms applicable to any of the Employee Plans.
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(iii) Other than routine claims for benefits, the Company has not
received any written notice of any pending material claims or lawsuits
which have been asserted or instituted against any of the Employee Plans,
the assets of the trust or funds under the Employee Plans, the sponsor or
administrator of any of the Employee Plans, or against any fiduciary of any
of the Employee Plans with respect to the operation of such Plan.
(iv) The Company has not received any written notice of any pending
investigation or pending enforcement action by the Pension Benefit Guaranty
Corporation, the Department of Labor, the Internal Revenue Service or any
other Governmental Entity with respect to any of the Employee Plans.
(v) To the best knowledge of the Company, all contributions required
to be made under the terms of the Employee Plans have been timely made. No
Employee Plan has an "accumulated funding deficiency" (within the meaning
of section 412 of the Code or Section 302 of ERISA).
(vi) The cash value of the corporate-owned life insurance policies and
other assets held in the Supplemental Executive Benefit Plans Trust
Agreement equals or exceeds the ABO liability of the Company under all
plans funded by such Trust, assuming for purposes of calculating such cash
value, that any corporate-owned life insurance policies are canceled.
Within 30 days after the date hereof, the Company will provide to Purchaser
a currently dated actuarial report and valuation prepared by Mullin
Consulting Inc., based on reasonable assumptions, evidencing the foregoing.
(b) Each of the Company's "group health plans" (within the meaning of
Code Section 5000(b)(1)) have been operated in substantial compliance with the
group health plan continuation coverage requirements of Section 4980B of the
Code and Sections 601 through 608 of ERISA, Title XXII of the Public Health
Service Act and the provisions of the Social Security Act.
(c) To the best knowledge of the Company, there has been no act or
omission by the Company that has given rise to or may give rise to material
fines, penalties, taxes, or related charges under Section 502(c), (i) or (1) or
Section 4071 of ERISA or Chapter 43 of the Code or the imposition of a lien
pursuant to Sections 401(a)(29) or 412(n) of the Code or pursuant to ERISA.
(d) True and complete copies of the following documents with respect
to each of the Employee Plans and other employee benefit plans, programs,
policies or arrangements maintained by the Company for domestic or international
employees (as applicable) have been delivered by the Company to Purchaser: (i)
any current written plans, related trust documents and group annuity contracts,
if any, and all amendments thereto (or, if no written plan document exists, a
written description of the terms of the plan), (ii) the most recent summary plan
description, and (iii) the most recent actuarial report, valuation and/or trust
statement relating to such plan.
<PAGE>
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(e) Except as provided in the Company's Change of Control Plan
adopted effective on February 19, 1998 (the "Change of Control Plan") with
respect to not more than 12 employees, neither the Company nor any of its
Subsidiaries is a party to or obligated under any agreement, plan, contract or
other arrangement pursuant to which the Company, any Subsidiary or Purchaser is
or might be required to make payments that would not be deductible for federal
income tax purposes by reason of the application of Section 280G of the Code.
SECTION 4.11. Compliance with Laws. Except as disclosed in the Filed
SEC Documents, the Company and its Subsidiaries are in compliance with all
applicable statutes, laws, ordinances, regulations, rules, judgments, decrees
and orders of any Governmental Entity applicable to their respective business or
operations, except for instances of actual or possible noncompliance that,
individually or in the aggregate, would not have a material adverse effect on
the Company and its Subsidiaries taken as a whole or prevent or materially delay
the consummation of the Offer and/or the Merger. As of the date of this
Agreement, no investigation or review by any Governmental Entity with respect to
the Company or any of its Subsidiaries is pending or, to the best knowledge of
the Company, threatened, nor has any Governmental Entity indicated an intention
to conduct any such investigation or review, other than, in each case, those the
outcome of which would not be reasonably expected to have a material adverse
effect on the Company and its Subsidiaries taken as a whole or prevent or
materially delay the consummation of the Offer or the Merger.
SECTION 4.12. Environmental Matters. Except as disclosed in the
Filed SEC Documents or as would not, individually or in the aggregate, have a
material adverse effect on the Company and its Subsidiaries taken as a whole:
(i) the Company and each of its Subsidiaries is in compliance with all
applicable Environmental Laws (as defined below); (ii) the Company and each of
its Subsidiaries has all permits, authorizations and approvals required under
any applicable Environmental Laws and is in compliance with their respective
requirements; (iii) to the knowledge of the Company and its Subsidiaries, there
are no pending or threatened claims against or governmental investigations
involving the Company or any of its Subsidiaries alleging a violation of or
response or remedial requirements under Environmental Laws; and (iv) to the
knowledge of the Company and its Subsidiaries, under applicable law, there are
no circumstances with respect to any current or former property or operations of
the Company or any of its Subsidiaries or of any entity for which any of them
have assumed liability that would form the basis of a claim against the Company
or any of its Subsidiaries alleging a material violation of Environmental Laws
that would have a material adverse effect on the Company and its Subsidiaries,
taken as a whole. As used herein, "Environmental Laws" means any and all
applicable foreign, Federal, state or local statutes, laws (including, with
respect to clauses (iii) and (iv) above, common law), regulations, ordinances,
rules or codes now in effect relating to the environment, or protection of
public or employee health, safety or welfare or to the use, generation,
manufacturing, treatment, disposal, storage, transportation, discharge, release
or
<PAGE>
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emission of any hazardous, toxic or radioactive substance, including
petroleum and its derivatives, into the environment, including but not limited
to ambient air, indoor air, surface water, groundwater or land, or the
remediation thereof, including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act, in each case as amended
and in effect as of the date hereof. There are no matters relating to
Environmental Laws required under applicable laws to be disclosed in the Filed
SEC Documents that have not been disclosed therein.
SECTION 4.13. Taxes. The Company and its Subsidiaries have filed all
material tax returns and reports required to be filed by them, or, in the case
of consolidated returns, such returns have been filed by Parent, and have paid
all material taxes due and required to be paid by them. All such tax returns
and reports are true and correct in all material respects. The most recent
financial statements contained in the Filed SEC Documents reflect an adequate
reserve for all taxes payable by the Company for all taxable periods and
portions thereof through the date of such financial statements, except for such
taxes as to which the failure to pay, individually or in the aggregate, would
not have a material adverse effect on the Company and its Subsidiaries taken as
a whole. No deficiencies for any taxes which remain outstanding have been
proposed, asserted or assessed against the Company or any of its Subsidiaries
except for such taxes as to which such deficiency, individually or in the
aggregate, would not have a material adverse effect on the Company and its
Subsidiaries taken as a whole. As used herein, "taxes" shall mean all Federal,
state, local and foreign income, property, sales, excise and other taxes,
tariffs or other governmental charges in the nature of a tax as well as any
interest, penalties and additions to tax.
SECTION 4.14. Technology and Intellectual Property. Except as
provided in Section 6.3 and except as would not have a material adverse effect
on the Company and its Subsidiaries, taken as a whole, the Company and its
Subsidiaries own or have valid licenses or otherwise have the right to make,
have made, use, have used, and sell products resulting therefrom, all material
technology, technology rights, patents, patent rights, trade secrets, trade
secret rights, trademarks, trademark rights, trade names, trade name rights,
service marks, service mark rights, trade dress, trade dress rights, copyrights
and other proprietary intellectual property rights that are employed or
necessary in the conduct of their respective business as now operated
(collectively, "Technology and Intellectual Property Rights"), and to transfer
Technology and Intellectual Property Rights pursuant to the terms and conditions
of this Agreement. No claims are final, pending or, to the knowledge of the
Company and its Subsidiaries, threatened that the Company or any of its
Subsidiaries is infringing or otherwise adversely affecting the rights of any
person, company or other entity with regard to any Technology and Intellectual
Property Right that would have a material adverse effect on the Company and its
Subsidiaries, taken as a whole. To the knowledge of the Company and its
Subsidiaries, no person, company or other entity is infringing the rights of the
Company or any of its Subsidiaries with respect to any Technology and
Intellectual Property Right.
<PAGE>
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SECTION 4.15. Opinion of Financial Advisor. The Board of Directors
of the Company has received the opinion dated June 18, 1998 of Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), that, as of such date and
based upon and subject to the matters set forth therein, the consideration to be
received by holders of Shares (other than Parent) pursuant to the Offer and the
Merger was fair from a financial point of view to such holders, a final draft of
which opinion has been delivered to Purchaser. Each of Purchaser and Merger Sub
acknowledges and agrees that it may not, and is not entitled to, rely on the
opinion of Merrill Lynch delivered to the Board of Directors of the Company.
SECTION 4.16. Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than Merrill Lynch,
is entitled to any broker's, finder's, financial advisor's or other similar fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by the Company. The estimated fees and expenses
incurred and to be incurred by the Company in connection with this Agreement and
the transactions contemplated by this Agreement (including the fees of the
Company's legal counsel and the legal counsel for its financial advisor) are set
forth in the Disclosure Letter. The Company has provided Purchaser true and
correct copies of all agreements between the Company and Merrill Lynch.
SECTION 4.17. Affiliated Written Transactions. Section 4.17 of the
Disclosure Letter sets forth a complete and accurate list of all contracts,
agreements, leases, licenses and other arrangements as of the date of this
Agreement to which Parent or any of its Subsidiaries (other than the Company and
its Subsidiaries), on the one hand, and the Company or any of its Subsidiaries,
on the other hand, is a party or by which the Company or any of its Subsidiaries
is bound involving more than $5 million per annum, but excluding any such
contracts solely with respect to any indebtedness between Parent or any of its
Subsidiaries (other than the Company and its Subsidiaries), on the one hand, and
the Company or any of its Subsidiaries, on the other hand. The Company has
furnished to Purchaser copies of all such items that are listed in Section 4.17
of the Disclosure Letter.
SECTION 4.18. State Takeover Statutes. No state takeover statute or
similar statute or regulations (except for Section 203 of the DGCL) applies or
purports to apply to the Offer, the Merger, this Agreement or any of the
transactions contemplated by this Agreement other than any of the foregoing that
would not prevent or materially delay the consummation of the Offer or the
Merger, provided that the Purchaser, Merger Sub and the Company use reasonable
commercial efforts to comply with and/or contest the applicability or
constitutionality of any such statute or regulation.
SECTION 4.19. Title. With such exceptions as would not in the
aggregate have a material adverse affect on the Company and its Subsidiaries,
each of the Company and its Subsidiaries has good and valid title to all of
their respective properties and assets free and clear
<PAGE>
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of all Liens except Permitted Liens (as defined below). For purposes of this
Agreement, "Lien" means any lien (including any tax lien), mortgage or security
interest, defect in title or encumbrance, and "Permitted Liens" means (i) Liens
for taxes not yet due and payable, that are payable without penalty or that are
being contested in good faith and for which proper reserves have been taken,
(ii) inchoate mechanic and materialmen liens for construction in progress, and
(iii) inchoate workmen, repairmen, warehousemen, customer, employee and carriers
liens arising in the ordinary course of business, in each case with respect to
obligations or claims which are either not delinquent or are being contested in
good faith and by appropriate proceedings conducted with due diligence, (iv)
Liens arising under this Agreement or the agreements contemplated by this
Agreement, (v) zoning restrictions, easements, licenses or other restrictions on
the use of real property of other minor irregularities in title thereto or
encumbrances thereon, so long as the same do not, individually or in the
aggregate, materially interfere with or impair the use of such real property in
the manner normally used, (vi) Liens arising out of judgments or awards with
respect to which at the time an appeal or proceeding for review is being
prosecuted in good faith if adequate reserves with respect thereto have been
established and are being maintained and with respect to which there shall have
been secured a stay of execution pending such appeal or proceeding for review,
and (vii) Liens and imperfections of title (including Liens created by the
operation of law) that, singly or in the aggregate, would not materially affect
the value or operation of the asset subject to such Lien in the hands of a
purchaser thereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB
Purchaser and Merger Sub represent and warrant to the Company as
follows:
SECTION 5.1. Organization. Each of Purchaser and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to carry on its business as now being conducted. Each of
Purchaser and Merger Sub is duly qualified to do business and is in good
standing in each jurisdiction where qualification as a foreign corporation is
necessary, other than in such jurisdictions where the failure to be so qualified
and in good standing would not prevent or materially delay the consummation of
the Offer and/or the Merger. Each of Purchaser and Merger Sub has delivered to
the Company complete and correct copies of its certificate of incorporation and
by-laws (or other comparable organizational documents) as amended to the date of
this Agreement. Merger Sub is a direct wholly-owned subsidiary of Purchaser and
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.
SECTION 5.2. Authority. Each of Purchaser and Merger Sub has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the
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transactions contemplated by this Agreement. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of Purchaser and Merger Sub and no other corporate
proceedings on the part of Purchaser and Merger Sub are necessary to authorize
this Agreement or to consummate the transactions contemplated hereby or thereby.
No vote of Purchaser stockholders is required to approve this Agreement or the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Purchaser and Merger Sub, and, assuming such Agreement constitutes
a valid and binding obligation of the Company, constitutes a valid and binding
obligation of Purchaser and Merger Sub enforceable against Purchaser and Merger
Sub in accordance with its terms, subject to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to enforceability, to the effect of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
SECTION 5.3. Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of the Exchange Act (including the
filing with the SEC of the Offer Documents), the HSR Act, the DGCL, foreign and
state antitrust and competition laws of jurisdictions in which Purchaser or
Merger Sub is qualified to do or is doing business as set forth in Schedule 5.3
hereto, and state takeover laws neither the execution, delivery or performance
of this Agreement by Purchaser and Merger Sub, nor the consummation by Purchaser
and Merger Sub of the transactions contemplated hereby, will (i) conflict with
or result in any breach of any provision of the respective certificate of
incorporation or by-laws of Purchaser and Merger Sub, (ii) require any filing
with, or permit, authorization, consent or approval of, any Governmental Entity
(except where the failure to obtain such permits, authorizations, consents or
approvals or to make such filings would not prevent or materially delay the
consummation of the Offer and/or the Merger), (iii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, lease, contract, agreement or other
instrument or obligation to which Purchaser or any of its Subsidiaries is a
party or by which any of them or any of their properties or assets may be bound
or (iv) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Purchaser, any of its Subsidiaries or any of their properties or
assets, except in the case of clauses (iii) and (iv) for violations, breaches,
defaults or terminations which individually or in the aggregate, would not
prevent or materially delay the consummation of the Offer and/or the Merger. No
filing, permit, authorization, consent or approval is required under the
European Merger Regulation No. 4064/89, as amended by Regulation No. 1310/97, in
connection with the transactions contemplated by this Agreement.
SECTION 5.4. Information Supplied. None of the information supplied
or to
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be supplied by Purchaser or Merger Sub specifically for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the Schedule 14D-9,
(iii) the Information Statement or (iv) the Proxy Statement will, in the case of
the Offer Documents, the Schedule 14D-9 and the Information Statement, at the
respective times the Offer Documents, the Schedule 14D-9 and the Information
Statement are filed with the SEC or first published, sent or given to the
Company's stockholders, or, in the case of the Proxy Statement, at the time the
Proxy Statement is first mailed to the Company's stockholders or at the time of
the Stockholders Meeting as such Proxy Statement may be amended or supplemented,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Offer Documents will comply in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder,
except that no representation or warranty is made by Purchaser or Merger Sub
with respect to statements made or incorporated by reference therein based on
information supplied by the Company specifically for inclusion or incorporation
by reference therein.
SECTION 5.5. Financing. Purchaser has obtained written commitments
that would provide sufficient funds to purchase, or to cause Merger Sub to
purchase, all of the Shares pursuant to the Offer and the Merger and to pay all
fees and expenses payable by Purchaser or Merger Sub related to the transactions
contemplated by this Agreement and has provided copies of such commitments to
the Company. Purchaser expressly acknowledges that Purchaser's ability to
obtain financing is not a condition to the obligations of Purchaser pursuant to
the Offer and under this Agreement and the Tender and Voting Agreement.
SECTION 5.6. Ownership of Shares. Neither Purchaser, Merger Sub nor
any other direct or indirect subsidiary of Purchaser beneficially owns any
Shares (other than pursuant to the Tender and Voting Agreement).
SECTION 5.7. Brokers. No broker, investment banker, financial advisor
or other person, other than J.P. Morgan Securities, Inc., is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Purchaser or Merger Sub.
ARTICLE VI
COVENANTS
SECTION 6.1. Conduct of Business. During the period from the date of
this Agreement until such time as Merger Sub's designees shall constitute a
majority of the Board of Directors of the Company, except as otherwise
contemplated hereby or to the extent that Purchaser shall otherwise consent in
writing, the Company shall, and shall cause its Subsidiaries to, carry on their
respective businesses in the ordinary course consistent with the manner as
heretofore conducted and, to the extent consistent therewith, use commercially
reasonable efforts
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to preserve intact their current business organization, keep available the
services of their current officers and employees and preserve their
relationships with customers, suppliers, licensors, licensees, distributors and
others having significant business dealings with them. Without limiting the
generality of the foregoing, during the period from the date of this Agreement
until such time as Merger Sub's designees shall constitute a majority of the
Board of Directors of the Company, except as expressly contemplated or permitted
by this Agreement or the Disclosure Letter, or to the extent that Purchaser
shall otherwise consent in writing, the Company shall (a) use its commercially
reasonable efforts to operate and maintain its business in all material respects
only in the usual, regular and ordinary manner consistent with past practice
(including undertaking scheduled or necessary "turnarounds" or other maintenance
work and including offsite storage, treatment and disposal of chemical
substances generated prior to such time as Merger Sub's designees shall
constitute a majority of the Board of Directors of the Company) and, to the
extent consistent with such operation and maintenance, use commercially
reasonable efforts to preserve the present business organization of its business
intact, keep available the services of, and good relations with, the present
employees and preserve present relationships with all persons having business
dealings with its business, except in each case for such matters that,
individually and in the aggregate, do not and are not reasonably likely to have
a material adverse effect on the Company and its Subsidiaries taken as a whole
and (b) except to the extent required by clause (a) of this Section 6.1, the
Company shall not, and shall not permit any of its Subsidiaries to:
(i) (x) other than dividends and distributions by a direct or indirect
wholly owned subsidiary of the Company to its parent and other than the
regular quarterly dividend in respect of the Shares in the amount of $0.70
per Share, declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (y) split, combine
or reclassify any of its capital stock or issue or authorize the issuance
of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or (z) purchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its Subsidiaries or
any other securities thereof or any rights, warrants or options to acquire
any such shares or other securities (other than in connection with the
exercise of currently outstanding Company Stock Options);
(ii) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than the
issuance of Shares upon the exercise of Company Stock Options outstanding
on the date of this Agreement in accordance with their present terms) or as
provided for herein;
(iii) amend its Certificate of Incorporation or By-laws or other
comparable organizational documents;
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(iv) acquire or agree to acquire (y) by merging or consolidating with,
or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation (other than any subsidiary of the
Company), partnership, joint venture, association or other business
organization or division therefor or (z) any assets that are material,
individually or in the aggregate, to the Company and its Subsidiaries taken
as a whole, except acquisitions in the ordinary course of business
consistent with past practice and acquisitions permitted by clause (vii)
below;
(v) sell, lease, license, mortgage or otherwise encumber or subject to
any Lien or otherwise dispose of any of its properties or assets, which are
material, in the aggregate, to the Company and its Subsidiaries taken as a
whole, except (x) sales, leases or other dispositions of inventory or (y)
sales or licenses in the ordinary course of business consistent with past
practice which, individually, are not in excess of $5 million and, in the
aggregate, are not in excess of $25 million;
(vi) (y) incur any indebtedness for borrowed money (other than (i) the
issuance or roll-over of commercial paper in the ordinary course of
business and consistent with past practice and (ii) indebtedness to or from
Parent that will be repaid in full prior to the expiration of the Offer),
or guarantee any such indebtedness or issue or sell any debt securities or
warrants or rights to acquire any debt securities of the Company or any of
its Subsidiaries or guarantee any debt securities of others, or (z) make
any loans, advances (other than to employees of the Company and its
Subsidiaries in the ordinary course of business) or capital contributions
to, or investments in, any other person (other than any subsidiary of the
Company);
(vii) make or agree to make any capital expenditures regarding the
BDO-II or PO-11 projects, other than those reasonably necessary to avoid
payment of penalties or cancellation fees, or make or agree to make any
other capital expenditure or expenditures with respect to property, plant
or equipment which, individually, is in excess of $10 million or, in the
aggregate, are in excess of $25 million other than caretaker, maintenance
and turnaround capital expenditures in the ordinary course of business;
(viii) pay, discharge, settle or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past
practice or in accordance with their terms, of liabilities reflected or
reserved against in, or contemplated by, the most recent consolidated
financial statements (or the notes thereto) of the Company included in the
Filed SEC Documents or incurred thereafter in the ordinary course of
business consistent with past practice, or waive any material benefits of,
or agree to modify in any material respect, any confidentiality, standstill
or similar agreements to which the Company is a party;
(ix) (x) adopt, enter into or amend any bonus, profit sharing,
compensation,
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stock option, warrant, pension, retirement, deferred compensation,
employment, consulting, indemnification, severance, termination or other
employee benefit plan, agreement, trust fund or arrangement for the benefit
or welfare of any officer, director or employee (y) except as reasonably
called for pursuant to formulas contained in existing employee benefit
plans or arrangements and except for salary increases in the ordinary
course of business and consistent with past practices, agree to any
increase in the compensation (including bonuses) payable or to become
payable to any officer, director or employee or (z) change the performance
objective or performance period under any employee benefit plans;
(x) make any tax election that would have a material adverse effect on
the Company and its Subsidiaries taken as a whole (and the Company shall,
before filing or causing to be filed any material tax return of the Company
or any of its Subsidiaries, consult with Purchaser and its advisors as to
the positions and elections that may be taken or made with respect to such
return and to the extent practical the Company shall defer settlement or
compromise of any income tax liability of the Company or any of its
Subsidiaries that would have a material adverse effect on the Company and
its Subsidiaries taken as a whole until such time as Merger Sub's designees
shall constitute a majority of the Board of Directors of the Company);
(xi) waive any material rights or claims relating to the Company's
business;
(xii) accelerate vesting or conversion or approve the acceleration or
conversion of any shares of restricted stock, except as provided in Section
7.4, or grant or approve the grant of any additional shares of restricted
stock, phantom stock units, or stock options under any existing plan,
except as provided in Section 7.4, or modify the term of any performance
period or the performance objective to be attained for that performance
period under any existing plan; or
(xiii) authorize any of, or commit or agree to take any of, the
foregoing actions.
SECTION 6.2. No Solicitation. (a)__The Company shall, and shall
direct and use reasonable efforts to cause its officers, directors, employees,
representatives and agents to, immediately cease any discussions or negotiations
with any parties other than Purchaser and Merger Sub that may be ongoing with
respect to a Takeover Proposal (as hereinafter defined). The Company shall not,
and shall not authorize or permit any of its officers, directors or employees or
any investment banker, financial advisor, attorney, accountant or other
representative retained by it to, directly or indirectly, (i) solicit, initiate
or encourage any inquiries or the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal or (ii) participate
in any discussions or negotiations regarding any Takeover Proposal; provided,
however, that if, at any time prior to the acceptance for payment of Shares
pursuant to the Offer, the Board of Directors of the Company determines in good
faith, after consultation with its financial advisers, that a Takeover Proposal
that has not been solicited,
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initiated or encouraged after the date hereof in violation of clause (i) above
(or Section 5.3 of the Tender and Voting Agreement) constitutes a Superior
Proposal (as defined in Section 9.1(d)(ii) hereof), the Company may (x) furnish
information with respect to the Company and its Subsidiaries to the third party
that has made such Takeover Proposal (and to any investment banker, financial
advisor, attorney, accountant or other representative retained by such party)
pursuant to a customary and reasonable confidentiality agreement and (y)
participate in negotiations regarding such Takeover Proposal. For purposes of
this Agreement, "Takeover Proposal" means any bona fide proposal made by a third
party to acquire, directly or indirectly, more than 30% of the voting power of
the Shares or of the assets of the Company; provided, however, that a change in
the terms of a proposal submitted prior to the date hereof shall be deemed a new
"Takeover Proposal."
(b) In addition to the obligations of the Company set forth in Section
6.2(a) hereof, the Company shall immediately advise Purchaser orally and in
writing of any request for information or of any Takeover Proposal or any
inquiry regarding the making of a Takeover Proposal.
(c) Nothing contained in this Section 6.2 shall prohibit the Company
from at any time taking and disclosing to its stockholders a position (including
the withdrawal or modification of any recommendation with respect to the Offer
and the Merger) contemplated by Rule 14e-2(a) promulgated under the Exchange Act
or from making any disclosure to the Company's stockholders if, in the good
faith judgment of the Board of Directors of the Company, after consultation with
outside counsel, failure so to disclose would create a risk of liability for
breach of its fiduciary duties to its stockholders under applicable law;
provided, however, that neither the Company nor its Board of Directors nor any
committee thereof shall, except as permitted by this Section 6.2(c) or as
contemplated by Section 9.1(d)(ii) hereof, withdraw or modify, or propose to
withdraw or modify, its position with respect to the Offer or the Merger or
approve or recommend, or propose to approve or recommend, a Takeover Proposal.
SECTION 6.3. Use of Names and Logos. Section 4.14 notwithstanding, it
is expressly agreed that Purchaser and Merger Sub are not purchasing or
acquiring any right, title or interest in the name of Parent or Company or any
trade names, trademarks, identifying logos, trade dress or service marks
employing or associated with the words "Atlantic Richfield Company" or "ARCO
Chemical Company" or any respective part or variation thereof, including,
without limitation, the name "ARCO", ARCO prefix marks, the Spark Logo, or any
confusingly similar trade name, trademark, initials or logo (collectively, the
"ARCO Trademarks and Logos"). Except to the extent permitted by licensing
arrangements with Purchaser and its affiliates, Purchaser and Merger Sub agree
that neither they nor any of their affiliates shall make any use of the ARCO
Trademarks and Logos from and after the Closing Date, except that the Surviving
Corporation may continue to use materials containing ARCO Trademarks and Logos
for the period after the
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Closing Date permitted under the immediately following sentence of this Section
6.3. Purchaser shall cause the Surviving Corporation, as promptly as practicable
but in no event later than 180 days following the Closing Date, to remove
"ARCO" from the names of all companies, to remove, strike over or otherwise
obliterate all ARCO Trademarks and Logos from all printed or consumable
materials, including, without limitation, any business cards, schedules,
stationery, promotional materials, manuals, forms and other similar materials,
if such materials are distributed or made available or proposed to be
distributed or made available to third parties. The Purchaser shall cause the
Surviving Corporation, with reasonable promptness, to prepare its own stock of
business cards, schedules, stationery, displays, signs, promotional materials,
manuals, forms and other materials to replace those materials included in its
properties and assets. The Purchaser shall cause the Surviving Corporation,
within two years following the Closing Date, to remove all ARCO Trademarks and
Logos from all durable materials, including without limitation, any signage or
other fixed assets, vehicles, rail cars and other similar durable assets, and
Purchaser shall indemnify and defend Parent from all claims and causes of action
relating to or arising out of the carry-over use of the ARCO Trademarks and
Logos herein after such two year period.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. Company Stockholder Approval. (a)__If the Company
Stockholder Approval is required by the DGCL, the Company shall and Purchaser
shall cause the Company to, as soon as practicable following the acceptance for
payment of, and payment for, Shares by Merger Sub pursuant to the Offer, (i)
duly call, give notice of, convene and hold a meeting of the Company's
stockholders (the "Stockholders Meeting") for the purpose of obtaining the
Company Stockholder Approval and (ii) acting through its Board of Directors,
recommend to its stockholders that the Company Stockholder Approval be given.
Notwithstanding the foregoing, if Merger Sub (together with all Affiliates of
Merger Sub) shall acquire at least 90% of the outstanding Shares, the parties
shall take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the expiration of the Offer without a
Stockholders Meeting in accordance with Section 253 of the DGCL. Without
limiting the generality of the foregoing, the Company agrees that its
obligations pursuant to the first sentence of this Section 7.1(a) shall not be
affected by the commencement, public proposal, public disclosure or
communication to the Company of any Takeover Proposal.
(b) If the Company Stockholder Approval is required by the DGCL, the
Company shall, and Purchaser shall cause the Company to, as soon as practicable
following the expiration of the Offer, prepare and file a preliminary
Information or Proxy Statement with the SEC and use its best efforts to respond
to any comments of the SEC or its staff and to cause the Information or Proxy
Statement to be mailed to the Company's stockholders as promptly as practicable
after responding to all such comments to the satisfaction of the staff. The
Company
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will notify Purchaser promptly 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 Information or Proxy Statement or for additional information
and will supply Purchaser 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 Information or Proxy Statement or the Merger. If
at any time prior to the Stockholders Meeting there shall occur any event that
should be set forth in an amendment or supplement to the Information or Proxy
Statement, the Company will, and Purchaser shall cause the Company to, promptly
prepare and mail to its stockholders such an amendment or supplement. The
Company will not mail any Proxy Statement, or any amendment or supplement
thereto, to which Purchaser reasonably objects; provided, that Purchaser shall
identify its objections and fully cooperate with the Company to create a
mutually satisfactory Information or Proxy Statement.
(c) Purchaser agrees to cause all Shares purchased pursuant to the
Offer to be voted in favor of, or shall consent to, the Company Stockholder
Approval.
SECTION 7.2. Access to Information; Confidentiality. (a) The Company
shall afford to Purchaser, and to Purchaser's officers, employees, accountants,
counsel, financial advisers and other representatives, reasonable access,
without causing undue disruption to the business of the Company, during normal
business hours during the period prior to the purchase of Shares pursuant to the
Offer to its properties, books, contracts, personnel and records and, during
such period, the Company shall furnish promptly to Purchaser (i) a copy of each
report, schedule, registration statement and other document filed by it during
such period pursuant to the requirements of Federal or state securities laws and
(ii) all other information concerning its business, properties and personnel as
Purchaser may reasonably request, in each case only to the extent, in the
judgment of counsel to the Company, permitted by law, including antitrust law.
Except as otherwise agreed to by the Company, unless and until Purchaser and
Merger Sub shall have purchased at least a majority of the outstanding Shares
pursuant to the Offer, Purchaser shall hold, and shall cause its officers,
employees, accountants, counsel, financial advisers and other representatives
and affiliates to hold, any and all information received from the Company,
directly or indirectly, in confidence, according to the terms of the
confidentiality agreement dated as of April 22, 1998, between the Company,
Purchaser and Parent (the "Confidentiality Agreement").
SECTION 7.3. Reasonable Efforts; Notification. (a)__Upon the terms
and subject to the conditions hereof, each of the parties hereto shall use its
commercially reasonable efforts to take, or cause to be taken, all appropriate
action, and to do or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as soon as practicable, including
but not limited to (i) cooperation in the preparation and filing of the Offer
Documents, the Schedule 14D-9, the Information Statement, the Proxy Statement,
any required filings under the
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HSR Act or other foreign filings and any amendments or supplements to any
thereof and (ii) using its commercially reasonable efforts to promptly make all
required regulatory filings and applications including, without limitation,
responding promptly to requests for further information and to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of Governmental Entities as are necessary for the consummation of the
transactions contemplated by this Agreement and to fulfill the conditions to the
Offer and the Merger. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of each party to this Agreement shall use
their commercially reasonable efforts to take all such necessary action.
(b) The Company and Purchaser each shall keep the other apprised of
the status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by Purchaser or the Company, as the case may be, or any
of their subsidiaries, from any Governmental Entity with respect to the Offer,
the Merger or any of the other transactions contemplated by this Agreement. The
parties hereto will consult and cooperate with one another, and consider in good
faith the views of one another in connection with, and shall provide each other
the opportunity to review and comment upon, any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party hereto in connection with proceedings
under or relating to the HSR Act or any other antitrust law.
(c) Without limiting the generality of the undertakings pursuant to
this Section 7.3: (i) Purchaser agrees that, if necessary to prevent any
Governmental Entity from taking steps to obtain, or from issuing, any order,
injunction, decree, judgment or ruling or the taking of any other action that
would (x) restrain, enjoin or otherwise prohibit the Offer, the Merger or any of
the other transactions contemplated by this Agreement or (y) cause any Offer
Condition not to be satisfied, Purchaser shall (A) offer to accept an order to
divest (and to enter into a consent decree or other agreement giving effect
thereto) such of the Company's or Purchaser's assets and business, and agree to
hold separate such assets and business pending such divestiture, and (B) enter
into any supply, license, tolling, joint venture or other agreement or take any
other action, as may be necessary to forestall such order, decree, ruling or
action; provided, however, that notwithstanding the foregoing provisions of this
clause (i), Purchaser shall not be required to take any such action that would
have a material adverse effect on the Company and its Subsidiaries taken as a
whole, to waive any material rights, or to take any action that would result in
any of the consequences referred to in paragraph (a) of Exhibit A and (ii)
without limitation of clause (i) of this Section 7.3(c), the Company and
Purchaser each agree to contest and resist any action seeking to have imposed
any order, decree, judgment, injunction, ruling or other order (whether
temporary, preliminary or permanent) (an "Order") that (x) would delay,
restrain, enjoin or otherwise prohibit consummation of the Offer, the Merger or
any of the
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other transactions contemplated by this Agreement or (y) cause any Offer
Condition not to be satisfied and, in the event that any such temporary or
preliminary Order is entered in any proceeding, to take the steps contemplated
by clause (i) of this Section 7.3(c) and to use its commercially reasonable
efforts to take promptly any and all other steps (including, the appeal thereof
and the posting of a bond) necessary to vacate, modify or suspend such Order so
as to permit such consummation as promptly as practicable after the date hereof.
SECTION 7.4. Stock Incentive Plans. (a)__Upon the consummation of the
Offer, as and to the extent provided in the Company's Change of Control Plan
(i) each outstanding option to purchase Shares (a "Company Stock Option")
heretofore granted under any stock option, stock appreciation rights or stock
purchase plan, program or arrangement of the Company (collectively, the "Stock
Incentive Plans") outstanding immediately prior to the consummation of the
Offer, whether or not then exercisable, shall be canceled by the Company in
exchange for an amount in cash, payable at the time of such cancellation, equal
to the product of (x) the number of Shares subject to such Company Stock Option
immediately prior to the consummation of the Offer and (y) the excess of the
price per Share to be paid in the Offer over the per Share exercise price of
such Company Stock Option (the "Net Amount"); (ii) each phantom stock unit
granted under the Company's Value Incentive Plan outstanding immediately prior
to the consummation of the Offer shall, whether or not exercisable, be canceled
in exchange for an amount in cash, payable at the time of such cancellation,
equal to (x) the excess of (1) the price per Share paid in the Offer over (2)
the award price assigned to the phantom stock unit, multiplied by (y) the number
of Shares subject to such unit (the "SAR Amount"); (iii) each dividend share
credit ("DSCs") accrued, credited or issued immediately prior to the
consummation of the Offer in connection with a Company Stock Option or phantom
stock unit, and each DSC that would have been accrued, credited or issued (as
determined in accordance with the Company's Change of Control Plan) through the
remainder of the term of each such Company Stock Option or phantom stock unit,
shall, whether or not vested, be canceled in exchange for an amount in cash,
payable at the time of such cancellation, equal to the price per Share paid in
the Offer (the "DSC Amount"); (iv) each share of contingent restricted stock
issued under the Company's 1998 Long Term Incentive Plan (the "1998 LTIP") that
is eligible for conversion upon achievement of the current Return on Capital
Managed target (the "RCM") performance level established under the 1998 LTIP
shall, immediately prior to the consummation of the Offer, be converted to
performance-based restricted stock on a pro-rated basis based on a calculation
of the percentage of the current RCM performance objective achieved as of the
consummation of the Offer (but not to exceed 25% of the outstanding shares of
contingent restricted stock issued under the 1998 LTIP); (v) the performance
supplement related to the contingent restricted stock referred to in clause;
(iv) above shall be calculated immediately prior to the consummation of the
Offer using the price per Share to be paid in the Offer, and the resulting
number of shares of performance-based restricted stock shall be issued to the
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Company's employees in accordance with the 1998 LTIP; and (vi) each share of
performance-based restricted stock outstanding immediately prior to the
consummation of the Offer (including amounts issued under clauses (iv) and (v)
of this Section 7.4(a)) shall, whether or not vested, be canceled in exchange
for an amount in cash, payable at the time of such cancellation, equal to the
price per Share paid in the Offer (the "Restricted Stock Amount").
(b) Subject to Section 7.4(a) hereof, all Stock Incentive Plans shall
terminate as of the Effective Time. Notwithstanding the foregoing, the
Surviving Corporation shall continue to be obligated to pay the Net Amount, the
SAR Amount, the DSC Amount and the Restricted Stock Amount.
(c) All calculations required to be made pursuant to this Section 7.4
shall be made in accordance with Article IV of the Company's Change of Control
Plan and the terms of the relevant Stock Incentive Plan.
(d) The Company represents that Parent has taken all such actions as
are necessary so that options to acquire Parent shares and DSCs with respect to
Parent shares held by or credited to employees of the Company and its
subsidiaries are not forfeited upon consummation of the Offer and remain
outstanding for the duration of their terms.
SECTION 7.5. Indemnification, Exculpation and Insurance.
(a)__Purchaser agrees that all rights to indemnification and exculpation
(including the advancement of expenses) from liabilities for acts or omissions
occurring at or prior to the Effective Time (including with respect to the
transactions contemplated by this Agreement) existing now or at the Effective
Time in favor of the current or former directors or officers of the Company as
provided in its Certificate of Incorporation, its By-laws (each as in effect on
the date hereof) and indemnification agreements shall be assumed by the
Surviving Corporation in the Merger, without further action, as of the Effective
Time and shall survive the Merger and shall continue in full force and effect
without amendment, modification or repeal in accordance with their terms for a
period of not less than six years after the Effective Time; provided, however,
that if any claims are asserted or made within such six-year period, all rights
to indemnification (and to advancement of expenses) hereunder in respect of any
such claims shall continue, without diminution, until disposition of any and all
such claims.
(b) For six years after the Effective Time, Purchaser agrees that it
shall and shall cause the Surviving Corporation to indemnify and hold harmless
each present and former director and officer of the Company, determined as of
the Effective Time (the "Indemnified Parties"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") (but only to the extent such
Costs are not otherwise covered by insurance and paid) incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of or pertaining to
matters existing or occurring at or prior to the Effective Time, including in
connection with this Agreement and the transactions contemplated hereby, whether
asserted or
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claimed prior to, at or after the Effective Time, to the fullest
extent permitted under applicable law (and Purchaser shall, or shall cause the
Surviving Corporation to, also advance expenses as incurred to the fullest
extent permitted under applicable law); provided, however, that, with respect to
any Indemnified Person that is an officer or employee of Parent as of the date
hereof, such Indemnified Person shall first have pursued all available rights to
indemnification (and advancement of expenses) from Parent. Parent shall
indemnify and hold harmless any such Indemnified Person that is at the date
hereof an officer or employee of Parent against any such Costs (not covered by
insurance and paid) to the fullest extent permitted under applicable law (and
Parent shall also advance expenses as incurred to the fullest extent permitted
under applicable law).
(c) In the event that Purchaser, the Surviving Corporation or any of
their successors or assigns (i) consolidates with or merges into any other
person and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers or conveys all or substantially all of
its properties and assets to any person, then, and in each such case, proper
provision will be made so that the successors and assigns of Purchaser or the
Surviving Corporation, as the case may be, shall assume the obligations set
forth in Sections 7.5(a) and (b). In the event the Surviving Corporation
transfers any material portion of its assets, in a single transaction or in a
series of transactions, Purchaser will either guarantee the indemnification
obligations referred to in Sections 7.5(a) and (b) hereof or take such other
action to insure that the ability of the Surviving Corporation, legal and
financial, to satisfy such indemnification obligations will not be diminished in
any material respect.
(d) For a period of six years after the Effective Time, Parent shall
cause to be maintained in effect policies of directors' and officers' liability
insurance substantially in the amounts currently maintained by Parent and
covering the officers, directors and employees of the Company currently covered
by Parent's directors' and officers' liability insurance with similar terms and
conditions with respect to claims arising from or related to facts or events
which occurred at or before the Effective Time; provided, however, that Parent
shall not be obligated to make annual premium payments for such insurance to the
extent such premiums exceed 200% of the annual premiums paid as of the date
hereof by Parent for such insurance (such 200% amount, the "Maximum Premium").
If such insurance coverage cannot be obtained at all, or can only be obtained at
an annual premium in excess of the Maximum Premium, Parent shall maintain the
most advantageous policies of directors' and officers' insurance obtainable for
an annual premium equal to the Maximum Premium; provided further, if such
insurance coverage cannot be obtained at all, Parent shall purchase extended
reporting periods with respect to such insurance for an amount which, together
with all other insurance purchased pursuant to this Section 7.5(d), does not
exceed the Maximum Premium. It is understood that Parent will not take any
action that would have the effect of limiting the aggregate amount of insurance
coverage required to be maintained for the individuals referred to in this
Section 7.5(d).
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(e) The provisions of this Section 7.5 (x) are intended to be for the
benefit of, and shall be enforceable by, each indemnified party, his or her
heirs and his or her representatives and (y) are in addition to, and not in
substitution for, any other rights to indemnification or contribution that any
such person may have by contract or otherwise.
SECTION 7.6. Fees and Expenses. All fees and expenses incurred in
connection with the Offer, the Merger, this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such fees or
expenses, whether or not the Offer or the Merger is consummated.
SECTION 7.7. Public Announcements. Purchaser and Merger Sub, on the
one hand, and the Company, on the other hand, shall consult with each other
before issuing, and provide each other the opportunity to review and comment
upon, any press release or other public statements with respect to the
transactions contemplated by this Agreement, including the Offer and the Merger,
and shall not issue any such press release or make any such public statement
prior to such consultation, except as may be required by applicable law, court
process or by obligations pursuant to any listing agreement with any national
securities exchange or national securities quotation system. The parties agree
that the initial press release to be issued with respect to the transactions
contemplated by this Agreement shall be in the form heretofore agreed to by the
parties.
SECTION 7.8. Employee Benefits Matters. (a)__At and after the
consummation of the Offer, Purchaser shall cause the Company and its
subsidiaries to promptly pay or provide when due all compensation and benefits
provided for pursuant to the terms of any compensation arrangements, employment
agreements and employee or director benefit plans (including, without
limitation, deferred compensation and change of control plans), programs and
policies in existence as of the consummation of the Offer for any employee
(and/or former employee) and director (and/or former director) of the Company
and its subsidiaries; provided, however, that this Section 7.8(a) shall not
preclude Purchaser from amending or terminating any such plans, arrangements,
programs or policies after the consummation of the Offer. Purchaser and the
Company agree that the Company and its subsidiaries shall pay promptly or
provide when due all compensation and benefits required to be paid pursuant to
the terms of any individual agreement with any employee, former employee,
director or former director in effect as of the date hereof.
(b) Purchaser shall cause the Company, for the period commencing upon
the consummation of the Offer and ending on the end of the calendar year
following the year in which the consummation of the Offer occurs (the
"Continuation Period"), to provide employee benefits under plans, programs and
arrangements which, in the aggregate for all current employees of the Company
and its Subsidiaries as a group (other than employees covered by a collective
bargaining agreement), will provide benefits to such employees which are not
materially less favorable than those provided pursuant to the plans, programs
and arrangements
<PAGE>
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of the Company and its subsidiaries in effect on the date hereof and employees
covered by collective bargaining agreements shall be provided with such benefits
as shall be required under the terms of any applicable collective bargaining
agreement; provided, however, that, without limiting the generality of the
foregoing, the Purchaser shall not be required to provide compensation which is
based upon the equity of the Company or any of its subsidiaries; and provided,
however, that, without limiting the generality of the foregoing, nothing herein
shall prevent the amendment or termination of any specific plan, program or
arrangement, require that the Surviving Corporation provide or permit investment
in the securities of Purchaser, the Company or the Surviving Corporation or
interfere with the Surviving Corporation's right or obligation to make such
changes as are necessary to conform with applicable law. During the Continuation
Period, the Purchaser shall provide, or cause the Surviving Corporation to
provide post-retirement health, dental, life insurance and other welfare
benefits that are not materially less favorable than those that are provided by
the Company immediately prior to the consummation of the Offer to those
employees or directors or former employees or directors of the Company and any
of its subsidiaries who at such time (x) were receiving any such benefits, (y)
would have been eligible to receive any of such benefits upon his or her
termination at such time or (z) would have become eligible within one (1) year
of such time to receive any of such benefits upon his or her termination with
such one-year period. Employees of the Company and its subsidiaries shall be
given credit for all service with the Parent and its affiliates and with the
Company and its subsidiaries, under each employee benefit plan, program, or
arrangement of the Purchaser or its affiliates in which such employees are
eligible to participate for purposes of eligibility, vesting and benefit
accrual; provided, however, that in no event shall such employees be entitled to
any credit to the extent that it would result in any duplication of benefits
with respect to the same period of service under any plans of the Parent and its
affiliates, the Company and the Purchaser.
(c) If employees of the Company and its subsidiaries become eligible
to participate in a medical, dental, disability, life insurance or other welfare
plan of Purchaser or its subsidiaries, Purchaser shall cause such plan to (i)
waive any preexisting condition limitations for conditions covered under the
applicable plan of the Parent or the Company and its or their subsidiaries and
(ii) give credit for any deductible and out of pocket expenses incurred by the
employees and their beneficiaries under such plans prior to such participation.
(d) Nothing in this Section 7.8 shall require the continued employment
of any person or, subject to paragraph (b) and (c) hereof, prevent the Company
and/or the Surviving Corporation and their subsidiaries from taking any action
or refraining from taking any action which the Company and its subsidiaries
prior to the consummation of the offer, could have taken or refrained from
taking.
(e) Promptly following the execution of this Agreement, the Company
and Parent will enter into an agreement providing that, effective upon the
purchase of Shares
<PAGE>
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pursuant to the Offer, all administrative service agreements and arrangements
between Parent and the Company relating to the Company's employee benefit plans
and payroll services shall continue for a period no less than the Continuation
Period; provided, however, that Parent shall have the right to (i) terminate
such agreement if there are any change or changes in such benefit plans or
payroll services that result in any additional costs or burdens to Parent in
performing its obligations under such agreement and (ii) to remove AIMCO as
designated fiduciary with respect to employee benefit plans within 90 days after
the consummation of the Offer.
SECTION 7.9. Termination of Other Agreements. The Company represents
that the Company and Parent will terminate the Stock Repurchase Agreement, dated
as of June 2, 1998 (the "Stock Repurchase Agreement"), the Stockholder
Agreement, dated as of June 2, 1998, the Registration Rights Agreement dated as
of June 2, 1998 and the Stockholder Agreement dated as of June 30, 1987, in each
case between the Company and Parent, effective upon the consummation of the
purchase of Shares by Purchaser under the Offer.
SECTION 7.10. Insurance. In connection with the arranging of
appropriate insurance coverage for the Company and its subsidiaries from and
after the purchase of Shares pursuant to the Offer, the Company and Parent shall
provide Purchaser on an expedited basis all reasonable assistance, including
access to relevant personnel and copies of relevant information.
ARTICLE VIII
CONDITIONS
SECTION 8.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) Company Stockholder Approval. If required by the DGCL, the
Company Stockholder Approval shall have been obtained; provided, however,
that neither Purchaser nor Merger Sub shall be entitled to assert the
failure of this condition if Purchaser breaches its agreement set forth in
Section 7.1(c) hereof.
(b) No Injunctions, Etc. No statute, rule, regulation, executive
order, decree, temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or
other Governmental Entity or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect.
(c) Purchase of Shares. Merger Sub shall have accepted for payment
and paid for Shares pursuant to the Offer; provided, however, that neither
Purchaser nor Merger Sub shall be entitled to assert the failure of this
condition if Merger Sub breaches any of its obligations in Section 1.1(a)
hereof or fails to purchase Shares pursuant to the Offer in breach of its
obligations under this Agreement.
ARTICLE IX
TERMINATION AND AMENDMENT
SECTION 9.1. Termination. This Agreement may be terminated at any
time
<PAGE>
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prior to the Effective Time, whether before or after the Company Stockholder
Approval (if required by the DGCL):
(a) by mutual written consent of Purchaser and the Company;
(b) by either Purchaser or the Company if
(i) any Governmental Entity shall have issued an order, decree or
ruling or taken any other action permanently enjoining, restraining or
otherwise prohibiting the acceptance for payment of, or payment for, Shares
pursuant to the Offer or the Merger and such order, decree or ruling or
other action shall have become final and nonappealable; or
(ii) the Merger shall not have been consummated by June 30, 1999.
(c) by the Purchaser if as the result of a failure of an Offer
Condition to be satisfied, Merger Sub shall not have accepted for payment any
Shares pursuant to the Offer on or prior to the Outside Date; provided, however,
that the right to terminate this Agreement pursuant to this Section 9.1(c) shall
not be available to Purchaser if (x) Merger Sub shall have breached its
obligations under the next to the last sentence of Section 1.1(a) hereof or (y)
such failure to satisfy an Offer Condition is caused by or results from the
failure of Purchaser or Merger Sub to perform in any material respect any of its
covenants or agreements contained in this Agreement or the failure of any
representation or warranty of Purchaser or Merger Sub contained herein to be
true and correct in any material respect. As used herein, the "Outside Date"
shall mean the later of (A) the 30th day after the initial expiration date of
the Offer or (B) the date that all conditions to the Offer set forth in the
Antitrust Condition and paragraph (a) of Exhibit A, the satisfaction of which
involve compliance with or otherwise relate to any antitrust or competition laws
or regulations (including any enforcement thereof), have been satisfied for a
period of two business days, but in any event no later than the 60th day after
the initial expiration date of the Offer; or
(d) by the Company if:
(i) Merger Sub shall not have accepted for payment any Shares
pursuant to the Offer on or prior to the Outside Date, provided, however,
that the right to terminate this Agreement pursuant to this Section
9.1(d)(i) shall not be available to the Company if the failure to accept
Shares for payment is caused by or results from the failure of the Company
to satisfy any condition set forth in paragraphs (c) or (d) of Exhibit A;
or
(ii) prior to the acceptance by Merger Sub of Shares for payment
pursuant to the Offer, the Board of Directors of the Company determines
that a Takeover Proposal constitutes a Superior Proposal (as defined
below). For purposes of this Agreement, a "Superior Proposal" means any
Takeover Proposal having terms which the Board of Directors of the Company
determines in its good faith judgment (based, with respect to the
consideration payable, on the opinion of a financial advisor of nationally
<PAGE>
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recognized reputation) (x) to be more favorable to the Company's
stockholders than the Offer and the Merger and (y) to be reasonably capable
of being completed (and for which financing has been committed on customary
terms); provided, however, that at least two business days prior to such
termination the Company shall have given Purchaser written notice advising
Purchaser that the Board of Directors of the Company has received a
Takeover Proposal that it has determined to be a Superior Proposal,
specifying the material terms and conditions of such Superior Proposal and
identifying the person making such Superior Proposal; and provided,
further, however, that (i) prior to such termination, the Board of
Directors has reaffirmed its determination that such Takeover Proposal,
taking into account any amendment by Purchaser of the terms of the Offer
and Merger or any offer by Purchaser to amend the terms of this Agreement,
the Offer or the Merger, together with any subsequent amendments or
modifications of such Takeover Proposal, is a Superior Proposal and (ii) no
termination pursuant to this Section 9.1(d)(ii) shall be effective unless
concurrently with such termination a termination fee equal to $140,000,000
is paid in cash by the Company to Purchaser.
SECTION 9.2. Effect of Termination. In the event of a termination of
this Agreement by either the Company or Purchaser as provided in Section 9.1,
this Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Purchaser, Merger Sub or the Company or their
respective officers or directors, except with respect to the last sentence of
Section 1.2(c), Section 5.7, the last sentence of Section 7.2, Section 9.1, this
Section 9.2 and Article X; provided, however, that nothing herein shall relieve
any party for liability for any willful and material breach hereof.
SECTION 9.3. Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after obtaining the Company Stockholder Approval (if
required by the DGCL), but, after any such approval, no amendment shall be made
which by law requires further approval by such stockholders without obtaining
such further approval. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
SECTION 9.4. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto or (iii) subject
to Section 9.3, waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of those rights.
<PAGE>
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SECTION 9.5. Procedure for Termination, Amendment, Extension or
Waiver. A termination of this Agreement pursuant to Section 9.1, an amendment
of this Agreement pursuant to Section 9.3 or an extension or waiver pursuant to
Section 9.4 shall, in order to be effective, require in the case of Purchaser,
Merger Sub or the Company, action by its Board of Directors or the duly
authorized designee of its Board of Directors; provided, however, that in the
event that Merger Sub's designees are appointed or elected to the Board of
Directors of the Company as provided in Section 1.3, after the acceptance for
payment and payment of Shares pursuant to the Offer and prior to the Effective
Time, the affirmative vote of a majority of the Independent Directors of the
Company that were not designated by Purchaser or Merger Sub shall be required by
the Company to take any action relating to this Agreement, the Offer, the Merger
or any other transactions contemplated hereby, including (i) amending or
terminating this Agreement, (ii) exercising or waiving any of the Company's,
shareholders' or employees' rights or remedies under this Agreement,
(iii) extending the time for performance of Purchaser's and Merger Sub's
respective obligations under this Agreement, (iv) approving any other action by
its Board of Directors with respect to this Agreement, or (v) amending or
otherwise modifying the Company's Certificate of Incorporation or By-laws.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Nonsurvival of Representations, Warranties and
Agreements. None of the representations, warranties or covenants (subject to
the succeeding sentence) in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time or, in the case of
the Company, shall survive the acceptance for payment of, and payment for,
Shares by Merger Sub pursuant to the Offer. This Section 10.1 shall not limit
any covenant or agreement of the parties (or Parent) which by its terms
contemplates performance after the Effective Time.
SECTION 10.2. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed), sent by overnight courier (providing proof of
delivery) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Purchaser or Merger Sub, to
Lyondell Petrochemical Company
1221 McKinney Street
Houston, Texas 77010
Attention: Kerry A. Galvin, Esq., Chief Corporate Counsel
Telecopy No.: (713) 309-4718
with copies to:
Baker & Botts, L.L.P.
<PAGE>
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One Shell Plaza
910 Louisiana Street
Houston, Texas 77002
Attention: Stephen A. Massad, Esq.
Telecopy No.: (713) 229-1522
and
(b) if to the Company, to
ARCO Chemical Company
3801 West Chester Pike
Newtown Square, Pennsylvania 19073
Attention: Robert Millstone, Esq.
Telecopy No.: (610) 359-3344
with copies to:
Atlantic Richfield Company
515 South Flower Street
Los Angeles, California 900071
Attention: John Lucas, Esq.
Telecopy No.: (213) 486-1544
SECTION 10.3. Interpretation. When a reference is made in this
Agreement to an Article or a Section, such reference shall be to an Article or a
Section of this Agreement unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement. Whenever
the words "Aincludes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". As used in
this Agreement, (x) "material adverse change" or "material adverse effect"
means, when used in connection with the Company and its Subsidiaries, any change
or effect that, individually or in the aggregate, with any such other changes or
effects (except that when used with respect to any representation or warranty
(other than Section 4.8), covenant or agreement, such other changes or effects
shall be limited to those resulting from a breach of such representation,
warranty, covenant or agreement), is materially adverse to the business, assets,
financial condition or results of operations of the Company and its Subsidiaries
taken as a whole, except for changes or effects relating to the economy in
general or resulting from actions expressly contemplated by this Agreement
(including Section 7.3), (y) "person" means an individual, corporation,
partnership, association, trust, unincorporated organization, other entity or
group (as defined in Regulation 13D-G) of the Exchange Act) and (z) "knowledge
of the Company", "the Company's knowledge" or variants thereof shall mean the
actual knowledge as of the date of this Agreement, of the President and Chief
Executive Officer; Senior Vice President, Manufacturing, Research, Engineering,
and Environmental, Health and Safety; Senior Vice President, Chief Financial
<PAGE>
-45-
Officer; Vice President and Controller; Vice President, General Counsel and
Secretary; Vice President, Human Resources; and General Tax Officer in each case
without specific investigation. Matters reflected in the Disclosure Letter are
not necessarily limited to matters required or contemplated by this Agreement to
be reflected therein. Such additional matters are set forth for informational
purposes and do not necessarily include other matters of a similar nature. In
no event shall the listing of such matters in the Disclosure Letter be deemed or
interpreted to broaden or otherwise amplify the Company's representations,
warranties, covenants or agreements contained in this Agreement.
SECTION 10.4. Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
SECTION 10.5. Entire Agreement; Third Party Beneficiaries. This
Agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein) constitute the entire agreement and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof. The representations and
warranties made by the Company in this Agreement and in the Disclosure Letter
are in lieu of and are exclusive of all other representations and warranties,
including any implied warranties. The Company and Parent hereby disclaim any
such other or implied representations or warranties, notwithstanding the
delivery or disclosure to Purchaser, Merger Sub or their officers, directors,
employees, agents or representatives of any documentation or other information
(including, without limitation, any financial projections or other supplemental
data). Except as set forth below with respect to the provisions of Section 6.3,
Section 7.1, and Articles II and III hereof, this Agreement is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder. The provisions of Section 6.3 are intended to be for the benefit of,
and shall be enforceable against Purchaser and Merger Sub by, Parent. Each
person who is an Independent Director as of the date hereof or immediately prior
to the Closing shall have the right (but shall have no obligation) to enforce
(against Purchaser and the Surviving Corporation, as applicable) the provisions
of Articles II and III and Section 7.1 on behalf of the Company or any person
who is a stockholder of the Company immediately prior to the Closing.
SECTION 10.6. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without regard
to principles of conflicts of law.
SECTION 10.7. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
<PAGE>
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SECTION 10.8. Enforcement. Each of the parties hereto (i) consents
to submit such party to the non-exclusive jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, (ii) agrees that such party will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(iii) agrees that such party will not bring any action relating to this
Agreement or any of the transactions contemplated hereby in any court other than
a Federal court sitting in the state of Delaware or a Delaware state court and
(iv) waives any right to trial by jury with respect to any claim or proceeding
related to or arising out of this Agreement or any of the transactions
contemplated hereby.
<PAGE>
IN WITNESS WHEREOF, Purchaser, Merger Sub and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
LYONDELL PETROCHEMICAL COMPANY
By /s/ Dan F. Smith
-----------------------------
Name: Dan F. Smith
Title: President and Chief Executive Officer
LYONDELL ACQUISITION CORPORATION
By /s/ Dan F. Smith
------------------------------
Name: Dan F. Smith
Title: President and Chief Executive Officer
ARCO CHEMICAL COMPANY
By /s/ Marvin O. Schlanger
------------------------------
Name: Marvin O. Schlanger
Title: Chief Executive Officer
<PAGE>
EXHIBIT A
CONDITIONS OF THE OFFER
The defined terms used in this Exhibit A for the meanings set forth in
the attached Agreement, except that the term "Merger Agreement" shall be deemed
to refer to the attached Agreement.
Notwithstanding any other term of the Offer but subject to the terms
and conditions of the Merger Agreement, Merger Sub shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-l(c) under the Exchange Act (relating to Merger Sub's
obligation to pay for or return tendered Shares after the termination or
withdrawal of the Offer), to pay for any Shares tendered pursuant to the Offer
if (i) there shall not have been validly tendered and not withdrawn as of the
expiration of the Offer such number of Shares that, together with any Shares
owned by Purchaser, Merger Sub and all of their affiliates, would constitute a
majority of the fully diluted Shares as of the expiration of the Offer
(determined on a fully diluted basis for all outstanding stock options and any
other rights to acquire Shares that are or would be vested prior to the
expiration of the Offer) (the "Minimum Condition") or (ii) any waiting period
under the HSR Act applicable to the purchase of Shares pursuant to the Offer
shall not have expired or been terminated (the "Antitrust Condition").
Furthermore, Merger Sub shall not be required to accept for payment or, subject
as aforesaid, to pay for any Shares not theretofore accepted for payment or paid
for, and may terminate the Offer if after the date of the Merger Agreement and
before acceptance of such Shares for payment or the payment therefor pursuant to
the Offer, any of the following conditions has occurred and continues to exist
as of a scheduled expiration date of the Offer (as extended, if required,
pursuant to the next to the last sentence of Section 1.1(a) of the Merger
Agreement) (other than as a result of a breach by Purchaser or Merger Sub of any
of their obligations under the Merger Agreement (including, without limitation,
Section 7.3 thereof)):
(a) there shall have been entered and then in effect any order,
preliminary or permanent injunction, decree, judgment or ruling in any
action or proceeding before any court or governmental, administrative or
regulatory authority or agency, or any statute, rule or regulation enacted,
entered, enforced, promulgated, amended or issued that is applicable to
Purchaser, Merger Sub, the Company or any subsidiary or affiliate of Merger
Sub or the Company or the Offer or the Merger, by any legislative body,
court, government or governmental, administrative or regulatory authority
or agency that: (i) makes illegal or otherwise restrains or prohibits the
consummation of the Offer in accordance with the terms of the Merger
Agreement, the acceptance for payment of, or payment for, the Shares by
Merger Sub or any of its affiliates, or the consummation of the Merger;
(ii) prohibits the ownership or operation by the Company or any of its
subsidiaries, or Purchaser or any of its subsidiaries, of all or any
material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or Purchaser or its subsidiaries, taken as
a whole, or materially limits the ownership or operation by the
<PAGE>
Company or any of its subsidiaries, or Purchaser or any of its
subsidiaries, of all or any material portion of the business or assets of
the Company and its subsidiaries, taken as a whole, or Purchaser and its
subsidiaries, taken as a whole, or compels Purchaser or any of its
subsidiaries to dispose of or hold separate all or any material portion of
the businesses or assets of the Company and its subsidiaries, taken as a
whole, or Purchaser and its subsidiaries, taken as a whole, in any such
case as a result of the transactions contemplated by the Offer or the
Merger Agreement; (iii) imposes substantial limitations on the ability of
Purchaser, Merger Sub or any of Purchaser's affiliates effectively to
acquire or hold or to exercise full rights of ownership of Shares; or (iv)
requires divestiture by Purchaser or Merger Sub or any of their affiliates
of any material portion of the Shares; provided, however, that this
paragraph (a) shall not apply to or include any consent decree or agreement
entered into by Purchaser, or any other action taken by Purchaser, in
connection with satisfying its obligations under Section 7.3 of the Merger
Agreement;
(b) there shall have occurred any material adverse change (as defined
in the Merger Agreement) in the Company and its Subsidiaries taken as a
whole;
(c) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified by reference to a material
adverse effect shall not be true and correct, or any such representations
and warranties 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) on the Company and its Subsidiaries taken as a whole, in
each case as if such representations and warranties were made at the time
of such determination;
(d) the Company shall not have performed and complied with in all
material respects any material agreement or covenant of the Company to be
performed or complied with by it under this Agreement and shall not have
cured such default after having been given five business days written
notice of such default by Purchaser;
(e) the Merger Agreement shall have been terminated in accordance with
its terms;
(f) (i) the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified in a manner adverse to Purchaser or Merger
Sub its approval or recommendation of the Offer, the Merger or this
Agreement or (ii) the Company shall have entered into any agreement with
respect to any Superior Proposal or (iii) the Board of Directors of the
Company or any committee therefor shall have resolved to take any of the
foregoing actions; provided, however, that clauses (i) and (iii) of this
paragraph (f) shall not apply to or include (x) a determination that a
Takeover Proposal is a Superior Proposal or (y) giving notice of a Superior
Proposal to Purchaser as contemplated by Section 9.1(d)(ii) of the Merger
Agreement; or
(g) there shall have occurred and continued to exist for at least
three business
<PAGE>
days (i) any general suspension of trading in, or limitation on prices for,
securities on a national securities exchange in the U.S. (excluding any
coordinated trading halt triggered solely as a result of a specified
decrease in a market index), (ii) a declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States,
(iii) a mandatory limitation by a United States federal Governmental Entity
or a change in the general financial, banking or capital markets which
results in a general inability of major financial institutions in the
United States to fulfill their obligations under commitments to extend
credit or (iv) or in the case of any of the foregoing existing on the date
of this Agreement, any material acceleration or worsening thereof;
which, in the sole judgment of Merger Sub in any such case, and regardless of
the circumstances (including any action or omission by Merger Sub) giving rise
to any such condition, makes it inadvisable to proceed with such acceptance for
payment or payments.
The foregoing conditions in paragraphs (a) through (g) are for the
sole benefit of Merger Sub and Purchaser and may, subject to the terms of this
Agreement, be waived by Merger Sub and Purchaser in whole or in part at any time
and from time to time in their sole discretion. The failure by Purchaser or
Merger Sub at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with respect to
any other facts and circumstances and each such right shall be deemed an ongoing
right that may be asserted at any time and from time to time.
<PAGE>
EXHIBIT (c)(4)
GUARANTY BY LYONDELL PETROCHEMICAL COMPANY
FOR VALUE RECEIVED, effective as of the Purchase, Lyondell Petrochemical
Company, a Delaware corporation ("Guarantor"), pursuant to the Tax Agreement
(the "Tax Agreement"), dated as of June 18, 1998 , among Atlantic Richfield
Company, a Delaware corporation ("ARCO"), ARCO Chemical Company, a Delaware
corporation ("ACC"), and Guarantor, (ARCO, together with its successors and
permitted assigns, the "Guaranteed Party"), does hereby unconditionally and
irrevocably guarantee to Guaranteed Party (i) the due and punctual performance
and observance by ARCO Chemical of each covenant, agreement, undertaking, and
any other obligation or condition binding upon or to be performed or observed by
it under and in accordance with the terms of the Tax Agreement, the Tax Sharing
Agreement and the Prior Agreement (collectively, the "Tax Obligation
Agreements") and (ii) the due and punctual payment of each amount that ARCO
Chemical is or may become obligated to pay under and in accordance with the
terms of the Tax Obligation Agreements, (such payment and other obligations of
ARCO Chemical being herein referred to as the "Obligations"). Guarantor further
agrees to pay all expenses (including, without limitation, all reasonable fees
and disbursements of counsel) that may be paid or incurred by any Guaranteed
Party in enforcing any rights with respect to, or collecting, any or all of the
Obligations and/or enforcing any rights with respect to, or collecting against,
Guarantor under this Guaranty.
Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference, and shall be construed and
interpreted in the manner described, in the Tax Agreement.
Guarantor hereby waives notice of acceptance of this Guaranty, and agrees
that, in its capacity as a guarantor, it shall not be required to consent to, or
to receive any notice of, any supplement to or amendment of, or waiver or
modification of the terms of, any of the Tax Obligation Agreements that may be
made or given as provided therein.
Effective as of the Purchase, ARCO Chemical will be an
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affiliate of Guarantor, and this Guaranty is being furnished to induce
Guaranteed Party to contract with ARCO Chemical and Guarantor as set forth in
the Tax Agreement.
Guarantor represents and warrants to Guaranteed Party that (a) Guarantor is
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware; (b) the execution, delivery and performance of this Guaranty
are within Guarantor's power and authority and do not contravene the charter or
the by-laws of Guarantor or any indenture, mortgage, credit agreement, note,
lease or other agreement to which Guarantor is a party or by which Guarantor is
bound, or any law, governmental rule, regulation, judgment or order binding on
Guarantor; and (c) this Guaranty has been duly authorized, executed and
delivered on behalf of Guarantor and constitutes a legal, valid, binding and
enforceable obligation of Guarantor.
No failure or delay or lack of demand, notice or diligence in exercising
any right under this Guaranty shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right under this Guaranty.
This Guaranty is an absolute, unconditional and continuing guaranty of
payment and not of collection and Guarantor waives any right to require that any
right to take action against ARCO Chemical be exhausted or that resort be made
to any security prior to action being taken against Guarantor.
In the event that this Guaranty or any of the Tax Obligation Agreements
shall be terminated, rejected or disaffirmed as a result of bankruptcy,
insolvency, reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar proceedings with respect to ARCO Chemical, Guarantor's
obligations hereunder shall continue to the same extent as if the same had not
been so terminated, rejected or disaffirmed. Guarantor shall and does hereby
waive all rights and benefits that might, in whole or in part, relieve Guarantor
from the performance of its duties and obligations by reason of any proceeding
as specified in the preceding sentence, and Guarantor agrees that it shall be
liable for all sums guaranteed, in respect of and without regard to, any
modification, limitation or discharge of the liability of ARCO Chemical that may
result from any such proceedings and notwithstanding any stay, injunction or
other prohibition issued in any such proceedings. Furthermore,
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the obligation of Guarantor hereunder will not be discharged by: (a) any
extension or renewal with respect to any obligation of ARCO Chemical under any
of the Tax Obligation Agreements; (b) any modification of, or amendment or
supplement to, any such agreement made in accordance with the terms of such
agreement; (c) any furnishing or acceptance of additional security or any
release of any security; (d) any waiver, consent or other action or inaction or
any exercise or non-exercise of any right, remedy or power with respect to ARCO
Chemical, or any change in the structure of ARCO Chemical; (e) any change in
ownership of the shares of capital stock of Guarantor or ARCO Chemical or any
merger or consolidation of either thereof into or with any other person; or (f)
any other occurrence whatsoever, except payment in full of all amounts payable
by ARCO Chemical under the Tax Obligation Agreements and performance in full of
all the Obligations in accordance with the terms and conditions of the Tax
Obligation Agreements.
Guarantor understands and agrees that its obligations hereunder shall be
continuing, absolute and unconditional without regard to, and Guarantor hereby
waives any defense to, or right to seek a discharge of, its obligations
hereunder with respect to: (a) the validity, legality, regularity or
enforceability of any of the Tax Obligation Agreements, any of the Obligations
or any collateral security therefor or guaranty or right of offset with respect
thereto at any time or from time to time held by any Guaranteed Party; (b) any
defense, setoff or counterclaim (other than a defense of payment or performance)
that may at any time be available to or be asserted by Guarantor or ARCO
Chemical against any Guaranteed Party; or (c) any other circumstances whatsoever
(with or without notice to or knowledge of ARCO Chemical or Guarantor) that
constitutes, or might be construed to constitute, an equitable or legal
discharge of ARCO Chemical or the Obligations, or of Guarantor under this
Guaranty, in bankruptcy or in any other instance.
Notwithstanding any payment or payments made by Guarantor hereunder or any
setoff or application of funds of Guarantor by any Guaranteed Party hereof,
Guarantor shall not be entitled to be subrogated to any of the rights of any
Guaranteed Party against ARCO Chemical or any collateral, security or guaranty
or
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right of setoff held by any Guaranteed Party for the payment of the Obligations,
nor shall Guarantor seek or be entitled to seek any reimbursement from ARCO
Chemical in respect of payments made by Guarantor hereunder, until all amounts
and performance owing to Guaranteed Party by ARCO Chemical on account of the
Obligations are paid and performed in full.
The obligations of Guarantor hereunder shall be automatically reinstated if
and to the extent that any payment by or on behalf of ARCO Chemical in respect
of any of the Obligations is rescinded or must be otherwise restored by any
holder of any of the Obligations as a result of any proceedings in bankruptcy or
reorganization or similar proceedings and Guarantor agrees that it will
reimburse such holders on demand for all reasonable expenses (including, without
limitation, all fees and disbursements of counsel) incurred by such holders in
connection with such rescission or restoration.
Any provision of this Guaranty that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
This Guaranty shall be binding upon the successors and assigns of
Guarantor; provided, that no transfer, assignment or delegation by Guarantor
without the consent of the Guaranteed Party shall release Guarantor from its
liabilities hereunder.
All notices, requests and demands to or upon Guarantor or any Guaranteed
Party shall be made in accordance with the terms of Section_14 of the Tax
Agreement.
This Guaranty and the Guarantor's duties and obligations hereunder shall
remain in full force and effect and be binding in accordance with its terms,
until the date on which all Obligations and the obligations of the Guarantor
hereunder shall have been satisfied by payment and performance in full.
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THIS GUARANTY SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF THE STATE OF
DELAWARE, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
Dated: As of June 18, 1998.
LYONDELL PETROCHEMICAL COMPANY
By /s/ Dan F. Smith
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Name: Dan F. Smith
Title: President and Chief
Executive Officer
