<PAGE> 1
Exhibit (a)(1)(A)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED SERIES A PARTICIPATING
PREFERRED STOCK PURCHASE RIGHTS)
OF
SYBRON CHEMICALS INC.
AT
$35.00 NET PER SHARE
BY
PROJECT TOLEDO ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
BAYER CORPORATION
A WHOLLY OWNED SUBSIDIARY OF
BAYER AKTIENGESELLSCHAFT
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, OCTOBER 5, 2000, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO THE AGREEMENT AND PLAN OF MERGER DATED
AS OF AUGUST 30, 2000, AMONG SYBRON CHEMICALS INC. (THE "COMPANY"), BAYER
CORPORATION AND PROJECT TOLEDO ACQUISITION CORP. THE BOARD OF DIRECTORS OF THE
COMPANY HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE OFFER, THE MERGER
(EACH AS DEFINED HEREIN) AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER
AGREEMENT; HAS UNANIMOUSLY DETERMINED THAT EACH OF THE OFFER, THE MERGER AND THE
MERGER AGREEMENT IS ADVISABLE, AND FAIR TO AND IN THE BEST INTERESTS OF THE
COMPANY AND THE STOCKHOLDERS OF THE COMPANY, AND UNANIMOUSLY RECOMMENDS THAT THE
STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES (AS DEFINED
HEREIN) PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) A
NUMBER OF SHARES (INCLUDING THE ASSOCIATED RIGHTS (AS DEFINED HEREIN)), WHICH
WHEN ADDED TO THE SHARES THEN BENEFICIALLY OWNED BY THE PURCHASER (AS DEFINED
HEREIN) REPRESENT AT LEAST A MAJORITY OF THE TOTAL NUMBER OF SHARES OUTSTANDING
ON A FULLY DILUTED BASIS, AND (B) THE WAITING PERIOD (AND ANY EXTENSION THEREOF)
UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND
ANY OTHER SIMILAR AND NECESSARY FOREIGN APPROVALS OR WAITING PERIODS APPLICABLE
TO THE PURCHASE OF THE SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN
TERMINATED AND ALL REGULATORY APPROVALS REQUIRED TO CONSUMMATE THE OFFER AND THE
MERGER HAVING BEEN OBTAINED AND REMAINING IN FULL FORCE AND EFFECT.
<PAGE> 2
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (1) complete and sign the Letter of Transmittal (or
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 EquiServe
Trust Company, N.A. (the "Depositary") 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 may be directed to Morrow & Co., Inc.
(the "Information Agent") or to ING Barings LLC (the "Dealer Manager") at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery or any other tender offer
materials may be obtained from the Information Agent or from brokers, dealers,
banks, trust companies or other nominees.
------------------------
The Dealer Manager for the Offer is:
ING BARINGS LLC
September 8, 2000
2
<PAGE> 3
SUMMARY TERM SHEET
Project Toledo Acquisition Corp. is offering to purchase all of the
outstanding common stock of Sybron Chemicals Inc. for $35.00 per share in cash.
The following are some of the questions you, as a stockholder of Sybron
Chemicals Inc., may have and answers to those questions. We urge you to read
carefully the remainder of this Offer to Purchase and the Letter of Transmittal
because the information in this summary is not complete. Additional important
information is contained in the remainder of this Offer to Purchase and the
Letter of Transmittal.
WHO IS OFFERING TO BUY MY SHARES?
Our name is Project Toledo Acquisition Corp. We are a Delaware corporation
formed for the purpose of making a tender offer for all of the outstanding
common stock of Sybron Chemicals Inc. We are a wholly owned subsidiary of Bayer
Corporation, an Indiana corporation, which is a wholly owned subsidiary of Bayer
Aktiengesellschaft, a company organized under the laws of the Federal Republic
of Germany. See "Introduction" and Section 9 -- "Certain Information Concerning
the Purchaser, Parent and Bayer AG" -- of this Offer to Purchase.
WHAT SHARES ARE BEING SOUGHT IN THE OFFER?
We are seeking to purchase all of the outstanding common stock of Sybron
Chemicals Inc. together with the associated rights to purchase Series A Junior
Participating Preferred Stock of Sybron Chemicals Inc. See "Introduction" and
Section 1 -- "Terms of the Offer" -- of this Offer to Purchase.
HOW MUCH ARE YOU OFFERING TO PAY, WHAT IS THE FORM OF PAYMENT AND WILL I HAVE TO
PAY ANY FEES OR COMMISSIONS?
We are offering to pay $35.00 per share, net to you, in cash. If you are
the record owner of your shares and you tender your shares to us in the offer,
you will not have to pay brokerage fees or similar expenses. If you own your
shares through a broker or other nominee, and your broker tenders your shares on
your behalf, your broker or nominee may charge you a fee for doing so. You
should consult your broker or nominee to determine whether any charges will
apply. See "Introduction" and Section 1 -- "Terms of the Offer" -- of this Offer
to Purchase.
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Bayer Corporation and Bayer Aktiengesellschaft will provide us with
sufficient funds to acquire all tendered shares and any shares to be acquired in
the merger that is expected to follow the successful completion of the offer.
The offer is not conditioned upon any financing arrangements. See Section 10 --
"Source and Amount of Funds" -- of this Offer to Purchase.
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
We do not think our financial condition is relevant to your decision
whether to tender shares and accept the offer because:
- the offer is being made for all outstanding shares solely for cash,
- the offer is not subject to any financing condition, and
- if we consummate the offer, we will acquire all remaining shares for the
same cash price in the merger.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
You will have at least until 12:00 midnight, New York City time, on
Thursday, October 5, 2000, to tender your shares in the offer. Further, if you
cannot deliver everything that is required in order to make a valid tender by
that time, you may be able to use a guaranteed delivery procedure, which is
described later in this
3
<PAGE> 4
Offer to Purchase. See Section 1 -- "Terms of the Offer" -- and Section
2 -- "Procedures for Tendering Shares" -- of this Offer to Purchase.
CAN THE OFFER BE EXTENDED AND UNDER WHAT CIRCUMSTANCES?
Subject to the terms of the merger agreement, we can extend the offer. We
have agreed in the merger agreement that:
- we may extend the offer in increments of not more than ten business days
each, if on a scheduled expiration date any of the conditions to our
offer are not satisfied;
- we may extend the offer for a period of time required by any rule,
regulation, interpretation or position of the United States Securities
and Exchange Commission or its staff applicable to the offer; and
- we may elect to provide a "subsequent offering period" for the offer. A
subsequent offering period, if one is included, will be an additional
period of time beginning after we have purchased shares tendered during
the offer, during which stockholders may tender, but not withdraw, their
shares and receive the offer consideration. We may, in our sole
discretion, provide a subsequent offering period regardless of whether or
not the events or the facts set forth in Section 14 ("Certain Conditions
of the Offer") have occurred. If we have acquired less than 90% of the
outstanding shares of Sybron Chemicals Inc. on the expiration date of the
offer, we intend to elect to provide a subsequent offering period.
See Section 1 -- "Terms of the Offer" -- of this Offer to Purchase.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will inform EquiServe Trust Company, N.A., the
depositary for the offer, of that fact and will make a public announcement of
the extension, not later than 9:00 a.m., New York City time, on the next
business day after the day on which the offer was scheduled to expire. See
Section 1 -- "Terms of the Offer" -- of this Offer to Purchase.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
There is no financing condition to the offer, however:
- we are not obligated to purchase any tendered shares unless the number of
shares validly tendered and not withdrawn before the expiration date of
the offer represents at least a majority of the total number of shares of
Sybron Chemicals Inc. outstanding on a fully diluted basis. We have
agreed not to waive this minimum tender condition without the consent of
Sybron Chemicals Inc.
- we are not obligated to purchase any tendered shares if:
- there is a material adverse change in Sybron Chemicals Inc. or its
business;
- the applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 has not expired or been terminated; or
- other similar and necessary foreign approvals have not been obtained
or waiting periods applicable to the offer have not expired or been
terminated.
The offer is also subject to a number of other conditions. See Section
14 -- "Certain Conditions of the Offer" -- of this Offer to Purchase.
HOW DO I TENDER MY SHARES?
To tender shares, you must deliver the certificates representing your
shares, together with a completed Letter of Transmittal and any other documents
required, to EquiServe Trust Company, N.A., the depositary for the offer, not
later than the time the tender offer expires. If your shares are held in street
name, the shares can be tendered by your nominee through The Depository Trust
Company. If you cannot deliver something that is required to be delivered to the
depositary by the expiration of the tender offer, you may get a little extra
4
<PAGE> 5
time to do so by having a broker, a bank or other fiduciary that is a member of
the Securities Transfer Agents Medallion Program or other eligible institution
guarantee that the missing items will be received by the depositary within three
American Stock Exchange trading days. For the tender to be valid, however, the
depositary must receive the missing items within that three trading day period.
See Section 2 -- "Procedures for Tendering Shares" -- of this Offer to Purchase.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
You can withdraw shares at any time until the offer has expired and, if we
have not by November 6, 2000, agreed to accept your shares for payment, you can
withdraw them at any time after such time until we accept shares for payment.
This right to withdraw will not apply to any subsequent offering period, if one
is included. See Section 1 -- "Terms of the Offer" -- and Section
3 -- "Withdrawal Rights" -- of this Offer to Purchase.
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
To withdraw shares, you must deliver a written notice of withdrawal, or a
facsimile of one, with the required information to the depositary while you
still have the right to withdraw the shares. See Section 1 -- "Terms of the
Offer" -- and Section 3 -- "Withdrawal Rights" -- of this Offer to Purchase.
WHAT DOES THE SYBRON CHEMICALS INC. BOARD OF DIRECTORS THINK OF THE OFFER?
We are making the offer pursuant to a merger agreement among Sybron
Chemicals Inc., Bayer Corporation and us. The Sybron Chemicals Inc. board of
directors unanimously approved the merger agreement, our tender offer and our
proposed merger with Sybron Chemicals Inc. The board of directors of Sybron
Chemicals Inc. has unanimously determined that each of the offer, the merger and
the merger agreement is advisable and fair to and in the best interests of
Sybron Chemicals Inc. and the stockholders of Sybron Chemicals Inc., and
unanimously recommends that stockholders accept the offer and tender their
shares. See the "Introduction" to this Offer to Purchase.
HAVE ANY STOCKHOLDERS AGREED TO TENDER THEIR SHARES?
Yes. Three stockholders that collectively own shares representing
approximately 45% of the outstanding common stock of Sybron Chemicals Inc. have
agreed to tender their shares in the offer.
WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL THE SHARES ARE NOT TENDERED
IN THE OFFER?
If we accept for payment and pay for at least a majority of the outstanding
shares on a fully diluted basis of Sybron Chemicals Inc., we will be merged with
and into Sybron Chemicals Inc. If that merger takes place, Bayer Corporation
will directly own all of the shares of Sybron Chemicals Inc. and all other
stockholders of Sybron Chemicals Inc. will have the right to receive $35.00 per
share in cash (or any higher price per share that is paid in the offer).
There are no appraisal rights available in connection with the offer.
However, if the merger takes place, stockholders who have not sold their shares
in the offer and have complied with the applicable provisions of Delaware law
will have appraisal rights under Delaware law. See Section 12 -- "Purpose of the
Offer; the Merger Agreement; the Stockholder Agreement; Plans for the
Company -- Appraisal Rights" -- of this Offer to Purchase.
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If the merger takes place, stockholders who do not tender in the offer will
have the right to receive the same amount of cash per share that they would have
received had they tendered their shares in the offer, subject to their right to
pursue appraisal under Delaware law. Therefore, if the merger takes place and
you do not perfect your appraisal rights, the only difference to you between
tendering your shares and not tendering your shares is that you will be paid
earlier if you tender your shares. However, if the merger does not take place,
the number of stockholders and of shares of Sybron Chemicals Inc. that are still
in the hands of the
5
<PAGE> 6
public may be so small that there may no longer be an active public trading
market (or, possibly, any public trading market) for the shares. Also, the
shares may no longer be eligible to be traded on the American Stock Exchange or
any other securities exchange, and Sybron Chemicals Inc. may cease making
filings with the Securities and Exchange Commission or otherwise cease being
required to comply with the Securities and Exchange Commission's rules relating
to publicly held companies. See Section 7 -- "Effect of the Offer on the Market
for the Shares; AMEX Listing; Exchange Act Registration; Margin
Regulations" -- and Section 12 -- "Purpose of the Offer; the Merger Agreement;
the Stockholder Agreement; Plans for the Company; Other Agreements" -- of this
Offer to Purchase.
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On April 25, 2000, the last trading day before Sybron Chemicals Inc.
publicly announced that J.P. Morgan Securities Inc. had been engaged to assist
Sybron Chemicals Inc. in exploring strategic alternatives, the last sale price
of the shares reported on the American Stock Exchange was $11.00 per share. On
August 29, 2000, the last trading day before Sybron Chemicals Inc. and Bayer
Corporation announced that they had signed the merger agreement, the last sale
price of the shares reported on the American Stock Exchange was $30.00 per
share. On September 7, 2000, the last trading day before we commenced our tender
offer, the last sale price of the shares was $34 9/16 per share. We advise you
to obtain a recent quotation for shares of Sybron Chemicals Inc. in deciding
whether to tender your shares. See Section 6 -- "Price Range of the Shares;
Dividends on the Shares" -- of this Offer to Purchase.
TO WHOM CAN I TALK IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You can call Morrow & Co., Inc. at (800) 566-9061 (toll free) or ING
Barings LLC at (877) 446-4930 (ext. 6677). Morrow & Co., Inc. is acting as the
information agent and ING Barings LLC is acting as the dealer manager for our
tender offer. See the back cover of this Offer to Purchase.
6
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
INTRODUCTION................................................ 8
THE TENDER OFFER............................................ 10
1. Terms of the Offer.................................... 10
2. Procedures for Tendering Shares....................... 11
3. Withdrawal Rights..................................... 15
4. Acceptance for Payment and Payment.................... 15
5. Certain U.S. Federal Income Tax Consequences.......... 16
6. Price Range of the Shares; Dividends on the Shares.... 17
7. Effect of the Offer on the Market for the Shares; AMEX
Listing; Exchange Act Registration; Margin
Regulations.......................................... 18
8. Certain Information Concerning the Company............ 18
9. Certain Information Concerning the Purchaser, Parent
and Bayer AG........................................... 20
10. Source and Amount of Funds............................ 22
11. Contacts and Transactions with the Company; Background
of the Offer........................................... 22
12. Purpose of the Offer; the Merger Agreement; the
Stockholder Agreement; Plans for the Company; Other
Agreements........................................... 23
13. Dividends and Distributions........................... 39
14. Certain Conditions of the Offer....................... 39
15. Certain Legal Matters................................. 41
16. Fees and Expenses..................................... 43
17. Miscellaneous......................................... 43
SCHEDULE I -- Directors and Executive Officers of Bayer AG,
Parent and the Purchaser.................................. 45
</TABLE>
7
<PAGE> 8
To the Holders of Common Stock of
SYBRON CHEMICALS INC.:
INTRODUCTION
PROJECT TOLEDO ACQUISITION CORP., a Delaware corporation (the "Purchaser")
and a wholly owned subsidiary of Bayer Corporation, an Indiana corporation
("Parent") and a wholly owned subsidiary of Bayer Aktiengesellschaft, a company
organized under the laws of the Federal Republic of Germany ("Bayer AG"), hereby
offers to purchase all the outstanding shares of common stock, par value $0.01
per share (the "Shares"), of Sybron Chemicals Inc., a Delaware corporation (the
"Company"), together with the associated rights (the "Rights") to purchase
Series A Junior Participating Preferred Stock pursuant to the Rights Agreement,
by and between the Company and Fleet National Bank, as Rights Agent, as amended
as of August 30, 2000 (as amended, the "Rights Agreement"), at $35.00 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"). Unless the
context otherwise requires, all references herein to Shares shall include the
Rights.
Tendering stockholders whose Shares are registered in their own names and
who tender directly to the Depositary (as defined below) 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. Stockholders who hold their Shares through banks or brokers should
check with such institutions as to whether they charge any service fees. The
Purchaser will pay all fees and expenses of ING Barings LLC, which is acting as
Dealer Manager (the "Dealer Manager"), EquiServe Trust Company, N.A., which is
acting as the Depositary (the "Depositary"), and Morrow & Co., Inc., which is
acting as the Information Agent (the "Information Agent"), incurred in
connection with the Offer. See Section 16.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of August 30, 2000 (the "Merger Agreement"), among the Company, Parent and
the Purchaser, 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 Parent (the "Merger"). In the Merger each outstanding Share
(other than Shares owned by Parent, the Purchaser or the Company 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 the price per
Share paid pursuant to the Offer in cash, without interest thereon.
Simultaneously with the execution of the Merger Agreement, Parent and the
Purchaser entered into a Stockholder Agreement dated as of August 30, 2000 (the
"Stockholder Agreement"), with 399 Venture Partners, Inc., Richard M. Klein and
John H. Schroeder (each a "Stockholder" and, collectively the "Stockholders").
The Stockholders have represented in the Stockholder Agreement that,
collectively, they have voting and dispositive control over 2,565,644 Shares,
which represented approximately 45% of the outstanding Shares as of August 30,
2000. Pursuant to the Stockholder Agreement the Stockholders have agreed, among
other things, to tender all such Shares pursuant to the Offer and have agreed to
vote such Shares in favor of the Merger.
The Merger Agreement and the Stockholder Agreement are more fully described
in Section 12.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT, THE OFFER, THE MERGER AND THE OTHER TRANSACTIONS
CONTEMPLATED BY THE MERGER AGREEMENT; HAS UNANIMOUSLY DETERMINED THAT EACH OF
THE OFFER, THE MERGER AND THE MERGER AGREEMENT IS ADVISABLE AND FAIR TO AND IN
THE BEST INTERESTS OF THE COMPANY AND THE 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
IN ARRIVING AT ITS DECISION TO APPROVE THE MERGER AGREEMENT, THE OFFER, THE
MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT AND TO
RECOMMEND THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER ARE DESCRIBED IN
8
<PAGE> 9
THE COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 (THE
"SCHEDULE 14D-9"), WHICH HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION (THE "COMMISSION") AND IS BEING MAILED TO STOCKHOLDERS OF THE COMPANY
CONCURRENTLY HEREWITH.
J.P. MORGAN SECURITIES INC. HAS ACTED AS THE COMPANY'S FINANCIAL ADVISOR.
THE OPINION OF J.P. MORGAN SECURITIES INC., DATED AUGUST 30, 2000, THAT, AS OF
SUCH DATE, THE CONSIDERATION TO BE RECEIVED IN THE OFFER AND THE MERGER BY THE
HOLDERS OF SHARES IS FAIR TO SUCH HOLDERS FROM A FINANCIAL POINT OF VIEW IS SET
FORTH IN FULL AS AN ANNEX TO THE SCHEDULE 14D-9. STOCKHOLDERS ARE URGED TO, AND
SHOULD, READ THE SCHEDULE 14D-9 AND SUCH OPINION CAREFULLY IN THEIR ENTIRETY.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN SECTION
1) A NUMBER OF SHARES, WHICH WHEN ADDED TO THE SHARES THEN BENEFICIALLY OWNED BY
PURCHASER REPRESENT AT LEAST A MAJORITY OF THE TOTAL NUMBER OF SHARES
OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION") AND (B) THE
WAITING PERIOD (AND ANY EXTENSION THEREOF) UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT") AND ANY OTHER SIMILAR AND
NECESSARY FOREIGN APPROVALS OR WAITING PERIODS APPLICABLE TO THE PURCHASE OF
SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED AND ALL
REGULATORY APPROVALS REQUIRED TO CONSUMMATE THE OFFER AND THE MERGER HAVING BEEN
OBTAINED AND REMAINING IN FULL FORCE AND EFFECT.
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, and Shares having been purchased pursuant to the Offer. In the
event the Purchaser acquires 90% or more of the outstanding Shares pursuant to
the Offer or otherwise, the Purchaser will be able to effect the Merger pursuant
to the "short-form" merger provisions of the Delaware General Corporation Law
(the "DGCL"), without prior notice to, or any action by, any other stockholder
of the Company. In such event, the Purchaser intends to effect the Merger
without prior notice to, or any action by, any other stockholder of the Company.
See Section 12.
The Company has informed the Purchaser that, as of August 30, 2000, the
authorized capital stock of the Company consists of 20,000,000 Shares and
500,000 shares of preferred stock, par value $0.01 per share ("Preferred
Stock"), of which 2,000 shares are designated as Series A Junior Participating
Preferred Stock. As of August 30, 2000, there were 5,738,426 Shares and no
shares of Preferred Stock issued and outstanding plus 205,104 Shares held in the
Company's treasury. At August 29, 2000, there was an aggregate of 560,000 Shares
reserved for issuance pursuant to the Company's 1992 Stock Option Plan and the
Company's Executive Bonus Plan. As of August 30, 2000, there are 500,379 Shares
the Company is obligated to issue pursuant to Options (as defined in Section 12)
currently outstanding (including the currently non-exercisable portions
thereof). Based upon the foregoing and assuming that no Shares are otherwise
issued after August 30, 2000, the Minimum Condition will be satisfied if at
least 3,119,405 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 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.
In connection with the Merger Agreement, the Board has agreed to take all
action requested by Parent in order to render the Rights according to the Rights
Agreement inapplicable to the Offer, the Merger and the other transactions
contemplated by the Merger Agreement and by the Stockholder Agreement.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY AND IN THEIR ENTIRETY BEFORE
ANY DECISION IS MADE WITH RESPECT TO THE OFFER.
9
<PAGE> 10
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 Thursday,
October 5, 2000, unless and until the Purchaser shall have extended the period
of time during which the Offer is open in accordance with the terms of the
Merger Agreement, 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.
The Purchaser may, without the consent of the Company, and expressly
reserves the right (but shall not be obligated) to, extend the Offer, and
thereby delay acceptance for payment of, and the payment for, any Shares, (a) in
increments of not more than ten business days each, if at the Expiration Date
any of the conditions to the Purchaser's obligation to purchase Shares are not
satisfied, until such time as such conditions are satisfied or waived and (b)
for any period required by any rule, regulation, interpretation or position of
the Commission or the staff thereof applicable to the Offer. If all of the
conditions to the Offer are not satisfied on the Expiration Date then the
Purchaser will extend the Offer from time to time until the earlier of the date
that such conditions are satisfied or waived or the date that is thirty days (or
if the conditions relating to receipt of regulatory approvals has not been
satisfied, sixty days) from the initial Expiration Date. UNDER NO CIRCUMSTANCES
WILL INTEREST BE PAID ON THE PURCHASE PRICE FOR TENDERED SHARES, REGARDLESS OF
ANY EXTENSION OF OR AMENDMENT TO THE OFFER OR ANY DELAY IN PAYING FOR SUCH
SHARES.
The Purchaser expressly reserves the right (but shall not be obligated), at
any time and from time to time, to waive any condition to the Offer or modify
the terms of the Offer, except that, without the consent of the Company, the
Purchaser shall not (i) reduce the number of Shares subject to the Offer, (ii)
reduce the price per Share to be paid pursuant to the Offer, (iii) waive the
Minimum Condition or add to the conditions of the Offer in any manner adverse to
the holders of Shares, (iv) change the form of consideration payable in the
Offer or (v) otherwise amend the Offer in any manner adverse to the holders of
Shares.
If by 12:00 midnight, New York City time, on Thursday, October 5, 2000 (or
any date or time then set as the Expiration Date), any of or all the conditions
to the Offer have not been satisfied or waived, the Purchaser, subject to the
terms of the Merger Agreement and the applicable rules and regulations of the
Commission, reserves the right (but shall not be obligated) (a) to terminate the
Offer and not accept for payment or pay for any Shares and return all tendered
Shares to tendering stockholders, (b) except as set forth above with respect to
the Minimum Condition, 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 validly withdrawn, (c) as set forth above, 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) except as set forth above, to
amend the Offer.
Any extension, waiver, amendment or termination will be followed as
promptly as practicable by public announcement thereof. An announcement in the
case of an extension will be made no later than 9:00 a.m., Eastern time, on the
next business day after the previously scheduled Expiration Date. Without
limiting the manner in which Purchaser may choose to make any public
announcement, subject to applicable law (including Rules 14d-4(d) and 14d-6(c)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
which require that material changes be promptly disseminated to holders of
Shares), we will have no obligation to publish, advertise or otherwise
communicate any such public announcement other than by issuing a release to the
Dow Jones News Service. As used in this Offer to Purchase, "business day" has
the meaning set forth in Rule 14d-1 under the Exchange Act.
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(d), 14d-6(c) and 14e-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
10
<PAGE> 11
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.
Pursuant to Rule 14d-11 under the Exchange Act, the Purchaser may, subject
to certain conditions, elect to provide a subsequent offering period of from
three business days to 20 business days in length following the expiration of
the Offer on the Expiration Date and acceptance for payment of the Shares
tendered in the Offer (a "Subsequent Offering Period"). A Subsequent Offering
Period would be an additional period of time, following the expiration of the
Offer and the purchase of Shares in the Offer, during which stockholders may
tender Shares not tendered in the Offer. A Subsequent Offering Period, if one is
included, is not an extension of the Offer, which already will have been
completed.
During a Subsequent Offering Period, tendering stockholders will not have
withdrawal rights and the Purchaser will promptly purchase and pay for any
Shares tendered at the same price paid in the Offer. Rule 14d-11 provides that
the Purchaser may provide a Subsequent Offering Period so long as, among other
things, (i) the initial 20-business day period of the Offer has expired, (ii)
the Purchaser offers the same form and amount of consideration for Shares in the
Subsequent Offering Period as in the initial Offer, (iii) the Purchaser
immediately accepts and promptly pays for all securities tendered during the
Offer prior to its expiration, (iv) the Purchaser announces the results of the
Offer, including the approximate number and percentage of Shares deposited in
the Offer, no later than 9:00 a.m., Eastern time, on the next business day after
the Expiration Date and immediately begins the Subsequent Offering Period and
(v) the Purchaser immediately accepts and promptly pays for Shares as they are
tendered during the Subsequent Offering Period. The Purchaser will be able to
include a Subsequent Offering Period, if it satisfies the conditions above,
after October 5, 2000. In a public release, the Commission has expressed the
view that the inclusion of a Subsequent Offering Period would constitute a
material change to the terms of the Offer requiring the Purchaser to disseminate
new information to stockholders in a manner reasonably calculated to inform them
of such change sufficiently in advance of the Expiration Date (generally five
business days). In the event the Purchaser elects to include a Subsequent
Offering Period, it will notify stockholders of the Company consistent with the
requirements of the Commission.
WE MAY, IN OUR SOLE DISCRETION, PROVIDE A SUBSEQUENT OFFERING PERIOD
REGARDLESS OF WHETHER OR NOT THE EVENTS OR THE FACTS SET FORTH IN SECTION 14
("CERTAIN CONDITIONS OF THE OFFER") HAVE OCCURRED. IF WE HAVE ACQUIRED LESS THAN
90% OF THE SHARES OF SYBRON CHEMICALS INC. ON THE EXPIRATION DATE OF THE OFFER,
WE INTEND TO ELECT TO PROVIDE A SUBSEQUENT OFFERING PERIOD. PURSUANT TO RULE
14d-7 UNDER THE EXCHANGE ACT, NO WITHDRAWAL RIGHTS APPLY TO SHARES TENDERED
DURING A SUBSEQUENT OFFERING PERIOD AND NO WITHDRAWAL RIGHTS APPLY DURING THE
SUBSEQUENT OFFERING PERIOD WITH RESPECT TO SHARES TENDERED IN THE OFFER AND
ACCEPTED FOR PAYMENT. THE SAME CONSIDERATION WILL BE PAID TO STOCKHOLDERS
TENDERING SHARES IN THE OFFER OR IN A SUBSEQUENT OFFERING PERIOD, IF ONE IS
INCLUDED.
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 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. PROCEDURES FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, (a) the certificates for tendered Shares, together with a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed, any
required signature guarantees and any other required documents, must, prior to
the Expiration Date, be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase; (b) in the case of a transfer
effected pursuant to the book-entry transfer procedures described under
"Book-Entry Transfer", either a Letter of Transmittal (or facsimile thereof),
properly completed and duly
11
<PAGE> 12
executed, and any required signature guarantees, or an Agent's Message (as
defined below), and any other required documents, must be received by the
Depositary at one of such addresses, such Shares must be delivered pursuant to
the book-entry transfer procedures described below and a Book-Entry Confirmation
(as defined below) must be received by the Depositary, in each case prior to the
Expiration Date; or (c) the tendering stockholder must, prior to the Expiration
Date, comply with the guaranteed delivery procedures described below under
"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.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY
(AS DEFINED BELOW), 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.
Book-Entry Transfer. The Depositary will establish an account with respect
to the Shares at The Depository Trust Company (the "Book-Entry Transfer
Facility") for purposes of the Offer within two business days after 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 facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message, and any other required documents, must be, in any case,
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 for a valid tender of
Shares by book-entry. 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.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal if (a) 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) 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
12
<PAGE> 13
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 book-entry transfer procedures 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:
(a) such tender is 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, is 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
(c) either (i) the certificates for tendered Shares together with a
Letter of Transmittal (or facsimile thereof), properly completed and duly
executed, and any required signature guarantees, and any other required
documents are received by the Depositary at one of its addresses set forth
on the back cover of this Offer to Purchase within three trading days after
the date of execution of such Notice of Guaranteed Delivery or (ii) in the
case of a book-entry transfer effected pursuant to the book-entry transfer
procedures described above under "Book-Entry Transfer", either a Letter of
Transmittal (or facsimile thereof), properly completed and duly executed,
and any required signature guarantees, or an Agent's Message, and any other
required documents, is received by the Depositary at one of such addresses,
such Shares are delivered pursuant to the book-entry transfer procedures
above and a Book-Entry Confirmation is received by the Depositary, in each
case within three trading days after the date of execution of such Notice
of Guaranteed Delivery. A "trading day" is any day on which the American
Stock Exchange (the "AMEX"), a subsidiary of the National Association of
Securities Dealers, Inc., is open for business.
The Notice of Guaranteed Delivery 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 in the form
set forth in such Notice of Guaranteed Delivery.
Other Requirements. Notwithstanding any provision hereof, payment for
Shares accepted for payment pursuant to the Offer will in all cases be made only
after timely receipt by the Depositary of (a) certificates for (or a timely
Book-Entry Confirmation with respect to) such Shares, (b) a Letter of
Transmittal (or 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 in lieu of the Letter of Transmittal) 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. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID BY THE PURCHASER
ON THE PURCHASE PRICE OF THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR
ANY DELAY IN MAKING SUCH PAYMENT.
Distribution of Rights. Holders of Shares will be required to tender one
Right for each Share tendered to effect a valid tender of such Share. Unless and
until the Distribution Date (as defined in the Rights Agreement) occurs, the
Rights are represented by and transferred with the Shares. Accordingly, if the
Distribution Date does not occur prior to the Expiration Date of the Offer, a
tender of Shares will constitute a tender of the associated Rights. If, however,
pursuant to the Rights Agreement or otherwise, a Distribution Date does occur,
certificates representing a number of Rights equal to the number of Shares being
tendered must be delivered to the Depositary in order for such Shares to be
validly tendered. If a Distribution Date has occurred, a tender of Shares
without Rights constitutes an agreement by the tendering stockholder to deliver
certificates representing a number of Rights equal to the number of Shares
tendered pursuant to the Offer to the Depositary within three trading days after
the date such certificates are distributed. The Purchaser reserves the right to
require that it receive such certificates prior to accepting Shares for payment.
Payment for Shares tendered and purchased pursuant to the Offer will be made
only after timely receipt by the Depositary of, among other things, such
certificates, if such certificates have been distributed to holders of Shares.
The Purchaser will not pay any additional consideration for the Rights tendered
pursuant to the Offer. The Rights
13
<PAGE> 14
Agreement has been amended as of August 30, 2000, to exempt from the provisions
of the Rights Agreement the Merger Agreement, the acquisition of Shares by the
Purchaser or Parent pursuant to the Offer, the Merger and the other transactions
contemplated by the Merger Agreement and by the Stockholder Agreement.
Appointment. By executing a Letter of Transmittal (or facsimile thereof),
or, in the case of a book-entry transfer, by delivery of an Agent's Message, in
lieu of a Letter of Transmittal, 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 August 30,
2000. 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 the effectiveness of 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, 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, Parent, Bayer AG, the Company, 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 and any other related documents 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 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.
14
<PAGE> 15
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 Monday, November 6, 2000.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase and must specify
the name of the person 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, any and all
signatures on the notice of withdrawal must be guaranteed by an Eligible
Institution. If Shares have been tendered pursuant to the book-entry transfer
procedures 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
any notice of withdrawal will be determined by the Purchaser in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, Bayer AG, the Company, 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.
In the event the Purchaser provides a Subsequent Offering Period following
the Offer, no withdrawal rights will apply to Shares tendered during such
Subsequent Offering Period or to Shares tendered in the Offer and accepted for
payment.
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 for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn in
accordance with Section 3 promptly after the Expiration Date. The Purchaser,
subject to the Merger Agreement, expressly reserves the right, in its sole
discretion, to delay acceptance for payment of or payment for Shares in order to
comply in whole or in part with any applicable law, including, without
limitation, the HSR Act and other foreign antitrust laws. Any such delays will
be effected in compliance with Rule 14e-1(c) under the Exchange Act (relating to
a bidder's obligation to pay for or return tendered securities promptly after
the termination or withdrawal of such bidder's offer).
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) the certificates
for such Shares, together with a Letter of Transmittal (or facsimile thereof),
properly completed and duly executed, and any required signature guarantees or
(b) in the case of a transfer effected pursuant to the book-entry transfer
procedures described in Section 2, a Book-Entry Confirmation and either a Letter
of Transmittal (or facsimile thereof), properly completed and duly executed, and
any required signature guarantees, or an Agent's Message, and any other required
documents. 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 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.
15
<PAGE> 16
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares validly tendered to the Purchaser and
not properly withdrawn as, if and when the Purchaser gives oral or written
notice to the Depositary of the Purchaser's acceptance for payment of such
Shares. 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 whose Shares have been
accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE FOR TENDERED SHARES, REGARDLESS OF ANY EXTENSION OF OR AMENDMENT
TO THE OFFER OR ANY DELAY IN PAYING FOR SUCH SHARES.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Shares pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer (but subject to compliance with Rule 14e-1(c) under the Exchange Act
(relating to a bidder's obligation to pay for or return tendered securities
promptly after the termination or withdrawal of such bidder's offer) and the
terms of the Merger Agreement (requiring that the Purchaser pay for Shares
accepted for payment as soon as practicable after the Expiration Date)), the
Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent tendering
stockholders are entitled to do so as described in Section 3.
If any tendered Shares are not accepted for payment pursuant to the terms
and conditions of the Offer for any reason, the certificates for such Shares
will be returned (and, if certificates are submitted for more Shares than are
tendered, new certificates for the Shares not tendered will be sent) in each
case 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 book-entry transfer 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 Parent, or to one or more direct or indirect wholly
owned subsidiaries of Parent, the right to purchase Shares tendered pursuant to
the Offer, but any such transfer or assignment will not relieve Parent 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 tendering stockholder will recognize gain or loss
equal to the difference between the amount of cash received by the stockholder
pursuant to the Offer or Merger and the aggregate adjusted 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 tendered Shares are held by a tendering stockholder as capital assets,
gain or loss recognized by such stockholder will be capital gain or loss, which
will be long-term capital gain or loss if such stockholder's holding period for
the Shares exceeds one year. In the case of a tendering noncorporate
stockholder, long-term capital gains will be eligible for a maximum U.S. federal
income tax rate of 20%. In addition, there are limits on the deductibility of
losses.
A stockholder (other than certain exempt stockholders including, among
others, all corporations and certain foreign individuals) 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) and certifies as to no loss of exemption from backup withholding
and otherwise complies with the applicable requirements of the backup
withholding rules. A stockholder that does not furnish a required TIN or that
does not otherwise establish a basis for an exemption from backup withholding
may be subject to a
16
<PAGE> 17
penalty imposed by the IRS. See "Backup Withholding" under Section 2. Each
stockholder should complete and sign the Substitute Form W-9 included as part of
the Letter of Transmittal so as to provide the information and certification
necessary to avoid backup withholding.
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 U.S. 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, such as holding Shares as
a hedge or as part of a hedging, straddle, conversion or other risk-reduction
transaction. 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 listed on the American Stock Exchange ("AMEX") under the
symbol "SYC", and have been at all times since October 10, 1996. The following
table sets forth, for each of the periods indicated, the high and low sales
prices per Share.
SYBRON CHEMICALS INC.
<TABLE>
<CAPTION>
HIGH LOW
---- ----
<S> <C> <C>
FISCAL YEAR ENDED DECEMBER 31, 1998:
First Quarter............................................. $ 37 $ 33 1/8
Second Quarter............................................ 35 1/4 29 3/4
Third Quarter............................................. 32 15
Fourth Quarter............................................ 21 11 1/4
FISCAL YEAR ENDED DECEMBER 31, 1999:
First Quarter............................................. 14 13/16 12
Second Quarter............................................ 20 1/2 13
Third Quarter............................................. 17 3/4 15 1/4
Fourth Quarter............................................ 15 1/4 11
FISCAL YEAR ENDED DECEMBER 31, 2000:
First Quarter............................................. 15 3/8 11 15/16
Second Quarter............................................ 22 11/16 11
Third Quarter (through September 7, 2000)................. 34 9/16 21 3/16
</TABLE>
On April 25, 2000, the last trading day before the Company publicly
announced that J.P. Morgan Securities Inc. had been engaged to assist the
Company in exploring strategic alternatives, the last reported sale price of the
shares on the AMEX was $11.00 per share. On August 29, 2000, the last full
trading day before the public announcement of the execution of the Merger
Agreement, the last reported sale price of the Shares on the AMEX was $30.00 per
Share. On September 7, 2000, the last full trading day before commencement of
the Offer, the last reported sale price of the Shares on the AMEX was $34 9/16
per Share. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE
SHARES.
The Purchaser has been advised by the Company that the Company has never
declared or paid any cash dividends on the Shares. In addition, the Company has
advised the Purchaser that the Company has not declared or paid any stock or
other non-cash dividends on the Shares.
17
<PAGE> 18
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; AMEX LISTING; 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.
AMEX Listing. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements for continued listing
on the AMEX. According to the AMEX's published guidelines, the AMEX would
consider delisting the Shares if, among other things, (i) the number of publicly
held Shares falls below 200,000, (ii) the total number of public shareholders is
less than 300, (iii) the Company's aggregate market value of Shares publicly
held is less than $1,000,000, or (iv) the total stockholders' equity was less
than $2,000,000 if the Company had losses in 2 of the most recent 3 years or
$4,000,000 if it had losses in 3 of the most recent 4 years. Shares held by
officers or directors of the Company or their immediate families, or by any
beneficial owner of 10% or more of the Shares, ordinarily will not be considered
as being publicly held for this purpose. According to the Company, as of August
30, 2000, there were 5,738,426 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 AMEX for continued listing and the Shares are no longer
listed, the market for Shares could be adversely affected.
If the AMEX 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. 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. Such registration may be terminated upon application of the
Company to the Commission if the Shares are neither listed on a national
securities exchange nor held by 300 or more holders of record. Termination of
registration of the Shares under the Exchange Act would 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 and the requirement of furnishing a proxy
statement pursuant to Section 14(a) or 14(c) of the Exchange Act in connection
with stockholders' meetings and the related requirement of furnishing an annual
report to stockholders. 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, as amended, 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.
If registration of the Shares is not terminated prior to the Merger, then
the Shares will be delisted from the AMEX and the registration of the Shares
under the Exchange Act will be terminated following 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 principal offices at
Birmingham Road, P.O. Box 66, Birmingham, NJ 08011, telephone number (609)
893-1100. According to the Company's Annual Report on
18
<PAGE> 19
Form 10-K for the fiscal year ended December 31, 1999 (the "Company 10-K") and
its Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 2000
(the "Company 10-Q"), the Company is engaged in the development, production and
marketing of specialty chemicals utilized primarily in the textile wet
processing, coatings, adhesives, plastics and molded goods, and environmental
products and services markets.
Set forth below is certain selected financial information with respect to
the Company and its subsidiaries excerpted from the information contained in the
Company 10-K and the Company 10-Q. More comprehensive financial information is
included in such reports and other documents filed by the Company with the
Commission, and the following summary is qualified in its entirety by reference
to such reports, other documents and all the financial information (including
any related notes) contained therein. Such reports and other documents should be
available for inspection and copies thereof should be obtainable in the manner
set forth below under "Available Information".
SYBRON CHEMICALS INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED AND AS OF AND AS OF
------------------------------------------ -------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30,
1999 1998 1997 2000 1999
------------ ------------ ------------ -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Consolidated Statement of Income:
Net sales.............................. $269,123 $222,822 $188,814 $147,127 $133,659
Operating income....................... 17,783 21,337 21,851 15,223 15,901
Net income............................. 2,991 8,425 10,640 3,963 5,632
Net income per share (diluted)......... $ 0.52 $ 1.44 $ 1.84 $ 0.69 $ 0.98
Consolidated Balance Sheet:
Total current assets................... 107,284 103,211 95,323 113,010 106,181
Total assets........................... 257,131 270,284 150,233 258,524 269,038
Total current liabilities.............. 48,626 51,257 51,892 49,458 54,111
Total liabilities...................... 184,548 197,636 87,822 183,554 193,902
Total stockholders' equity............. 72,583 72,648 62,411 74,970 75,136
</TABLE>
Certain Company Projections. During the course of discussions between
representatives of Parent and the Company, the Company provided Parent or its
representatives with certain non-public business and financial information about
the Company. The following is a summary of selected projected financial
information provided by the Company:
<TABLE>
<CAPTION>
PROJECTIONS FOR YEAR ENDING DECEMBER 31,
----------------------------------------------
2000 2001 2002 2003 2004
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net Sales..................................... $296.3 $310.5 $328.8 $347.9 $368.0
Gross Profit.................................. 95.6 100.9 106.7 113.1 119.7
EBIT.......................................... 31.9 34.4 37.8 41.5 45.6
EBITDA........................................ 44.2 46.8 50.4 54.3 58.6
</TABLE>
The Company has advised the Purchaser, Parent and Bayer AG that it does not
as a matter of course make public any projections as to future performance or
earnings, and the projections set forth above are included in this Offer to
Purchase only because this information was provided to Parent. The projections
were not prepared with a view to public disclosure or compliance with the
published guidelines of the Commission or the guidelines established by the
American Institute of Certified Public Accountants regarding projections or
forecasts. The projections do not purport to present operations in accordance
with generally accepted accounting principles, and the Company's independent
auditors have not examined or compiled the projections and accordingly assume no
responsibility for them. The Company has advised the Purchaser,
19
<PAGE> 20
Parent and Bayer AG that its internal financial forecasts (upon which the
projections provided to Parent and the Purchaser were based in part) are, in
general, prepared solely for internal use and capital budgeting and other
management decisions and are subjective in many respects and thus susceptible to
interpretations and periodic revision based on actual experience and business
developments. The projections also reflect numerous assumption made by
management of the Company, with respect to industry performance, general
business, economic, market and financial conditions and other matters, including
effective tax rates consistent with historical levels for the Company and
expected debt payments, all of which are difficult to predict, many of which are
beyond the Company's control, and none of which were subject to approval by the
Purchaser, Parent or Bayer AG. Accordingly, there can be no assurance that the
assumptions made in preparing the projections will prove accurate. It is
expected that there will be differences between actual and projected results,
and actual results may be materially greater or less than those contained in the
projections. The inclusion of the projections herein should not be regarded as
an indication that any of the Purchaser, Parent, Bayer AG, the Company or their
respective affiliates or representatives considered or consider the projections
to be a reliable prediction of future events, and the projections should not be
relied upon as such. None of the Purchaser, Parent, Bayer AG, the Company or any
of their respective affiliates or representatives has made or makes any
representation to any person regarding the ultimate performance of the Company
compared to the information contained in the projections, and none of them
intends to update or otherwise revise the projections to reflect circumstances
existing after the date when made or to reflect the occurrence of future events
even in the event that any or all of the assumptions underlying the projections
are shown to be in error.
Available Information. The Company is subject to the informational
requirements of the Exchange Act and, in accordance therewith, is required to
file reports and other information with the Commission relating to its business,
financial condition and other matters. Certain information as of particular
dates concerning the Company's directors and officers, their remuneration, stock
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 reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, DC 20549, and at the regional offices of the Commission located at
Seven World Trade Center, 13th Floor, New York, NY 10048 and Northwestern Atrium
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 also maintains a Web site on
the Internet at <http://www.sec.gov> that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission.
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, Parent and Bayer AG do not have
any knowledge that any such information is untrue, none of the Purchaser, Parent
nor Bayer AG 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, PARENT AND BAYER AG
The Purchaser, a Delaware corporation and a wholly owned subsidiary of
Parent, 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 Parent. All outstanding shares of capital
stock of the Purchaser are owned by Parent.
Parent, an Indiana corporation, is a wholly owned subsidiary of Bayer AG,
with its principal office located at 100 Bayer Road, Pittsburgh, PA 15205-9741,
telephone number (412) 777-2000. Parent, the largest subsidiary of Bayer AG and
the American presence of the Bayer Group (as defined below), is a research based
company with operations in health care, agriculture, polymers and chemicals.
20
<PAGE> 21
The Bayer group, consisting of Bayer AG and approximately 40 German and
approximately 235 foreign consolidated subsidiaries (collectively, the "Bayer
Group") in which Bayer AG, directly or indirectly, has a majority of the voting
rights or which are under its uniform control, is engaged in the development,
manufacture, sale and marketing of health care products, agricultural products,
polymers and chemicals. Bayer AG's principal office is located at D-51368
Leverkusen, Federal Republic of Germany, telephone number 011-49-214-301.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser, Parent and Bayer AG are set forth in
Schedule I hereto.
Except as described in this Offer to Purchase, none of the Purchaser,
Parent and Bayer AG or, to the best knowledge of the Purchaser, Parent and Bayer
AG, any of the persons listed in Schedule I or any associate or majority-owned
subsidiary of the Purchaser, Parent or Bayer AG or any of the persons so listed,
beneficially owns any equity security of the Company, and none of the Purchaser,
Parent and Bayer AG or, to the best knowledge of the Purchaser, Parent and Bayer
AG, any of the other persons referred to above, or any of the respective
directors, executive officers or subsidiaries of any of the foregoing, has
effected any transaction in any equity security of the Company during the past
60 days.
Except as described in this Offer to Purchase or the Schedule TO (as
defined below), (a) there have not been any contacts, transactions or
negotiations between the Purchaser, Parent and Bayer AG, any of their respective
subsidiaries or, to the best knowledge of the Purchaser, Parent and Bayer AG,
any of the persons listed in Schedule I, on the one hand, and the Company or any
of its directors, officers or affiliates, on the other hand, that are required
to be disclosed pursuant to the rules and regulations of the Commission and (b)
none of the Purchaser, Parent and Bayer AG or, to the best knowledge of the
Purchaser, Parent and Bayer AG, any of the persons listed in Schedule I has any
contract, arrangement, understanding or relationship with any person with
respect to any securities of the Company.
Set forth below is a summary of certain selected consolidated financial
information of Bayer AG and its consolidated subsidiaries for the fiscal years
ended December 31, 1997, 1998 and 1999 and for the six month periods ended June
30, 1999 and 2000. Such financial information is excerpted and derived from the
English language sections of Bayer AG's Annual Report 1999 and Interim Report
for the first six months of 2000. The selected consolidated financial
information is stated in euro. Such information is provided for supplemental
information purposes only. Because the only consideration in the Offer and
Merger is cash and the Offer covers all outstanding Shares, and in view of the
absence of a financing condition and the financial capacity of Parent and Bayer
AG, the Purchaser believes the financial condition of Parent and Bayer AG is not
material to a decision by a holder of Shares whether to sell, tender or hold
Shares pursuant to the Offer.
BAYER GROUP
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(EURO IN MILLIONS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED AND AS OF AND AS OF
------------------------------------------ -------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30,
1999 1998 1997 2000 1999
------------ ------------ ------------ -------- --------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF INCOME
Net Sales.................................. 27,320 28,062 28,124 15,238 14,224
Operating Income........................... 3,357 3,155 3,077 1,994 2,556
Income after Tax........................... 2,018 1,615 1,509 1,044 1,718
CONSOLIDATED BALANCE SHEET
Total Assets............................... 31,279 29,377 27,697 33,850 29,800
Total Liabilities.......................... 16,097 16,598 15,465 18,504 15,258
Total Stockholders' Equity................. 15,182 12,779 12,232 15,346 14,542
</TABLE>
21
<PAGE> 22
10. SOURCE AND AMOUNT OF FUNDS
The Offer is not conditioned on any financing arrangements.
The total amount of funds required by the Purchaser to purchase all
outstanding Shares pursuant to the Offer and to pay fees and expenses related to
the Offer and the Merger is estimated to be approximately $226 million. The
Purchaser plans to obtain all funds needed for the Offer and the Merger through
capital contributions or intercompany loans of available cash from Parent and
Bayer AG.
11. CONTACTS AND TRANSACTIONS WITH THE COMPANY; BACKGROUND OF THE OFFER
On September 3, 1999, Mr. Peter Dixon, Managing Director at ING Barings
Ltd. London, and Dr. Richard Pott, Head of Business Group Specialty Products of
Bayer AG, discussed the possibility of a potential business combination between
Bayer AG and the Company. Subsequent to that meeting Mr. Peter Dixon had several
contacts with Mr. Paul C. Schorr IV, then a director of the Company and Vice
President of Citicorp Venture Capital Ltd. (which is related to 399 Venture
Partners, Inc., a stockholder of the Company) in connection with the subject
matter of the meeting of September 3rd.
On April 26, 2000, the Company issued a press release announcing that it
had engaged J.P. Morgan Securities Inc. as its financial advisor to assist in
the exploration of strategic alternatives.
Following such press release, Mr. Dixon suggested to Dr. Pott that Bayer AG
consider evaluating the Company as an acquisition candidate.
On May 12, 2000, the Company's financial advisor, J.P. Morgan Securities
Inc., provided Bayer AG with a confidentiality agreement, which was executed by
J.P. Morgan Securities Inc., as agent for the Company, and Bayer AG on May 19,
2000.
On May 31, 2000, Bayer AG received a Confidential Information Memorandum
with regard to the Company from J.P. Morgan Securities Inc. Bayer AG also
received a letter from J.P. Morgan Securities Inc. outlining instructions for
submitting an indicative non-binding bid (the "Initial Bid Instruction Letter").
On June 27, 2000, Bayer AG submitted a preliminary indicative bid providing
a range for the enterprise value of the Company in accordance with the
instructions provided in the Initial Bid Instruction Letter, subject to, among
other terms, a need for a period of due diligence. Arrangements were made for
Bayer AG and Parent to conduct due diligence and to meet with the Company's
management.
On July 5, 2000, Bayer AG engaged ING Barings LLC to serve as its financial
advisor.
On July 5, 6, and 7, 2000, representatives of Bayer AG and Parent and their
advisors met with members of the Company's management to conduct a review of the
Company's business and operations. Also during this period, Bayer AG and Parent,
together with their financial and legal advisors, conducted legal, business, and
financial due diligence with respect to the Company.
Between July 7, 2000 and August 14, 2000, additional due diligence was
conducted by Bayer AG and Parent, together with their financial and legal
advisors, through the review of documents provided by the Company and through
telephone conversations between representatives of Bayer AG and Parent and
representatives of the Company.
On July 26, 2000, J.P. Morgan Securities Inc. provided a draft of the
Merger Agreement to Bayer AG and instructions for submitting a final bid (the
"Final Bid Instruction Letter").
During the second week of August 2000, Cravath, Swaine & Moore was hired by
Bayer AG as its outside legal advisor with respect to the Offer and the Merger.
On August 14, 2000, in accordance with the Final Bid Instruction Letter,
Bayer AG and Parent submitted a bid for the enterprise value of the Company.
Bayer AG and Parent also submitted comments to the Merger Agreement and provided
a draft of the Stockholder Agreement pursuant to which significant stockholders
of the Company would agree to support the proposed acquisition of the Company by
Bayer AG in accordance with the terms of the Merger Agreement. Bayer AG stated
that the execution of the
22
<PAGE> 23
Merger Agreement (in the form submitted by Bayer AG) and the Stockholder
Agreement would be a condition for Parent's entry into the proposed transaction.
On August 16, 2000, Dr. Karl-Heinrich Mohrmann, Project Manager, Mergers &
Acquisitions at Bayer AG, and Lars Hanan, a Managing Director at ING Barings
LLC, contacted the Company's financial advisor to discuss Bayer AG's final bid.
It was agreed that Bayer AG and the Company would meet on August 18, 2000 to
further discuss Bayer AG's bid.
On August 18, 2000, representatives of Bayer AG, Parent and the Company,
together with their respective financial and legal advisors, met to negotiate
the purchase price for the Company as well as other terms of the Merger
Agreement and the Stockholder Agreement. Bayer AG indicated that it would be
willing to pay $35 per share in cash, subject to negotiation of a mutually
satisfactory Merger Agreement and Stockholder Agreement, and Bayer AG and the
Company entered into an exclusivity agreement for an initial period to expire on
August 30, 2000.
Between August 18 and August 30, 2000, Bayer AG, Parent, and the Company
and their respective financial and legal advisors worked to finalize the terms
of the Merger Agreement and the Stockholder Agreement. On August 14, 2000, Bayer
AG's Board of Management voted unanimously in favor of the proposed Offer and
Merger, and the Offer and Merger were subsequently approved by Bayer AG's
Supervisory Board. On August 30, 2000, the Company's Board of Directors
unanimously declared the advisability of and approved the Merger Agreement, the
Stockholder Agreement and the transactions contemplated thereby, including the
Offer, the Merger and the transactions contemplated by the Stockholder
Agreement.
On August 30, 2000, Parent, the Purchaser and the Company executed and
delivered the Merger Agreement, Parent, the Purchaser and certain stockholders
of the Company executed and delivered the Stockholder Agreement and the parties
issued a joint press release announcing the execution of the Merger Agreement.
On September 8, 2000, in accordance with the Merger Agreement, the
Purchaser commenced the Offer.
During the Offer, Parent, the Purchaser and Bayer AG intend to have ongoing
contacts with the Company and its directors, officers and stockholders.
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE STOCKHOLDER AGREEMENT; PLANS
FOR THE COMPANY; OTHER AGREEMENTS
Purpose
The purpose of the Offer is to enable Parent 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, with the Company being the surviving
corporation, and each issued Share (other than Shares owned by Parent, the
Purchaser or the Company or a subsidiary of Parent (other than the Purchaser) 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 the price
per Share paid pursuant to the Offer in cash, without interest thereon.
Vote Required To Approve Merger. The DGCL requires, among other things,
that the adoption of any agreement of merger or consolidation of the Company
must be approved and found advisable by the Board of Directors of the Company
and, if the "short-form" merger procedure described below is not available,
adopted 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
23
<PAGE> 24
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. If required by the DGCL, the Company will call and
hold a meeting of its stockholders promptly following the consummation of the
Offer for the purposes of voting upon the adoption of the Merger Agreement. At
any such meeting all Shares then owned by Parent or the Purchaser will be voted
in favor of the adoption of the Merger. If the Purchaser acquires -- through the
Offer, the Merger Agreement, the Stockholder Agreement or otherwise -- voting
power with respect to at least a 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. Accordingly, if, as a result of the Offer or otherwise, the
Purchaser acquires or controls the voting power of at least 90% of the
outstanding Shares, the Purchaser intends to effect the Merger without prior
notice to, or any action by, any other stockholder of the Company.
Conditions to the Merger. The Merger Agreement provides that the
respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver, where permissible, at or prior to the time the Company
files with the Secretary of State of the State of Delaware a certificate of
merger or other appropriate documents in such form as is required by, and
executed in accordance with, the relevant provisions of the DGCL (or such later
time as may be specified therein the "Effective Time") of the following
conditions:
(a) the Merger Agreement shall have been adopted by the affirmative
vote of the stockholders of the Company by the requisite vote in accordance
with the DGCL, if such vote is required by the DGCL;
(b) all regulatory approvals required to consummate the transactions
contemplated by the Merger Agreement (whether United States, federal or
state, or foreign) shall have been obtained and shall remain in full force
and effect, and all statutory waiting periods in respect thereof shall have
been expired;
(c) no statute, rule or regulation shall have been enacted or
promulgated by any governmental authority (whether United States, federal
or state, or foreign) which prohibits the consummation of the Merger;
(d) there shall be no order or injunction of a court of competent
jurisdiction (whether United States, federal or state, or foreign) in
effect precluding, restricting, prohibiting, preventing, conditioning or
making illegal the consummation of the Merger; and
(e) the Purchaser shall have purchased all Shares validly tendered and
not withdrawn pursuant to the Offer.
Termination of the Merger Agreement. The Merger Agreement may be
terminated and the Merger may be abandoned at any time notwithstanding adoption
of the Merger by the stockholders of the Company, but prior to the Effective
Time:
(a) by mutual written consent of Parent and the Company;
(b) by Parent or Purchaser if an occurrence or circumstance (except
where Parent's or Purchaser's failure to fulfill any of their respective
obligations under the Merger Agreement is the cause of or resulted in such
occurrence or circumstance and except where there has been a material
breach of any representation or warranty on the part of Parent or Purchaser
which has not been cured) has rendered the conditions set forth in Section
14 hereof (A) incapable of being satisfied prior to the Expiration Date
(assuming for such purposes that the Company has exercised its right to
cause the Expiration Date to be extended to the Mandatory Extension Date
(as defined in the Merger Agreement), if later in accordance with Section
1.01(a) of the Merger Agreement) or (B) not satisfied as of the actual
Expiration Date, and
24
<PAGE> 25
either (x) Purchaser shall have failed to commence the Offer within seven
business days after the date of the Merger Agreement, or (y) the Offer
shall have been terminated or shall have expired without Purchaser having
purchased any Shares pursuant to the Offer;
(c) by either Parent or the Company if any court of competent
jurisdiction or other governmental body (whether United States, federal or
state, or foreign) shall have issued an order, decree or ruling or taken
any other action precluding, restricting, prohibiting, preventing,
conditioning or making illegal the Merger (whether temporary, preliminary
or permanent) and such order, decree, ruling or other action shall have
become final and nonappealable;
(d) by Parent or Purchaser prior to the purchase of Shares pursuant to
the Offer, if (i) Parent or Purchaser shall discover that any
representation or warranty made by the Company in the Merger Agreement is
untrue at the time such representation or warranty was made or (except for
those representations and warranties made as of a particular date which
need only be true and correct as of such date) shall not be true and
correct as of the Expiration Date, except where the failure to be so true
and correct would not have a Material Adverse Effect (as defined below
under "Representations and Warranties"), provided that if any such failure
to be so true and correct is capable of being cured prior to the Mandatory
Extension Date, if later, then Parent and Purchaser may not terminate the
Merger Agreement under this paragraph (d) until such Mandatory Extension
Date, (ii) there shall have been a breach of any covenant or agreement on
the part of the Company under the Merger Agreement resulting in a Material
Adverse Effect which shall not be capable of being cured prior to the
Expiration Date (assuming for such purposes that the Company has exercised
its right to cause the Expiration Date to be extended to the Mandatory
Extension Date, if later, in accordance with Section 1.01(a) of the Merger
Agreement), (iii) the Board (x) fails to recommend approval and adoption of
the Merger Agreement and the Merger by the stockholders of the Company or
withdraws or amends or modifies in a manner adverse to Parent and Purchaser
its recommendation or approval in respect of the Merger Agreement, the
Offer or the Merger, (y) makes any recommendation with respect to an
Alternative Acquisition (as defined below under "Takeover Proposals") other
than a recommendation to reject such Alternative Acquisition, or (z)
publicly announces its intention to enter into an Alternative Acquisition
or (iv) there shall not have been validly tendered and not withdrawn prior
to the expiration of the Offer at least a majority of the Shares, on a
fully diluted basis, and on or prior to such date a person shall have made
a written Alternative Acquisition Proposal (as defined below under
"Takeover Proposals") to the Company and not withdrawn such proposal;
(e) by the Company prior to the purchase of the Shares pursuant to the
Offer, if (i) the Company shall discover that any representation or
warranty made by Parent or Purchaser in the Merger Agreement is untrue at
the time such representation or warranty was made or (except for those
representations and warranties made as of a particular date which need only
be true and correct as of such date) shall not be true and correct as of
the date of the purchase of any Shares pursuant to the Offer (the
"Consummation of the Offer"), except where the failure to be so true and
correct would not materially adversely affect (or materially delay) the
consummation of the Offer or the Merger, provided that if any such failure
to be so true and correct is capable of being cured prior to the Expiration
Date, then the Company may not terminate the Merger Agreement under this
paragraph (e) until the Expiration Date and unless at such time the matter
has not been cured, or (ii) there shall have been a material breach of any
covenant or agreement in the Merger Agreement on the part of Parent or
Purchaser which materially adversely affects (or materially delays) the
consummation of the Offer or the Merger which shall not be capable of being
cured prior to the Expiration Date, or (iii) prior to the consummation of
the Offer, the Board shall have withdrawn, or modified or changed in a
manner adverse to Parent or Purchaser, its approval or recommendation of
the Offer, this Agreement, or the Merger in order to approve and permit the
Company to execute a definitive agreement providing for a Superior Company
Proposal (as defined below under "Takeover Proposals") in accordance with
the provisions of the fifth paragraph below under
25
<PAGE> 26
"Takeover Proposals"; provided, that the Company may not terminate the
Merger Agreement pursuant to the circumstances described in this clause
(iii) unless:
(A) at least five business days prior to terminating the Merger
Agreement pursuant to this paragraph (e) the Company has provided Parent
with written notice advising Parent that the Board has received a
Superior Company Proposal that it intends to accept, specifying the
material terms and conditions of such Superior Company Proposal and
identifying the person making such Superior Company Proposal;
(B) the Company has caused its financial and legal advisors to
negotiate in good faith with Parent to attempt to make such adjustments
in the financial terms of an amendment to this Agreement that are equal
or superior to the financial terms of such Superior Company Proposal;
and
(C) the Company has paid to (or concurrently pays to) Parent a
termination fee in accordance with the third paragraph below under "Fees
and Expenses; Termination Fee"; or
(f) by the Company if there shall not have been a material breach of
any representation, warranty, covenant or agreement on the part of the
Company which has not been cured and (i) Purchaser shall have failed to
commence the Offer within seven business days of the Merger Agreement, (ii)
the Offer shall have been terminated or shall have expired without
Purchaser having purchased any Shares pursuant to the Offer or (iii)
Purchaser shall have failed to pay for Shares pursuant to the Offer prior
to the Expiration Date.
Takeover Proposals. The Merger Agreement provides that the Company and its
subsidiaries will not (and the Company will not permit any of its or any of its
subsidiaries' officers, directors or employees or any investment banker,
financial advisor, attorney, accountant or other representative retained by it
or any of its subsidiaries to) directly or indirectly (i) solicit, encourage,
engage in discussions or negotiate with any Person (whether such discussions or
negotiations are initiated by the Company or otherwise) or take any other action
intended or designed to facilitate any inquiry or effort of any Person (other
than Parent) relating to the possible acquisition of the Company (whether by way
of merger, purchase of capital stock, purchase of assets or otherwise) or any
material portion of its capital stock or assets (with any such efforts by any
such Person, including a firm proposal to make such an acquisition, to be
referred to as an "Alternative Acquisition", (ii) provide information with
respect to the Company to any Person, other than Parent, relating to a possible
Alternative Acquisition by any Person, other than Parent, (iii) enter into an
agreement with any Person, other than Parent, providing for a possible
Alternative Acquisition, or (iv) make or authorize any statement, recommendation
or solicitation in support of any possible Alternative Acquisition by any
Person, other than by Parent. Notwithstanding the foregoing, prior to the
acceptance for payment of Shares pursuant to, and subject to the conditions of,
the Offer the Board may, to the extent required by the fiduciary obligations of
the Board, as determined in good faith by the Board (including a majority of the
disinterested members thereof) after consultation with independent counsel, in
response to a proposal for an Alternative Acquisition ("Alternative Acquisition
Proposal") that the Board determines, in good faith after consultation with
independent counsel and an independent financial advisor, is or is reasonably
likely to result in a Superior Company Proposal (as defined below), that was not
solicited by the Company and that did not otherwise result from a breach of the
Company's obligations described above and subject to providing prior written
notice of its decision to take such action to Parent, (x) furnish information
with respect to the Company to the Person or group making such Alternative
Acquisition Proposal and its representatives pursuant to a confidentiality
agreement with terms not materially more favorable to the Person making the
Alternative Acquisition Proposal than those applicable to Parent under the
Letter Agreement dated May 12, 2000 between Bayer AG and the Company (except
that such confidentiality agreement need not contain any standstill provisions)
and (y) participate in discussions and negotiations with such Person or group
and its representatives to the extent required by the fiduciary duties of the
Board regarding such Alternative Acquisition Proposal. The Company will, and
will cause its representatives to, cease immediately all discussions and
negotiations regarding any proposal that constitutes, or may reasonably be
expected to lead to, an Alternative Acquisition Proposal.
Any violation of the restrictions described in this "Takeover Proposals"
section by any director, officer or employee of the Company or any of its
subsidiaries or any investment banker, financial advisor, attorney,
26
<PAGE> 27
accountant or other representative of the Company or any of its subsidiaries
shall be deemed to be a breach of the foregoing provisions of the Merger
Agreement.
"Person" means any corporation, individual, partnership, limited liability
company, trust, other entity or group (as defined in the Exchange Act).
"Superior Company Proposal" means any proposal made by a third party to
acquire all or substantially all the equity securities or assets of the Company,
or other transaction for the acquisition of all or substantially all the equity
securities or assets of the Company through a tender or exchange offer, a
merger, a consolidation, a liquidation or dissolution, a recapitalization, a
sale or a joint venture, (i) that is not subject to a financing contingency,
(ii) that is on terms which the Board determines in its good faith judgment
(after consultation with a financial advisor of nationally recognized
reputation, with only customary qualifications, and independent legal counsel)
to be superior for the holders of Shares, from a financial point of view, to the
Offer and the Merger, taking into account all of the terms and conditions of
such proposal and the Merger Agreement (including any proposal by Parent to
amend the terms of the Merger Agreement, the Offer and the Merger) and (iii)
that is reasonably likely to be consummated, taking into account all financial,
regulatory, legal and other aspects of such proposal (including, without
limitation, any antitrust or competition law approvals or non-objections).
The Merger Agreement further provides that, except as described below,
neither the Board nor any committee thereof shall (i) withdraw or modify, or
propose to withdraw or modify, in a manner adverse to Parent or Purchaser, the
approval or recommendation by the Board or any such committee of the Merger
Agreement, the Offer or the Merger, (ii) approve or cause or permit the Company
to enter into any letter of intent, agreement in principle, acquisition
agreement or similar agreement constituting or relating to, or which is intended
to or is reasonably likely to lead to any Alternative Acquisition Proposal,
(iii) approve or recommend, or propose to approve or recommend, any Alternative
Acquisition Proposal or (iv) agree or resolve to take actions set forth in
clauses (i), (ii) or (iii) of this sentence. Notwithstanding the foregoing, if,
prior to the acceptance for payment of Shares pursuant to the Offer (the
"Applicable Period"), the Board receives a Superior Company Proposal and the
Board determines in good faith, after consultation with independent counsel,
that it is necessary to do so in order to comply with its fiduciary obligations,
the Board may, during the Applicable Period, in response to a Superior Company
Proposal that was unsolicited and did not otherwise result from a breach of the
Company's obligations described above, withdraw its approval or recommendation
of the Offer, the Merger and the Merger Agreement and, in connection therewith,
approve or recommend such Superior Company Proposal concurrently with a
termination of this Agreement in accordance with paragraph (e)(iii) above under
"Termination of the Merger Agreement".
In addition to the obligations of the Company described in the preceding
paragraphs in this "Takeover Proposals" section, the Merger Agreement provides
that the Company will promptly, and in any event within 24 hours, advise Parent
orally and in writing of any Alternative Acquisition Proposal or any inquiry
with respect to or that could lead to any Alternative Acquisition Proposal, the
identity of the person or group making any such Alternative Acquisition Proposal
or inquiry and the material terms of any such Alternative Acquisition Proposal
or inquiry. The Company has agreed to (i) keep Parent reasonably informed of the
status, including any change to the details, of any such Alternative Acquisition
Proposal or inquiry and (ii) provide Parent as soon as practicable after receipt
or delivery thereof with copies of all material correspondence and other written
material sent or provided to the Company from any third party in connection with
any Alternative Acquisition Proposal or sent or provided by the Company to any
third party in connection with any Alternative Acquisition Proposal.
The Merger Agreement provides that the foregoing provisions will not
prohibit the Company from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making
any required disclosure to the Company's stockholders if, in the good faith
judgment of the Board, after consultation with independent counsel, failure so
to disclose could be inconsistent with its obligations under applicable law,
provided, however, that except as set forth above under this "Takeover
Proposals" section, neither the Board nor any committee thereof shall withdraw
or modify, or propose to
27
<PAGE> 28
withdraw or modify its position with respect to the Merger Agreement, the Offer
or the Merger or adopt, approve or recommend, or propose to adopt, approve or
recommend any Alternative Acquisition Proposal.
Fees and Expenses; Termination Fee. The Merger Agreement provides that
except as set forth below, all costs and expenses incurred in connection with
the Merger Agreement, the Offer, the Merger and the other transactions
contemplated by the Merger Agreement shall be paid by the party incurring such
costs or expenses.
If Parent or Purchaser have terminated the Merger Agreement pursuant to the
provisions described in clauses (d)(i), (d)(ii) or (d)(iv) above under
"Termination of the Merger Agreement", then the Company shall promptly reimburse
Parent for all documented out-of-pocket expenses of Parent and its subsidiaries,
up to an amount of $1,000,000, incurred in connection with the transactions
contemplated by the Merger Agreement (which $1,000,000 limit shall not apply in
the event of any intentional or knowing breach by the Company of the Merger
Agreement).
If Parent or Purchaser have terminated the Merger Agreement pursuant to the
provisions described in clause (d)(iii) above under "Termination of the Merger
Agreement" or the Company has terminated the Merger Agreement pursuant to the
provisions described in clause (e)(iii) above under "Termination of the Merger
Agreement", then in any such case the Company will, simultaneously with or prior
to such termination, pay Parent a termination fee of $12,000,000 (the
"Termination Fee") and shall have no obligation to pay any amounts under the
immediately preceding paragraph.
If Parent or Purchaser have terminated the Merger Agreement pursuant to the
provisions described in clauses (d)(i), (d)(ii) or (d)(iv) above under
"Termination of the Merger Agreement" and within twelve months after such
termination either (x) the Company enters into an agreement to merge with
another entity or enters into an agreement pursuant to which more than fifty
percent (50%) of the issued and outstanding Shares are acquired by another
person or pursuant to which new voting securities are issued to another person
or to the stockholders of another entity which will aggregate more than fifty
percent (50%) of the outstanding voting securities of the Company after such
issuance, (y) another person acquires more than fifty percent (50%) of the
issued and outstanding Shares, or (z) the Company enters into an agreement with
respect to, or consummates, an Alternative Acquisition (any agreement referred
to in clause (x), (y) or (z) of this paragraph, an "Acquisition Agreement"),
then in any such case the Company shall promptly, but in no event later than two
business days after the date of any of the events in (x), (y) or (z), pay Parent
the excess of the Termination Fee over any amounts paid to Parent pursuant to
the second paragraph of this "Fees and Expenses; Termination Fee" section;
provided, however, that if Parent or the Purchaser have terminated the Merger
Agreement pursuant to paragraph (d)(i) under "Termination of the Merger
Agreement", then the Company shall be obligated to make the payments provided by
this paragraph only if the applicable consideration per Share payable in respect
of the alternative transaction described above does not equal or exceed the
Transaction Consideration (as defined in the Merger Agreement).
Notwithstanding any other provision of the Merger Agreement, no fee or
expense reimbursement shall be paid pursuant to any of the preceding paragraphs
under this "Fees and Expenses; Termination Fee" section to any party who shall
be in material breach of its obligations under the Merger Agreement (which
breach has not been cured after notice and a reasonable opportunity to cure).
For purposes of this paragraph, Parent and Purchaser shall be deemed a single
party.
Conduct of Business. The Merger Agreement provides that during the period
from the date of the Merger Agreement to such time at which directors of the
Company affiliated with or designated by Parent or Purchaser shall constitute a
majority of the Board (such time, the "Board Transition Date"), the Company and
its subsidiaries will each conduct its operations according to its ordinary and
usual course of business, consistent with past practice; will use their
reasonable efforts to preserve substantially intact the business organization of
the Company and its subsidiaries, to maintain adequate insurance coverage, to
keep available the services of their current officers and employees and to
preserve the current relationships of the Company and its subsidiaries with
customers, suppliers and other persons with which the Company or any of its
subsidiaries has significant business relationships to the end that its goodwill
and ongoing business shall not be impaired at the Effective Time. Without
limiting the generality of the foregoing, and except as otherwise
28
<PAGE> 29
contemplated by the Merger Agreement, neither the Company nor any of its
subsidiaries will, prior to the Board Transition Date, without the prior written
consent of Parent:
(i) issue, sell or pledge, or authorize or propose the issuance, sale
or pledge of (A) additional shares of capital stock of any class of the
Company, any Voting Company Debt (as defined below) or other voting
securities, or securities convertible into any such shares, or any rights,
warrants or options to acquire any such shares or other convertible
securities, other than such issuance of Shares pursuant to the exercise of
Options (outstanding on the date of the Merger Agreement) in accordance
with their terms as in effect on the date of the Merger Agreement, or, in
accordance with the Rights Agreement, the Rights, or, in accordance with
the Rights Agreement, Series A Junior Participating Preferred Shares
pursuant to the exercise of the Rights, in each case outstanding on the
date of the Merger Agreement, or (B) any other securities in respect of, in
lieu of or in substitution for, Shares outstanding on the date of the
Merger Agreement or "Voting Company Debt" (which shall mean any bond,
debenture or indebtedness having the right to vote on matters on which the
stockholders may vote),
(ii) purchase or otherwise acquire, or propose to purchase or
otherwise acquire, any outstanding Shares, except for Restricted Shares (as
defined in the Merger Agreement) pursuant to the terms and conditions of
the issuance of such Shares,
(iii) declare, set aside or pay any dividend or distribution on any
Shares,
(iv) propose or adopt any amendments to its Restated Certificate of
Incorporation or By-Laws,
(v) sell, lease, license, encumber or otherwise dispose of (A) any
equity securities of its subsidiaries, or (B) any other assets or property
except in the ordinary course of business consistent with past practice,
(vi) merge or consolidate with any other person, acquire any equity
securities or any material amount of assets (other than purchases of
inventory in the ordinary course of business consistent with past practice)
of any other person or enter into any partnership or joint venture with any
other person,
(vii) sell, transfer, license, sublicense or otherwise dispose of any
material intellectual property rights (other than in the ordinary course of
business consistent with past practice) or amend or modify any existing
agreements with respect to any material intellectual property rights or
third party intellectual property rights,
(viii) (A) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse or otherwise as an accommodation
become responsible for, the obligations of any other person other than for
an amount not exceeding $5,000,000 in the aggregate, or make any loans,
advances, or capital contributions to, or investments in, any other person,
(B) enter into or amend any material contract or agreement other than in
the ordinary course of business consistent with past practice, (C)
authorize or make any capital expenditures or purchases of fixed assets
that are not currently budgeted and that in the aggregate exceeds
$2,000,000, (D) terminate any material contract (other than an expiration
in accordance with the terms of such contract as in effect on the date of
the Merger Agreement) to which the Company is a party or (E) enter into or
amend any contract, agreement, commitment or arrangement to effect any of
the matters prohibited hereunder,
(ix) take any action, other than as required by GAAP, to change
accounting policies or procedures or cash maintenance policies or
procedures (including, without limitation, procedures with respect to
revenue recognition, capitalization of development costs, payments of
accounts payable and collection of accounts receivable),
(x) make any tax election not required by law or inconsistent with
past practice or settle or compromise any tax liability,
(xi) pay, discharge, settle, or satisfy any lawsuits, claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction
in the ordinary course of business consistent with past practice of
liabilities reflected or
29
<PAGE> 30
reserved against on the Company's July 31, 2000 pro forma balance sheet or
incurred in the ordinary course of business consistent with past practice
or other payments, discharges or satisfactions which in the aggregate do
not exceed $250,000 or waive the benefits of, or agree to modify in any
manner, any confidentiality or standstill agreement,
(xii) (A) grant to any employee, officer, director, consultant or
independent contractor of the Company or any of its subsidiaries any
increase in compensation or pay any bonus, other than in the ordinary
course of business consistent with past practice to persons that are not
directors or executive officers of the Company of any of its subsidiaries,
(B) grant to any employee, officer, director, consultant or independent
contractor of the Company or any of its subsidiaries any increase in
severance or termination pay, (C) establish, adopt, enter into or amend any
Company Benefit Agreement (as defined in the Merger Agreement), (D)
establish, adopt, enter into or amend in any material respect any
collective bargaining agreement or Company Benefit Plan (as defined in the
Merger Agreement) (except that the Company may enter into negotiations
beginning November 1, 2000 and thereafter, subject to prior consultation
with Parent, amend any collective bargaining agreement which would
otherwise expire in accordance with its terms prior to January 1, 2001),
(E) take any action to accelerate any rights or benefits, take any action
to fund or in any other way secure the payment of compensation or benefits
under any Company Benefit Agreement or Company Benefit Plan, or make any
material determinations not in the ordinary course of business consistent
with past practice, under any collective bargaining agreement or Company
Benefit Plan or Company Benefit Agreement or (F) amend or modify or grant
any option to purchase Shares granted under the Company Stock Plans, in
each case above other than (i) changes that are required by applicable law
or (ii) to satisfy obligations existing as of the date of the Merger
Agreement or (iii) in connection with the hiring of new employees in the
ordinary course of business consistent with past practice,
(xiii) (A) take any action that (x) would make any representation and
warranty of the Company hereunder that is qualified by materiality or
Material Adverse Effect inaccurate in any respect at, or as of any time
prior to, the Effective Time or (y) would make any representation or
warranty of the Company hereunder that is not so qualified to be inaccurate
in any material respect at, or as of any time prior to, the Effective Time
or (B) omit to take any action reasonably necessary to prevent any such
representation or warranty from being inaccurate in any respect or material
respect, as the case may be, at any such time, or
(xiv) agree in writing or otherwise to take any of the foregoing
actions or any action which would prevent the conditions to Purchaser's
obligation to purchase Shares under the Offer or Parent's and Purchaser's
obligation to consummate the Merger from being satisfied.
Board of Directors. The Merger Agreement provides that subject to the
requirements of applicable law, promptly upon the purchase by Purchaser of
Shares pursuant to and subject to the conditions of the Offer and from time to
time thereafter, Purchaser shall be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Board as will give
Purchaser representation on the Board equal to the product of the number of
directors on the Board, after giving effect to such representation, and the
percentage that such number of Shares so purchased (or subsequently acquired by
Purchaser or any of its subsidiaries or affiliates from time to time, in
accordance with applicable law, in open market or privately negotiated
transactions, at such price or prices as they may determine in their sole
discretion) bears to the total number of issued and outstanding Shares, and
promptly upon request by Purchaser, the Company shall either increase the size
of the Board or secure the resignation of such number of directors as is
necessary to enable Purchaser's designees to be elected to the Board and shall
cause Purchaser's designees to be so elected. At such times the Company will use
its reasonable efforts to cause individuals designated by Purchaser to
constitute the same percentage as is on the Board of (i) each committee of the
Board (other than any committee of the Board established to take action pursuant
to the Merger Agreement), (ii) each board of directors of each subsidiary of the
Company designated by Purchaser and (iii) each committee of each such board.
Notwithstanding the foregoing, until the time Purchaser purchases Shares
representing a majority of the Company's outstanding voting power on a fully
diluted basis, the Company shall use its reasonable efforts to ensure that all
of the members of the Board and such boards and committees as of the date of the
Merger
30
<PAGE> 31
Agreement who are not employees of the Company and who are not otherwise
affiliated with Purchaser shall remain members of the Board and such boards and
committees until the Effective Time.
The Company's obligations to appoint designees to the Board shall be
subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder. The Company shall promptly take all actions requested by Parent
necessary to effect any such election, including all actions required under
Section 14(f) and Rule 14f-1 in order to fulfill its obligations described in
this "Board of Directors" section. Parent or Purchaser will supply to the
Company in writing and be solely responsible for any information with respect to
any of them and their nominees, officers, directors and affiliates required by
Section 14(f) and Rule 14f-1 to be included in the information statement (the
"information statement").
Following the election or appointment of Purchaser's designees pursuant to
the provisions of this section and prior to the Effective Time, any amendment of
the Merger Agreement or any provisions of the Restated Certificate of
Incorporations or By-Laws of the Company which directly or indirectly affects
the consummation of the Merger or the terms or the timing thereof, any extension
by the Company of the time for the performance of any of the obligations or
other acts of Parent or Purchaser or waiver of any of the Company's rights
hereunder, will require the concurrence of a majority of the directors of the
Company then in office who are not designated by Purchaser or otherwise
affiliated with Purchaser (the "Independent Directors").
Stock Options. The Merger Agreement provides that each option to purchase
Shares granted under the Company Stock Plans (an "Option"), whether vested or
unvested and whether or not presently exercisable, outstanding immediately prior
to the acceptance for payment of Shares pursuant to the Offer, shall be
cancelled immediately prior to the acceptance for payments of Shares pursuant to
the Offer, and in consideration therefor the holder thereof shall be solely
entitled to receive, and shall receive a cash payment from the Company in an
amount equal to the product of (i) the excess, if any, of $35.00 per Share in
cash or any higher price as shall be paid in respect of the Shares in the Offer
over the exercise price per Share of the Option and (ii) the number of Shares
covered by such Option (such payment, if any, to be net of applicable
withholding and excise taxes). Such cash payment shall be paid at or as soon as
practicable following the Effective Time. As of the Effective Time, all plans
and agreements pursuant to which such Options were granted shall terminate and
all rights under any provision of any other plan, program or arrangement
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any of its subsidiaries, other than the right to
receive cash payments under the Company's Executive Bonus Plan and Share
Participation Plan (each as defined in the Merger Agreement) shall be
terminated, and no person shall have any continuing rights thereunder. The
Company shall take all action reasonable and necessary to effectuate the
foregoing and to ensure that, after the Effective Time, no person shall have any
right under any plan, program or arrangement with respect to equity securities
of the Company or any subsidiary thereof, other than the right to receive cash
payments under the Company's Executive Bonus Plan and Share Participation Plan.
Benefits Matters. The Merger Agreement provides that following the Board
Transition Date, Parent will cause the Company, continuing as the surviving
corporation following the Merger (the "Surviving Corporation"), to comply with
the applicable terms and provisions of the employment, retirement, termination,
severance and similar agreements and arrangements with officers or other
employees of the Company and its subsidiaries which are in effect as of the
Board Transition Date.
Parent agrees that for a period of twelve (12) months following the Board
Transition Date, it will, or will cause the Surviving Corporation and its
subsidiaries to, continue to maintain the employee benefit plans (other than
equity or equity-based plans) for employees and former employees of the Company
and its subsidiaries which are in effect as of the Board Transition Date, or
other plans that, in the aggregate, provide benefits that are comparable in all
material respects (other than equity or equity-based plans) to the benefits in
effect as of the Board Transition Date with respect to such employees.
Indemnification and Insurance. Notwithstanding the fact that the Restated
Certificate of Incorporation and the By-laws of the Company will be the
Certificate of Incorporation and By-laws of the Surviving Corporation until
thereafter changed or amended as provided in the Merger Agreement or by law,
Parent and Purchaser agree that all rights to indemnification existing in favor
of, and all limitations on the personal
31
<PAGE> 32
liability of, each present and former director, officer, employee or agent of
the Company or any of its subsidiaries or a director, officer, employee, agent
or trustee of any employee benefit plan for employees of the Company or any of
its subsidiaries, and each person who is or was then serving in any such
capacity (or any person who is or was then serving any other corporation or
entity in any such capacity at the request of the Company) (individually, an
"Indemnified Party" and, collectively, the "Indemnified Parties") provided for
in the Company's Restated Certificate of Incorporation or By-Laws or similar
organizational documents for any Company subsidiary as in effect on the date of
the Merger Agreement with respect to matters occurring prior to the Effective
Time shall survive the Merger and shall continue in full force and effect for a
period of not less than seven (7) years from the Effective Time; provided,
however, that all rights to indemnification in respect of any claim for
indemnification for losses, damages or liabilities of any kind or nature
incurred which is asserted or made within such period shall continue until the
final disposition of such claim. Notwithstanding the foregoing, no party
obligated to provide indemnification hereunder (the "Indemnifying Party") shall
be obligated under this "Indemnification and Insurance" section to make any
payments in respect of a settlement effected without its written consent (which
consent shall not be unreasonably withheld).
Prior to the Effective Date, the Company shall obtain from the Company's
current carrier an extended reporting coverage endorsement to the Company's
current Directors and Officers Liability policy, which endorsement shall cover
claims emanating from occurrences prior to the Effective Time, and which shall
extend coverage to all Indemnified Parties who are currently covered by the
Company's Directors and Officers Liability policy. Parent and the Surviving
Corporation shall cause such coverage endorsement to be maintained in effect for
a period of seven (7) years after the Effective Date.
The Indemnification and Insurance provisions described above shall survive
the closing of the Offer and the Merger, are intended to benefit the Company,
the Surviving Corporation and each of the Indemnified Parties (each of whom
shall be entitled to enforce the "Indemnification and Insurance" provisions
described above against Parent or the Surviving Corporation, as the case may be)
and shall be binding on all successors and assigns of Parent and the Surviving
Corporation.
In the event the Surviving Corporation or Parent or any of their respective
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, assume the obligations described in
this "Indemnification and Insurance" section.
Reasonable Efforts; Notification. The Merger Agreement provides that
subject to the terms and conditions provided therein, each of the parties
thereto agrees promptly to effect all necessary filings under the HSR Act and
use its reasonable efforts to secure all government clearances (whether United
States, federal or state or foreign). Each of the parties thereto further agrees
to use its reasonable best efforts to take, or cause to be taken, all action,
and to do, or cause to be done, all other things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by the Merger Agreement. In particular, Parent and the
Company will use their respective reasonable efforts to obtain all other
consents, authorizations, orders and approvals required in connection with, and
waivers of any violations, breaches and defaults that may be caused by, the
consummation of the Offer, the Merger or the other transactions contemplated by
the Merger Agreement, to obtain all necessary consents, approvals or waivers
from third parties for the consummation of the transactions, and to execute and
deliver any additional instruments necessary to consummate the transactions
contemplated by the Merger Agreement and to fully carry out the purposes of the
Merger Agreement. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of the Merger
Agreement, the proper officers and directors of each party to the Merger
Agreement shall take all such reasonably necessary action. Notwithstanding
anything in this "Reasonable Efforts; Notification" section to the contrary, in
no event shall Parent or Purchaser be required to agree to hold separate or
divest any business or assets in order to satisfy their respective obligations
described hereunder.
32
<PAGE> 33
The Company has agreed to give prompt notice to Parent, and Parent and
Purchaser have agreed to give prompt notice to the Company, of (i) the
occurrence or nonoccurrence of any event, the occurrence or nonoccurrence of
which would be likely to cause any representation or warranty contained in the
Merger Agreement to be untrue or inaccurate in any material respect at or prior
to the Effective Time, (ii) any material failure of the Company, Parent or
Purchaser, as the case may be, to comply with or satisfy in any material respect
any covenant, condition or agreement to be complied with or satisfied by it
under the terms of the Merger Agreement, (iii) any notice or other communication
from any third party alleging that the consent of such third party is required
in connection with the transactions contemplated by the Merger Agreement, or
(iv) any Material Adverse Effect or material adverse effect on the financial
condition, assets, liabilities, business or results of operations of Parent and
its subsidiaries taken as a whole.
The Company has agreed to confer on a regular and frequent basis with
Parent with respect to the Company's and its subsidiaries' business and
operations and other matters relevant to the Offer and the Merger, and each of
Parent and the Company has agreed to promptly advise the other, orally and in
writing, of any change or event, including, without limitation, any complaint,
investigation or hearing by any governmental entity (or communication indicating
the same may be contemplated) or the institution or threat of litigation,
having, or which, insofar as can be reasonable foreseen, would have, a Material
Adverse Effect or a material adverse effect on the financial condition, assets,
liabilities, business or results of operations of Parent and its subsidiaries
taken as a whole.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties, including representations relating to
corporate existence and power; capitalization; corporate authorizations;
subsidiaries; absence of certain changes; Commission filings; contracts; absence
of undisclosed liabilities; government authorizations; title to property;
litigation; compliance with laws; employment agreements; benefit plans; labor
matters; environmental matters; taxes; intellectual property; accuracy of
certain disclosures; and the opinion of the Company's financial advisor.
Certain representations and warranties in the Merger Agreement made by the
Company and Parent are qualified as to "materiality" or "material adverse
effect". For purposes of the Merger Agreement and the Offer, the term "Material
Adverse Effect" means any change, event, occurrence, state of facts or effect
that is material and adverse to the condition (financial or otherwise), assets,
business, operations, properties or results of operations of the Company and its
subsidiaries taken as a whole (provided that no such change, event, occurrence,
state of facts or effect shall be deemed to be a Material Adverse Effect unless,
in aggregate with all other such changes, events, occurrences, state of facts or
effects, there has been or could reasonably be expected to be liabilities,
damages or other loss to the Company and its subsidiaries taken as a whole in
excess of $4,200,000), or, could reasonably be expected to, directly or
indirectly, prevent or materially impede or delay the consummation of the Offer,
the Merger or the other material transactions contemplated by the Merger
Agreement, except for any change, event, occurrence, state of facts or effect
relating to (i) the identity of Parent or the Purchaser, or (ii) past, existing
or prospective general economic or regulatory conditions affecting at any time
the Company or any of its subsidiaries or the industry or industries in which
any of them operate.
Procedure for Amendment, Extension or Waiver. The Merger Agreement may be
amended by action taken by or on behalf of the Boards of Directors of the
Company (excluding any representative of Parent or any subsidiary of Parent),
Parent and the Purchaser at any time before or after adoption of the Merger
Agreement by the stockholders of the Company but, after any such adoption, no
amendment shall be made which by law requires the further approval by such
stockholders without such further approval. The Merger Agreement may not be
amended except by an instrument in writing signed on behalf of all the parties.
Subject to provisions of Section 1.01 of the Merger Agreement, at any time
prior to the Effective Time, the parties hereto, by action taken by or on behalf
of the respective Boards of Directors of the Company (excluding any
representative of Parent or any subsidiary of Parent), Parent and the Purchaser,
may (i) extend the time for the performance of any of the obligations or other
acts of any other applicable party to the Merger Agreement, (ii) waive any
inaccuracies in the representations and warranties contained in the Merger
Agreement by any other applicable party or in any document, certificate or
writing delivered pursuant
33
<PAGE> 34
to the Merger Agreement by any other applicable party or (iii) subject to
applicable law, waive compliance with any of the agreements of any other
applicable party or with any conditions to its own obligations. Any agreement on
the part of any other applicable party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
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 (d)(1)
to the Schedule TO. The Merger Agreement should be read in its entirety for a
more complete description of the matters summarized above.
The Stockholder Agreement
Tender Offer. The Stockholder Agreement provides that with respect to the
Offer: (a) promptly, and in no event later than the tenth business day following
the commencement of the Offer or, if later, the third business day following
receipt of the applicable Offer Documents (as defined in the Merger Agreement),
each stockholder of the Company party thereto (each, a "Stockholder" and
collectively, the "Stockholders") shall tender to the Depositary (i) a Letter of
Transmittal with respect to the Initial Stockholder Shares (as defined in the
Stockholder Agreement) and all other Shares acquired by such Stockholder in any
capacity after the date of the Stockholder Agreement and prior to the
termination of the Stockholder Agreement in accordance with its terms whether
upon the exercise of options, warrants or rights, the conversion or exchange of
convertible or exchangeable securities, or by means of purchase, dividend,
distribution or otherwise (collectively, including the Initial Stockholder
Shares, the "Stockholder Shares" of such Stockholder), complying with the terms
of this Offer to Purchase, (ii) the certificates representing the Stockholder
Shares of such Stockholder, and (iii) all other documents or instruments
required to be delivered pursuant to the terms of this Offer to Purchase;
(b) each Stockholder shall not, subject to applicable law, withdraw the
tender of its Stockholder Shares effected in accordance with foregoing paragraph
(a); provided, however, that such Stockholder may decline to tender, or may
withdraw, any and all of the Stockholder Shares if, without the prior consent of
such Stockholder, Purchaser amends the Offer to (i) reduce the Transaction
Consideration (as defined in the Merger Agreement) to less than $35.00 per
share, net to the sellers in cash (the "Initial Transaction Consideration"),
(ii) reduce the number of Shares subject to the Offer, (iii) change the form of
consideration payable in the Offer or (iv) amend or modify any term or condition
of the Offer in a manner adverse to the stockholders of the Company (other than
insignificant changes or amendments or other than to waive any condition other
than the Minimum Condition). Each Stockholder shall give Purchaser at least two
business days' prior notice of any withdrawal of its Stockholder Shares pursuant
to the immediately preceding proviso; and
(c) Purchaser and Parent may allow the Offer to expire without accepting
for payment or paying for any Stockholder Shares, on the terms and conditions
set forth in this Offer to Purchase. If all Stockholder Shares validly tendered
and not withdrawn are not accepted for payment and paid for in accordance with
the terms of this Offer to Purchase, they shall be returned to the Stockholders,
whereupon they shall continue to be held by the Stockholders subject to the
terms and conditions of the Stockholder Agreement.
Consent and Voting. The Stockholder Agreement provides that each
Stockholder revokes any and all previous proxies granted with respect to its
Stockholder Shares. By entering into the Stockholder Agreement, each Stockholder
consents to the Merger Agreement and the transactions contemplated thereby,
including the Merger. So long as the Stockholder Agreement is in effect and has
not been terminated, each Stockholder agrees (i) to vote all Stockholder Shares
acquired by each Stockholder in favor of adoption of the Merger Agreement and
approval of the Merger and the other transactions contemplated thereby and (ii)
to vote all Stockholder Shares acquired by such Stockholder against (a) any
Alternative Acquisition and against any Alternative Acquisition Proposal, (b)
any merger agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the Company,
and (c) any amendment to the Company's certificate of incorporation or the
Company's by-laws or other proposal or transaction involving the Company or any
subsidiary of the Company, which amendment or other proposal or transaction
would in any manner
34
<PAGE> 35
impede, frustrate, prevent or nullify any provision of the Merger Agreement, the
Offer, the Merger or any other transaction contemplated thereby or change in any
manner the voting rights of any class of the Company's capital stock. No
Stockholder shall commit or agree to take any action inconsistent with the
foregoing.
In order to fully implement the agreement of each Stockholder set forth in
the preceding paragraphs, each Stockholder has irrevocably appointed Parent,
with full power of substitution (Parent and its substitutes being referred to in
this "Stockholder Agreement" section as the "Proxy"), as the true and lawful
attorney and proxy of such Stockholder to vote all Stockholder Shares of such
Stockholder on matters as to which such Stockholder is entitled to vote at a
meeting of the stockholders of the Company or to which such Stockholder is
entitled to express consent or dissent to corporate action in writing without a
meeting of stockholders, in the Proxy's absolute, sole and binding discretion,
on the matters specified in the preceding paragraphs. Each Stockholder agrees
that the Proxy may, in such Stockholder's name and stead, (i) attend any annual
or special meeting of the stockholders of the Company and vote all Stockholder
Shares of such Stockholder at any such annual or special meeting as to the
matters specified in the preceding paragraph, and (ii) execute with respect to
all Stockholder Shares of such Stockholder any written consent to, or dissent
from, corporate action respecting any matter specified in the preceding
paragraph above. Such Stockholder agrees to refrain from (A) voting the
Stockholder Shares of such Stockholder at any annual or special meeting of the
stockholders of the Company in any manner inconsistent with the terms of the
Stockholders Agreement, (B) executing any written consent in lieu of a meeting
of the stockholders of the Company in any manner inconsistent with the terms of
the Stockholder Agreement, and (C) granting any proxy or authorization to any
person with respect to the voting of the Stockholder Shares of such Stockholder,
except pursuant to the Stockholder Agreement, or taking any action contrary to
or in any manner inconsistent with the terms of the Stockholder Agreement. Each
Stockholder has agreed to waive, and has agreed not to exercise or assert, any
appraisal rights under Section 262 of the DGCL in connection with the Merger.
Each Stockholder has agreed that the grant of proxy and appointment of attorney
is irrevocable and coupled with an interest and agrees that the person
designated as Proxy may at any time name any other person as its substituted
Proxy to act, either as to a specific matter or as to all matters.
The Stockholder Agreement further provides that until such agreement is
terminated, each Stockholder shall not directly or indirectly (i) offer to sell,
sell short, transfer (including gift), assign, pledge or otherwise dispose of or
transfer (including by merger, testamentary disposition, interspousal
disposition pursuant to a domestic relations proceeding or otherwise or
otherwise by operation of law) (each, a "Transfer") any interest in, or encumber
with any lien, restriction or security interest, other than restrictions under
applicable securities laws, any of the Stockholder Shares of such Stockholder,
(ii) enter into any contract, option, put, call, "collar" or other agreement or
understanding with respect to any Transfer of any or all of the Stockholder
Shares of such Stockholder or any interest therein; (iii) deposit the
Stockholder Shares of such Stockholder into a voting trust or enter into a
voting agreement or arrangement with respect thereto; or (iv) take any other
action with respect to the Stockholder Shares of such Stockholder that would in
any way restrict, limit or interfere with the performance of its obligations
under the Stockholder Agreement.
Additional Agreements. Pursuant to the terms of the Stockholder Agreement,
each Stockholder has covenanted and agreed that:
(a) from the date of the Stockholder Agreement until the earlier of
the Effective Time and the termination of the Stockholder Agreement in
accordance with its terms, such Stockholder shall not (and will not permit
any of its officers, directors, agents or affiliates to) directly or
indirectly (i) solicit, engage in discussions or negotiate with any person
(whether such discussions or negotiations are initiated by such
Stockholder, the Company or otherwise) or take any other action intended or
designed to facilitate the efforts of any person (other than Parent)
relating to any Alternative Acquisition, (ii) provide information with
respect to the Company to any person, other than Parent, relating to a
possible Alternative Acquisition by any person, other than Parent, or (iii)
enter into an agreement with any person, other than Parent, relating to a
possible Alternative Acquisition. Each Stockholder has agreed to promptly
advise Parent orally and in writing of any Alternative Acquisition Proposal
or inquiry made to such Stockholder with respect to or that could lead to
any Alternative Acquisition Proposal, the identity of the person
35
<PAGE> 36
making such Alternative Acquisition Proposal and the material terms of any
such Alternative Acquisition Proposal or inquiry; and
(b) in the event of any change in the Company's capital stock by
reason of stock dividends, stock splits, mergers, consolidations,
recapitalization, combinations, conversions, exchanges of shares,
extraordinary or liquidating dividends, or other changes in the corporate
or capital structure of the Company which would have the effect of diluting
or changing Parent and Purchaser's rights thereunder, the number and kind
of shares or securities subject to the Stockholder Agreement and the price
set forth therein at which the Stockholder Shares may be purchased from
such Stockholder pursuant to the Offer shall be appropriately and equitably
adjusted so that Parent and Purchaser shall receive pursuant to the Offer
the number and class of shares or other securities or property that Parent
or Purchaser, as the case may be, would have received in respect of the
Stockholder Shares of such Stockholder purchasable pursuant to the Offer if
such purchase had occurred immediately prior to such event.
Profit Sharing. (i)(A) If the Merger Agreement is terminated under any of
the circumstances described in the third and fourth paragraphs under "Fees and
Expenses; Termination Fee" under which the Company is or becomes required to pay
the Termination Fee and an Alternative Acquisition is consummated, each of
Richard M. Klein and 399 Venture Partners, Inc. (the "Principal Stockholders")
shall pay to Parent an amount equal to 50% of all profit (determined in
accordance with clause (B) below) in respect of the number of Stockholder Shares
owned of record or beneficially by such Principal Stockholder on the date of
consummation of such Alternative Acquisition (such shares, the "Applicable
Shares") associated with the consummation of such Alternative Acquisition.
(B) The profit associated with the consummation of such Alternative
Acquisition shall equal (x) the aggregate consideration paid (which for
purposes of the Stockholder Agreement shall include any residual interest
in the Company retained immediately following consummation of such
Alternative Acquisition) in respect of the number of Stockholder Shares of
such Principal Stockholder as a result of the consummation of such
Alternative Acquisition, valuing any noncash consideration (which for
purposes of the Stockholder Agreement shall include any residual interest
in the Company retained immediately following consummation of such
Alternative Acquisition) at its fair market value on the date of such
consummation, less (y) the product obtained by multiplying $35.00 by the
number of Stockholder Shares of such Principal Stockholder.
(ii) For purposes of the Stockholder Agreement, the fair market value
of any noncash consideration consisting of:
(A) securities listed on a national securities exchange or traded
on the NASDAQ shall be equal to the average closing price per share of
such security as reported on such exchange or NASDAQ for the 5 trading
days prior to the date of determination; and
(B) consideration which is other than securities of the form
specified in clause (A) above shall be determined by a nationally
recognized independent investment banking firm mutually selected, within
three business days after the event requiring selection of such
investment banking firm, by Parent and the Representative (as defined in
clause (iv) below), which determination shall be made by such investment
banking firm within 15 business days after the date of such event;
provided, however, that if Parent and the Representative do not agree
within three business days after the date of such event as to the
selection of an investment banking firm, then, by the end of the fifth
business day after the date of such event, each of Parent, on the one
hand, and the Representative, on the other hand, shall select an
investment banking firm, which two investment banking firms shall
jointly make such determination within 20 business days after the date
of such event, or, if such two investment banking firms are unable to
agree on such determination, the two investment banking firms shall, by
the end of the 20th business day after the date of such event, select a
third investment banking firm and notify such third investment banking
firm in writing (with a copy to Parent and the Representative) of their
respective determinations of the fair market value of such noncash
consideration, following which such third investment banking firm shall,
within 15 business days after the date of its selection, notify Parent
and the Representative in writing of its selection of one or
36
<PAGE> 37
the other of the two original determinations of the fair market value of
such noncash consideration; provided further, that the reasonable and
customary fees and expenses of all such investment banking firms shall
be borne equally by Parent, on the one hand, and the Stockholders, on
the other hand. The determination of the investment banking firm shall
be binding upon the parties.
(iii) Any such payment to be made by a Principal Stockholder pursuant
to paragraph (i) above shall be made as follows: (A) with respect to any
Stockholder Shares held of record or beneficially by such Principal
Stockholder at the time the Alternative Acquisition is consummated (x) if
the consideration paid in the Alternative Acquisition is all cash, such
payment shall be made in cash within three business days following receipt
by such Principal Stockholder of such consideration by wire transfer of
same day funds to an account designated by Parent, (y) if such
consideration is all noncash consideration, such payment shall be made
through a transfer of such noncash consideration to Parent, suitably
endorsed for transfer (with the method and timing of such transfer to be
reasonably determined by Parent), or (z) if such consideration is part cash
and part noncash consideration, such payment shall be made in cash (in the
manner set forth in clause (x) above) and in such noncash consideration (in
the manner set forth in clause (y) above) in the same proportion as such
consideration is payable to such Principal Stockholder in accordance with
the terms of the Alternative Acquisition, and (B) with respect to all other
Stockholder Shares, such payment shall be made in cash within three
business days following the consummation of such Alternate Acquisition or,
if a payment is to be made in accordance with clause (A) of this clause
(iii), at the time of such payment, in either case by wire transfer of same
day funds to an account designated by Parent.
(iv) (A) Each Principal Stockholder has irrevocably constituted and
appointed Richard M. Klein (the "Representative"), as such Principal
Stockholder's true and lawful agent and attorney-in-fact, to enter into any
agreement in connection with the transactions contemplated under this
"Profit Sharing" section, to exercise all or any of the powers, authority
and discretion conferred on such Principal Stockholder under this "Profit
Sharing" section, to give and receive notices on such Principal
Stockholder's behalf and to represent such Principal Stockholder with
respect to any matter, suit, claim, action or proceeding arising with
respect to any transaction contemplated by this "Profit Sharing" section,
and the Representative has agreed to act as, and to undertake the duties
and responsibilities of, such agent and attorney-in-fact. Each Principal
Stockholder has agreed to ratify and confirm, any action taken by the
Representative in the exercise of the agency and power of attorney granted
to the Representative and described in this paragraph (iv), which agency
and power of attorney, being coupled with an interest, is irrevocable and a
durable agency and power of attorney and shall survive the death,
incapacity or incompetence of such Principal Stockholder.
(B) Each Principal Stockholder has agreed and acknowledged that the
Representative shall represent and bind all the Principal Stockholders and
that Parent shall be entitled to rely exclusively on the Representative for
all purposes specified in the Stockholder Agreement in connection with this
"Profit Sharing" section, and that no suit, action, proceeding or claim may
be brought against Parent or any of its affiliates by any Principal
Stockholder with respect to any matter herein that is to be effected by the
Representative.
Termination. The Stockholder Agreement terminates upon the earlier of (i)
the Effective Time and (ii) the termination of the Merger Agreement in
accordance with its terms; provided, however, that if the Merger Agreement is
terminated under any of the circumstances described in the third and fourth
paragraphs under "Fees and Expenses; Termination Fee" above, the provisions of
the "Profit Sharing" section shall continue in full force and effect during the
12 month period described in the fourth paragraph under "Fees and Expenses;
Termination Fee"; provided further, however, that if the Company or any of its
subsidiaries enters into an Acquisition Agreement relating to, but does not
consummate, any Alternative Acquisition prior to the end of such 12 month
period, the provisions of the "Profit Sharing" section shall continue in full
force and effect until such Alternative Acquisition is consummated or such
Acquisition Agreement is terminated and such Alternative Acquisition is not
consummated. No termination of the Stockholder Agreement shall relieve any party
to the Stockholder Agreement from any liability from any breach of any provision
of the Stockholder Agreement prior to termination.
37
<PAGE> 38
The foregoing summary of the Stockholder Agreement is qualified in its
entirety by reference to the Stockholder Agreement, a copy of which is filed as
Exhibit (d)(2) to the Schedule TO. The Stockholder Agreement should be read in
its entirety for a more complete description of the matters summarized above.
The Confidentiality Agreement
Pursuant to the Letter Agreement, dated as of May 12, 2000, between J.P.
Morgan Securities Inc., as agent for the Company, and Bayer AG (the "Letter
Agreement"), the Company and Parent agreed to keep confidential certain
information provided by the Company or its representatives. The Letter Agreement
also contains customary standstill provisions. The Merger Agreement provides
that certain information exchanged pursuant to Section 6.03 of the Merger
Agreement concerning "Access to Information" shall be subject to the Letter
Agreement.
The Rights Agreement
The Board has agreed to take all action requested by Parent in order to
render the Rights inapplicable to the Offer, the Merger and the other
transactions contemplated by the Merger Agreement and the Stockholder Agreement.
Except as provided in writing by Parent, the Company has agreed that the Board
will not (i) amend the Rights Agreement, (ii) redeem the Rights or (iii) take
any action with respect to, or make any determination under, the Rights
Agreement.
Plans for the Company
If a majority of the outstanding Shares are purchased by the Purchaser
pursuant to the Offer, Parent may designate its representatives as a majority of
the Company's Board of Directors. Following completion of the Offer and the
Merger, Parent intends to integrate the Company's operations with those of
Parent under the direction of Parent's management and initially operate the
Company as a wholly owned subsidiary. Parent's principal reason for acquiring
the Company is the strategic fit of the Company's operations with Parent's
operations. Parent intends to continue to review the Company and its assets,
corporate structure, dividend policy, capitalization, operations, properties,
policies, management and personnel with a joint integration team and to
consider, subject to the terms of the Merger Agreement, this team's
recommendations. Parent intends to evaluate proposed changes, if any, that would
be desirable in light of the circumstances then existing, and reserves the right
to take such actions or effect such changes as it deems desirable. Such changes
could include changes in the Company's corporate structure, operational
headquarters, capitalization, management or dividend policy as well as
integration of the Company or parts thereof with other related businesses of
Parent.
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 will have certain rights pursuant to the provisions of Section 262 of the
DGCL ("Section 262") to demand appraisal of their Shares. Under Section 262,
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.
38
<PAGE> 39
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.
13. DIVIDENDS AND DISTRIBUTIONS
As discussed in Section 12, the Merger Agreement provides that from the
date of the Merger Agreement to the Board Transition Date, without the prior
approval of Parent, neither the Company nor any of its subsidiaries may declare,
set aside or pay any dividends or distribution on any Shares.
14. CERTAIN CONDITIONS OF THE OFFER
The Merger Agreement provides that the 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 promptly after the
termination or withdrawal of the Offer), to pay for any Shares tendered pursuant
to the Offer unless (i) there shall have been validly tendered and not withdrawn
prior to the expiration of the Offer a number of Shares (including the
associated Rights), which when added to the Shares then beneficially owned by
Purchaser would satisfy the "Minimum Condition", and (ii) the waiting period
under the HSR Act and any other similar and necessary foreign approvals or
waiting periods applicable to the purchase of Shares pursuant to the Offer have
expired or been terminated and all regulatory approvals required to consummate
the Offer and the Merger have been obtained and remain in full force and effect.
Furthermore, notwithstanding any other provisions of the Offer or the Merger
Agreement, Purchaser will not be required to accept for payment or, subject as
aforesaid, to pay for any Shares if, at any time on or after the date of the
Merger Agreement and before the acceptance of such Shares for payment or the
payment therefor, any of the following conditions exists:
(a) there shall be pending or threatened any suit, action or
proceeding by any governmental authority or agency (whether United States,
federal or state, or foreign) that has reasonable likelihood of success
which seeks to (i) prohibit the making or consummation of the Offer or the
consummation of the Merger, (ii) restrain or prohibit the performance of
the Merger Agreement or obtain from the Company, Parent or Purchaser any
damages that are material in relation to the Company and its subsidiaries
taken as whole, (iii) prohibit or limit the ownership or operation by the
Company, Parent or any of their respective subsidiaries of any portion of
the business or assets of the Company, Parent or any of their respective
subsidiaries, or to compel the Company, Parent or any of their respective
subsidiaries to dispose of or hold separate any portion of the business or
assets of the Company, Parent or any of their respective subsidiaries, as a
result of the Offer, the Merger or any other transaction contemplated by
the Merger Agreement, (iv) impose limitations on the ability of Parent or
Purchaser to acquire or hold, or exercise full rights of ownership of, any
Shares, including the right to vote the Company's common stock purchased by
it on all matters properly presented to the stockholders of the Company, or
(v) prohibit Parent or any of its subsidiaries from effectively controlling
in any material respect the business or operations of the Company and its
subsidiaries; or
(b) there is in effect any statute, rule or regulation enacted or
promulgated or any order, decree or injunction (whether preliminary, final
or appealable) issued by a court or governmental authority of competent
jurisdiction (whether United States, federal or state, or foreign) that has
a substantial likelihood of resulting, directly or indirectly, in any of
the consequences referred to in paragraph (a) above or prohibits the
consummation of the Offer or the consummation of the Merger or requires
Parent or Purchaser to hold separate any material portion of the stock or
assets of the Company or its subsidiaries; or
39
<PAGE> 40
(c) there shall have been any statute, rule or regulation enacted or
promulgated which prohibits the consummation of the Offer or the Merger; or
(d) there shall have occurred: (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the over-the-counter market in the United States or Germany,
or (ii) a declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States or Germany; or
(e) any representation or warranty made by the Company in the Merger
Agreement that is qualified as to materiality shall not be true and correct
or any such representation and warranty that is not so qualified shall not
be true and correct in any material respect, as of the date of the Merger
Agreement and as of such time, except to the extent such representation and
warranty expressly relates to any earlier date (in which case on and as of
such earlier date), other than for such failures to be true and correct
that, individually or in the aggregate, have not had and could not
reasonably be expected to have a Material Adverse Effect; or
(f) there shall have been a breach in any material respect by the
Company of any of its covenants or agreements (other than those required
under "Takeover Proposals" and "The Rights Agreement" in Section 12) or
there shall have been a breach by the Company of any of its covenants or
agreements contained under "Takeover Proposals" and "The Rights Agreement"
in Section 12; or
(g) except as set forth in the Company's disclosure schedule or in the
Company documents filed with the SEC pursuant to all applicable
requirements of the Securities Act of 1933 (the "Securities Act") and the
Exchange Act, since the date of the Merger Agreement, there shall have been
any state of facts, change, development, effect, event, condition or
occurrence that, individually or in the aggregate, constitutes or could
reasonably be expected to have a Material Adverse Effect; or
(h) the Merger Agreement shall have been terminated in accordance with
its terms; or
(i) the Company's Board of Directors shall have withdrawn or modified
(including by amendment of the Schedule 14D-9) its approval or
recommendation of the Offer, the Merger Agreement or the Merger, shall have
failed to recommend to the stockholders that they approve the Offer, shall
have recommended to the Company's stockholders another offer or shall have
adopted any resolution to effect any of the foregoing; or
(j) any Person (other than Parent or any of its subsidiaries) acquires
beneficial ownership (as defined in Rule 13d-3 promulgated under the
Exchange Act), of at least 25% of the outstanding voting securities of the
Company or is granted any option or right to acquire at least 25% of such
voting securities or, in either case, such lesser percentage resulting in a
Triggering Event (as defined in the Rights Agreement) (other than an
inadvertent Triggering Event which has been promptly cured) under the
Rights Agreement (as used in this Section 14, "Person" shall include any
corporation, individual, partnership, limited liability company, trust,
other entity or group (as defined in the Exchange Act), other than Parent
or any of its affiliates (as defined in the Exchange Act)); or
(k) any of the Stockholders shall have failed to enter into the
Stockholder Agreement or shall have materially breached their obligations
under the terms of such agreement;
which, in any such case, and regardless of the circumstances giving rise to any
such condition, make it inadvisable, in the sole and absolute discretion of
Parent and the Purchaser, to proceed with such acceptance for payment or
payment.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and, subject to Section 1.01(a) of the Merger Agreement related to the
Offer, may be asserted by Parent or the Purchaser regardless of the
circumstances giving rise to such condition or may be waived (except for the
Minimum Condition) by Parent or the Purchaser in whole or in part at any time
and from time to time in its sole discretion, subject in each case to the terms
of the Merger Agreement. The failure by Parent or the Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right and may be asserted
at any time and from time to time.
40
<PAGE> 41
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 Parent with representatives of the Company, none of the Purchaser, Parent 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, Parent and the Purchaser 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, subject to the terms and conditions of the Merger
Agreement, 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
acquirer 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 U.S. 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 Board has approved the Merger Agreement, the Stockholder
Agreement, the Offer, the Merger and the other transactions contemplated by the
Merger Agreement and by the Stockholder Agreement for purposes of Section 203 of
the DGCL. Therefore, the restrictions on business combinations set forth in
Section 203 of the DGCL are inapplicable to the Offer and the Merger.
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 Parent has currently
complied with any 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
41
<PAGE> 42
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 payment or pay for any Shares tendered
pursuant to the Offer. See Section 14.
Antitrust
United States Antitrust Law. 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 Parent of a Notification and Report Form with respect to the
Offer, unless Parent receives a request for additional information or
documentary material from the Antitrust Division of the Department of Justice
(the "Antitrust Division") or the Federal Trade Commission (the "FTC") or unless
early termination of the waiting period is granted. Parent is in the process of
preparing such filing. If, within the initial 15-day waiting period, either the
Antitrust Division or the FTC requests additional information from Parent
concerning the Offer, the waiting period will be extended and would expire at
11:59 p.m., New York City time, on the tenth calendar day after the date of
substantial compliance by Parent and the Company with such request. Only one
extension of the waiting period pursuant to a request for additional information
is authorized by the HSR Act. Thereafter, such waiting period may be extended
only by court order or with the consent of Parent. In practice, complying with a
request for additional information or material can take a significant amount of
time. In addition, if the Antitrust Division or the FTC raises substantive
issues in connection with a proposed transaction, the parties frequently engage
in negotiations with the relevant governmental agency concerning possible means
of addressing those issues and may agree to delay consummation of the
transaction while such negotiations continue. 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 Parent 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.
German Antitrust Law. Under the Act against Restrictions of Competition
(ARC) a merger has to be notified to the Federal Cartel Office
(Bundeskartellamt, FCO) prior to its completion if certain jurisdictional
thresholds are met. The FCO is responsible for the enforcement of German merger
control provisions at the national level. In addition to the pre-merger
notification, the completion of a merger must also be notified to the FCO
(post-completion notice). Transactions which are deemed to be concentrations
subject to merger control are set-out in a comprehensive list in the ARC. If a
concentration is subject to German merger control a pre-merger notification is
mandatory. A specific deadline for such notification, however, is not provided
for by statutory provisions. Since transactions subject to the merger regime
must not be completed before clearance by the FCO, the notification must be
filed well in advance of the proposed completion date.
After receipt of a complete notification, the FCO must decide within one
month from filing (first stage) whether to clear the merger or to initiate
further investigations (second stage). Second stage proceedings have to be
finished by way of a formal decision of the FCO to the effect that the
concentration is prohibited or cleared within a period of four months from the
date of notification, which period, in borderline cases, can be further extended
with the consent of the notifying parties. If the information provided for in
the notification is
42
<PAGE> 43
sufficient and the transaction does not raise any substantive competition
concerns, the FCO will generally issue a clearance letter within the first stage
investigation period, which as an informal decision is not subject to appeal. In
general, the FCO will prohibit a concentration which is expected to create or
strengthen a dominant position unless the participating undertakings prove that
a concentration will also lead to improvements in the conditions of competition,
and that these improvements will outweigh the disadvantages of dominance.
Other Foreign Laws. The Company and Parent and certain of their respective
subsidiaries conduct business in several foreign countries where regulatory
filings or approvals may be required or desirable in connection with the
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 and the Company are analyzing the applicability of any such laws and
currently intend 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
ING Barings LLC is acting as Dealer Manager for the Offer and is providing
certain financial advisory services to Parent and the Purchaser in connection
with the Offer, for which services ING Barings LLC will receive customary
compensation. Parent also has agreed to reimburse ING Barings LLC for reasonable
travel and other out-of-pocket expenses, including reasonable fees and expenses
of its legal counsel, and to indemnify ING Barings LLC and certain related
parties against certain liabilities, including liabilities under the federal
securities laws, arising out of its engagement. In the ordinary course of
business, ING Barings LLC and its affiliates may actively trade or hold the
securities of the Company for their own account and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.
Parent and the Purchaser have retained Morrow & Co., Inc. to act as the
Information Agent and EquiServe Trust Company, N.A. 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 federal securities laws.
Neither the Purchaser nor Parent 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 Parent 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
Parent 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 PARENT NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
43
<PAGE> 44
Parent and the Purchaser have filed with the Commission the Schedule TO
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).
PROJECT TOLEDO ACQUISITION CORP.
September 8, 2000
44
<PAGE> 45
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
BAYER AG, PARENT AND THE PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF BAYER AG. The name, business
address, present principal occupation or employment and material occupations,
positions, offices or employment for the past five years of each of the
directors and executive officers of Bayer AG are set forth below. Unless
otherwise indicated, the business address of each such director or executive
officer is Bayer Aktiengesellschaft, D-51368 Leverkusen, Federal Republic of
Germany. All the directors and executive officers listed below are citizens of
the Federal Republic of Germany, except for Dr. Pol Bamelis and Dr. Andre
Leysen, who are citizens of Belgium, and Loedewijk van Wachem, who is a citizen
of The Netherlands.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
------------------------- --------------------------------------------------
<S> <C>
Dr. Manfred Schneider..................... Chairman, Board of Management.
Dr. Pol Bamelis........................... Member, Board of Management.
Dr. Attila Molnar......................... Member, Board of Management (since April 1999);
Chairman, Board of Directors, Bayer Corporation
(since May 2000); Head of Business Group, Basic &
Fine Chemicals, Bayer AG (from April 1996 to April
1999); Head of Production, Business Group Coatings
& Colorants, Bayer AG (until April 1996).
Dr. Frank-Joachim Morich.................. Member, Board of Management (since May 2000);
Member, Board of Directors, Bayer Corporation
(since May 2000); Head of Business Group, Consumer
Care, Bayer AG (from February 1998 to April 2000);
Head of Product Development, Business Group
Pharmaceuticals, Bayer AG (from January 1995 to
January 1998).
Dr. Udo Oels.............................. Member, Board of Management (since February 1996);
Head of Business Group, Organic Chemicals, Bayer
AG (until January 1996).
Werner Spinner............................ Member, Board of Management (since February 1998);
Head of Business Group, Consumer Care, Bayer AG
(until February 1998).
Werner Wenning............................ Member, Board of Management (since February 1997);
Member, Board of Directors of Bayer Corporation
(since July 1997); Head of Corporate Planning and
Controlling, Bayer AG (from April 1996 to January
1997); Vice-Chairman of the Board of Directors and
General Manager, Bayer Hispania Industrial, S.A.,
Barcelona/Spain (until March 1996).
Dr. Gottfried O. Zaby..................... Member, Board of Management (since May 2000); Head
of Business Group Plastics, Bayer AG (from July
1997 to April 2000); Head of Production and
Technology, Business Group Plastics, Bayer AG
(from September 1996 to June 1997); Head of
Research and Development, Business Group Plastics,
Bayer AG (until August 1996).
</TABLE>
45
<PAGE> 46
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
------------------------- --------------------------------------------------
<S> <C>
Hermann-Josef Strenger.................... Chairman, Supervisory Board.
Erhard Gipperich.......................... Vice Chairman, Supervisory Board; Chairman, Works
Council Leverkusen Plant, Bayer AG (1998 to
present); Chairman, Central Works Council, Bayer
AG (August 1998 to present); Chairman, Combine
Works Council, Bayer AG (August 1998 to present);
Vice-Chairman, Works Council Leverkusen Plant,
Bayer AG (until June 1998).
Dr. Klaus Alberti......................... Member, Supervisory Board; Head of Environmental
and Safety, Business Group, Specialty Products,
Bayer AG (since 1996).
Petra Brayer.............................. Member, Supervisory Board; Vice-Chairman, Works
Bayer Fraser GmbH Council Bayer Faser GmbH.
41538 Dormagen, Germany
Karl-Josef Ellrich........................ Member, Supervisory Board; Chairman, Works Council
of the Dormagen plant, Bayer AG.
Detlef Fahlbusch.......................... Member, Supervisory Board; Regional President
IG BCE Nordrhein Northrhein of Mining, Chemical and Energy
40476 Dusseldorf, Germany Industrial Trade Union of Germany.
Dr. Martin Kohlhausen..................... Member, Supervisory Board; Chairman of the Board
Commerzbank Aktiengesellschaft of Managing Directors of Commerzbank AG.
60261 Frankfurt am Main, Germany
Hilmar Kopper............................. Member, Supervisory Board; Chairman, Supervisory
Deutsche Bank AG Board, Deutsche Bank AG (since May 1997);
60325 Frankfurt, Germany Spokesman and Member of the Executive Board,
Deutsche Bank AG (from December 1989 to May 1997).
Petra Kronen.............................. Member, Supervisory Board (since July 2000);
Chairman, Works Council of the Uerdingen plant,
Bayer AG.
Dr. Manfred Lennings...................... Member, Supervisory Board; Industrial Consultant;
Schmachtenbergstrasse 142 Consultant Westdeutsche Landesbank (from March
45219 Essen, Germany 1984 until February 1999).
Dr. Andre Leysen.......................... Member, Supervisory Board; Chairman, Board of
Agfa-Gevaert N.V. Directors, Agfa-Gevaert N.V.
Septestraat 27
B-2640 Mortsel, Belgium
Dr. h.c. Helmut Maucher................... Member, Supervisory Board; Chairman of the Board
Nestle-Haus and Chief Executive Officer, Nestle S.A (from June
60528 Frankfurt, Germany 1999 to May 2000).
Rolf Nietzard............................. Member, Supervisory Board; Member of Works Council
Leverkusen Plant, Bayer AG (from August 1998 to
present); Chairman of the Central Works Council,
Bayer AG (from November 1995 to August 1998);
Member, Combined Works Council, Bayer AG.
</TABLE>
46
<PAGE> 47
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
------------------------- --------------------------------------------------
<S> <C>
Dr. Heinrich Pierer von Esch.............. Member, Supervisory Board; Chairman of the
Siemens AG Managing Board, President and Chief Executive
80333 Munchen, Germany Officer, Siemens AG (since 1992).
Waltraud Schlaefke........................ Member, Supervisory Board; Vice-Chairman Works
Wolff Walsrode AG Council, Wolff Walsrode AG.
29655 Walsrode, Germany
Hubertus Schmoldt......................... Member, Supervisory Board; President, Executive
IG Bergbau, Chemie, Energie Board, Mining, Chemical and Energy Industrial
Konigsworther Platz 6 Trade Union of Germany (1998 to present);
30167 Hannover, Germany President Executive Board -- Chemical, Paper,
Ceramics/Industrial Union (September 1995 to
October 1997).
Dieter Schulte............................ Member, Supervisory Board; President, German Trade
German Trade Union Federation DGB Union Federation-DGB (since 1994).
10178 Berlin, Germany
Loedewijk van Wachem...................... Member, Supervisory Board; Chairman, Supervisory
Carel van Bylandtlaan 30 Board, Royal Dutch Petroleum Company.
NL-2596 HR The Hague, Netherlands
Professor Dr. Ernst-Ludwig Winnacker...... Member, Supervisory Board; President, German
Deutsche Forschungsgemeinschaft Science Foundation (since January 1998); Professor
53170 Bonn, Germany of Biochemistry, University of Munich (until
December 1997).
Dr. Hermann Wunderlich.................... Member, Supervisory Board (since April 1996);
Arndtstrabe 8 Member, Management Board, Bayer AG (until April
51519 Odenthal, Germany 1996).
</TABLE>
2. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The name, business address,
present principal occupation or employment and material occupations, positions,
offices or employment for the past five years of each of the directors and
executive officers of Parent are set forth below. Unless otherwise indicated,
the business address of each such director and executive officer is Bayer
Corporation, 100 Bayer Road, Pittsburgh, PA 15205-9741. All the directors and
executive officers listed below are citizens of the United States, except for
Dr. Attila Molnar, Dr. Frank-Joachim Morich, Werner Wenning, Gunter Hilken, H.H.
Wehmeier, Dr. Wolfgang Plischke and Dr. Frank Wenzel, who are citizens of the
Federal Republic of Germany, Emil Lansu, who is a citizen of The Netherlands,
and Rolf Classon, who is a citizen of Sweden.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
------------------------- --------------------------------------------------
<S> <C>
Dr. Attila Molnar......................... Chairman, Board of Directors (since May 2000);
Bayer AG Member, Board of Management, Bayer AG; Head of
51368 Leverkusen, Germany Business Group, Basic & Fine Chemicals, Bayer AG
(from April 1996 to April 1999); Head of
Production, Business Group Coatings & Colorants,
Bayer AG (until April 1996).
Dr. Frank-Joachim Morich.................. Member, Board of Directors (since May 2000);
Bayer AG Member, Board of Management, Bayer AG. Head of
51368 Leverkusen, Germany Business Group, Consumer Care, Bayer AG (from
February 1998 to April 2000); Head of Product
Development, Business Group Pharmaceuticals, Bayer
AG (from January 1995 to January 1998).
</TABLE>
47
<PAGE> 48
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
------------------------- --------------------------------------------------
<S> <C>
Werner Wenning............................ Member, Board of Directors (since July 1997);
Bayer AG Member, Board of Management, Bayer AG; Head of
51368 Leverkusen, Germany Corporate Planning and Controlling, Bayer AG (from
April 1996 to January 1997); Vice-Chairman of the
Board of Directors and General Manager, Bayer
Hispania Industrial, S.A., Barcelona/Spain (until
March 1996).
H.H. Wehmeier............................. Member, Board of Directors; President and Chief
Executive Officer, Bayer Corporation (since 1995).
Joseph A. Akers........................... Executive Vice President, Chief Administrative
Officer, Chief Financial Officer, Bayer
Corporation (since April 1999); Senior Vice
President & Controller Diagnostics, Bayer
Corporation (February 1992 to April 1999).
Gary Balkema.............................. President, Consumer Care Business Group, Bayer
Bayer Corporation Corporation (since December 1994).
36 Columbia Road
P.O. Box 1910
Morristown, NJ 07962
Nicholas T. Cullen, Jr. .................. Executive Vice President, Bayer Corporation and
President, Plastics Division (from 1999 to
present); and President, Performance Products
Division, Bayer Corporation (1997 to 1998); Senior
Vice President, Coatings Raw Materials, Bayer
Corporation (1995 to 1996).
R.D. Fuchs................................ Executive Vice President, Chief Technology
Officer, Bayer Corporation (March 1997 to
present); Sarnia Site Manager -- Sarnia Ontario,
Canada, Bayer Inc. (January 1994 to March 1999).
Gunter Hilken............................. Executive Vice President and President, Fibers,
Bayer Corporation Additives & Rubber Division, Bayer Corporation
2603 West Market Street (October 1999 to present); Senior Vice President
Akron, OH 44313 and Site Manager, Bayer Inc. (1997 to September
1999); Vice President, Manufacturing, Bayer Inc.
(1996).
Emil Lansu................................ Executive Vice President, Bayer Corporation (1997
Bayer Corporation to present); President, Agriculture Division,
8400 Hawthorn Road Bayer Corporation (1997 to present); Head of
Kansas City, MO 64120 Plastics Marketing, Bayer AG (1993 to 1997).
E. L. Foote, Jr........................... Executive Vice President and President, Industrial
Chemicals Division, Bayer Corporation (1997 to
present); Senior Vice President Manufacturing &
Technology, Bayer Corporation (1995 to 1997).
Leslie F. Nute............................ Senior Vice President, General Counsel and
Secretary, Bayer Corporation (1995 to present).
Howard W. Reed............................ Senior Vice President, Human Resources, Bayer
Corporation (1996 to present).
Dr. Frank Wenzel.......................... Senior Vice President and Controller, Bayer
Corporation (1992 to present).
</TABLE>
48
<PAGE> 49
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
------------------------- --------------------------------------------------
<S> <C>
Dr. John L. Williams...................... Executive Vice President, Bayer Corporation,
President, Coatings and Colorants Division, Bayer
Corporation (1999 to present); Senior Vice
President, Bayer Corporation (1995 to 1999).
Margo Barnes.............................. Senior Vice President, Corporate Communications,
Bayer Corporation.
Dr. Wolfgang Plischke..................... Executive Vice President and President
400 Morgan Lane Pharmaceutical Division, Bayer Corporation (1999
West Haven, CT 06516 to present); President, Bayer Yakuhin, Osaka,
Japan (1995 to 1999).
Lawrence D. Stern......................... Executive Vice President, Bayer Corporation (since
April 2000); Business Manager, Lyondell Chemical
(formerly ARCO Chemical) (prior to April 2000).
Jon R. Wyne............................... Senior Vice President and Treasurer, Bayer
Corporation.
Rolf Classon.............................. Executive Vice President and
Bayer Corporation President -- Diagnostics, Bayer Corporation.
511 Benedict Avenue
Tarrytown, NY 10591
</TABLE>
3. DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER. The name, business
address, present principal occupation or employment and material occupations,
positions, offices or employment for the past five years 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 Project Toledo
Acquisition Corp., 100 Bayer Road, Pittsburgh, PA 15205-9741. All the directors
and executive officers listed below are citizens of the United States, except
for Dr. Frank Wenzel, who is a citizen of the Federal Republic of Germany.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- --------------------------------------------------
<S> <C>
E. L. Foote, Jr. ......................... Director; Executive Vice President and President,
Industrial Chemicals Division, Bayer Corporation
(1997 to present); Senior Vice President
Manufacturing & Technology, Bayer Corporation
(1995 to 1997).
Dr. John L. Williams...................... President; Executive Vice President, Bayer
Corporation, President, Coatings and Colorants
Division, Bayer Corporation (1999 to present);
Senior Vice President, Bayer Corporation (1995 to
1999).
Dr. Frank Wenzel.......................... Vice President; Senior Vice President and
Controller, Bayer Corporation (1992 to present).
Jon R. Wyne............................... Treasurer; Senior Vice President and Treasurer,
Bayer Corporation.
Leslie F. Nute............................ Secretary; Senior Vice President, General Counsel
and Secretary, Bayer Corporation (1995 to
present).
Tracy E. Spagnol.......................... Assistant Treasurer; Director Treasury Services,
North America, Bayer Corporation (from September
1995 to present).
Bruce A. Mackintosh....................... Assistant Secretary; Vice President and Assistant
General Counsel, Bayer Corporation.
</TABLE>
49
<PAGE> 50
The Letter of Transmittal, certificates for Shares and any other required
documents should be sent or delivered by each stockholder of the Company or such
stockholder's broker, dealer, bank, trust company or other nominee to the
Depositary at one of its addresses set forth below.
The Depositary for the Offer is
EquiServe Trust Company, N.A.
<TABLE>
<S> <C> <C>
By First Class Mail: By Hand: By Overnight Carrier:
EquiServe Trust Company, N.A. Securities Transfer & EquiServe Trust Company, N.A.
Attn: Corporate Actions Reporting Services, Inc. Attn: Corporate Actions
P.O. Box 8029 c/o EquiServe Trust Company, N.A. 150 Royall Street
Boston, MA 02266-8029 100 William Street, Galleria Canton, MA 02021
New York, NY 10038
</TABLE>
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective telephone numbers and locations
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal, the Notice of Guaranteed Delivery or any other tender offer
materials may be obtained from the Information Agent. 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:
MORROW & CO., INC.
445 Park Avenue
5th Floor
New York, NY 10022
Call collect (212) 754-8000
Banks and Brokerage Firms,
please call:
(800) 662-5200
Shareholders, please call:
(800) 566-9061
The Dealer Manager for the Offer is:
ING BARINGS LLC
55 East 52nd Street
New York, New York 10055
Call (877) 446-4930 (ext. 6677)
