<PAGE> 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE TO
(RULE 14D-100)
TENDER OFFER STATEMENT UNDER SECTION 14(d)(1) OR 13(e)(1) OF
THE SECURITIES EXCHANGE ACT OF 1934
------------------------
MCWHORTER TECHNOLOGIES, INC.
(NAME OF SUBJECT COMPANY (ISSUER))
TARTAN, INC.,
A WHOLLY OWNED SUBSIDIARY OF
EASTMAN CHEMICAL COMPANY
(NAME OF FILING PERSONS (OFFERORS))
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
(TITLE OF CLASS OF SECURITIES)
582803102
(CUSIP NUMBER OF CLASS OF SECURITIES)
THERESA K. LEE
100 NORTH EASTMAN ROAD
KINGSPORT, TENNESSEE 37662
TELEPHONE: (423) 229-2000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND
COMMUNICATIONS ON BEHALF OF FILING PERSONS)
------------------------
WITH A COPY TO:
MICHAEL P. ROGAN, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
1440 NEW YORK AVENUE, N.W.
WASHINGTON, D.C. 20005
TELEPHONE: (202) 371-7000
CALCULATION OF FILING FEE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Transaction valuation* Amount of filing fee*
$196,028,495 $39,206
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
* For purposes of calculating the filing fee only. This calculation assumes
the purchase of an aggregate of 9,950,685 shares of common stock of
McWhorter Technologies, Inc. at $19.70 per share. The amount of the filing
fee, calculated in accordance with Rule 0-11(d) of the Securities Exchange
Act of 1934, as amended, equals 1/50th of one percent of the transaction
value.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
<TABLE>
<S> <C> <C> <C> <C>
Amount Previously Paid: Not applicable. Filing Party: Not applicable.
Form or Registration No.: Not applicable. Date Filed: Not applicable.
</TABLE>
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
Check the appropriate boxes below to designate any transactions to which the
statement relates:
[X] third-party tender offer subject to Rule 14d-1.
[ ] issuer tender offer subject to Rule 13e-4.
[ ] going-private transaction subject to Rule 13e-3.
[ ] amendment to Schedule 13D under Rule 13d-2.
Check the following box if the filing is a final amendment reporting the results
of the tender offer: [ ]
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
This Tender Offer Statement on Schedule TO is filed by Eastman Chemical
Company, a Delaware corporation ("Parent"), and Tartan, Inc., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Parent. This
Schedule TO relates to the offer by Purchaser to purchase all outstanding shares
of common stock, par value $0.01 per share, including the associated rights to
purchase preferred stock (collectively, the "Shares"), of McWhorter
Technologies, Inc., a Delaware corporation (the "Company"), at $19.70 per Share,
net to the seller in cash, upon the terms and subject to the conditions set
forth in the Offer to Purchase, dated May 12, 2000 (the "Offer to Purchase"),
and the related Letter of Transmittal, copies of which are attached hereto as
Exhibits (a)(1) and (a)(2), respectively (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"). The information set
forth in the Offer is incorporated herein by reference with respect to Items 1
through 9 and 11 of this Schedule TO.
ITEM 10. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not applicable.
ITEM 12. EXHIBITS.
<TABLE>
<S> <C>
(a)(1) Offer to Purchase, dated May 12, 2000
(a)(2) Letter of Transmittal
(a)(3) Notice of Guaranteed Delivery
(a)(4) Letter from the Dealer Manager to Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees
(a)(5) Letter to Clients for Use by Brokers, Dealers, Commercial
Banks, Trust Companies and Other Nominees
(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9
(a)(7) Summary Advertisement as published on May 12, 2000
(a)(8) Text of Press Release, dated May 12, 2000, issued by Parent
(b) Not applicable
(d)(1) Agreement and Plan of Merger, dated as of May 3, 2000, by
and among Parent, the Purchaser and the Company
(d)(2) Confidentiality Agreement between Parent and the Company,
dated as of November 12, 1999
(g) Not applicable
(h) Not applicable
</TABLE>
2
<PAGE> 3
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
Tartan, Inc.
By: /s/ ALLAN R. ROTHWELL
------------------------------------
Name: Allan R. Rothwell
Title: President
Eastman Chemical Company
By: /s/ ALLAN R. ROTHWELL
------------------------------------
Name: Allan R. Rothwell
Title: President Chemicals Group
Dated: May 12, 2000
3
<PAGE> 1
EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
MCWHORTER TECHNOLOGIES, INC.
AT
$19.70 NET PER SHARE IN CASH
BY
TARTAN, INC.,
A WHOLLY OWNED SUBSIDIARY OF
EASTMAN CHEMICAL COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JUNE 9, 2000, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE IN CONNECTION WITH AN AGREEMENT AND PLAN OF MERGER,
DATED AS OF MAY 3, 2000, BY AND AMONG EASTMAN CHEMICAL COMPANY ("PARENT"),
TARTAN, INC. (THE "PURCHASER") AND MCWHORTER TECHNOLOGIES, INC. (THE "COMPANY").
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE TERMS
OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE
OFFER AND THE MERGER, ARE ADVISABLE, FAIR TO AND IN THE BEST INTERESTS OF THE
COMPANY'S STOCKHOLDERS, HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) THAT
NUMBER OF SHARES (AS DEFINED HEREIN) WHICH, WHEN ADDED TO THE SHARES
BENEFICIALLY OWNED BY PARENT OR THE PURCHASER (IF ANY), REPRESENTS AT LEAST A
MAJORITY OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE SHARES
ARE ACCEPTED FOR PAYMENT. THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET
FORTH IN THIS OFFER TO PURCHASE. SEE SECTION 14.
------------------------
IMPORTANT
Any stockholder wishing to tender Shares must (1) complete and sign the
enclosed Letter of Transmittal (or a facsimile thereof) in accordance with the
instructions in the Letter of Transmittal and mail or deliver the Letter of
Transmittal and all other required documents to the Depositary (as defined
herein) together with the certificates representing the Shares or follow the
procedure for book-entry transfer set forth in Section 3 of this Offer to
Purchase or (2) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for the stockholder.
Any stockholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such person to
tender such Shares.
The rights to purchase preferred stock of the Company are presently
evidenced by the certificates for the shares of common stock of the Company and
a tender by a stockholder of such stockholder's shares of common stock will also
constitute a tender of the associated rights to purchase preferred stock.
Any stockholder who wishes to tender Shares and cannot deliver certificates
representing such Shares and all other required documents to the Depositary
prior to the expiration of the Offer, or who cannot comply with the procedures
for book-entry transfer on a timely basis, may tender such Shares by following
the procedures for guaranteed delivery set forth in Section 3 of this Offer to
Purchase.
Questions and requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Requests for additional
copies of this Offer to Purchase, the Letter of Transmittal, the Notice of
Guaranteed Delivery and other tender offer materials may be directed to the
Information Agent, the Dealer Manager or brokers, dealers, commercial banks or
trust companies.
------------------------
The Dealer Manager for the Offer is:
CHASE SECURITIES INC.
May 12, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
SUMMARY TERM SHEET................................................. 1
INTRODUCTION....................................................... 5
THE OFFER.......................................................... 8
1. Terms of the Offer.......................................... 8
2. Acceptance for Payment and Payment for Shares............... 9
3. Procedures for Tendering Shares............................. 10
4. Withdrawal Rights........................................... 13
5. Certain United States Federal Income Tax Consequences....... 14
6. Price Range of the Shares; Dividends........................ 15
7. Certain Effects of the Offer................................ 15
8. Certain Information Concerning the Company.................. 16
9. Certain Information Concerning Parent and the Purchaser..... 18
10. Source and Amount of Funds.................................. 19
11. Background of the Offer; Purpose of the Offer and the
Merger;
the Merger Agreement and Certain Other Agreements........... 20
12. Plans for the Company; Other Matters........................ 29
13. Dividends and Distributions................................. 31
14. Conditions to the Offer..................................... 31
15. Certain Legal Matters....................................... 33
16. Fees and Expenses........................................... 35
17. Miscellaneous............................................... 35
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND THE PURCHASER......................................... I-1
</TABLE>
<PAGE> 3
SUMMARY TERM SHEET
Tartan, Inc. is offering to purchase all of the outstanding common stock of
McWhorter Technologies, Inc. (including the associated rights to purchase
preferred stock) for $19.70 per share in cash. The following are some of the
questions that you, as a stockholder of McWhorter, may have and our answers to
those questions. Additional important information is contained in the remainder
of this Offer to Purchase and the Letter of Transmittal. We urge you to read
carefully the entire Offer to Purchase and the Letter of Transmittal.
WHO IS OFFERING TO BUY MY SECURITIES?
Our name is Tartan, Inc. We are a Delaware corporation formed for the
purpose of making a tender offer for all of the common stock of McWhorter. We
have carried on no activities other than in connection with the merger agreement
by and among Eastman Chemical Company, Tartan, Inc. and McWhorter. We are a
wholly owned subsidiary of Eastman, a Delaware corporation. Eastman manufactures
and markets plastics, chemicals and fibers, employs 15,000 people in more than
30 countries and had 1999 sales of $4.6 billion. See the "Introduction" and
Section 9 of this Offer to Purchase.
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THE OFFER?
We are seeking to purchase all of the outstanding common stock of McWhorter
and the rights to purchase preferred stock associated with those shares. See the
"Introduction" and Section 1 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 $19.70 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 or nominee 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 the "Introduction" to this Offer to Purchase.
DO YOU HAVE THE FINANCIAL RESOURCES TO MAKE PAYMENT?
Eastman Chemical Company, our parent company, will provide us with
sufficient funds to purchase all shares validly tendered and not withdrawn in
the offer and to provide funding for the merger which is expected to follow the
successful completion of the offer. We anticipate that all of these funds will
be obtained from the existing resources and internally generated funds of
Eastman, including the issuance of commercial paper in the ordinary course of
its business. The offer is not conditioned upon any financing arrangements. See
Section 10 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 your shares in the offer because the form of payment consists
solely of cash. Eastman has arranged for all of our funding to come from its
existing resources and internally generated funds, including the issuance of
commercial paper in the ordinary course of its business. See Section 10 of this
Offer to Purchase.
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 Friday,
June 9, 2000 to tender your shares in the offer. 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 Offer to Purchase. See Sections 1 and 3 of this Offer to Purchase.
<PAGE> 4
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 without
McWhorter's consent in the following circumstances:
- If necessary to satisfy the condition that any applicable waiting period
under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, or any foreign antitrust, investment or competition law or
regulation shall have expired or been terminated, we may extend the
offer, but not beyond July 31, 2000.
- If any of the other conditions to the offer have not been satisfied or
waived, we may extend the offer until such time as they are satisfied or
waived, but not beyond June 30, 2000.
- If all conditions to the offer have been satisfied or waived but less
than 90% of the outstanding shares of McWhorter have been validly
tendered and not properly withdrawn, we may extend the offer for up to
ten (10) business days.
- If all conditions to the offer have been satisfied or waived (following,
if applicable, the ten (10) business day extension described above), we
will accept for payment and pay for all shares validly tendered and not
withdrawn at such time (which shares may not thereafter be withdrawn),
and may extend the offer for a subsequent offering period of at least
three (3) business days and no more than twenty (20) business days (for
all such extensions), during which time stockholders may tender, but not
withdraw, their shares and receive the offer consideration.
See Section 1 of this Offer to Purchase for more details on our ability to
extend the offer.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
If we extend the offer, we will inform ChaseMellon Shareholder Services,
L.L.C. (which is the depositary for the offer) of that fact and will make a
public announcement of the extension no 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 of this Offer to Purchase.
WHAT ARE THE MOST SIGNIFICANT CONDITIONS TO THE OFFER?
- We are not obligated to purchase any shares that are validly tendered
unless the number of shares validly tendered and not withdrawn before the
expiration date of the offer represents at least a majority of the then
outstanding shares on a fully diluted basis. We call this condition the
"minimum condition." For purposes of the offer, "on a fully diluted
basis" means, as of any time, on a basis that includes the number of
shares of McWhorter common stock that are actually issued and outstanding
plus the maximum number of such shares that McWhorter may be required to
issue under stock options, warrants and other rights or securities
exercisable or exchangeable for, or convertible into, shares of McWhorter
common stock, whether or not currently exercisable.
- We are not obligated to purchase shares that are validly tendered if
there is a material adverse change in McWhorter or its business.
- We are not obligated to purchase shares that are validly tendered if any
applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act or foreign antitrust, investment or competition laws or
regulations has not expired or been terminated.
The offer is also subject to a number of other conditions. We can waive any
of the conditions to the offer without McWhorter's consent, other than the
minimum condition. See Sections 1 and 14 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 by the Letter of Transmittal, to ChaseMellon
2
<PAGE> 5
Shareholder Services, L.L.C., the depositary for the offer, no 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 Depositary Trust Company. If
you are unable to deliver any required document or instrument to the depositary
by the expiration of the tender offer, you may gain some extra time 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 New York 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 3 of
this Offer to Purchase.
UNTIL WHAT TIME MAY I WITHDRAW PREVIOUSLY TENDERED SHARES?
You may withdraw shares at any time until the offer has expired and, if we
have not accepted your shares for payment by July 10, 2000, you may withdraw
them at any time after that date until we accept shares for payment. This right
to withdraw will not apply to the subsequent offering period discussed in
Section 1. See Section 4 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 4 of this Offer to
Purchase.
WHAT DOES THE MCWHORTER BOARD OF DIRECTORS THINK OF THE OFFER?
We are making the offer pursuant to the merger agreement, which has been
unanimously approved by the McWhorter board of directors. The board of directors
of McWhorter unanimously:
- determined that the terms of the merger agreement and the transactions
contemplated thereby, including the offer and the merger, are advisable,
fair to and in the best interests of McWhorter's stockholders,
- approved the merger agreement and the transactions contemplated thereby,
including the offer and the merger, and
- recommends that McWhorter's stockholders accept the offer and tender
their shares pursuant to the offer.
See the "Introduction" to this Offer to Purchase.
WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL OF THE MCWHORTER SHARES ARE
NOT TENDERED IN THE OFFER?
Yes. If we accept for payment and pay for at least a majority of the shares
of McWhorter on a fully diluted basis, Tartan, Inc. will be merged with and into
McWhorter. If that merger takes place, Eastman will own all of the shares of
McWhorter and all remaining stockholders of McWhorter (other than Tartan, Inc.
and stockholders properly exercising dissenters' rights) will receive $19.70 per
share in cash (or any higher price per share that is paid in the offer). See the
"Introduction" and Section 11 of this Offer to Purchase.
IF A MAJORITY OF THE SHARES ARE TENDERED AND ACCEPTED FOR PAYMENT, WILL
MCWHORTER CONTINUE AS A PUBLIC COMPANY?
No. Following the purchase of shares in the offer, we expect to consummate
the merger. If the merger takes place, McWhorter no longer will be publicly
owned. Even if for some reason the merger does not take place, if we purchase
all of the tendered shares, there may be so few remaining stockholders and
publicly held shares that McWhorter common stock will no longer be eligible to
be traded through the New York Stock Exchange or any other securities exchange,
there may not be a public trading market for McWhorter common stock, and
McWhorter may cease making filings with the SEC or otherwise cease being
required to comply with the SEC rules relating to publicly held companies. See
Section 7 of this Offer to Purchase.
3
<PAGE> 6
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
If the merger described above takes place, stockholders not tendering in
the offer will receive the same amount of cash per share that they would have
received had they tendered their shares in the offer, subject to any dissenters'
rights properly exercised under Delaware law. Therefore, if the merger takes
place, the only difference to you between tendering your shares and not
tendering your shares is that you will be paid earlier and not have dissenters'
rights if you tender your shares. If, however, for some reason the merger does
not take place, the number of stockholders and the number of shares of McWhorter
that are still publicly held may be so small that there no longer will be an
active public trading market (or, possibly, there may not be any public trading
market) for the McWhorter common stock. Also, as described above, McWhorter may
cease making filings with the SEC or otherwise may not be required to comply
with the SEC rules relating to publicly held companies. See the "Introduction"
and Section 7 of this Offer to Purchase.
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
On May 3, 2000, the last trading day before we announced the acquisition,
the closing price of McWhorter common stock reported on the New York Stock
Exchange was $13.875 per share. On May 11, 2000, the last trading day before we
commenced the tender offer, the closing price of McWhorter common stock reported
on the New York Stock Exchange was $19.625 per share. We encourage you to obtain
a recent quotation for shares of common stock in deciding whether to tender your
shares. See Section 6 of this Offer to Purchase.
WHAT ARE CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF TENDERING
SHARES?
The receipt of cash for shares pursuant to the tender offer or the merger
will be a taxable transaction for United States federal income tax purposes and
possibly for state, local and foreign income tax purposes as well. In general, a
stockholder who sells shares pursuant to the tender offer or receives cash in
exchange for shares pursuant to the merger will recognize gain or loss for
United States federal income tax purposes equal to the difference, if any,
between the amount of cash received and the stockholder's adjusted tax basis in
the shares sold pursuant to the tender offer or exchanged for cash pursuant to
the merger. If the shares exchanged constitute capital assets in the hands of
the stockholder, such gain or loss will be capital gain or loss. In general,
capital gains recognized by an individual will be subject to a maximum United
States federal income tax rate of 20% if the shares were held for more than one
year, and if held for one year or less they will be subject to tax at ordinary
income tax rates. See Section 5 of this Offer to Purchase.
TO WHOM MAY I SPEAK IF I HAVE QUESTIONS ABOUT THE TENDER OFFER?
You may call Georgeson Shareholder Communications Inc. at (800) 223-2064
(toll free) or Chase Securities Inc. at (212) 270-3272. Georgeson Shareholder
Communications Inc. is acting as the information agent and Chase Securities Inc.
is acting as the dealer manager for our tender offer. See the back cover of this
Offer to Purchase.
4
<PAGE> 7
To the Holders of Common Stock of
McWhorter Technologies, Inc.:
INTRODUCTION
Tartan, Inc., a Delaware corporation (the "Purchaser") and a wholly owned
subsidiary of Eastman Chemical Company, a Delaware corporation ("Parent"),
hereby offers to purchase all outstanding shares of common stock, par value
$0.01 per share (the "Common Stock"), of McWhorter Technologies, Inc., a
Delaware corporation (the "Company"), together with the associated rights to
purchase preferred stock (the "Rights") issued pursuant to the Rights Agreement,
dated as of February 1, 1994, as amended (the "Rights Agreement"), between the
Company and Equiserve Trust Company, N.A., as successor Rights Agent (the shares
of Common Stock and any associated Rights are herein referred to as the
"Shares"), at a price of $19.70 per Share, net to the seller in cash, without
interest (the "Offer Price"), upon the terms and subject to the conditions set
forth in this Offer to Purchase and in the related Letter of Transmittal (which,
as amended or supplemented from time to time, collectively constitute the
"Offer").
Tendering stockholders who are record owners of their Shares and 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, stock transfer taxes with respect to the purchase of
Shares by the Purchaser pursuant to the Offer. Stockholders who hold their
Shares through a bank or broker should check with such institution as to whether
it charges any service fees. However, any tendering stockholder or other payee
who fails to complete and sign the Substitute Form W-9 that is included in the
Letter of Transmittal may be subject to a required federal backup withholding
tax of 31% of the gross proceeds payable to such stockholder or other payee
pursuant to the Offer. See Sections 3 and 5. The Purchaser will pay all fees and
expenses of Chase Securities Inc., as Dealer Manager (in such capacity, the
"Dealer Manager"), ChaseMellon Shareholder Services, L.L.C., as Depositary (the
"Depositary"), and Georgeson Shareholder Communications Inc., as Information
Agent (the "Information Agent"), incurred in connection with the Offer and in
accordance with the terms of the agreements entered into between the Purchaser
and/or Parent and each such person. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY
DETERMINED THAT THE TERMS OF THE MERGER AGREEMENT (AS DEFINED BELOW) AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER (AS
DEFINED BELOW), ARE ADVISABLE, FAIR TO AND IN THE BEST INTERESTS OF THE
COMPANY'S STOCKHOLDERS, HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND
UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR
SHARES PURSUANT TO THE OFFER.
Lehman Brothers Inc. ("Lehman Brothers"), the Company's financial advisor,
has delivered to the Company Board its written opinion, dated May 3, 2000, to
the effect that, as of such date and based upon and subject to certain
assumptions and matters stated therein, from a financial point of view, the
consideration to be received by the holders of Shares in the Offer and the
Merger is fair to such holders. A copy of Lehman Brothers' written opinion is
attached as Annex A to the Company's Solicitation/Recommendation Statement on
Schedule 14D-9 (the "Schedule 14D-9"), which has been filed by the Company with
the Securities and Exchange Commission (the "SEC") in connection with the Offer
and which is being mailed to holders of Shares concurrently herewith. Holders of
Shares are urged to, and should, read the full text of such opinion carefully in
its entirety.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) THAT
NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT OR
THE PURCHASER (IF ANY), REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING
ON A FULLY DILUTED BASIS ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT (THE
"MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET
FORTH IN THIS OFFER TO PURCHASE. SEE SECTION 14. As used in this Offer to
Purchase, "on a fully diluted basis" means, as of any time, on a basis that
includes the number of Shares that are actually issued and outstanding plus the
maximum number of Shares that the Company may be required to issue pursuant to
obligations under stock options, warrants and other
5
<PAGE> 8
rights and securities exercisable or exchangeable for, or convertible into,
Shares, whether or not currently exercisable. The Company has represented and
warranted to Parent and the Purchaser that, as of March 31, 2000, there were (1)
9,950,685 Shares issued and outstanding and (2) 812,272 Shares issuable upon the
exercise of options. Neither Parent, the Purchaser nor any person listed on
Schedule I hereto beneficially owns any Shares. The Merger Agreement provides,
among other things, that the Company will not, without the prior written consent
of Parent, issue any additional Shares (except upon the exercise of outstanding
options) or other securities convertible into, or exercisable or exchangeable
for, Shares. See Section 11. Based on the foregoing and assuming the issuance of
812,272 Shares issuable upon the exercise of outstanding options, the Purchaser
believes that the Minimum Condition will be satisfied if 5,381,479 Shares are
validly tendered and not withdrawn prior to the Expiration Date.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of May 3, 2000 (the "Merger Agreement"), by and among Parent, the Purchaser
and the Company. Pursuant to the Merger Agreement, as soon as practicable after
the completion of the Offer and satisfaction or waiver, if permissible, of all
conditions, including the approval and adoption of the Merger Agreement by the
stockholders of the Company (if required by applicable law), the Purchaser will
be merged with and into the Company (the "Merger") and the Company will be the
surviving corporation in the Merger (the "Surviving Corporation"). At the
effective time of the Merger (the "Effective Time"), each Share then
outstanding, other than Shares held by (1) the Company or any of its
subsidiaries, (2) Parent or any of its subsidiaries, including the Purchaser,
and (3) stockholders who properly perfect their dissenters' rights under the
Delaware General Corporation Law, as amended (the "DGCL"), will be converted
into the right to receive $19.70 in cash or any higher price per Share paid in
the Offer, without interest. The Merger Agreement is more fully described in
Section 11.
The Merger Agreement provides that, upon the purchase by the Purchaser of
at least a majority of the Shares pursuant to the Offer and from time to time
thereafter, Parent will be entitled to designate such number of directors,
rounded up to the next whole number, on the Company Board so that the percentage
of Parent's nominees on the Company Board equals the percentage of outstanding
Shares beneficially owned by the Purchaser, Parent and their affiliates. The
Company will, at such time, upon the request of Parent, promptly use its
reasonable best efforts to take all action necessary to cause such persons
designated by Parent to be appointed or elected to the Company Board, if
necessary, by increasing the size of the Company Board or securing resignations
of incumbent directors or both.
The Company and the Rights Agent under the Rights Agreement amended the
Rights Agreement to provide that (1) so long as the Merger Agreement has not
been terminated pursuant to the termination provisions thereof, a Distribution
Date (as defined in the Rights Agreement) will not occur or be deemed to occur,
and neither Parent nor the Purchaser will become an Acquiring Person (as defined
in the Rights Agreement), as a result of the execution, delivery or performance
of the Merger Agreement, the announcement, making or consummation of the Offer,
the acquisition of Shares pursuant to the Offer or the Merger, the consummation
of the Merger or any other transaction contemplated by the Merger Agreement and
(2) the Rights will expire immediately prior to the consummation of the Offer.
Consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including, if required, the approval and adoption of the
Merger Agreement by the affirmative vote of the holders of a majority of the
outstanding Shares. If the Minimum Condition is satisfied, the Purchaser would
have sufficient voting power to approve the Merger without the affirmative vote
of any other stockholder. The Company has agreed, if required, to cause a
meeting of its stockholders to be held as promptly as practicable following
consummation of the Offer for the purpose of considering and taking action upon
the approval and adoption of the Merger Agreement. Parent has agreed to vote the
Shares owned by Parent, the Purchaser and any other subsidiaries of Parent in
favor of the approval and adoption of the Merger Agreement. See Section 12.
Under Section 253 of the DGCL, if a corporation owns at least 90% of the
outstanding shares of each class of a subsidiary corporation, the corporation
holding such stock may merge such subsidiary into itself, or itself into such
subsidiary, without any action or vote on the part of the board of directors or
the stockholders of such other corporation (a "short-form merger"). In the event
that the Purchaser acquires in the aggregate
6
<PAGE> 9
at least 90% of the outstanding Shares pursuant to the Offer or otherwise, then,
at the election of Parent, a short-form merger could be effected without any
further approval of the Company Board or the Company's stockholders. Even if the
Purchaser does not own 90% of the outstanding Shares following consummation of
the Offer, Parent or the Purchaser could seek to purchase additional Shares in
the open market or otherwise in order to reach the 90% threshold and employ a
short-form merger. The per Share consideration paid for any Shares so acquired
in open market purchases may be greater or less than the Offer Price.
In addition, the Merger Agreement provides that if, following a Subsequent
Offering Period (as hereinafter defined), if any, the Purchaser has acquired
less than 90% of the Shares, but not less than 75% of the Shares, then the
Company, the Purchaser and Parent will enter into a stock option agreement, on
customary terms, whereby the Company will grant to the Purchaser an option to
purchase that number of Shares that, when added to the Shares owned by the
Purchaser and its affiliates, results in Purchaser owning 90% of the outstanding
Shares on a fully diluted basis.
Parent presently intends to effect a short-form merger, if permitted to do
so under the DGCL, pursuant to which the Purchaser will be merged with and into
the Company. See Section 12.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
7
<PAGE> 10
THE OFFER
1. TERMS OF THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not withdrawn in accordance with
Section 4. The term "Expiration Date" shall mean 12:00 midnight, New York City
time, on Friday, June 9, 2000, unless and until the Purchaser, in accordance
with the terms of the Merger Agreement, has extended the period of time during
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date at which the Offer, as so extended by the Purchaser
(other than any extension with respect to the Subsequent Offering Period
described below), expires.
The acceptance for payment of Shares pursuant to the Offer, and payment
therefor, is conditioned upon the satisfaction of the Minimum Condition, the
expiration or termination of all waiting periods imposed by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
and any foreign antitrust, investment or competition laws or regulations, and
the other conditions set forth in Section 14. If such conditions are not
satisfied prior to the Expiration Date, the Purchaser reserves the right,
subject to the terms of the Merger Agreement and subject to complying with
applicable rules and regulations of the SEC, to (1) decline to purchase any
Shares tendered in the Offer and terminate the Offer and return all tendered
Shares to the tendering stockholders, (2) waive any or all conditions to the
Offer (other than the Minimum Condition) and, to the extent permitted by
applicable law, purchase all Shares validly tendered and not properly withdrawn,
or (3) extend the Offer and, subject to the right of stockholders to withdraw
Shares until the new Expiration Date, retain all Shares that have been tendered
until the expiration of the Offer as extended. The Merger Agreement provides
that the Purchaser will not waive the Minimum Condition, decrease the Offer
Price, change the form of consideration payable in the Offer, decrease the
number of Shares sought in the Offer, impose additional conditions to the Offer
or amend any other condition to the Offer in any manner adverse to the holders
of the Shares without the prior written consent of the Company.
The Merger Agreement requires the Purchaser to accept for payment and pay
for all Shares validly tendered and not withdrawn pursuant to the Offer if all
conditions to the Offer are satisfied or waived on the Expiration Date. If on
the initial scheduled Expiration Date of the Offer (as it may be extended) all
conditions to the Offer have not been satisfied or waived, Purchaser may, in its
sole discretion, extend the Offer from time to time for such period of time as
Purchaser deems appropriate, but in no event beyond June 30, 2000, unless any
applicable waiting period under the HSR Act, or any foreign antitrust,
investment or competition law or regulation has not expired or been terminated,
in which case the Purchaser may extend the Offer, but in no event beyond July
31, 2000. Notwithstanding the foregoing, if, immediately prior to the Expiration
Date of the Offer (as it may be extended), the Shares tendered and not withdrawn
constitute less than 90% of the outstanding Shares, the Purchaser may extend the
Offer for a period not to exceed ten (10) business days.
Pursuant to Rule 14d-11 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), the Purchaser may, subject to certain conditions,
provide a subsequent offering period following the expiration of the Offer on
the Expiration Date (a "Subsequent Offering Period"). A Subsequent Offering
Period is an additional period of time from three (3) business days to twenty
(20) business days in length, beginning after the Purchaser purchases Shares
tendered in the Offer, during which stockholders may tender, but not withdraw,
their Shares and receive the Offer Price.
The Merger Agreement provides that the Purchaser may, in its sole
discretion, commence 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. During a Subsequent Offering Period, the Purchaser will promptly
purchase and pay for all Shares tendered at the same price paid in the Offer.
Subject to the applicable rules and regulations of the SEC and the
provisions of the Merger Agreement, the Purchaser also expressly reserves the
right, in its sole discretion, at any time or from time to time, (1) to
8
<PAGE> 11
terminate the Offer if any of the conditions set forth in Section 14 have not
been satisfied and (2) to waive any condition to the Offer (other than the
Minimum Condition) or otherwise amend the Offer in any respect, in each case by
giving oral or written notice of such extension, termination, waiver or
amendment to the Depositary and by making a public announcement thereof. If the
Purchaser accepts for payment any Shares pursuant to the Offer, it will accept
for payment all Shares validly tendered prior to the Expiration Date and not
properly withdrawn, and will promptly pay for all Shares so accepted for
payment.
The rights reserved by the Purchaser by the preceding paragraph are in
addition to the Purchaser's rights pursuant to Section 14. Any extension,
amendment or termination of the Offer will be followed as promptly as
practicable by public announcement thereof, the announcement in the case of an
extension to be issued no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date in accordance with
Rules 14d-4(d), 14d-6(c) and 14e-1(d) under the Exchange Act. As used in this
Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1 under
the Exchange Act. Without limiting the obligation of the Purchaser under such
Rules or the manner in which the Purchaser may choose to make any public
announcement, the Purchaser currently intends to make announcements by issuing a
press release to the Dow Jones News Service.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of, or
payment for, Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering stockholders are
entitled to withdrawal rights as described in Section 4. However, the ability of
the Purchaser to delay the payment for Shares which the Purchaser has accepted
for payment is limited by Rule 14e-1(c) under the Exchange Act, which requires
that a bidder pay the consideration offered or return the securities deposited
by, or on behalf of, holders of securities promptly after the termination or
withdrawal of such bidder's Offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
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 the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in percentage of securities
sought, will depend upon the facts and circumstances then existing, including
the relative materiality of the changed terms or information. In the SEC's view,
an offer should remain open for a minimum of five (5) business days from the
date a material change is first published, sent or given to stockholders and, if
material changes are made with respect to information that approaches the
significance of price and the number of shares being sought, a minimum of ten
(10) business days may be required to allow adequate dissemination and investor
response. The requirement to extend the Offer will not apply to the extent that
the number of business days remaining between the occurrence of the change and
the then-scheduled Expiration Date equals or exceeds the minimum extension
period that would be required because of such amendment. If, prior to the
Expiration Date, the Purchaser increases the consideration offered to holders of
Shares pursuant to the Offer, such increased consideration will be paid to all
holders whose Shares are purchased in the Offer whether or not such Shares were
tendered prior to such increase.
The Company has provided 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 and the related Letter of Transmittal
will be mailed to record holders of Shares and will be furnished to brokers,
dealers, banks and similar persons whose names, or the names of whose nominees,
appear on the stockholder lists or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), the Purchaser will accept for payment and will pay
9
<PAGE> 12
for, as soon as practicable after the Expiration Date, all Shares validly
tendered prior to the Expiration Date and not properly withdrawn in accordance
with Section 4.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (1) certificates for
such Shares (or a timely Book-Entry Confirmation (as defined below) with respect
thereto), (2) a Letter of Transmittal (or facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or, in the case of a
book-entry transfer, an Agent's Message (as defined below) in lieu of the Letter
of Transmittal, and (3) any other documents required by the Letter of
Transmittal. The per Share consideration paid to any holder of Shares pursuant
to the Offer will be the highest per Share consideration paid to any other
holder of such Shares pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn, if, as and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares. Payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders.
UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE
PAID BY THE PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER
OR ANY DELAY IN MAKING SUCH PAYMENT.
The Purchaser expressly reserves the right, in its sole discretion, to
delay acceptance for payment of, or payment for, Shares in order to comply in
whole or in part with any applicable law. 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 (including such rights as
are set forth in Sections 1 and 14) (but subject to compliance with Rule
14e-1(c) under the Exchange Act), 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 exercise, and duly
exercise, withdrawal rights as described in Section 4.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, or if certificates are submitted representing more Shares than are
tendered, certificates evidencing Shares not tendered or not accepted for
purchase will be returned to the tendering stockholder, or such other person as
the tendering stockholder shall specify in the Letter of Transmittal, as
promptly as practicable following the expiration, termination or withdrawal of
the Offer. In the case of Shares delivered by book-entry transfer into the
Depositary's account at the Book-Entry Transfer Facility (as defined below)
pursuant to the procedures set forth in Section 3, such Shares will be credited
to such account maintained at the Book-Entry Transfer Facility as the tendering
stockholder shall specify in the Letter of Transmittal, as promptly as
practicable following the expiration, termination or withdrawal of the Offer. If
no such instructions are given with respect to Shares delivered by book-entry
transfer, any such Shares not tendered or not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility designated in the
Letter of Transmittal as the account from which such Shares were delivered.
The Purchaser reserves the right to transfer or assign, in whole or, from
time to time, in part, to one or more of its affiliates, the right to purchase
Shares tendered pursuant to the Offer, but any such transfer or assignment will
not relieve the Purchaser of its obligations under the Offer and will in no way
prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURES FOR TENDERING SHARES.
Valid Tenders. For Shares to be validly tendered pursuant to the Offer,
either (1) a properly completed and duly executed Letter of Transmittal (or
facsimile thereof), together with any required signature guarantees, or in the
case of a book-entry transfer, an Agent's Message in lieu of the Letter of
Transmittal, and any other required documents, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase prior to the Expiration Date and either certificates evidencing
tendered Shares
10
<PAGE> 13
must be received by the Depositary at one of such addresses or such Shares must
be delivered to the Depositary pursuant to the procedures for book-entry
transfer set forth below and a Book-Entry Confirmation must be received by the
Depositary, in each case prior to the Expiration Date, or (2) the tendering
stockholder must comply with the guaranteed delivery procedures described below.
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 (2) business days after the date
of this Offer to Purchase. Any financial institution that is a participant in
the Book-Entry Transfer Facility's system may make book-entry delivery of Shares
by causing the Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account in accordance with the Book-Entry Transfer Facility's
procedures for such transfer. Even though delivery of Shares may be effected
through book-entry transfer into the Depositary's account at the Book-Entry
Transfer Facility, a Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message in lieu of the Letter of Transmittal, and any other required
documents, must, in any case, be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date, or the tendering stockholder must comply with the guaranteed
delivery procedures described below. The confirmation of a book-entry transfer
of Shares into the Depositary's account at the Book-Entry Transfer Facility as
described above is referred to herein as a "Book-Entry Confirmation." DELIVERY
OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY 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 such participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED
DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE
OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. No signature guarantee is required on the Letter of
Transmittal (1) if the Letter of Transmittal is signed by the registered
holder(s) (which term, for purposes of this Section, includes any participant in
the Book-Entry Transfer Facility's systems whose name appears on a security
position listing as the owner of the Shares) of Shares tendered therewith and
such registered holder has not completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" on the
Letter of Transmittal, or (2) if such Shares are tendered for the account of a
financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a participant in the Security
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
"Eligible Institution" and, collectively, "Eligible Institutions"). In all other
cases, all signatures on Letters of Transmittal must be guaranteed by an
Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal. If
the certificates for Shares are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or
certificates for Shares not tendered or not accepted for payment are to be
returned, to a person other than the registered holder of the certificates
surrendered, then the tendered certificates for such Shares must be endorsed or
accompanied by appropriate stock powers, in either case, signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed by an
Eligible Institution as provided in the Letter of Transmittal. See Instructions
1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedures for book-entry transfer
11
<PAGE> 14
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:
(1) such tender is made by or through an Eligible Institution;
(2) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(3) the certificates for (or a Book-Entry Confirmation with respect
to) such Shares, together with a properly completed and duly executed
Letter of Transmittal (or facsimile thereof), with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message,
and any other required documents, are received by the Depositary within
three (3) New York Stock Exchange ("NYSE") trading days after the date of
execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram or facsimile or mailed to the Depositary
and must include a guarantee by an Eligible Institution in the form set forth in
the form of Notice of Guaranteed Delivery made available by the Purchaser.
Upon the acceptance of Shares for payment pursuant to the Offer, the valid
tender of Shares pursuant to one of the procedures described above will
constitute a binding agreement between the tendering stockholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing the Letter of Transmittal as set forth above
(including delivery through an Agent's Message), the tendering stockholder will
irrevocably appoint designees of Parent as such stockholder's attorneys-in-fact
and proxies in the manner set forth in the Letter of Transmittal, each with full
power of substitution, to the full extent of such stockholder's rights with
respect to the Shares tendered by such stockholder and accepted for payment by
the Purchaser and with respect to any and all non-cash dividends, distributions,
rights, other Shares or other securities issued or issuable in respect of such
Shares on or after May 3, 2000 (collectively, "Distributions"). All such powers
of attorney and proxies will be considered coupled with an interest in the
tendered Shares. Such appointment will be effective if, as and when, and only to
the extent that, the Purchaser accepts for payment Shares tendered by such
stockholder as provided herein. All such powers of attorney and proxies will be
irrevocable and will be deemed granted in consideration of the acceptance for
payment by the Purchaser of Shares tendered in accordance with the terms of the
Offer. Upon such appointment, all prior powers of attorney, proxies and consents
given by such stockholder with respect to such Shares (and any and all
Distributions) will, without further action, be revoked and no subsequent powers
of attorney, proxies, consents or revocations may be given by such stockholder
(and, if given, will not be deemed effective). The designees of Parent will
thereby be empowered to exercise all voting and other rights with respect to
such Shares (and any and all Distributions), including, without limitation, in
respect of any annual or special meeting of the Company's stockholders (and any
adjournment or postponement thereof), actions by written consent in lieu of any
such meeting or otherwise, as each such attorney-in-fact and proxy or his
substitute shall in his sole discretion deem proper. 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 any and all Distributions), including voting at any
meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by 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 of any Shares determined by it not to be in
proper form or the acceptance for payment of which, or payment for which, may,
in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also
reserves the absolute right, in its sole discretion, to waive any defect or
irregularity in any tender of Shares of any particular stockholder, whether or
not similar defects or irregularities are waived in the case of other
stockholders. No tender of Shares will be deemed to have been validly made until
all defects or irregularities relating thereto have been cured or waived. None
of the Purchaser, Parent, the Dealer Manager, the Depositary, the Information
Agent or any other person will be under any duty to give notification of any
12
<PAGE> 15
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 in this regard (including the Letter of Transmittal and
the instructions thereto) will be final and binding.
Backup Withholding. Under the "backup withholding" provisions of United
States federal income tax law, the Depositary may be required to withhold 31% of
the amount of any payments pursuant to the Offer. In order to avoid backup
withholding of United States federal income tax payments of the Offer Price
pursuant to the Offer, a stockholder surrendering Shares in the Offer must,
unless an exemption applies and is proven in a manner satisfactory to the
Depositary, provide the Depositary with such stockholder's correct taxpayer
identifying number ("TIN") on a Substitute Form W-9 and certify under penalty of
perjury that such TIN is correct and that such stockholder is not subject to
backup withholding. Certain stockholders (including, among others, all
corporations and certain foreign individuals and entities) are not subject to
backup withholding. If a stockholder does not provide its correct TIN or fails
to provide the certifications described above, the Internal Revenue Service may
impose a penalty on such stockholder and payment of the Offer Price to such
stockholder pursuant to the Offer may be subject to backup withholding. 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 proven in
a manner satisfactory to the Depositary). 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 10 to the Letter of Transmittal.
4. WITHDRAWAL RIGHTS.
Except as otherwise provided in this Section 4 or as provided by applicable
law, tenders of Shares are irrevocable. Shares tendered pursuant to the Offer
may be withdrawn pursuant to the procedures set forth below at any time prior to
the Expiration Date and, unless theretofore accepted for payment and paid for by
Purchaser pursuant to the Offer, may also be withdrawn at any time after July
10, 2000.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase. Any
such notice of withdrawal must specify the name of the person who tendered the
Shares to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of the Shares to be withdrawn, if different from the name of
the person who tendered the Shares. If certificates evidencing Shares to be
withdrawn have been delivered or otherwise identified to the Depositary, then,
prior to the physical release of such certificates, the serial numbers shown on
such certificates must be submitted to the Depositary and, unless such Shares
have been tendered by an Eligible Institution, the signatures on the notice of
withdrawal must be guaranteed by an Eligible Institution. If Shares have been
delivered pursuant to the procedures for book-entry transfer as set forth in
Section 3, any notice of withdrawal must also specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares and otherwise comply with such Book-Entry Transfer Facility's procedures.
Withdrawals of tendered Shares may not be rescinded, and any Shares
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date, or during the Subsequent Offering Period, by again following
one of the procedures described in Section 3.
All questions as to the form and validity (including time of receipt) of
notices of withdrawal will be determined by the Purchaser, in its sole
discretion, which determination will be final and binding. None of the
Purchaser, Parent, the Dealer Manager, the Depositary, the Information Agent or
any other person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
No withdrawal rights will 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.
See Section 1.
13
<PAGE> 16
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The following discussion is a summary of certain material United States
federal income tax consequences of the Offer and the Merger to holders of Shares
whose Shares are tendered and accepted for payment pursuant to the Offer or
whose Shares are converted into the right to receive cash in the Merger. The
discussion is for general information only and does not purport to consider all
aspects of United States federal income taxation that might be relevant to
holders of Shares. The discussion is limited to holders of Shares who hold the
Shares "as capital assets" within the meaning of Section 1221 of the Internal
Revenue Code of 1986, as amended (the "Code"), which generally includes property
held for investment. The discussion set forth below does not apply to certain
categories of holders of Shares subject to special treatment under the Code,
such as foreign holders and holders who acquired such Shares pursuant to the
exercise of employee stock options or otherwise as compensation. This summary is
based upon laws, regulations, rulings and interpretations currently in effect,
all of which are subject to change, retroactively or prospectively.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for United States federal income tax purposes and may also
be a taxable transaction under applicable state, local and foreign income and
other tax laws. In general, a holder who sells Shares pursuant to the Offer, or
who receives cash in exchange for Shares pursuant to the Merger, will recognize
gain or loss for United States federal income tax purposes equal to the
difference, if any, between the amount of cash received and the holder's
adjusted tax basis in the Shares sold pursuant to the Offer or surrendered for
cash pursuant to the Merger.
The gain or loss recognized by a holder of Shares pursuant to the Offer or
the Merger will be capital gain or loss and if, as of the date of the tender
pursuant to the Offer or surrender for cash pursuant to the Merger, as the case
may be, the holder has held the Shares tendered or surrendered for more than one
year, such capital gain will be long-term. The amount of any gain or loss
recognized and its character as short-term or long-term will be calculated and
determined separately for each identifiable block of Shares tendered pursuant to
the Offer or surrendered for cash pursuant to the Merger. In general, capital
gains recognized by an individual upon a disposition of a Share that has been
held for more than one year will be subject to a maximum United States federal
income tax rate of 20% or, in the case of a Share that has been held for one
year or less, will be subject to tax at ordinary income rates. Certain
limitations apply to the tax treatment of a stockholder's capital losses.
Unless a stockholder complies with certain reporting and/or certification
procedures or is an exempt recipient under applicable provisions of the Code and
Treasury regulations promulgated thereunder, such stockholder may be subject to
a withholding tax of 31% with respect to any cash payments received pursuant to
the Offer and the Merger. See the discussion regarding backup withholding in
Section 3. Foreign stockholders should consult with their own tax advisors
regarding withholding taxes in general.
BECAUSE INDIVIDUAL CIRCUMSTANCES MAY DIFFER, EACH STOCKHOLDER IS URGED TO
CONSULT HIS, HER OR ITS OWN TAX ADVISOR TO DETERMINE THE SPECIFIC TAX
CONSEQUENCES OF THE OFFER AND THE MERGER, INCLUDING ANY FEDERAL, STATE, LOCAL,
FOREIGN OR OTHER TAX CONSEQUENCES (INCLUDING ANY TAX RETURN FILING OR OTHER TAX
REPORTING REQUIREMENTS) OF THE OFFER AND THE MERGER.
14
<PAGE> 17
6. PRICE RANGE OF THE SHARES; DIVIDENDS.
The Shares are traded on the NYSE under the symbol "MWT." The following
table sets forth, for each of the fiscal quarters indicated, the high and low
sales price per Share. The Rights trade together with the Common Stock. Share
prices are as reported on the NYSE based on published financial sources.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Fiscal Year Ended October 31, 1998
First Quarter............................................. $26.38 $23.63
Second Quarter............................................ 26.50 24.31
Third Quarter............................................. 28.38 24.00
Fourth Quarter............................................ 24.75 18.88
Fiscal Year Ended October 31, 1999
First Quarter............................................. $23.81 $19.50
Second Quarter............................................ 19.75 12.44
Third Quarter............................................. 17.50 12.50
Fourth Quarter............................................ 18.38 12.50
Fiscal Year Ended October 31, 2000
First Quarter............................................. $16.75 $12.75
Second Quarter............................................ 15.38 10.88
Third Quarter (through May 11, 2000)...................... 19.75 13.88
</TABLE>
On May 3, 2000, the last full trading day prior to the public announcement
of the execution of the Merger Agreement by the Company, Parent and the
Purchaser, the last reported closing sales price of the Shares on the NYSE was
$13.875 per Share. On May 11, 2000, the last full trading day prior to the
commencement of the Offer, the last reported closing sales price of the Shares
on the NYSE was $19.625 per Share. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT
MARKET QUOTATION FOR THE SHARES.
The Company has not paid any cash dividends on its Common Stock during
either of its two most recent fiscal years. Under the terms of the Merger
Agreement, the Company is not permitted to declare or pay dividends with respect
to the Shares without the prior written consent of Parent and Parent does not
intend to consent to any such declaration or payment.
7. CERTAIN EFFECTS OF THE OFFER.
Market for the Shares. The purchase of Shares by the Purchaser pursuant to
the Offer will reduce the number of Shares that might otherwise trade publicly,
could reduce the number of holders of Shares and, depending upon the number of
Shares so purchased, could adversely affect the liquidity and market value of
the remaining Shares held by the public.
NYSE Listing. The Shares are listed on the NYSE. Depending upon the
aggregate market value and the per Share price of any Shares not purchased
pursuant to the Offer, the Shares may no longer meet the requirements for
continued listing on the NYSE. According to the NYSE's published guidelines, the
NYSE would consider delisting the Shares if, among other things, the number of
record holders of at least 100 or more Shares should fall below 400 (or below
1,200 if the average monthly trading volume is below 100,000 for the last 12
months), the number of publicly held Shares (exclusive of holdings of officers
and directors of the Company and their immediate families and other concentrated
holdings of 10% or more) should fall below 600,000, or the total global market
capitalization is less than $50,000,000 and total stockholders' equity is less
than $50,000,000, or the average global market capitalization over a consecutive
30 trading-day period is less than $15,000,000.
If the NYSE were to delist the Shares, the market therefor could be
adversely affected. It is possible that such Shares would continue to trade on
other securities exchanges or in the over-the-counter market, and that price
quotations would be reported by such exchanges or through the Nasdaq or other
sources. The extent of the public market for the Shares and the availability of
such quotations would, however, depend upon the
15
<PAGE> 18
number of stockholders and/or the aggregate market value of such Shares
remaining at such time, the interest in maintaining a market in such Shares on
the part of securities firms, the possible termination of registration of such
Shares under the Exchange Act and other factors. The Purchaser cannot predict
whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for, or
marketability of, the Shares or whether it would cause future market prices to
be greater or less than the Offer Price.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the SEC if the Shares are neither
listed on a national securities exchange nor held by 300 or more holders of
record. Termination of registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company to
its stockholders and to the SEC and would make certain provisions of the
Exchange Act no longer applicable to the Company, such as the short-swing profit
recovery provisions of Section 16(b), the requirement of furnishing a proxy
statement pursuant to Section 14(a) in connection with stockholders' meetings
and the related requirement of furnishing an annual report to stockholders and
the requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions. Furthermore, the ability of "affiliates" of the Company
and persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or Rule 144A promulgated under the Securities
Act of 1933, as amended, may be impaired or eliminated.
Margin Regulations. The Shares are presently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which status has the effect, among other things, of
allowing brokers to extend credit on the collateral of the Shares. Depending
upon factors similar to those described above regarding stock exchange listing
and market quotations, it is possible that, following the Offer, the Shares
would no longer constitute "margin securities" for the purposes of the margin
regulations of the Federal Reserve Board and therefore could no longer be used
as collateral for loans made by brokers. In addition, if registration of the
Shares under the Exchange Act were terminated, the Shares would no longer
constitute "margin securities."
The Purchaser currently intends to seek delisting of the Shares from the
NYSE and the termination of the registration of the Shares under the Exchange
Act as soon after the completion of the Offer as the requirements for such
delisting and termination are met. If the NYSE listing and the Exchange Act
registration of the Shares are not terminated prior to the Merger, then the
Shares will be delisted from the NYSE and the registration of the Shares under
the Exchange Act will be terminated following the consummation of the Merger.
8. CERTAIN INFORMATION CONCERNING THE COMPANY.
The information concerning the Company contained in this Offer to Purchase,
including financial information, has been furnished by the Company or has been
taken from or based upon publicly available documents and records on file with
the SEC and other public sources. Although neither the Purchaser nor Parent has
any knowledge that would indicate that any statements contained herein based
upon such reports and documents are untrue, none of Parent, the Purchaser, the
Dealer Manager, the Depositary or the Information Agent assumes any
responsibility for the accuracy or completeness of the information concerning
the Company contained in such documents and records or for any failure by the
Company to disclose events which may have occurred or may affect the
significance or accuracy of any such information but which are unknown to
Parent, the Purchaser, the Dealer Manager, the Depositary or the Information
Agent.
The Company is a leading manufacturer of surface coating resins and
colorants and is a manufacturer of resins used in the reinforced fiberglass
plastics industry. Surface coating resins are a primary component of paint and
coatings which are used for a variety of protective and decorative purposes.
Colorants are used to disperse pigments in paints and coatings. Resins used for
reinforced fiberglass plastics are a primary component for various fiberglass
products. The Company was formed in 1994 when it was spun off from The Valspar
Corporation and merged with the former resin products division of Cargill Inc.
The Company employs approximately 1,100 people at 14 global sites.
16
<PAGE> 19
The Company is a Delaware corporation with its principal executive offices
at 400 East Cottage Place, Carpentersville, Illinois 60110. The telephone number
of the Company is (847) 428-2657.
Selected Financial Information. Set forth below is selected consolidated
financial information with respect to the Company, excerpted or derived from the
Company's Annual Report on Form 10-K for the fiscal year ended October 31, 1999
(the "Company 10-K") and the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended January 31, 2000 (the "Company 10-Q"), each as filed with
the SEC pursuant to the Exchange Act. Parent and the Purchaser make no
representation as to the accuracy of such financial information. More
comprehensive financial information is included in the Company 10-K, the Company
10-Q and in other documents filed by the Company with the SEC. The following
summary is qualified in its entirety by reference to the Company 10-K, the
Company 10-Q and such other documents, including the financial information and
related notes contained therein. The Company 10-K, the Company 10-Q and such
other documents may be inspected and copies may be obtained from the SEC or the
NYSE in the manner set forth below.
McWHORTER TECHNOLOGIES, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
QUARTER ENDED JANUARY 31, YEAR ENDED OCTOBER 31,
------------------------- ------------------------------
2000 1999 1999 1998 1997
--------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net Sales............................ $103,299 $ 96,235 $443,797 $454,930 $331,465
Income from Operations............... 2,931 4,028 28,301 25,683 27,149
Net Income........................... 473 1,208 11,901 12,844 15,418
Earnings per Share -- basic.......... .05 .12 1.18 1.25 1.50
Earnings per Share -- diluted........ .05 .12 1.17 1.24 1.48
</TABLE>
<TABLE>
<CAPTION>
AT JANUARY 31, AT OCTOBER 31,
----------------------- ------------------------------
2000 1999 1999 1998 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total Assets......................... $358,749 $356,252 $362,062 $362,465 $259,182
Net Working Capital.................. 54,635 48,516 55,037 45,170 24,674
Long-term Obligations................ 134,975 130,760 134,036 130,128 57,152
Stockholders' Equity................. 109,098 108,668 111,163 107,444 91,668
</TABLE>
Available Information. The Company is subject to the information and
reporting requirements of the Exchange Act and, in accordance therewith, is
required to file reports and other information with the SEC relating to its
business, financial condition and other matters. Information, as of particular
dates, concerning the Company's directors and officers, their remuneration,
stock options granted to them, the principal holders of the Company's securities
and any material interests of such persons in transactions with the Company is
required to be disclosed in proxy statements distributed to the Company's
stockholders and filed with the SEC. These reports, proxy statements and other
information should be available for inspection at the public reference
facilities of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the regional offices of the SEC located at Seven World Trade Center, Suite 1300,
New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Information regarding the public reference
facilities may be obtained from the SEC by telephoning 1-800-SEC-0330. Copies of
these materials should be obtainable by mail, upon payment of the SEC's
customary fees, by writing to the SEC's principal office at 450 Fifth Street,
N.W., Washington, D.C. 20549. The SEC also maintains a website on the Internet
at http://www.sec.gov that contains reports, proxy statements and other
information relating to the Company. Reports, proxy statements and other
information concerning the Company should also be available for inspection at
the offices of the NYSE, 20 Broad Street, New York, New York 10005.
17
<PAGE> 20
9. CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER.
Parent and the Purchaser. Parent, a Delaware corporation, is a global
chemical company with a broad portfolio of plastic, chemical, and fiber
products. Parent manufactures and sells chemicals and specialty polymers
supplied to the inks, coatings, adhesives, sealants, and textile industries;
fine chemicals; performance chemicals and intermediates; specialty plastics;
polyester plastics such as polyethylene terephthalate sold under the trademark
EASTAPAK polymers; and fibers. In 1999, Parent had sales of $4.59 billion,
operating earnings of $202 million, net earnings of $48 million, and diluted
earnings per share of $0.61.
Parent began business in 1920 for the purpose of producing photographic
chemicals. Today, Parent is a major chemical producer and leader in the
application of several manufacturing technologies, and in 1999 became an
industry leader in the area of e-commerce by being the first chemical company to
offer e-commerce capability to its customers in the United States and Canada.
Parent pioneered the application of coal gasification technology for the
production of chemicals (also referred to as "chemicals from coal technology")
and currently operates one of the largest coal gasification facilities in the
United States. Parent is also a leader in the manufacture of oxo chemicals that
are used in the production of numerous coatings and resin intermediates, the
manufacture of fine chemicals used in photographic and other custom chemicals,
and the application of advanced environmental waste management practices for
chemical manufacturing operations. Parent is a world leader in production and
recycling of a wide variety of polyester plastics, including polyethylene
terephthalate and other flexible packaging materials.
The Purchaser is a newly incorporated Delaware corporation organized in
connection with the Offer and the Merger and has not carried on any significant
activities other than in connection with the Offer and the Merger. All of the
outstanding capital stock of the Purchaser is owned directly by Parent. Until
immediately prior to the time the Purchaser purchases Shares pursuant to the
Offer, it is not anticipated that the Purchaser will have any significant assets
or liabilities or engage in any significant activities other than those incident
to its formation and capitalization and the transactions contemplated by the
Offer and the Merger.
The principal offices of Parent and the Purchaser are located at 100 North
Eastman Road, Kingsport, Tennessee 37660. The telephone number of Parent and the
Purchaser is (423) 229-2000.
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and the executive
officers of Parent and the Purchaser are set forth on Schedule I hereto.
Except as set forth in this Offer to Purchase, none of Parent, the
Purchaser nor, to the best knowledge of Parent and the Purchaser, any of the
persons listed on Schedule I hereto or any associate or majority owned
subsidiary of such persons beneficially owns or has any right to acquire,
directly or indirectly, any Shares, and none of Parent, the Purchaser nor, to
the best knowledge of Parent and the Purchaser, any of the other persons or
entities referred to above, nor any of the respective directors, executive
officers or subsidiaries of any of the foregoing, has effected any transaction
in the Shares during the past sixty (60) days.
Except as set forth in this Offer to Purchase, neither Parent nor the
Purchaser nor, to the best knowledge of Parent and the Purchaser, any of the
persons listed on Schedule I hereto has any contract, arrangement, understanding
or relationship with any other person with respect to any securities of the
Company, including, but not limited to, any contract, arrangement, understanding
or relationship concerning the transfer or the voting of any securities of the
Company, finder's fees, joint ventures, loan or option arrangements, puts or
calls, guarantees of loans, guarantees against loss, guarantees of profits,
divisions of profits or loss or the giving or withholding of proxies.
Except as set forth in this Offer to Purchase, neither Parent nor the
Purchaser nor, to the best knowledge of Parent and the Purchaser, any of the
persons listed on Schedule I hereto has had any business relationships or
transactions with the Company or any of its executive officers, directors or
affiliates that is required to be reported under the rules and regulations of
the SEC applicable to the Offer. Except as set forth in this Offer to Purchase,
there have been no contacts, negotiations or transactions between Parent or the
Purchaser, their respective subsidiaries, or, to the best knowledge of Parent
and the Purchaser, any of the persons listed on Schedule I hereto, on the one
hand, and the Company or its executive officers, directors or affiliates, on the
18
<PAGE> 21
other hand, concerning a merger, consolidation or acquisition, tender offer or
other acquisition of securities, election of directors or a sale or other
transfer of a material amount of assets. See Section 11.
In the ordinary course of business, Parent and the Company have entered
into transactions whereby Parent has sold certain of its products to the
Company, aggregating approximately $7.8 million since January 1998.
As has been previously reported, on September 30, 1998, Parent entered into
a voluntary plea agreement with the U.S. Department of Justice and agreed to pay
an $11 million fine to resolve a charge brought against Parent for violation of
Section One of the Sherman Act. Under the agreement, Parent entered a plea of
guilty to one count of price-fixing for sorbates, a class of food preservatives,
from January 1995 through June 1997. The plea agreement was approved by the
United States District Court for the Northern District of California on October
21, 1998. Parent recognized the entire fine in third quarter 1998 and is paying
the fine in installments over a period of five years. On October 26, 1999,
Parent pleaded guilty in a Federal Court of Canada to a violation of the
Competition Act of Canada and was fined $780,000 (Canadian). The plea admitted
that the same conduct that was the subject of the September 30, 1998 plea in the
United States had occurred with respect to sorbates sold in Canada, and
prohibited repetition of the conduct and provides for future monitoring. The
fine has been paid and was recognized as a charge against earnings in the fourth
quarter 1999.
Except as set forth above, during the past five years, neither Parent nor
the Purchaser nor, to the best knowledge Parent and the Purchaser, any of the
persons listed on Schedule I hereto has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), nor has any of them,
during the past five years, been a party to any judicial or administrative
proceeding (except for matters that were dismissed without sanction or
settlement) that resulted in a judgment, decree or final order enjoining the
person from future violations of, or prohibiting activities subject to, federal
or state securities laws, or a finding of any violation of federal or state
securities laws.
Available Information. Parent is subject to the information and reporting
requirements of the Exchange Act and, in accordance therewith, is required to
file reports and other information with the SEC relating to its business,
financial condition and other matters. Information, as of particular dates,
concerning Parent's directors and officers, their remuneration, stock options
granted to them, the principal holders of Parent's securities and any material
interests of such persons in transactions with Parent is required to be
disclosed in proxy statements distributed to Parent's stockholders and filed
with the SEC. These reports, proxy statements and other information should be
available for inspection at the public reference facilities of the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the
SEC located at Seven World Trade Center, Suite 1300, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661. Information regarding the public reference facilities may be obtained
from the SEC by telephoning 1-800-SEC-0330. Copies of these materials should be
obtainable by mail, upon payment of the SEC's customary fees, by writing to the
SEC's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The
SEC also maintains a website at http://www.sec.gov that contains reports, proxy
statements and other information relating to Parent. Reports, proxy statements
and other information concerning Parent should also be available at the offices
of the NYSE, 20 Broad Street, New York, New York 10005.
10. SOURCE AND AMOUNT OF FUNDS.
The Offer is not conditioned upon any financing arrangements. The total
amount of funds required by the Purchaser to purchase Shares pursuant to the
Offer and the Merger is estimated to be approximately $196 million. The
Purchaser will obtain all such funds from Parent. Parent will obtain such funds
from existing resources and internally generated funds, including the issuance
of commercial paper in the ordinary course of business.
19
<PAGE> 22
11. BACKGROUND OF THE OFFER; PURPOSE OF THE OFFER AND THE MERGER;
THE MERGER AGREEMENT AND CERTAIN OTHER AGREEMENTS.
Contacts with the Company; Background of the Offer.
Parent continually evaluates and considers other businesses of varying
sizes as potential strategic partners and candidates for acquisition. In the
fall of 1999, Parent was approached by the Company's previous financial advisor
to determine whether Parent had any interest in a strategic transaction
involving the Company. Following additional conversations between Parent and the
Company's previous and current financial advisors, on November 12, 1999, Parent
and the Company entered into a confidentiality agreement.
On December 13, 1999, Allan R. Rothwell, President of the Chemicals Group
of Parent, James P. Rogers, Senior Vice President and Chief Financial Officer of
Parent, and Bruce E. Moore, Vice President and General Manager of Coatings,
Adhesives and Specialty Polymers of Parent, together with other members of
Parent's senior management, met with John R. Stevenson, Chairman of the Company
Board, Jeffrey M. Nodland, President and Chief Executive Officer of the Company,
Louise M. Tonozzi-Frederick, Chief Financial Officer of the Company, and the
Company's current financial advisor. This meeting continued to be exploratory in
nature, with the parties discussing in general terms the strategic benefits of
Parent's proposed acquisition of the Company. Following this meeting, members of
Parent's senior management engaged in a series of conversations with the
Company's financial advisor regarding potential valuations of the Company and
other due diligence matters.
In January 2000, Parent retained Chase Securities Inc. to provide financial
advice regarding a potential business combination with the Company.
On February 2 and February 3, 2000, members of Parent's management,
together with Parent's financial advisor, met in Chicago, at the offices of the
Company's outside legal counsel, with members of the Company's management,
together with the Company's financial advisor, and commenced Parent's initial
due diligence investigation.
In addition, on February 3, 2000, at a meeting of the Finance Committee of
Parent's Board of Directors (the "Parent Board"), Mr. Rogers briefed the
committee on the status of discussions between the Company and Parent.
On February 17, 2000, Parent submitted a letter to the Company, through the
Company's financial advisor, indicating that Parent was considering a
transaction in which it would acquire all of the Company's issued and
outstanding Shares at a price of $20.00 per Share, subject to further due
diligence. Parent also requested a period of exclusive negotiations with the
Company.
On February 25, 2000, Mr. Stevenson notified Mr. Rogers that the Company
would not consider a business combination at Parent's proposed offer price. Mr.
Rogers and members of Parent's management then engaged in a series of
conversations with Mr. Stevenson and the Company's financial advisor. As a
result, Parent and the Company agreed that Parent would continue its due
diligence investigation in order to reevaluate Parent's valuation of the
Company.
On March 1, 2000, Mr. Stevenson spoke with Mr. Rogers by telephone and
orally agreed to suspend discussions with other interested parties for a period
of thirty days. On March 2, 2000, at a meeting of the Finance Committee of the
Parent Board, Mr. Rogers briefed the committee on the status of discussions
between the Company and Parent.
As a result of these conversations, in March 2000, Parent expanded its due
diligence activities to include the world-wide operations of the Company, and
continued to engage in due diligence until execution of the Merger Agreement.
On April 6, 2000, Parent submitted a letter to the Company, through the
Company's financial advisor, containing a non-binding proposal to acquire all of
the Company's issued and outstanding Shares at a price of $18.00 per Share.
20
<PAGE> 23
On April 7, 2000, the Company Board determined that Parent's proposal was
not acceptable to the Company, and Mr. Stevenson conveyed the Company Board's
determination to Mr. Rogers. Between April 7 and April 10, Parent's financial
advisor and the Company's financial advisor engaged in a series of conversations
relating to Parent's valuation of the Company.
On April 10, 2000, Parent submitted a letter to the Company, through the
Company's financial advisor, containing a non-binding proposal to acquire all of
the Company's issued and outstanding Shares at a price of $20.00 per Share,
subject to certain conditions, including the amendment of certain of the
Company's employment agreements in a manner favorable to Parent. Parent also
advised the Company's financial advisor that, as an alternative to its written
proposal, Parent would consider acquiring all of the Company's issued and
outstanding Shares at a price of $19.70 per Share, subject to certain conditions
but excluding the condition that certain employment agreements be amended.
On April 11, 2000, the Company Board authorized management to continue
negotiations with Parent relating to Parent's $19.70 proposal.
On April 12 and 13, 2000, Mr. Rogers and Prentice O. McKibben, Jr.,
Director Corporate Development of Parent, together with Parent's financial
advisor, conducted discussions with Mr. Stevenson, together with the Company's
financial advisor, resulting in a tentative agreement on a price of $19.70 per
Share, subject to satisfactory completion of negotiations with respect to the
Merger Agreement, completion of Parent's due diligence investigation and
approval by the Parent Board and the Company Board.
From April 13, 2000 through May 3, 2000, the parties, together with their
respective outside legal counsel, conducted negotiations with respect to the
Merger Agreement.
At a meeting of the Parent Board held on May 3, 2000, the Parent Board
unanimously approved and adopted the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger.
At a meeting of the Company Board held on May 3, 2000, the Company Board
unanimously determined that the terms of the Merger Agreement, including the
Offer and the Merger, are advisable, fair to and in the best interests of the
holders of the Shares, unanimously approved and adopted the Merger Agreement and
the transactions contemplated thereby, including the Offer and the Merger, and
unanimously recommended that stockholders of the Company accept the Offer and
tender their Shares pursuant to the Offer. At the Company Board meeting, Lehman
Brothers delivered to the Company Board its oral opinion (confirmed by delivery
of a written opinion) to the effect that, as of such date and based upon and
subject to certain matters and assumptions stated therein, from a financial
point of view, the consideration to be received by the holders of Shares
pursuant to the Offer and the Merger is fair to such holders.
Following the approval of the Parent Board and the Company Board, on May 3,
2000, Parent, the Purchaser and the Company executed and delivered the Merger
Agreement and, on May 4, 2000, issued a press release announcing the execution
of the Merger Agreement and the transactions contemplated thereby.
On May 12, 2000, pursuant to the terms of the Merger Agreement, the
Purchaser and Parent commenced the Offer.
Purpose of the Offer and the Merger.
The purpose of the Offer and the Merger is to enable Parent to acquire
control of, and the entire equity interest in, the Company. Upon consummation of
the Merger, the Company will become a wholly owned subsidiary of Parent. The
Offer is being made pursuant to the Merger Agreement and is intended to increase
the likelihood that the Merger will be effected.
Stockholders of the Company who sell their Shares in the Offer will cease
to have any equity interest in the Company and any right to participate in its
earnings and future growth. If the Merger is consummated, non-tendering
stockholders will no longer have an equity interest in the Company and instead
will have only the right to receive cash consideration pursuant to the Merger
Agreement or to exercise statutory appraisal rights under Section 262 of the
DGCL. See Section 12. Similarly, after selling their Shares in the Offer or the
21
<PAGE> 24
subsequent Merger, stockholders of the Company will not bear the risk of any
decrease in the value of the Company.
The primary benefits of the Offer and the Merger to the stockholders of the
Company are that such stockholders are being afforded an opportunity to sell all
of their Shares for cash at a price which represents a premium of approximately
42% over the closing sales price of the Shares on May 3, 2000, the last full
trading day prior to the initial public announcement that the Company, the
Purchaser and Parent had executed the Merger Agreement.
MERGER AGREEMENT
The following is a summary of the material provisions of the Merger
Agreement, a copy of which is filed as an exhibit to the Tender Offer Statement
on Schedule TO filed by Parent and the Purchaser with the SEC in connection with
the Offer (the "Schedule TO"). This summary is qualified in its entirety by
reference to the Merger Agreement, which is deemed to be incorporated herein.
The following summary may not contain all of the information that is important
to you. The Merger Agreement may be examined and copies may be obtained from the
SEC in the manner set forth in Section 9. Capitalized terms used herein and not
otherwise defined shall have the meanings set forth in the Merger Agreement.
The Offer. The Merger Agreement provides that the Purchaser will commence
the Offer and that, upon the terms and subject to the satisfaction or waiver of
the conditions of the Offer, the Purchaser will purchase all Shares validly
tendered pursuant to the Offer. The obligation of the Purchaser to accept for
payment and pay for any Shares validly tendered prior to the expiration of the
Offer is conditioned upon satisfaction of the Minimum Condition and the
satisfaction or waiver of the conditions described in Annex A to the Merger
Agreement. The Merger Agreement provides that the Purchaser may not amend or
waive the Minimum Condition, or decrease the Offer Price, change the form of
consideration payable in the Offer, decrease the number of Shares sought in the
Offer, impose additional conditions to the Offer or amend any other condition of
the Offer in any manner adverse to the holders of Shares without the written
consent of the Company. Notwithstanding the foregoing provisions, if on the
initial scheduled expiration of the Offer (as it may be extended), all
conditions to the Offer have not been satisfied or waived, the Offer may be
extended from time to time until June 30, 2000, unless any applicable waiting
period under the HSR Act or any foreign antitrust, investment or competition law
or regulation has not expired or been terminated, in which case the Offer may be
extended from time to time until July 31, 2000. In addition, the Offer Price may
be increased and the Offer may be extended to the extent required by law in
connection with such increase, in each case without the consent of the Company.
Stock Option Agreement. The Merger Agreement provides that, if following a
Subsequent Offering Period, the Purchaser has acquired less than 90% of the
Shares but not less than 75% of the Shares, Parent, the Purchaser and the
Company will enter into a stock option agreement, on customary terms, pursuant
to which the Company will grant to the Purchaser an option to purchase that
number of Shares equal to the number of Shares that, when added to the number of
Shares owned by the Purchaser and its affiliates immediately following
expiration of the Subsequent Offering Period, results in Purchaser's
beneficially owning 90% of the Shares then outstanding on a fully diluted basis.
Designation of Directors. The Merger Agreement provides that, promptly
upon the purchase of and payment for Shares by Parent or any of its subsidiaries
which represents at least a majority of the outstanding Shares (on a fully
diluted basis), Parent will be entitled to designate such number of directors,
rounded up to the next whole number, on the Company Board so that the percentage
of Parent's nominees on the Company Board equals the percentage of outstanding
Shares beneficially owned by Parent, the Purchaser and their affiliates. The
Company will, upon request of Parent, use its reasonable best efforts promptly
either to increase the size of the Company Board or to secure the resignations
of incumbent directors, or both, and use its reasonable best efforts to cause
Parent's designees to be so elected or appointed to the Company Board. The
Company's obligation to elect or appoint Parent's designees to the Company Board
is subject to compliance with Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder.
22
<PAGE> 25
The Merger Agreement further provides that in the event that Parent's
designees are elected to the Company Board, until the Effective Time, the
Company will cause the Company Board to have at least three directors who were
directors on May 3, 2000 (the "Independent Directors"), provided that if any
Independent Directors cannot serve due to death or disability, the remaining
Independent Directors (or Independent Director, if there is only one remaining)
are entitled to designate another person or persons who served as a director on
May 3, 2000, to fill such vacancies or, if no Independent Director then remains,
the other directors will designate three persons who were directors on May 3,
2000, to fill such vacancies. Once Parent's designees constitute a majority of
the Company Board, the affirmative vote of a majority of the Independent
Directors is required to (1) amend or terminate the Merger Agreement by the
Company, (2) exercise or waive any of the Company's rights, benefits or remedies
under the Merger Agreement, (3) amend the Certificate of Incorporation or
By-laws of the Company, or (4) take any other action of the Company Board under
or in connection with the Merger Agreement; provided, that if there are no
Independent Directors as a result of such persons' deaths, disabilities or
refusal to serve, such actions may be effected by majority vote of the entire
Company Board.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof, the Purchaser will be merged with and into the Company, with
the Company continuing as the Surviving Corporation and a wholly owned
Subsidiary of Parent. At the Effective Time, each issued and outstanding Share
(other than Shares owned by Parent, the Purchaser or any other wholly owned
Subsidiary of Parent, Shares owned by the Company as treasury stock and Shares
held by holders who perfect any available dissenters rights under the DGCL) will
be converted into the right to receive the Offer Price, without interest
thereon, and each issued and outstanding share of common stock of the Purchaser
will be converted into and become one fully paid and nonassessable share of
common stock of the Surviving Corporation.
Treatment of Options. The Merger Agreement provides that Parent and the
Company shall take all actions necessary to provide that, as of the Effective
Time, each outstanding option to purchase Shares which has been granted under
the Company's stock option plans, whether or not then exercisable or vested,
will be cancelled. In consideration for such cancellation, Parent will, or will
cause the Surviving Corporation to, pay to the holder of each option to purchase
Shares, an amount equal to the product of (A) the excess, if any, of the Offer
Price over the per share exercise price thereof and (B) the number of Shares
subject to such Option. The Merger Agreement provides that the Company will take
all action necessary so that, as of the Effective Time, all plans, programs or
arrangements of the Company providing for the issuance or grant of options or
other interests in the capital stock of the Company will be terminated.
Conditions. The respective obligations of each party to effect the Merger
are subject to the satisfaction on or prior to the closing of the Merger, of
each of the following conditions: (1) the Merger Agreement and the Merger have
been approved and adopted by the requisite vote of the holders of Shares if
required by the DGCL in order to consummate the Merger; (2) no statute, rule,
order, decree, regulation, executive order, ruling or temporary or permanent
injunction has been enacted, entered promulgated or enforced by any Governmental
Entity of competent jurisdiction which prohibits the consummation of the Merger
and all foreign or domestic governmental consents, orders and approvals required
for the consummation of the Merger and the transactions contemplated by the
Merger Agreement have been obtained and are in effect at the Effective Time; and
(3) Parent, the Purchaser or their affiliates have purchased Shares pursuant to
the Offer.
Stockholders' Meeting. Pursuant to the Merger Agreement, the Company will,
if required by applicable law in order to consummate the Merger, (1) duly call,
give notice of, convene and hold a special meeting of its stockholders as soon
as reasonably practicable following the acceptance for payment and purchase of
Shares by the Purchaser pursuant to the Offer for the purpose of considering and
taking action upon the Merger Agreement; (2) prepare and file with the SEC a
preliminary proxy or information statement relating to the Merger and the Merger
Agreement and will use its reasonable best efforts to cause a definitive Proxy
Statement to be mailed to its stockholders; (3) subject to the applicable
provisions of the Merger Agreement, include in the Proxy Statement the
recommendation of the Company Board that stockholders of the Company vote in
favor of the approval of the Merger and the adoption of the Merger Agreement;
and (4) use its reasonable best efforts to solicit from holders of Shares
proxies in favor of the Merger and take all other action reasonably necessary or
advisable to secure the stockholder approval required by the DGCL to effect the
23
<PAGE> 26
Merger. In the event that Parent, the Purchaser or any other subsidiary of
Parent acquires at least 90% of the outstanding Shares, pursuant to the Offer or
otherwise, the parties will take all necessary and appropriate action to cause
the Merger to become effective as soon as practicable after such acquisition,
without a meeting of the Company's stockholders, in accordance with the DGCL.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto, including representations
by the Company as to, among other things (1) organization, good standing and
Subsidiaries, (2) capitalization, (3) authorization, validity of the Merger
Agreement and all required Company action taken with respect to the Offer and
the Merger, (4) vote required to approve the Merger, (5) required consents or
approvals, (6) no material misstatements in filings made with the SEC or
financial statements, (7) absence of material adverse changes, (8) no
undisclosed liabilities, (9) no misstatements or omissions of a material fact in
the Schedule 14D-9, Proxy Statement or other filings with the SEC with respect
to the Offer and the Merger, (10) employee benefit plans and ERISA, (11)
litigation, (12) compliance with environmental laws and regulations, (13) tax
returns and tax liabilities, (14) labor relations, (15) compliance with all
laws, (16) insurance, (17) material contracts, (18) title to properties, (19)
all necessary permits and licenses, (20) intellectual property, (21) Year 2000
issues, (22) major customers, (23) receipt of fairness opinion from financial
advisor, (24) rights plan, and (25) full disclosure. In addition, the Merger
Agreement contains representations by Parent and the Purchaser as to, among
other things, (1) organization and good standing, (2) authorization, validity of
the Merger Agreement and all required Parent and Purchaser action taken with
respect to the Offer and the Merger, (3) required consents or approvals, (4) no
misstatements or omissions of a material fact in the Offer Documents, the Proxy
Statement or other filings with the SEC with respect to the Offer and the
Merger, (5) financing the Offer and the Merger, (6) operations of the Purchaser,
(7) no vote of Parent's stockholders required, and (8) no ownership of Shares.
Interim Operations. Pursuant to the Merger Agreement, the Company has
agreed that after the date of the Merger Agreement and prior to the Effective
Time, unless Parent otherwise agrees in writing or except as otherwise
contemplated by the Merger Agreement:
(a) the business of the Company and each of its Subsidiaries will be
conducted only in the ordinary and usual course and, to the extent
consistent therewith, each of the Company and its Subsidiaries will use its
reasonable best efforts to preserve its business organization substantially
intact and maintain its existing relations with customers, suppliers,
employees, creditors and business partners;
(b) the Company will not, and will not permit its Subsidiaries to: (1)
amend its certificate of incorporation or by-laws or similar organizational
documents; (2) declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to its capital stock except
that a wholly owned subsidiary of the Company may declare and pay a
dividend or make advances to its parent or the Company; (3) issue, sell,
transfer, pledge, dispose of or encumber any shares of, or securities
convertible into or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of capital stock
of any class or bonds, debentures, notes or other indebtedness having
general voting rights (or convertible into securities having such rights)
("Voting Debt") of the Company or any of its Subsidiaries, other than
Shares reserved for issuance pursuant to the exercise of stock options
outstanding on the date of the Merger Agreement; (4) split, combine or
reclassify the outstanding Shares or any outstanding capital stock of any
of its Subsidiaries; or (5) redeem, purchase or otherwise acquire directly
or indirectly any shares of its capital stock or any instrument or security
which consists of or includes a right to acquire such shares;
(c) the Company will not, and will not permit any of its Subsidiaries
to, transfer, lease, license, sell, mortgage, pledge, dispose of, or
encumber any assets other than in the ordinary and usual course of business
and consistent with past practice and other than sales of assets that do
not exceed $250,000 per transaction and $1,500,000 in the aggregate;
(d) the Company will not, and will not permit any of its Subsidiaries
to, acquire or publicly propose to acquire or agree to acquire (1) by
merging or consolidating with, or by purchasing an equity interest in or a
substantial portion of the assets of, or by any other manner, any business
or any corporation,
24
<PAGE> 27
partnership, joint venture, association or other business organization or
division thereof or (2) any assets outside of the ordinary and usual course
of business;
(e) the Company will not grant any increase in the compensation
payable or to become payable by the Company to any executive officers of
the Company, and the Company will not, and will not permit any of its
Subsidiaries to (1) grant any increase in the compensation payable or to
become payable, except for increases in the ordinary and usual course of
business, including in connection with internal promotions, and consistent
with past practice, to employees of the Company or its Subsidiaries or any
executive officer of the Company's Subsidiaries or enter into or adopt any
new, or amend or otherwise increase or accelerate the payment or vesting of
any benefit or amount payable or to become payable under any, bonus,
incentive compensation, deferred compensation, severance, profit sharing,
stock option, stock purchase, insurance, pension, retirement or other
employee benefit plan, or other contract, agreement, commitment,
arrangement, plan, trust fund or policy maintained or contributed to or
entered into by the Company or any of its Subsidiaries for the benefit of
any employee; or (2) enter into any employment (other than "at will") or
severance agreement with or, except in accordance with the policies and
practices of the Company existing on the date of the Merger Agreement with
respect to non-executive employees, grant any severance or termination pay
to any officer, director or employee of the Company or any of its
Subsidiaries;
(f) the Company will not, and will not permit any of its Subsidiaries
to, other than with respect to contracts terminable upon no more than
ninety (90) days notice without penalty (1) enter into new contracts,
modify, amend, terminate, renew or fail to use reasonable business efforts
to renew any contract or agreement to which the Company or any of its
Subsidiaries is a party, which is material to the Company and its
Subsidiaries taken as a whole and provided that the term of any new
contract or any contract modification, amendment or renewal does not exceed
twelve months and, provided further, that no loans or advances may be made
or extended to any customers in connection with any such contract,
modification, amendment or renewal, or waive, release or assign any
material rights or claims therein, or (2) enter into, modify, amend, or
renew any contract or agreement if the dollar value of such new contract or
agreement, or existing contract or agreement as so amended, modified, or
renewed, is or would be in excess of $150,000 (not to exceed $1,500,000 in
the aggregate);
(g) the Company will, and will cause each of its Subsidiaries to,
maintain insurance coverage that in the aggregate is not materially
different from that which was in effect on the date of the Merger
Agreement;
(h) the Company will not, and will not permit any of its Subsidiaries
to: (1) incur or assume any long-term debt or any short-term indebtedness
or assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any
other person in each case except pursuant to the borrowings under existing
bank lines of credit (or replacement lines of credit of equal or lesser
amounts which have terms no less favorable to the Company than the lines of
credit being replaced or, with respect to overnight facilities, which have
terms no less favorable than market rates) in the ordinary and usual course
of business; (2) make any loans, advances or capital contributions to, or
investments in, any other person (other than to wholly owned Subsidiaries
of the Company consistent with past practice); or (3) make any new capital
expenditure or expenditures which exceed the amounts budgeted therefor in
the 2000 capital expenditure budget for the Company;
(i) the Company will not, and will not permit any of its Subsidiaries
to, change any of the accounting principles used by it except as required
by law, rule, regulation or United States generally accepted accounting
principles;
(j) the Company will not, and will not permit any of its Subsidiaries
to, make any material Tax election other than in the ordinary course of
business and consistent with past practice, change any material accounting
method relating to Taxes unless required by GAAP, or settle or compromise
any Tax liability in excess of $100,000 arising from or in connection with
any single issue or consent to any waiver of the statute of limitations for
any such Tax liability;
25
<PAGE> 28
(k) the Company will not, and will not permit any of its Subsidiaries
to, pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction of any such claims, liabilities
or obligations (1) in the ordinary course of business and consistent with
past practice, (2) properly reflected or reserved against in the
consolidated financial statements (or the notes thereto) as of and for the
fiscal year ended January 31, 2000 of the Company and its consolidated
Subsidiaries, and (3) not in excess of $100,000 individually or $1,000,000
in the aggregate;
(l) the Company will not, and will not permit any of its Subsidiaries
to, adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of
the Company or any of its Subsidiaries (other than the Merger);
(m) the Company will not, and will not permit any of its Subsidiaries
to, amend, renew, terminate or cause to be extended any material lease,
agreement or arrangement relating to any of its leased real properties or
enter into any material lease, agreement or arrangement with respect to any
real property;
(n) the Company will, and will cause each of its Subsidiaries to, use
reasonable best efforts to maintain in effect all existing Permits that are
material to the operations of the Company or any of its Subsidiaries;
(o) subject to certain other restrictions set forth in the Merger
Agreement, the Company will not, and will not permit any of its
Subsidiaries to, enter into any agreement or arrangement with any of their
respective officers, directors, 10% stockholders or any persons affiliated
with the foregoing, other than such agreements and arrangements as are
entered into in the usual, ordinary and regular course of business and
which have been negotiated on an arm's-length basis and are no less
favorable to the Company or its Subsidiaries than the Company or such
Subsidiary would have obtained from an unaffiliated third party;
(p) the Company will not, and will not permit any of its Subsidiaries
to, take, or agree to commit to take, any action that would materially
impair the ability of the Company, Parent or the Purchaser to consummate
the Offer or the Merger in accordance with the terms of the Merger
Agreement or materially delay such consummation; and
(q) the Company will not, and will not permit any of its Subsidiaries
to, enter into an agreement, contract, commitment or arrangement to do any
of the foregoing, or to announce publicly an intention to do any of the
foregoing.
No Solicitation. Pursuant to the Merger Agreement, the Company has agreed
that from the date of the Merger Agreement until the termination of the Merger
Agreement in accordance with its terms neither it nor any of its Subsidiaries or
affiliates will (and the Company will use its reasonable best efforts to cause
its and each of its Subsidiaries' officers, directors, employees,
representatives and agents, including, but not limited to, investment bankers,
attorneys and accountants, not to), directly or indirectly, solicit, participate
in, initiate, or knowingly encourage discussions or negotiations with, provide
any information to, or enter into any agreement with, any corporation,
partnership, person or other entity or group (other than Parent, any of its
affiliates or representatives) concerning any merger, business combination,
tender offer, exchange offer, sale of all or substantially all of its business,
assets, capital stock or debt securities or similar transactions involving the
Company (an "Acquisition Proposal"). The Company also agreed immediately to
cease any existing activities, discussions or negotiations with any other
persons with respect to any of the foregoing. Notwithstanding the foregoing, the
Company may, directly or indirectly, provide access and furnish information
concerning its business, properties or assets to any corporation, partnership,
person or other entity or group pursuant to customary confidentiality
agreements, and may negotiate and participate in discussions and negotiations
with such entity or group if (x) such entity or group has submitted an
unsolicited bona fide written proposal to the Company Board relating to any such
transaction, (y) such proposal provides for the acquisition for cash and/or
publicly traded securities of all of the outstanding Shares, and (z) the Company
Board determines in good faith, after consultation with its independent
financial advisor, that such proposal is financially superior to the Offer and
the Merger and fully financed or reasonably capable of being financed. A
26
<PAGE> 29
proposal meeting all of the criteria in the preceding sentence is referred to in
the Merger Agreement as a "Superior Proposal." The Merger Agreement does not
prohibit the Company or the Company Board from taking and disclosing to the
Company's stockholders a position with respect to a tender offer by a third
party pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act.
The Company has agreed immediately to notify Parent of any Superior Proposal, or
if an inquiry is made, to keep Parent fully apprised of all developments with
respect thereto, immediately to provide to Parent copies of any written
materials received by the Company in connection with any Superior Proposal,
discussion, negotiation or inquiry, and to identify the party making any
Superior Proposal or inquiry or engaging in such discussion or negotiation. The
Company also has agreed promptly to provide to Parent any non-public information
concerning the Company provided to any other party which was not previously
provided to Parent. The Company has agreed not to release any third party from,
or waive any provisions of, any confidentiality or standstill agreement to which
the Company is a party. The Merger Agreement provides that, only in connection
with the valid termination of the Merger Agreement in connection with a Superior
Proposal, may the Company Board (1) withdraw, or modify or change in a manner
adverse to Parent or the Purchaser, the approval or recommendation by the
Company Board of the Offer, the Merger Agreement or the Merger, or propose to do
so, (2) approve or recommend any Acquisition Proposal or propose to do so, or
(3) enter into any agreement with respect to any Acquisition Proposal or propose
to do so.
Directors' and Offers' Indemnification and Insurance. The Merger Agreement
provides that the certificate of incorporation and by-laws of the Surviving
Corporation shall contain specified indemnification provisions with respect to
directors and officers of the Company prior to the Effective Time. Such
indemnification provisions may not be amended, repealed or otherwise modified
for a period of six (6) years after the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who at any time prior to
the Effective Time were directors or officers of the Company in respect of
actions or omissions occurring at or prior to the Effective Time, unless such
modification is required by law. Notwithstanding the foregoing, if the Surviving
Corporation or any successor corporation is merged with and into Parent,
Parent's certificate of incorporation and by-laws do not have to contain the
indemnification provisions otherwise required by the Merger Agreement. The
Merger Agreement further provides that for six years after the Effective Time,
the Surviving Corporation (and any successor corporation) will indemnify, defend
and hold harmless to the fullest extent permitted under Delaware law the present
and former officers and directors of the Company against all losses, claims,
damages, liabilities, fees and expenses (including reasonable fees and
disbursements of counsel and judgments, fines, losses, claims, liabilities and
amounts paid in settlement (provided that any such settlement is effected with
the written consent of Parent or the Surviving Corporation)) in connection with
any claim, suit, action, proceeding or investigation that is, in whole or in
part, based or arising out of the fact that such person is or was a director or
officer of the Company and arising out of actions or omissions occurring at or
prior to the Effective Time.
The Merger Agreement further provides that for six years after the
Effective Time, Parent will, or will cause the Surviving Corporation to,
maintain in effect, if available, directors' and officers' liability insurance
covering those persons currently covered by the Company's directors' and
officers' liability insurance policy, to the extent that it provides coverage
for events occurring on or prior to the Effective Time, on terms (including the
amounts of coverage and the amounts of deductibles, if any) that are no less
favorable than the terms of the Company's current policies.
Termination. The Merger Agreement provides that it may be terminated or
abandoned at any time prior to the Effective Time, whether before or after
stockholder approval thereof:
(a) by the mutual consent of the Parent Board and the Company Board.
(b) by either of the Company Board or the Parent Board:
(1) if Shares have not been purchased pursuant to the Offer on or
prior to August 18, 2000; provided, that the right to terminate the
Merger Agreement pursuant to this paragraph is not available to any
party whose failure to fulfill any obligation under the Merger Agreement
has been the cause of, or resulted in, the failure of the Purchaser to
purchase Shares pursuant to the Offer on or prior to such date; or
27
<PAGE> 30
(2) if any Governmental Entity has issued an order, decree or
ruling or taken any other action (which order, decree, ruling or other
action the parties shall use their reasonable efforts to lift), in each
case, permanently restraining, enjoining, or otherwise prohibiting the
transactions contemplated by the Merger Agreement and such order,
decree, ruling or other action has become final and non-appealable.
(c) by the Company Board:
(1) if, prior to the purchase of Shares pursuant to the Offer, the
Company Board has withdrawn, or modified or changed in a manner adverse
to Parent or the Purchaser, its approval or recommendation of the Offer,
the Merger Agreement or the Merger in order to approve and permit the
Company to execute a definitive agreement providing for a Superior
Proposal; provided that (A) at least three (3) business days prior to
terminating the Merger Agreement pursuant to this paragraph the Company
has provided Parent with written notice advising Parent that the Company
Board has received a Superior Proposal that it intends to accept,
specifying the material terms and conditions of such Superior Proposal
and identifying the person making such Superior Proposal, and (B) the
Company has caused its financial and legal advisors to negotiate in good
faith with Parent to make such adjustments in the financial terms of a
revised Merger Agreement that are equal or superior to the financial
terms of such Superior Proposal; and further provided that the Company
may not terminate the Merger Agreement pursuant to this paragraph if the
Company is in material breach of the Merger Agreement; or
(2) if, prior to the purchase of Shares pursuant to the Offer,
Parent or the Purchaser breaches in any material respect any of its
material covenants and agreements contained in the Merger Agreement or
breaches its representations and warranties in any material respect; or
(3) if Parent or the Purchaser has terminated the Offer, or the
Offer has expired, without Parent or the Purchaser, as the case may be,
purchasing any Shares pursuant thereto; provided, that the Company may
not terminate the Merger Agreement pursuant to this paragraph if the
Company is in material breach of the Merger Agreement.
(d) by the Parent Board:
(1) if, due to an occurrence that if occurring after the
commencement of the Offer would result in a failure to satisfy any of
the conditions set forth in Section 14 below as of the expected initial
scheduled Expiration Date, Parent, the Purchaser, or any of their
affiliates has failed to commence the Offer on or prior to ten business
days following the date of the initial public announcement of the Offer;
provided that Parent may not terminate the Merger Agreement pursuant to
this paragraph if Parent or the Purchaser is in material breach of the
Merger Agreement; or
(2) if prior to the purchase of Shares pursuant to the Offer, the
Company Board has withdrawn, or modified or changed in a manner adverse
to Parent or the Purchaser, its approval or recommendation of the Offer,
the Merger Agreement or the Merger or has recommended an Acquisition
Proposal or offer, or has executed an agreement in principle or
definitive agreement providing for a tender offer or exchange offer for
any shares of capital stock of the Company, or a merger, consolidation
or other business combination with a person or entity other than Parent,
the Purchaser or their affiliates (or the Company Board resolves to do
any of the foregoing); provided that Parent may not terminate the Merger
Agreement pursuant to this paragraph if Parent or the Purchaser is in
material breach of the Merger Agreement; or
(3) if Parent or the Purchaser has terminated the Offer, or the
Offer has expired without Parent or the Purchaser purchasing any Shares
thereunder; provided that Parent may not terminate the Merger Agreement
pursuant to this paragraph if Parent or the Purchaser is in material
breach of the Merger Agreement.
Effect of Termination; Termination Fee. The Merger Agreement provides that
in the event of termination, the Merger Agreement will forthwith become null and
void, and there will be no liability on the
28
<PAGE> 31
part of Parent, the Purchaser or the Company except (A) for fraud or for breach
of the Merger Agreement and (B) as described below with respect to the payment
of certain fees.
Set forth below are the circumstances under which a termination fee is
payable under the terms of the Merger Agreement. All references to paragraph
numbers refer to the section entitled "Termination" above.
If (w) the Company Board terminates the Merger Agreement pursuant to
paragraph (c)(1), (x) the Parent Board terminates the Merger Agreement pursuant
to paragraph (d)(2), (y)(I) the Company Board terminates the Merger Agreement
pursuant to paragraphs (b)(1) or (c)(3) and prior thereto there was publicly
announced another Acquisition Proposal or (II) the Parent Board terminates the
Merger Agreement pursuant to paragraphs (b)(1) or (d)(3) due to a failure to
satisfy the Minimum Condition or the conditions contained in paragraphs (h) or
(i) of Annex A to the Merger Agreement and Parent reasonably determines that
such failure is attributable to there having been publicly announced another
Acquisition Proposal, or (z)(I) the Parent Board, due to a material breach by
the Company of certain specified covenants or agreements, including the no
solicitation covenant, terminates the Merger Agreement pursuant to paragraphs
(d)(i) or (d)(3) or (II)(A) the Parent Board, due to a material breach by the
Company of any other covenant or agreement contained in the Merger Agreement,
terminates the Merger Agreement pursuant to paragraphs (d)(1) or (d)(3) and (B)
within ninety (90) days of such termination, the Company enters into a
definitive agreement with respect to an Acquisition Proposal (regardless of the
timing of consummation of such Acquisition Proposal) or an Acquisition Proposal
has been otherwise consummated, then in any such case as described in clause
(w), (x), (y) or (z), the Company is obligated to pay to Parent $8 million. Such
payment is due no later than two business days after such termination of the
Merger Agreement, except in the case of any termination by the Company pursuant
to paragraph (c)(1), in which case, payment is due simultaneously with the
termination, or in the case of termination by the Parent in connection with the
circumstances described in clause (z) (II), in which case, payment is due
simultaneously with the consummation of the Acquisition Proposal.
Fees and Expenses. The Merger Agreement provides that, except as set forth
above, all costs and expenses incurred in connection with the Merger Agreement
and the transactions contemplated thereby will be paid by the party incurring
such expenses.
CONFIDENTIALITY AGREEMENT
The following is a summary of the material provisions of the
Confidentiality Agreement, a copy of which is filed as an exhibit to the
Schedule TO. This summary is qualified in its entirety by reference to the
Confidentiality Agreement, which is deemed incorporated herein. The following
summary may not contain all of the information that is important to you. The
Confidentiality Agreement may be examined and copies may be obtained from the
SEC in the manner set forth in Section 9.
Pursuant to the terms of the Confidentiality Agreement entered into on
November 12, 1999, the Company agreed to provide Parent with certain
confidential information and Parent agreed, for a period of two years, to treat
such information as confidential and to use such information solely in
connection with a possible acquisition of the Company. Parent further agreed
that, for a period of one hundred and eighty (180) days, unless requested in
writing in advance by the Company Board, neither it nor its affiliates would
acquire or attempt to acquire ownership of any of the assets or businesses of
the Company, or any securities issued by the Company, or any rights or options
to acquire such ownership, or undertake certain other actions with respect to
these matters. Parent further agreed not to hire management or employees of the
Company for a period of one year except in certain specified circumstances.
12. PLANS FOR THE COMPANY; OTHER MATTERS.
Plans for the Company. Parent is conducting a detailed review of the
Company and its assets, corporate structure, dividend policy, capitalization,
operations, properties, policies, management and personnel and will consider,
subject to the terms of the Merger Agreement, what, if any, changes would be
desirable in light of
29
<PAGE> 32
the circumstances existing upon completion of the Offer. Such changes could
include, among other things, changes in the Company's business, corporate
structure, capitalization, management or dividend policy.
Assuming the Minimum Condition is satisfied and the Purchaser purchases
Shares pursuant to the Offer, Parent intends promptly to exercise its rights
under the Merger Agreement to obtain majority representation on, and control of,
the Company Board. See "Merger Agreement -- Designation of Directors" above.
Parent will exercise such rights by causing the Company to elect to the Company
Board Messrs. Allan R. Rothwell, Bruce E. Moore, Prentice O. McKibben, Jr. and
Eric D. DeLoach. Information with respect to such directors is contained in the
Schedule 14D-9. The Merger Agreement provides that, upon the purchase of and
payment for any Shares by Parent or any of its subsidiaries pursuant to the
Offer, Parent will be entitled to designate such number of directors, rounded up
to the next whole number, on the Company Board such that the percentage of its
designees on the Company Board equals the percentage of the outstanding Shares
beneficially owned by the Purchaser, Parent and any of their affiliates. See
Section 11. The Merger Agreement provides that the directors of the Purchaser
and the officers of the Company, in each case immediately prior to the Effective
Time, will, from and after the Effective Time, be the initial directors and
officers, respectively, of the Surviving Corporation.
Except as disclosed in this Offer to Purchase, and except as may be
effected in connection with the integration of operations referred to above,
neither Parent nor the Purchaser has any present plans or proposals that would
result in an extraordinary corporate transaction, such as a merger,
reorganization, liquidation, relocation of operations, or sale or transfer of a
material amount of assets, involving the Company or its subsidiaries, or any
material changes in the Company's capitalization, corporate structure, business
or composition of its management or the Company Board.
Stockholder Approval. Under the DGCL, the approval of the Company Board
and the affirmative vote of the holders of a majority of the outstanding Shares
are required to adopt and approve the Merger Agreement and the transactions
contemplated thereby. The Company has represented in the Merger Agreement that
the execution and delivery of the Merger Agreement by the Company and the
consummation by the Company of the transactions contemplated by the Merger
Agreement have been duly authorized by all necessary corporate action on the
part of the Company, subject to the approval of the Merger by the Company's
stockholders in accordance with the DGCL. In addition, the Company has
represented that the affirmative vote of the holders of a majority of the
outstanding Shares is the only vote of the holders of any class or series of the
Company's capital stock which is necessary to approve the Merger Agreement and
the transactions contemplated thereby, including the Merger. Therefore, unless
the Merger is consummated pursuant to the short-form merger provisions under the
DGCL described below (in which case no further corporate action by the
stockholders of the Company will be required to complete the Merger), the only
remaining required corporate action of the Company will be the approval of the
Merger Agreement and the transactions contemplated thereby by the affirmative
vote of the holders of a majority of the Shares. The Merger Agreement provides
that Parent will vote, or cause to be voted, all of the Shares then owned by
Parent, the Purchaser or any of Parent's other subsidiaries and affiliates in
favor of the approval of the Merger and the adoption of the Merger Agreement. In
the event that Parent, the Purchaser and Parent's other subsidiaries and
affiliates acquire in the aggregate at least a majority of the Shares entitled
to vote on the approval of the Merger and the Merger Agreement (which would be
the case if the Minimum Condition is satisfied and the Purchaser were to accept
for payment Shares tendered in the Offer), they would have the ability to effect
the Merger without the affirmative votes of any other stockholders.
Short-Form Merger. Section 253 of the DGCL provides that, if a corporation
owns at least 90% of the outstanding shares of each class of another
corporation, the corporation holding such stock may merge itself into such
corporation without any action or vote on the part of the board of directors or
the stockholders of such other corporation (a "short-form merger"). In the event
that Parent, the Purchaser and any other subsidiaries of Parent acquire in the
aggregate at least 90% of the outstanding Shares, pursuant to the Offer or
otherwise, then, at the election of Parent, a short-form merger could be
effected without any approval of the stockholders of the Company, subject to
compliance with the provisions of Section 253 of the DGCL. Even if Parent and
the Purchaser do not own 90% of the outstanding Shares following consummation of
the Offer, Parent and the Purchaser could seek to purchase additional Shares in
the open market or otherwise in order to
30
<PAGE> 33
reach the 90% threshold and employ a short-form merger. The per Share
consideration paid for any Shares so acquired may be greater or less than that
paid in the Offer. In addition, the Merger Agreement provides that, if the
Purchaser obtains 75% or more of the issued and outstanding Shares in the Offer
and the Subsequent Offering Period, but less than 90%, the Company will grant to
the Purchaser an option to purchase the number of Shares that, when combined
with the Shares beneficially owned by the Purchaser, would result in the
Purchaser owning 90% of the outstanding Shares. Parent and the Purchaser
presently intend to effect a short-form merger if permitted to do so under the
DGCL.
Appraisal Rights. Holders of the Shares do not have appraisal rights in
connection with the Offer. However, if the Merger is consummated, holders of the
Shares at the Effective Time will have certain rights pursuant to the provisions
of Section 262 of the DGCL, including the right to dissent and demand appraisal
of, and to receive payment in cash of the fair value of, their Shares. Under
Section 262 of the DGCL, dissenting stockholders of the Company 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 thereon, if any. Any such judicial determination of the fair value of
the 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 THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER THE
DGCL DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE
FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY APPRAISAL RIGHTS AVAILABLE
UNDER THE DGCL. THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT
ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL.
13. DIVIDENDS AND DISTRIBUTIONS.
As described above, the Merger Agreement provides that from the date of the
Merger Agreement until the Effective Time, without the prior written consent of
Parent, neither the Company nor any of its Subsidiaries will (1) declare, set
aside or pay any dividend or other distribution payable in cash, stock or
property with respect to its capital stock, except that a wholly owned
Subsidiary of the Company may declare and pay a dividend or make advances to its
parent or the Company; (2) issue, sell, transfer, pledge, dispose of or encumber
any shares of, or securities convertible into or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire any shares of,
capital stock of any class or Voting Debt of the Company or any of its
Subsidiaries, other than Shares reserved for issuances pursuant to the exercise
of options outstanding on such date; (3) split, combine or reclassify the
outstanding Shares or any outstanding capital stock of any of the Subsidiaries
of the Company; or (4) redeem, purchase or otherwise acquire directly or
indirectly any of its capital stock or any instrument or security which consists
of or includes a right to acquire such capital stock.
14. CONDITIONS TO THE OFFER.
Notwithstanding any other provisions of the Offer, and in addition to (and
not in limitation of) the Purchaser's rights to extend and amend the Offer at
any time in its sole discretion (subject to the provisions of the Merger
Agreement), the Purchaser is not required to accept for payment or, subject to
any applicable rules and regulations of the SEC, including Rule 14e-1(c) under
the Exchange Act (relating to the Purchaser's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay for,
and may delay the acceptance for payment of or, subject to the restriction
referred to above, the payment for, any tendered Shares, and may terminate the
Offer as to any Shares not then paid for, if (1) any applicable waiting period
under the HSR Act or any foreign antitrust, investment or competition law or
regulation has not expired or terminated, (2) the Minimum Condition has not been
satisfied, or (3) at any
31
<PAGE> 34
time on or after the date of the Merger Agreement and before the time of payment
for any such Shares, any of the following events shall occur or shall be
determined by the Purchaser to have occurred:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity (1) seeking to prohibit or impose any
material limitations on Parent's or the Purchaser's ownership or operation
(or that of any of their respective Subsidiaries or affiliates) of all or a
material portion of their or the Company's businesses or assets, or to
compel Parent or the Purchaser or their respective Subsidiaries and
affiliates to dispose of or hold separate any material portion of the
business or assets of the Company or Parent and their respective
Subsidiaries, in each case taken as a whole, (2) challenging the
acquisition by Parent or the Purchaser of any Shares under the Offer,
seeking to restrain or prohibit the making or consummation of the Offer or
the Merger or the performance of any of the other transactions contemplated
by this Agreement, or seeking to obtain from the Company, Parent or the
Purchaser any damages that are material in relation to the Company and its
Subsidiaries taken as a whole, (3) seeking to impose material limitations
on the ability of the Purchaser, or rendering the Purchaser unable, to
accept for payment, pay for or purchase some or all of the Shares pursuant
to the Offer and the Merger, or (4) seeking to impose material limitations
on the ability of the Purchaser or Parent effectively to exercise full
rights of ownership of the Shares, including, without limitation, the right
to vote the Shares purchased by it on all matters properly presented to the
Company's stockholders;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any
Governmental Entity, other than the application to the Offer or the Merger
of applicable waiting periods under the HSR Act or any foreign antitrust,
investment or competition law or regulation, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (1) through (4) of paragraph (a) above;
(c) there shall have occurred and continue to exist (1) any general
suspension of trading in, or limitation on prices for, securities on the
NYSE for a period in excess of three hours (excluding suspensions or
limitations resulting solely from physical damage or interference with such
exchanges not related to market conditions), or (2) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory);
(d) any of the representations and warranties of the Company set forth
in the Merger Agreement, when read without any exception or qualification
as to materiality or Company Material Adverse Effect, shall not be true and
correct, as if such representations and warranties were made at the time of
such determination (except as to any such representation and warranty which
speaks as of a specific date, which must be untrue or incorrect as of such
specific date), except where the failure to be so true and correct would
not, individually or in the aggregate, reasonably be likely to have a
Company Material Adverse Effect;
(e) the Company shall have breached or failed to perform any material
obligation or to comply with any material agreement or covenant of the
Company to be performed or complied with by it under the Merger Agreement;
(f) there shall have occurred any events or changes which have had or
which are reasonably likely to have or constitute, individually or in the
aggregate, a Company Material Adverse Effect;
(g) the Merger Agreement shall have been terminated in accordance with
its terms;
(h) (1) it shall have been publicly disclosed or Parent or the
Purchaser shall have otherwise learned that any person, entity or "group"
(as defined in Section 13(d)(3) of the Exchange Act), other than Parent or
its affiliates or any group of which any of them is a member, shall have
acquired beneficial ownership (determined pursuant to Rule 13d-3
promulgated under the Exchange Act) of 15% or more of any class or series
of capital stock of the Company (including the Shares) (or any person
beneficially owning 15% of any class or series of capital stock of the
Company (including the Shares) on the date of the Merger Agreement shall
increase such person's beneficial ownership by 1% or more in excess of such
beneficial ownership as reported in an SEC filing publicly filed prior to
the date of the Merger
32
<PAGE> 35
Agreement), through the acquisition of stock, the formation of a group or
otherwise, or shall have been granted an option, right or warrant,
conditional or otherwise, to acquire beneficial ownership of 15% or more of
any class or series of capital stock of the Company (including the Shares);
or (2) any person or group shall have entered into a definitive agreement
or agreement in principle with the Company with respect to a merger,
consolidation or other business combination with the Company; or
(i) the Company Board or any committee thereof (1) shall have
withdrawn, or modified or changed in a manner adverse to Parent or the
Purchaser (including by amendment of the Schedule 14D-9), its
recommendation of the Offer, the Merger Agreement, or the Merger, (2) shall
have recommended another proposal or offer, (3) shall have resolved to do
any of the foregoing, or (4) shall have taken a neutral position or made no
recommendation, unless the Company Board determines in good faith, based
upon an opinion of independent legal counsel, that the failure to take such
position would be reasonably likely to violate their fiduciary duties to
the Company's stockholders under applicable law, with respect to another
proposal or offer (other than by Parent or the Purchaser) after a
reasonable amount of time (and in no event more than ten business days
following receipt thereof) has elapsed for the Company Board or any
committee thereof to review and make a recommendation with respect thereto;
which in the sole judgment of Parent or the Purchaser, in any such case, makes
it inadvisable to proceed with the Offer or with such acceptance for payment or
payment for Shares.
The foregoing conditions are for the sole benefit of Parent and the
Purchaser and may be waived by Parent or the Purchaser, in whole or in part, at
any time and from time to time in the sole discretion of Parent or the
Purchaser. 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 which may be asserted at any time
and from time to time.
15. CERTAIN LEGAL MATTERS.
General. Except as described in this Offer to Purchase, based on
information provided by the Company, neither the Purchaser nor Parent is aware
of (1) any license or regulatory permit that appears to be material to the
business of the Company and its Subsidiaries, taken as a whole, that might be
adversely affected by the acquisition of Shares by Parent or the Purchaser
pursuant to the Offer or the Merger, or (2) any approval or other action by any
governmental, administrative or regulatory agency or authority, domestic or
foreign, that would be required prior to the acquisition of Shares by the
Purchaser pursuant to the Offer or the Merger. Should any such approval or other
action be required, the Purchaser and Parent presently contemplate that such
approval or other action would be sought. While, except as otherwise described
in this Offer to Purchase, 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 business of the
Company or Parent or that certain parts of the businesses of the Company or
Parent might not have to be disposed of, or other substantial conditions
complied with, in the event that such approvals were not obtained or such other
actions were not taken or in order to obtain any such approval or other action.
If certain types of adverse actions are taken with respect to the matters
discussed below, the Purchaser could decline to accept for payment, or pay for,
any Shares tendered. The Purchaser's obligation under the Offer to accept for
payment and pay for Shares is subject to certain conditions including conditions
with respect to governmental actions. See Section 14.
Antitrust. The Offer is subject to the HSR Act and the rules promulgated
thereunder, which provide that certain acquisition transactions may not be
consummated unless certain information has been furnished to the Antitrust
Division of the Department of Justice (the "Antitrust Division") and the Federal
Trade Commission (the "FTC") and certain waiting period requirements have been
satisfied.
A Notification and Report Form with respect to the Offer was filed under
the HSR Act on May 8, 2000. Under the provisions of the HSR Act applicable to
the Offer, the purchase of Shares pursuant to the Offer may not be consummated
until the expiration of a 15-calendar day waiting period following the filing by
33
<PAGE> 36
Parent, unless the Antitrust Division and the FTC terminate the waiting period
prior thereto. Accordingly, the waiting period under the HSR Act applicable to
the Offer will expire at 11:59 p.m., New York City time, on May 23, 2000,
unless, prior to the expiration or termination of the waiting period, the FTC or
the Antitrust Division extends the waiting period by requesting additional
information or documentary material. If such a request is made, 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 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. The
Purchaser will not accept for payment Shares tendered pursuant to the Offer
unless and until the waiting period requirements imposed by the HSR Act with
respect to the Offer have been satisfied. See Section 14.
The FTC and the Antitrust Division frequently scrutinize the legality under
the Antitrust Laws (as defined below) of transactions such as Purchaser's
acquisition of Shares pursuant to the Offer and the Merger. At any time before
or after Purchaser's acquisition of Shares, the Antitrust Division or the FTC
could take such action under the Antitrust Laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition of
Shares pursuant to the Offer or otherwise seeking divestiture of Shares acquired
by Purchaser or divestiture of substantial assets of Parent, the Company or
their respective affiliates. Private parties and state attorneys general may
also bring legal action under the Antitrust Laws under certain circumstances.
Based upon an examination of information provided by the Company relating
to the businesses in which Parent and the Company are engaged, Parent and the
Purchaser believe that the acquisition of Shares by the Purchaser pursuant to
the Offer or Merger will not violate the Antitrust Laws. Nevertheless, there can
be no assurance that a challenge to the Offer or other acquisition of Shares by
the Purchaser on antitrust grounds will not be made or, if such a challenge is
made, what the result would be.
As used in this Offer to Purchase, "Antitrust Laws" shall mean and include
the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the
Federal Trade Commission Act, as amended, and all other Federal and state
statutes, rules, regulations, orders, decrees, administrative and judicial
doctrines, and other laws that are designed or intended to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade.
Foreign Laws. Parent, the Company and certain of their 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 currently scheduled Expiration Date. The
Purchaser is seeking further information regarding applicability of any such
laws and currently intends to take such action as may be required or desirable.
Pursuant to the Merger Agreement, if any such filings or approvals may not be
made or obtained prior to the currently scheduled Expiration Date, the Purchaser
has the right, in its sole discretion, to extend the Offer until such time as
all required or desirable filings and approvals may be made or obtained,
provided that the Offer may not be extended beyond July 31, 2000.
State Antitakeover Statutes. The Company is incorporated under the laws of
the State of Delaware. In general, Section 203 of the DGCL ("Section 203")
prevents an "interested stockholder" (including a person who has the right to
acquire 15% or more of the corporation's outstanding voting stock) from engaging
in a "business combination" (defined to include mergers and certain other
actions) with a Delaware corporation for a period of three years following the
date such person became an interested stockholder. The Company Board approved
for purposes of Section 203 the entering into by the Purchaser, Parent and the
Company of the Merger Agreement and the consummation of the transactions
contemplated thereby and has taken all appropriate action so that Section 203,
with respect to the Company, will not be applicable to Parent and the Purchaser
by virtue of such actions.
A number of states have adopted laws and regulations that purport to apply
to attempts to acquire securities of corporations that are incorporated in such
states, or whose business operations have substantial economic effects in such
states, or which have substantial assets, security holders, employees, principal
executive offices or principal places of business in such states. In Edgar v.
MITE Corp., the Supreme Court of
34
<PAGE> 37
the United States invalidated on constitutional grounds the Illinois Business
Takeover statute, which, as a matter of state securities law, made certain
corporate acquisitions more difficult. However, in 1987, in CTS Corp. v.
Dynamics Corp. of America, the Supreme Court held that the State of Indiana may,
as a matter of corporate law and, in particular, with respect to those aspects
of corporate law concerning corporate governance, constitutionally disqualify a
potential acquiror from voting on the affairs of a target corporation without
the prior approval of the remaining stockholders. The state law before the
Supreme Court was by its terms applicable only to corporations that had a
substantial number of stockholders in the state and were incorporated there.
Subsequently, in TLX Acquisition Corp. v. Telex Corp., a Federal District Court
in Oklahoma ruled that the Oklahoma statutes were unconstitutional insofar as
they apply to corporations incorporated outside Oklahoma in that they would
subject such corporations to inconsistent regulations. Similarly, in Tyson
Foods, Inc. v. McReynolds, a Federal District Court in Tennessee ruled that four
Tennessee takeover statutes were unconstitutional as applied to corporations
incorporated outside Tennessee. This decision was affirmed by the United States
Court of Appeals for the Sixth Circuit.
Other than as set forth above, Parent and the Purchaser do not believe that
the antitakeover laws and regulations of any state will by their terms apply to
the Offer and the Merger, and neither Parent nor the Purchaser has attempted to
comply with any state antitakeover statute or regulation. The Purchaser reserves
the right to challenge the applicability or validity of any state law
purportedly applicable to the Offer and nothing in this Offer to Purchase or any
action taken in connection with the Offer is intended as a waiver of such right.
If it is asserted that any state antitakeover statute is applicable to the Offer
and an appropriate court does not determine that it is inapplicable or invalid
as applied to the Offer, 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 may be delayed in consummating the Offer. In
such case, the Purchaser may not be obligated to accept for payment, or pay for,
any Shares tendered pursuant to the Offer. See Section 14.
16. FEES AND EXPENSES.
Chase Securities Inc. is acting as Dealer Manager in connection with the
Offer and is providing certain financial advisory services to the Purchaser and
Parent in connection with the Offer. Parent has agreed to pay Chase Securities
Inc. customary fees for such services. Parent has also agreed to reimburse Chase
Securities Inc. for its out-of-pocket expenses, including the reasonable fees
and expenses of its counsel and any other advisor retained by Chase Securities
Inc. in connection with its engagement and to indemnify Chase Securities Inc.
and certain related persons against certain liabilities and expenses, including
certain liabilities and expenses under the federal securities laws.
The Purchaser and Parent have retained Georgeson Shareholder Communications
Inc. to serve as the Information Agent and ChaseMellon Shareholder Services,
L.L.C. to serve as the Depositary in connection with the Offer. The Information
Agent may contact holders of Shares by personal interview, mail, telephone,
telex, telegraph and other methods of electronic communication and may request
brokers, dealers, commercial banks, trust companies and other nominees to
forward the Offer materials to beneficial holders. The Information Agent and the
Depositary will each receive reasonable and customary compensation for their
services, be reimbursed for certain reasonable out-of-pocket expenses and be
indemnified against certain liabilities in connection with their services,
including certain liabilities and expenses under the federal securities laws.
Except as set forth above, neither Parent nor the Purchaser will pay any
fees or commissions to any broker or dealer or other person or entity in
connection with the solicitation of tenders of Shares pursuant to the Offer.
Brokers, dealers, banks and trust companies will be reimbursed by the Purchaser
for customary mailing and handling expenses incurred by them in forwarding the
Offer materials to their customers.
17. MISCELLANEOUS.
The Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute
35
<PAGE> 38
prohibiting the making of the Offer or the acceptance of the Shares pursuant
thereto, the Purchaser shall make a good faith effort to comply with such
statute or seek to have such statute declared inapplicable to the Offer. If,
after such good faith effort, the Purchaser cannot comply with such state
statute, the Offer will not be made to (nor will tenders be accepted from or on
behalf of) holders of Shares in such state. In any jurisdiction where the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by the Dealer Manager or one or more registered brokers or dealers
which are licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR THE PURCHASER NOT CONTAINED HEREIN OR IN
THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
The Purchaser and Parent have filed with the SEC a Tender Offer Statement
on 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 with the SEC
a Solicitation/Recommendation Statement on Schedule 14D-9, together with
exhibits, pursuant to Rule 14d-9 under the Exchange Act, setting forth its
recommendation with respect to the Offer and the reasons for its recommendation
and furnishing certain additional related information. Such Schedules and any
amendments thereto, including exhibits, should be available for inspection, and
copies should be obtainable in the same manner set forth in Section 9 of this
Offer to Purchase (except that such material will not be available at the
regional offices of the SEC).
TARTAN, INC.
May 12, 2000
36
<PAGE> 39
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND
EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER
Directors and Executive Officers of Parent and the Purchaser. Set forth
below is the name and present principal occupation or employment, and material
occupations, positions, offices or employments for the past five years, of each
director and executive officer of Parent and the Purchaser. Other than Peter M.
Wood, who is a citizen of the United Kingdom, each such person is a citizen of
the United States of America. Unless otherwise indicated, the current business
address of each such person is c/o Eastman Chemical Company, 100 North Eastman
Road, Kingsport, Tennessee 37660. Unless otherwise indicated, each occupation
set forth opposite an individual's name refers to employment with Parent. Unless
otherwise indicated, each such person has held his or her present occupation as
set forth below, or has been an executive officer at Parent, or the organization
indicated, for the past five years. Directors of Parent or the Purchaser, as the
case may be, are identified by an asterisk.
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- ------------------------------------------------------------
<S> <C>
H. Jesse Arnelle* Mr. Arnelle is of counsel to the Winston-Salem, North
Carolina-based law firm of Womble, Carlyle, Sandridge &
Rice. He was a partner of the San Francisco-based law firm
of Arnelle, Hastie, McGee, Willis & Greene or its
predecessor from 1985 until 1996. Mr. Arnelle is Immediate
Past Chairman of the Board of Trustees of Pennsylvania State
University, is a director of the National Football
Foundation and Collegiate Hall of Fame, and is a member of
the boards of directors of Armstrong World Industries, Inc.,
FPL Group, Inc., Gannett Corporation, Textron, Inc., Union
Pacific Resources, Inc., and Waste Management, Inc.
Calvin A. Campbell, Jr.* Mr. Campbell has been Chairman of the Board, President and
Goodman Equipment Corporation Chief Executive Officer of Goodman Equipment Corporation
6646A South Narrangansett since 1971. Goodman Equipment designs, manufactures, and
Bedford Park, IL 60638 markets worldwide underground mining locomotives and
personnel carriers and plastics blow molding machinery. He
was also President and Chief Executive Officer of Cyprus
Amax Minerals Company in 1992, Chairman of the Board in 1991
and 1992, and a director from 1985 through 1994. Mr.
Campbell is a member of the board of directors of Mine
Safety Appliances Company and Bulley & Andrews Company. He
is also a director and immediate past Chairman of the
National Association of Manufacturers, is a director of the
National Mining Association, is a director and former
Chairman of the Illinois Manufacturers Association, and
serves as a trustee of the Illinois Institute of Technology.
</TABLE>
I-1
<PAGE> 40
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- ------------------------------------------------------------
<S> <C>
Earnest W. Deavenport, Jr.* Mr. Deavenport is Chairman of the Board and Chief Executive
Officer of Parent. He joined Parent in 1960. Mr. Deavenport
was named President of Parent in 1989. He also served as
Group Vice President of Eastman Kodak Company from 1989
through 1993. Mr. Deavenport is a member of the boards of
directors of AmSouth Bancorporation and Milliken & Company.
He also serves as a director of the American Plastics
Council and the National Association of Manufacturers, on
the Board of Trustees of the Malcolm Baldridge National
Quality Award Foundation, and on the policy committee of the
Business Roundtable.
Jerry E. Dempsey* Mr. Dempsey served as Chairman of the Board and Chief
Executive Officer of PPG Industries, Inc. from 1993 until
his retirement in 1997. From 1991 until he joined PPG, he
was Senior Vice President of WMX Technologies, Inc., a waste
treatment and disposal company, and Chairman of its
publicly-traded, majority-owned subsidiary, Chemical Waste
Management, Inc., having served as President and Chief
Executive Officer of Chemical Waste Management, Inc. since
1985. Mr. Dempsey is also a member of the boards of
directors of Birmingham Steel Corporation and Navistar
International Corporation
John W. Donehower* Mr. Donehower is Senior Vice President and Chief Financial
Kimberly-Clark Corporation Officer of Kimberly-Clark Corporation. He joined
351 Phelps Drive Kimberly-Clark in 1974, and served in a series of management
Irving, TX 75038 positions prior to election to his current position in 1993.
Mr. Donehower is also a member of the boards of directors of
Factory Mutual Insurance Company and Kimberly-Clark De
Mexico S.A. de C.V.
Donald W. Griffin* Mr. Griffin is Chairman of the Board, President, and Chief
Olin Corporation Executive Officer of Olin Corporation, a manufacturer of
501 Merritt P.O. Box 4500 chemicals, metals, and ammunition. He joined Olin in 1961,
Norwalk, CT 06856-4500 and served in a series of marketing and management positions
prior to election to the position of President and Chief
Operating Officer in 1994 and to his current positions in
1996. Mr. Griffin is also a member of the board of directors
of A.C. Nielsen Corporation. He also serves as a trustee of
the University of Evansville and the Buffalo Bill Historical
Center.
Lee Liu* Mr. Liu is the Chairman of the Board of Alliant Energy
Corporation, was Chairman of the Board of Alliant's
predecessor, Interstate Energy Corporation from 1998 to
1999, and was Chairman of the Board and Chief Executive
Officer of IES Industries, Inc., predecessor of Interstate
Energy Corporation, and of IES Utilities, the major
subsidiary of IES Industries, from 1993 to 1998. Mr. Liu has
been with Iowa Electric Light & Power Company, predecessor
of IES Industries, since 1957. He is also a member of the
boards of directors of Principal Financial Group and McLeod
USA Incorporated.
</TABLE>
I-2
<PAGE> 41
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- ------------------------------------------------------------
<S> <C>
Marilyn R. Marks* Miss Marks is Chairman of the Board and Chief Executive
TruckBay.com, Inc. Officer of TruckBay.com, Inc., an Internet source for goods,
1201 Peachtree Street, N.E. services, and information serving the trucking industry, and
400 Colony Square Suite 1101 Chairman of the Board of Dorsey Trailers, Inc., a truck
Atlanta, GA 30361 trailer manufacturer. She was Chief Executive Officer and
President of Dorsey Trailers, Inc. from 1987 to November
1997 and was President of Dorsey Trailers, Inc. until 1999.
Miss Marks is also a member of the board of directors of
Dana Corporation, and also serves as a director of the
American Trucking Associations Foundation.
Dr. John A. White* Dr. White is Chancellor of the University of Arkansas. From
1991 to 1997, he was Dean of the College of Engineering at
the Georgia Institute of Technology. From July 1988 to
September 1991, he was Assistant Director of the National
Science Foundation in Washington, D.C., and served on the
faculty of the Georgia Institute of Technology from 1975 to
1997. Dr. White is also a member of the National Science
Board, a member of the National Academy of Engineering, and
a member of the boards of directors of J.B. Hunt Transport
Services, Inc., Logility, Inc., Motorola, Inc., and Russell
Corporation.
Peter M. Wood* Mr. Wood served as a Managing Director of J.P. Morgan &
Company, from which he retired in 1996. He joined J.P.
Morgan as a Senior Vice President in 1986. Mr. Wood served
as Vice President, Mergers & Acquisitions with Kidder,
Peabody & Co. from 1981 to 1986, was employed by McKinsey &
Company from 1966 to 1981 and by Shell Chemical Company,
Ltd. from 1961 to 1964. Mr. Wood is also a member of the
boards of directors of Middlesex Mutual Assurance Company,
Payless Cashways, Inc. and Stone & Webster, Inc.
Dr. James L. Chitwood Dr. Chitwood is Senior Vice President, Corporate Strategy
and Chief Technology Officer of Parent. Dr. Chitwood joined
Parent in 1968, was named Senior Vice President of Parent in
1989, and Group Vice President, Specialty Business Group in
1991, Senior Vice President with responsibility for Parent
business organizations in 1994, and from 1996 to 1999 was
Senior Vice President with responsibility for operations
outside North America. He also served as a Vice President of
Eastman Kodak Company from 1984 through 1993.
Betty W. DeVinney Mrs. DeVinney is Vice President, Communications and Public
Affairs of Parent. Mrs. DeVinney joined Parent in 1973. She
became Manager, Employment, in 1991, Manager, Community
Relations in 1995 and Manager, Corporate Relations in 1997.
She assumed her current position in 1998.
J. Brian Ferguson Mr. Ferguson, is President, Polymers Group of Parent. Mr.
Ferguson joined Parent in 1977. He was named Vice President,
Industry and Federal Affairs in 1994, became Managing
Director, Greater China in 1997, and was named President,
Eastman Chemicals Asia Pacific in 1998. He assumed his
current position in 1999.
</TABLE>
I-3
<PAGE> 42
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- ------------------------------------------------------------
<S> <C>
Mark W. Joslin Mr. Joslin became Vice President and Controller of Parent
effective March 1, 2000. Mr. Joslin joined Parent in 1999 as
Vice President, Finance. Mr. Joslin previously served as
Chief Financial Officer, Treasurer and Secretary of Lawter
International, Inc. Prior to joining Lawter in 1996, he was
employed by Arthur Andersen LLP, Baxter International, and
ANGUS Chemical.
Theresa K. Lee Ms. Lee became Vice President, General Counsel and Secretary
of Parent effective January 1, 2000. Ms. Lee joined Parent
as a staff attorney in 1987, served as Assistant General
Counsel for the health, safety and environmental legal staff
from 1993 to 1995, and served as Assistant General Counsel
for the corporate legal staff from 1995, until her
appointment as Vice President, Associate General Counsel and
Secretary in 1997.
Roger K. Mowen, Jr. Mr. Mowen is Vice President, CustomerFirst and Chief
Information Officer of Parent. Mr. Mowen joined Parent in
1971. He was named Vice President and General Manager,
Polymer Modifiers, in 1991, Superintendent of the Polymers
Division in 1994, and President, Carolina Operations in
1996. In 1998 he was named Vice President, Customer Demand
Chain and assumed his current position in 1999.
James P. Rogers Mr. Rogers joined Parent in 1999 as Senior Vice President
and Chief Financial Officer. Mr. Rogers served previously as
Executive Vice President and Chief Financial Officer of GAF
Materials Corporation. He also served as Executive Vice
President, Finance, of International Specialty Products,
Inc., which was spun off from GAF in 1997.
B. Fielding Rolston Mr. Rolston is Vice President, Human Resources and Quality
of Parent. Mr. Rolston joined Parent in 1964 and was
appointed Vice President, Customer Service and Materials
Management of Parent in 1987 and Vice President, Human
Resources and Health, Safety, Environment and Security in
1998. He assumed his current position in 1999.
Allan R. Rothwell Mr. Rothwell is President, Chemicals Group of Parent. Mr.
Rothwell joined Parent in 1969, became Vice President and
General Manager, Container Plastics Business Organization in
1994, and was appointed Vice President, Corporate
Development and Strategy in 1997. He was named Senior Vice
President and Chief Financial Officer in 1998 and assumed
his current position in 1999.
Garland S. Williamson Mr. Williamson is Vice President, Worldwide Operations and
Chief Health, Safety and Environmental Officer of Parent.
Mr. Williamson joined Parent in 1967. He was named Vice
President, Asia Pacific Manufacturing in 1992, and was
appointed President, Texas Operations in 1996. He assumed
his current position in 1998.
</TABLE>
I-4
<PAGE> 43
DIRECTORS AND EXECUTIVE OFFICERS OF TARTAN, INC.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS
---- ------------------------------------------------------------
<S> <C>
Allan R. Rothwell* Mr. Rothwell serves as President, Secretary and Treasurer of
Tartan, Inc. Mr. Rothwell is also President, Chemicals Group
of Parent. Mr. Rothwell joined Parent in 1969, became Vice
President and General Manager, Container Plastics Business
Organization in 1994, and was appointed Vice President,
Corporate Development and Strategy in 1997. He was named
Senior Vice President and Chief Financial Officer in 1998
and assumed his current position in 1999.
</TABLE>
I-5
<PAGE> 44
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and any other required documents should be sent or delivered by each stockholder
of the Company or his or her broker, dealer, commercial bank, trust company or
other nominee to the Depositary, at one of the addresses set forth below:
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight:
Reorganization Department Reorganization Department Reorganization Department
P. O. Box 3301 120 Broadway 85 Challenger Road
South Hackensack, NJ 07606 13th Floor Mail Drop-Reorg
New York, NY 10271 Ridgefield Park, NJ 07660
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 296-4293
Confirm Facsimile Transmission
By Telephone Only:
(201) 296-4860
Any questions or requests for assistance or additional copies of this Offer
to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and
the Guidelines for Certification of Taxpayer Identification on Substitute Form
W-9 may be directed to the Information Agent or the Dealer Manager at the
addresses and telephone numbers set forth below. Stockholders may also contact
their broker, dealer, commercial bank or trust company for assistance concerning
the Offer.
The Information Agent for the Offer is:
[GEORGSESON LOGO]
17 State Street, 10th Floor
New York, NY 10004
Banks and Brokers Call Collect:
(212) 440-9800
All Others Call Toll-Free:
(800) 223-2064
The Dealer Manager for the Offer is:
CHASE SECURITIES INC.
270 Park Avenue, 10th Floor
New York, NY 10017
(212) 270-3272
<PAGE> 1
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
MCWHORTER TECHNOLOGIES, INC.
PURSUANT TO THE OFFER TO PURCHASE DATED MAY 12, 2000
BY
TARTAN, INC.,
A WHOLLY OWNED SUBSIDIARY OF
EASTMAN CHEMICAL COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JUNE 9, 2000, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Overnight:
By Mail: By Hand:
Reorganization Department
Reorganization Department Reorganization Department
85 Challenger Road
P.O. Box 3301 120 Broadway
Mail Drop-Reorg
South Hackensack, NJ 07606 13th Floor
Ridgefield Park, NJ 07660
New York, NY 10271
</TABLE>
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 296-4293
Confirm Facsimile Transmission
By Telephone Only:
(201) 296-4860
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS
SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. YOU MUST
SIGN THIS LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED THEREFOR
BELOW, WITH SIGNATURE GUARANTEE IF REQUIRED, AND COMPLETE THE SUBSTITUTE FORM
W-9 SET FORTH BELOW.
THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Description of Shares Tendered
- ---------------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s)
(Please Fill in, if Blank, Exactly as Name(s) Share Certificate(s) Tendered
Appear(s) on Share Certificate(s)) (Attach Additional List if Necessary)
- ---------------------------------------------------------------------------------------------------------------
Total Number of
Shares Number
Certificate Represented by of Shares
Number(s)* Certificate(s) Tendered**
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
------------------------------------------------
Total Shares
- ---------------------------------------------------------------------------------------------------------------
* Need not be completed by stockholders tendering by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares represented by Share certificates delivered
to the Depositary are being tendered. See Instruction 4.
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
This Letter of Transmittal is to be used by stockholders of McWhorter
Technologies, Inc. either if certificates evidencing Shares (as defined below)
are to be forwarded herewith or, unless an Agent's Message (as defined in the
Offer to Purchase, dated May 12, 2000 (the "Offer to Purchase")) is utilized, if
delivery of Shares is to be made by book-entry transfer to the account
maintained by ChaseMellon Shareholder Services, L.L.C. (the "Depositary") at The
Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the
procedures described in Section 3 of the Offer to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver confirmation of the book-entry transfer of their Shares into
the Depositary's account at the Book-Entry Transfer Facility (a "Book-Entry
Confirmation") and all other documents required hereby to the Depositary on or
prior to the Expiration Date (as defined in the Offer to Purchase) must tender
their Shares pursuant to the guaranteed delivery procedures set forth in Section
3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO
THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE
THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY MAY
DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution:
--------------------------------------------------
Account Number:
-----------------------------------------------------------------
Transaction Code Number:
--------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered Holder(s):
------------------------------------------------
Window Ticket Number (if any):
--------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-----------------------------
Name of Institution that Guaranteed Delivery:
-----------------------------------
If Delivered by Book-Entry Transfer:
--------------------------------------------
Account Number:
-----------------------------------------------------------------
Transaction Code Number:
--------------------------------------------------------
The names and addresses of the registered holders should be printed, if not
already printed above, exactly as they appear on the certificates representing
Shares tendered hereby. The certificates and number of Shares that the
undersigned wishes to tender should be indicated in the appropriate boxes.
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to Tartan, Inc., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of Eastman Chemical Company, a
Delaware corporation ("Parent"), the above-described shares of common stock, par
value $0.01 per share, of McWhorter Technologies, Inc., a Delaware corporation
(the "Company"), including the associated rights to purchase preferred stock
(collectively, the "Shares"), pursuant to the Purchaser's offer to purchase all
outstanding Shares at a price of $19.70 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase, dated May 12, 2000 (the "Offer to Purchase"), receipt
of which is hereby acknowledged, and in this related Letter of Transmittal
(which, each as amended or supplemented from time to time, together constitute
the "Offer").
The undersigned understands that the Purchaser reserves the right to
transfer or assign, in whole at any time, or in part from time to time, to one
or more of its affiliates, the right to purchase all or any portion of the
Shares tendered pursuant to the Offer, but any such transfer or assignment will
not relieve the Purchaser of its obligations under the Offer and will in no way
prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with 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 undersigned hereby sells,
assigns and transfers to, or upon the order of, the Purchaser all right, title
and interest in and to all the Shares that are being tendered hereby (and any
and all non-cash dividends, distributions, rights, other Shares or other
securities issued or issuable in respect thereof or declared, paid or
distributed in respect of such Shares on or after May 3, 2000 (collectively,
"Distributions")), and irrevocably constitutes and appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares and all Distributions, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (i) deliver certificates for such Shares (and any and all Distributions), or
transfer ownership of such Shares (and any and all Distributions) on the account
books maintained by the Book-Entry Transfer Facility, together, in any such
case, with all accompanying evidences of transfer and authenticity to, or upon
the order of, the Purchaser, (ii) present such Shares (and any and all
Distributions) for transfer on the books of the Company, and (iii) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any and all Distributions), all in accordance with the terms of the
Offer.
By executing this Letter of Transmittal, the undersigned hereby irrevocably
appoints Allan R. Rothwell, Bruce E. Moore, Prentice O. McKibben, Jr. and Eric
D. DeLoach and each of them, the attorneys-in-fact and proxies of the
undersigned, each with full power of substitution, to the full extent of such
stockholder's rights with respect to the Shares tendered hereby and accepted for
payment by the Purchaser (and any and all Distributions), to vote in such manner
as each such attorney and proxy or his substitute shall in his sole discretion
deem proper, and otherwise act with respect to all the Shares tendered hereby
which have been accepted for payment by the Purchaser prior to the time of such
vote which the undersigned is entitled to vote at any meeting of stockholders
(whether annual or special and whether or not an adjourned meeting) of the
Company, or otherwise. This power of attorney and proxy is coupled with an
interest in the Company and in the Shares and is irrevocable and is granted in
consideration of, and is effective when, if and to the extent that the Purchaser
accepts such Shares for payment pursuant to the Offer. Such acceptance for
payment shall revoke, without further action, all prior powers of attorney and
proxies granted by the undersigned at any time with respect to such Shares (and
all Distributions) and no subsequent powers of attorney or proxies will be given
(and if given will be deemed not to be effective) with respect thereto by the
undersigned. The undersigned acknowledges that in order for Shares to be deemed
validly tendered, immediately upon the acceptance for payment of such Shares,
the Purchaser or the Purchaser's designee must be able to exercise full voting
and all other rights which inure to a record and beneficial holder with respect
to such Shares.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any and all Distributions), and that when the
<PAGE> 4
same are accepted for payment by the Purchaser, the Purchaser will acquire good,
marketable and unencumbered title thereto and to all Distributions, free and
clear of all liens, restrictions, charges and encumbrances, and the same will
not be subject to any adverse claim. The undersigned will, upon request, execute
and deliver any additional documents deemed by the Depositary or the Purchaser
to be necessary or desirable to complete or confirm the sale, assignment and
transfer of the Shares tendered hereby (and any and all Distributions). In
addition, the undersigned will remit and transfer promptly to the Depositary for
the account of the Purchaser all Distributions in respect of the Shares tendered
hereby, accompanied by appropriate documentation of transfer, and, pending such
remittance and transfer or appropriate assurance thereof, the Purchaser shall be
entitled to all rights and privileges as owner of each such Distribution and may
withhold the entire purchase price of the Shares tendered hereby or deduct from
such purchase price the amount or value of such Distribution as determined by
the Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall survive the
death or incapacity of the undersigned, and any obligation of the undersigned
hereunder shall be binding upon the heirs, executors, personal and legal
representatives, administrators, trustees in bankruptcy, successors and assigns
of the undersigned. Except as stated in the Offer to Purchase, this tender is
irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer. The
undersigned recognizes that under certain circumstances set forth in the Offer
to Purchase, the Purchaser may not be required to accept for payment any of the
Shares tendered hereby.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price and/or return any
certificates for Shares not tendered or accepted for payment in the name(s) of
the registered holder(s) appearing above under "Description of Shares Tendered."
Similarly, unless otherwise indicated in the box entitled "Special Delivery
Instructions," please mail the check for the purchase price and/or return any
certificates evidencing Shares not tendered or accepted for payment (and any
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing above under "Description of Shares Tendered." In the event
that the boxes entitled "Special Payment Instructions" and "Special Delivery
Instructions" are both completed, please issue the check for the purchase price
and/or return any certificates evidencing Shares not tendered or accepted for
payment in the name(s) of, and mail such check and/or return such certificates
to, the person(s) so indicated. Unless otherwise indicated herein in the box
entitled "Special Payment Instructions," please credit any Shares tendered
herewith by book-entry transfer that are not accepted for payment by crediting
the account at the Book-Entry Transfer Facility designated above. The
undersigned recognizes that the Purchaser has no obligation, pursuant to the
"Special Payment Instructions," to transfer any Shares from the name of the
registered holder thereof if the Purchaser does not accept for payment any of
the Shares so tendered.
<PAGE> 5
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7 OF THIS LETTER OF TRANSMITTAL)
To be completed ONLY if the check for the purchase price of Shares accepted
for payment or certificates evidencing Shares not tendered or not accepted for
payment are to be issued in the name of someone other than the undersigned or if
Shares tendered hereby and delivered by book-entry transfer that are not
accepted for payment are to be returned by credit to an account maintained at
the Book-Entry Transfer Facility other than the account indicated above.
Issue check and/or Share certificates to:
Name:
- ---------------------------------------------
(PLEASE PRINT)
Address:
- -------------------------------------------
- ------------------------------------------------------
(INCLUDE ZIP CODE)
- ------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
CREDIT SHARES DELIVERED BY BOOK-ENTRY TRANSFER AND NOT
PURCHASED TO THE BOOK-ENTRY TRANSFER FACILITY ACCOUNT.
---------------------------
(ACCOUNT NUMBER)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7 OF THIS
LETTER OF TRANSMITTAL)
To be completed ONLY if the check for the purchase price of Shares accepted
for payment or certificates evidencing Shares not tendered or not accepted for
payment are to be sent to someone other than the undersigned, or to the
undersigned at an address other than that shown under "Description of Shares
Tendered."
Mail check and/or Share certificates to:
Name:
- ---------------------------------------------
(PLEASE PRINT)
Address:
- -------------------------------------------
- ------------------------------------------------------
(INCLUDE ZIP CODE)
- ------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER)
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
<PAGE> 6
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Dated: ________________ ____, 2000
(Must be signed by registered holder(s) exactly as name(s) appear(s) on Share
certificate(s) or on a security position listing or by person(s) authorized to
become registered holder(s) by certificates and documents transmitted herewith.
If signature is by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, please provide the following information. See
Instruction 5 of this Letter of Transmittal.)
Name(s):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Name of Firm:
-------------------------------------------------------------------
Capacity (full title):
----------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
-------------------------------------------------
Tax Identification or Social Security Number:
-------------------------------------
(Complete Substitute Form W-9 Below)
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5 OF THIS LETTER OF TRANSMITTAL)
Authorized Signature:
-----------------------------------------------------------
Name(s):
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Title:
--------------------------------------------------------------------------
Name of Firm:
-------------------------------------------------------------------
Address:
------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
-------------------------------------------------
Date: ________________ ____, 2000
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this document, shall include
any participant in the Book-Entry Transfer Facility's system whose name appears
on a security position listing as the owner of Shares) of Shares tendered
herewith, unless such holder(s) has completed either the box entitled "Special
Delivery Instructions" or the box entitled "Special Payment Instructions" in
this Letter of Transmittal or (b) if such Shares are tendered for the account of
a financial institution that is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agent's Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program (each, an
"Eligible Institution"). In all other cases, all signatures on this Letter of
Transmittal must be guaranteed by an Eligible Institution. See Instruction 5.
2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery
Procedures. This Letter of Transmittal is to be completed by stockholders of
the Company either if certificates for Shares are to be forwarded herewith or,
unless an Agent's Message is utilized, if a tender of Shares is to be made
pursuant to the procedures for delivery by book-entry transfer set forth in
Section 3 of the Offer to Purchase. For Shares to be validly tendered pursuant
to the Offer, (a) a properly completed and duly executed Letter of Transmittal
(or facsimile thereof), with any required signature guarantees, or an Agent's
Message in the case of a book-entry delivery, and any other documents required
by this Letter of Transmittal, must be received by the Depositary at one of the
Depositary's addresses set forth herein and either certificates or a timely
Book-Entry Confirmation for tendered Shares must be received by the Depositary
at one of such addresses, in each case prior to the Expiration Date (as defined
in the Offer to Purchase), or (b) the tendering stockholder must comply with the
guaranteed delivery procedures set forth below. If certificates are forwarded to
the Depositary in multiple deliveries, a properly completed and duly executed
Letter of Transmittal must accompany each such delivery.
Stockholders whose certificates for Shares are not immediately available,
who cannot deliver their certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot complete the procedures
for delivery by book-entry transfer on a timely basis may tender their Shares by
properly completing and duly executing the Notice of Guaranteed Delivery
pursuant to the guaranteed delivery procedure described in Section 3 of the
Offer to Purchase. Pursuant to such procedure: (a) such tender must be made by
or through an Eligible Institution; (b) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form provided by the
Purchaser herewith (or a facsimile thereof), must be received by the Depositary
prior to the Expiration Date; and (c) the certificates for all physically
tendered Shares, in proper form for transfer, or a Book-Entry Confirmation with
respect to all tendered Shares, together with this properly completed and duly
executed Letter of Transmittal (or facsimile thereof) with any required
signature guarantees, and any other documents required by this Letter of
Transmittal, must be received by the Depositary within three New York Stock
Exchange trading days after the date of execution of the Notice of Guaranteed
Delivery, all as described in Section 3 of the Offer to Purchase. A "trading
day" is any day on which the New York Stock Exchange is open for business.
THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE SOLE ELECTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY
WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN
THE CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a manually signed facsimile hereof), waive any
right to receive any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein under "Description of
Shares Tendered" is inadequate, the certificate numbers and/or the number of
Shares tendered should be listed on a separate signed schedule and attached
hereto.
<PAGE> 8
4. Partial Tenders. (Not applicable to stockholders who tender by
book-entry transfer.) If fewer than all the Shares evidenced by any Share
certificate delivered to the Depositary herewith are to be tendered hereby, fill
in the number of Shares which are to be tendered in the box entitled "Number of
Shares Tendered." In such cases, new certificate(s) for the remainder of the
Shares that were evidenced by the certificates delivered to the Depositary
herewith will be sent to the person(s) signing this Letter of Transmittal,
unless otherwise provided in the box entitled "Special Delivery Instructions,"
as soon as practicable after the Expiration Date. All Shares evidenced by
certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly to the name(s) as
written on the face of the certificate(s) evidencing such Shares without
alteration, enlargement or any other change whatsoever.
If any Shares tendered hereby are owned of record by two or more persons,
all such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders on several certificates, it will be necessary to complete,
sign and submit as many separate Letters of Transmittal as there are different
registrations of such certificates.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsement of certificates or separate stock powers
is required, unless payment is to be made to, or certificates evidencing Shares
not tendered or not purchased are to be issued in the name of, a person other
than the registered holder(s), in which case, the certificate(s) evidencing the
Shares tendered hereby must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered holder(s)
appear(s) on such certificate(s). Signatures on such certificate(s) and stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such certificate(s). Signatures on such
certificate(s) and stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificate(s) or stock powers are
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Purchaser of such person's authority so to act must be
submitted.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction
6, the Purchaser will pay or cause to be paid all stock transfer taxes with
respect to the sale and transfer of any Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price of any Shares purchased is
to be made to, or certificate(s) evidencing Shares not tendered or not purchased
are to be registered in the name of, a person other than the registered
holder(s), or if tendered certificates are registered in the name of any person
other than the person(s) signing this Letter of Transmittal, the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to the Purchaser of the payment of such taxes, or
exemption therefrom, is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE(S) EVIDENCING THE SHARES
TENDERED HEREBY.
7. Special Payment and Delivery Instructions. If a check for the purchase
price of any Shares tendered hereby is to be issued, or certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person (s) signing this Letter of Transmittal or if such
check or any such certificate is to be sent to someone other than the person(s)
signing this Letter of Transmittal or to the person(s) signing this Letter of
Transmittal but at an address other than that shown in the box entitled
"Description of Shares Tendered," the appropriate boxes on this Letter of
Transmittal must be completed. Any stockholder(s) delivering Shares by
book-entry transfer may request that Shares not purchased be
<PAGE> 9
credited to such account maintained at the Book-Entry Transfer Facility as such
stockholder(s) may designate in the box entitled "Special Payment Instructions."
If no such instructions are given, any such Shares not purchased will be
returned by crediting the account at the Book-Entry Transfer Facility designated
above as the account from which such Shares were delivered.
8. Requests for Assistance or Additional Copies. Questions and requests
for assistance may be directed to the Dealer Manager or the Information Agent at
the addresses and telephone numbers set forth below. Additional copies of the
Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery
and the Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 may be obtained from the Information Agent at the address
set forth below or from brokers, dealers, commercial banks or trust companies.
9. Waiver of Conditions. Except as otherwise provided in the Offer to
Purchase, the Purchaser reserves the absolute right in its sole discretion to
waive, at any time or from time to time, any of the specified conditions of the
Offer, in whole or in part, in the case of any Shares tendered.
10. Substitute Form W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such stockholder is not subject to backup withholding of United States federal
income tax. If a tendering stockholder has been notified by the Internal Revenue
Service that such stockholder is subject to backup withholding, such stockholder
must cross out item (2) of the Certification box of the Substitute Form W-9,
unless such stockholder has since been notified by the Internal Revenue Service
that such stockholder is no longer subject to backup withholding. Failure to
provide the information on the Substitute Form W-9 may subject the tendering
stockholder to 31% United States federal income tax withholding with respect to
any payments received pursuant to the Offer. If the tendering stockholder has
not been issued a TIN and has applied for one or intends to apply for one in the
near future, such stockholder should write "Applied For" in the space provided
for the TIN in Part I of the Substitute Form W-9, and sign and date the
Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is
not provided with a TIN within 60 days, the Depositary will withhold 31% on all
payments of the purchase price to such stockholder until a TIN is provided to
the Depositary.
11. Lost, Destroyed or Stolen Certificates. If any certificate(s)
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Transfer Agent, Equiserve Trust Company, N.A., at (800)
633-4236. The stockholder will then be instructed as to the steps that must be
taken in order to replace the certificate(s). This Letter of Transmittal and
related documents cannot be processed until the procedures for replacing lost or
destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE
CASE OF A BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, TOGETHER WITH SHARE
CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS, OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED
DELIVERY, MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE.
IMPORTANT TAX INFORMATION
Under the U.S. federal income tax law, a stockholder whose tendered Shares
are accepted for payment is required by law to provide the Depositary (as payer)
with such stockholder's correct TIN on Substitute Form W-9 below. If such
stockholder is an individual, the TIN is such stockholder's social security
number. If a tendering stockholder is subject to backup withholding, such
stockholder must cross out Item (2) of Part II on the Substitute Form W-9. If
the Depositary is not provided with the correct TIN, the stockholder may be
subject to a $50 penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such stockholder with respect to Shares purchased
pursuant to the Offer may be subject to backup withholding of 31%.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a Form W-8, signed under penalties of
perjury, attesting to such individual's exempt status. A Form W-8 can be
obtained from the Depositary. Exempt stockholders,
<PAGE> 10
other than foreign individuals, should furnish their TIN, write "Exempt" on the
face of the Substitute Form W-9 below and sign, date and return the Substitute
Form W-9 to the Depositary. See the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
instructions.
If backup withholding applies with respect to a stockholder, the Depositary
is required to withhold 31% of any payments made to such stockholder. Backup
withholding is not an additional tax. Rather, the tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld. If
withholding results in an overpayment of taxes, a refund may be obtained from
the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such stockholder is awaiting a TIN), and (b) that
such stockholder is not subject to backup withholding because (i) such
stockholder has not been notified by the Internal Revenue Service that such
stockholder is subject to backup withholding as a result of a failure to report
all interest or dividends or (ii) the Internal Revenue Service has notified such
stockholder that such stockholder is no longer subject to backup withholding. To
prevent possible erroneous backup withholding, exempt stockholders (other than
certain foreign individuals) should certify in accordance with the enclosed
Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9 that such stockholder is exempt from backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering stockholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the stockholder should write "Applied For" in the space provided for the
TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% of all payments of the purchase price to such
stockholder until a TIN is provided to the Depositary.
<PAGE> 11
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C., AS DEPOSITARY
- ---------------------------------------------------------------------------------------------------------------------------
PART I--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND ----------------------------
SUBSTITUTE CERTIFY BY SIGNING AND DATING BELOW. SOCIAL SECURITY NUMBER
FORMW-9
DEPARTMENT OF THE TREASURY OR
INTERNAL REVENUE SERVICE ----------------------------
EMPLOYER IDENTIFICATION NUMBER
(IF AWAITING TIN WRITE
"APPLIED FOR")
------------------------------------------------------------------------------------------
PART II -- FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING, SEE THE ENCLOSED GUIDELINES AND
PAYER'S REQUEST FOR COMPLETE AS INSTRUCTED THEREIN.
TAXPAYER IDENTIFICATION
NUMBER (TIN) AND CERTIFICATION -- UNDER PENALTIES OF PERJURY, I CERTIFY THAT:
CERTIFICATION FOR
PAYEE EXEMPT FROM (1) THE NUMBER SHOWN ON THIS FORM IS MY CORRECT TAXPAYER IDENTIFICATION NUMBER (OR A
BACKUP WITHHOLDING TAXPAYER IDENTIFICATION NUMBER HAS NOT BEEN ISSUED TO ME AND EITHER (A) I HAVE MAILED OR
DELIVERED AN APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE
APPROPRIATE INTERNAL REVENUE SERVICE ("IRS") OR SOCIAL SECURITY ADMINISTRATION
OFFICE OR (B) I INTEND TO MAIL OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I
UNDERSTAND THAT IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER WITHIN SIXTY
(60) DAYS, 31% OF ALL REPORTABLE PAYMENTS MADE TO ME THEREAFTER WILL BE WITHHELD
UNTIL I PROVIDE A NUMBER), AND
(2) I AM NOT SUBJECT TO BACKUP WITHHOLDING BECAUSE (A) I AM EXEMPT FROM BACKUP
WITHHOLDING, OR (B) I HAVE NOT BEEN NOTIFIED BY THE IRS THAT I AM SUBJECT TO BACKUP
WITHHOLDING AS A RESULT OF FAILURE TO REPORT ALL INTEREST OR DIVIDENDS OR (C) THE
IRS HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO BACKUP WITHHOLDING.
------------------------------------------------------------------------------------------
CERTIFICATE INSTRUCTIONS -- YOU MUST CROSS OUT ITEM(2) ABOVE IF YOU HAVE BEEN NOTIFIED
BY THE IRS THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST
OR DIVIDENDS ON YOUR TAX RETURN. HOWEVER, IF AFTER BEING NOTIFIED BY THE IRS THAT YOU
WERE SUBJECT TO BACKUP WITHHOLDING YOU RECEIVED ANOTHER NOTIFICATION FROM THE IRS
STATING THAT YOU ARE NO LONGER SUBJECT TO BACKUP WITHHOLDING, DO NOT CROSS OUT ITEM (2).
(ALSO SEE INSTRUCTIONS IN THE ENCLOSED GUIDELINES.)
------------------------------------------------------------------------------------------
SIGNATURE ____________________ DATE _____ , 2000
NAME ________________________
ADDRESS ______________________
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR"
IN THE SPACE PROVIDED FOR THE TIN IN PART I OF SUBSTITUTE FORM W-9.
<TABLE>
<S> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION NUMBER HAS NOT BEEN ISSUED TO ME, AND EITHER
(1) I HAVE MAILED OR DELIVERED AN APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE
INTERNAL REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE, OR (2) I INTEND TO MAIL OR DELIVER AN
APPLICATION IN THE NEAR FUTURE. I UNDERSTAND THAT IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER BY THE TIME
OF PAYMENT, 31% OF ALL REPORTABLE PAYMENTS MADE TO ME WILL BE WITHHELD, BUT THAT SUCH AMOUNTS WILL BE REFUNDED TO
ME IF I PROVIDE A CERTIFIED TAXPAYER IDENTIFICATION NUMBER TO THE DEPOSITARY WITHIN SIXTY (60) DAYS.
</TABLE>
<TABLE>
<S> <C> <C> <C>
----------------------------------------------------- --------------------------- , 2000
SIGNATURE DATE
- --------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 12
Questions and requests for assistance may be directed to the Information Agent
or the Dealer Manager as set forth below. Requests for copies of the Offer to
Purchase, the Letter of Transmittal and other related materials may be directed
to the Information Agent or to brokers, dealers, commercial banks or trust
companies.
The Information Agent for the Offer is:
[GEORGSESON LOGO]
17 State Street, 10th Floor
New York, New York 10004
Banks and Brokers, Call Collect: (212) 440-9800
ALL OTHERS CALL TOLL-FREE: (800) 223-2064
The Dealer Manager for the Offer is:
CHASE SECURITIES INC.
270 Park Avenue, 10th Floor
New York, New York 10017
(212) 270-3272
<PAGE> 1
EXHIBIT (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
MCWHORTER TECHNOLOGIES, INC.
TO
TARTAN, INC.,
A WHOLLY OWNED SUBSIDIARY OF
EASTMAN CHEMICAL COMPANY
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JUNE 9, 2000, UNLESS THE OFFER IS EXTENDED.
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) if (i) certificates
representing shares of common stock, par value $0.01 per share, of McWhorter
Technologies, Inc., a Delaware corporation (the "Company"), including the
associated rights to purchase preferred stock (collectively, the "Shares"), are
not immediately available, (ii) time will not permit all required documents to
reach ChaseMellon Shareholder Services, L.L.C. (the "Depositary") prior to the
Expiration Date (as defined in the Offer to Purchase), or (iii) the procedures
for book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or mail or transmitted by telegram
or facsimile to the Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
<TABLE>
<S> <C> <C>
By Mail: By Hand: By Overnight:
Reorganization Department Reorganization Department Reorganization Department
P.O. Box 3301 120 Broadway 85 Challenger Road
South Hackensack, NJ 07606 13th Floor Mail Drop-Reorg
New York, NY 10271 Ridgefield Park, NJ 07660
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 296-4293
Confirm Facsimile Transmission
By Telephone Only:
(201) 296-4860
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A
LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION"
UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE
APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
LADIES AND GENTLEMEN:
The undersigned hereby tenders to Tartan, Inc., a Delaware corporation and
a wholly owned subsidiary of Eastman Chemical Company, a Delaware corporation,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated May 12, 2000 (the "Offer to Purchase"), and the related Letter of
Transmittal (which, each as amended or supplemented from time to time, together
constitute the "Offer"), receipt of each of which is hereby acknowledged, the
number of Shares specified below pursuant to the guaranteed delivery procedures
described in Section 3 of the Offer to Purchase.
Number of Shares Tendered:
---------------------
Certificate Nos. (if available):
- ------------------------------------------------------
Check box if Shares will be tendered by book-entry transfer: [ ]
Account Number at The Depository Trust
Company:
------------------------------------------
Dated: ____________________________ , 2000
Names(s) of Record Holder(s):
- ------------------------------------------------------
- ------------------------------------------------------
(Please Print)
Address(es):
- ---------------------------------------
- ------------------------------------------------------
(Zip Code)
Area Code and Telephone Number:
- ------------------------------------------------------
Signature(s):
- --------------------------------------
- ------------------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Security Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program
hereby (a) represents that the tender of Shares effected hereby complies with
Rule 14e-4 under the Securities Exchange Act of 1934, as amended, and (b)
guarantees delivery to the Depositary, at one of its addresses set forth above,
of certificates representing the Shares tendered hereby in proper form for
transfer, or confirmation of book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company, in each case with delivery
of a properly completed and duly executed Letter of Transmittal (or facsimile
thereof) with any required signature guarantees, or an Agent's Message (as
defined in Section 3 of the Offer to Purchase), and any other documents required
by the Letter of Transmittal, within three New York Stock Exchange trading days
after the date of execution of this Notice of Guaranteed Delivery.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates for Shares to the Depositary within the time period shown herein.
Failure to do so could result in a financial loss to such Eligible Institution.
Name of Firm:
-------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Authorized Signature)
Address:
------------------------------------------------------------------------
(Include Zip Code)
Area Code and
Telephone Number:
---------------------------------------------------------------
Name:
---------------------------------------------------------------------------
(Please Type or Print)
Title:
--------------------------------------------------------------------------
Dated: ________________ __ , 2000
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SUCH
CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
EXHIBIT (a)(4)
CHASE SECURITIES INC.
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
MCWHORTER TECHNOLOGIES, INC.
AT
$19.70 NET PER SHARE IN CASH
BY
TARTAN, INC.,
A WHOLLY OWNED SUBSIDIARY OF
EASTMAN CHEMICAL COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JUNE 9, 2000, UNLESS THE OFFER IS EXTENDED.
May 12, 2000
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged by Eastman Chemical Company, a Delaware corporation
("Parent"), and Tartan, Inc., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of Parent, to act as Dealer Manager in connection with
the Purchaser's offer to purchase all outstanding shares of common stock, par
value $0.01 per share, including the associated rights to purchase preferred
stock (collectively, the "Shares"), of McWhorter Technologies, Inc., a Delaware
corporation (the "Company"), at a price of $19.70 per Share, net to the seller
in cash, without interest thereon, upon the terms and subject to the conditions
set forth in the Offer to Purchase, dated May 12, 2000 (the "Offer to
Purchase"), and the related Letter of Transmittal (which, each as amended or
supplemented from time to time, together constitute the "Offer") enclosed
herewith. The Offer is being made in connection with the Agreement and Plan of
Merger, dated as of May 3, 2000 (the "Merger Agreement"), by and among Parent,
the Purchaser and the Company. All capitalized terms used and not otherwise
defined herein shall have the meanings ascribed to them in the Offer to
Purchase.
Please furnish copies of the enclosed materials to those of your clients
for whom you hold Shares registered in your name or in the name of your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES
WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT OR THE PURCHASER
(IF ANY), REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY
DILUTED BASIS ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT. THE OFFER IS ALSO
SUBJECT TO OTHER CONDITIONS SET FORTH IN THE OFFER TO PURCHASE. SEE SECTION 14
OF THE OFFER TO PURCHASE.
<PAGE> 2
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, or who hold
Shares registered in their own names, we are enclosing the following documents:
1. Offer to Purchase, dated May 12, 2000;
2. Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of
Transmittal (with manual signatures) may be used to tender Shares;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
certificates for Shares are not immediately available or time will
not permit all required documents to reach the Depositary prior to
the Expiration Date or the procedures for book-entry transfer
cannot be completed on a timely basis;
4. A printed form letter that may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such clients'
instructions with regard to the Offer;
5. The letter to stockholders of the Company from Jeffrey M. Nodland,
the President and Chief Executive Officer of the Company,
accompanied by the Company's Solicitation/Recommendation Statement
on Schedule 14D-9 filed with the Securities and Exchange Commission
by the Company, which includes the recommendation of the Board of
Directors of the Company that stockholders accept the Offer and
tender their Shares to the Purchaser pursuant to the Offer; and
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
TERMS OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER, ARE ADVISABLE, FAIR TO AND IN THE BEST
INTERESTS OF THE COMPANY'S STOCKHOLDERS, HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE
MERGER, AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and pay for all Shares
which are validly tendered prior to the Expiration Date and not theretofore
properly withdrawn when, as and if the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance of such Shares for payment. In all
cases, payment for Shares purchased pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) the certificates evidencing such
Shares or timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company pursuant to the procedures
set forth in Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal
(or facsimile thereof), properly completed and duly executed, or an Agent's
Message (as defined in the Offer to Purchase) in connection with a book-entry
transfer, and (iii) all other documents required by the Letter of Transmittal.
Neither Parent nor the Purchaser will pay any fees or commissions to any
broker or dealer or any other person (other than the Dealer Manager and the
Information Agent as described in "Fees and Expenses" of the Offer to Purchase)
in connection with the solicitation of tenders of Shares pursuant to the Offer.
The Purchaser will, however, upon request, reimburse you for customary mailing
and handling expenses incurred by you in forwarding the enclosed materials to
your clients. The Purchaser will pay or cause to be paid any stock transfer
taxes incident to the transfer to it of validly tendered Shares, except as
otherwise provided in Instruction 6 of the Letter of Transmittal.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JUNE 9, 2000, UNLESS THE OFFER IS
EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or facsimile thereof), with any required
signature guarantees and any other required documents, should be sent to the
Depositary, and certificates representing the tendered Shares should be
delivered or such Shares should be tendered by book-entry transfer, all in
accordance with the Instructions set forth in the Letter of
- 2 -
<PAGE> 3
Transmittal and the Offer to Purchase. If holders of Shares wish to tender, but
it is impracticable for them to forward their certificates or other required
documents prior to the Expiration Date, a tender may be effected by following
the guaranteed delivery procedures specified under Section 3 of the Offer to
Purchase.
Any inquiries you may have with respect to the Offer should be addressed to
the Dealer Manager or the Information Agent at their respective addresses and
telephone numbers set forth on the back cover page of the Offer to Purchase.
Additional copies of the enclosed materials may be obtained by calling the
Information Agent, Georgeson Shareholder Communications Inc., at (212) 440-9800
or toll free at (800) 223-2064, or from brokers, dealers, commercial banks or
trust companies.
Very truly yours,
Chase Securities Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON AS AN AGENT OF THE PURCHASER, PARENT, THE DEPOSITARY, THE
INFORMATION AGENT OR THE DEALER MANAGER, OR ANY AFFILIATE OF ANY OF THE
FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY
STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
DOCUMENTS ENCLOSED AND THE STATEMENTS CONTAINED THEREIN.
- 3 -
<PAGE> 1
EXHIBIT (a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
MCWHORTER TECHNOLOGIES, INC.
AT
$19.70 NET PER SHARE IN CASH
BY
TARTAN, INC.,
A WHOLLY OWNED SUBSIDIARY OF
EASTMAN CHEMICAL COMPANY
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JUNE 9, 2000, UNLESS THE OFFER IS EXTENDED.
May 12, 2000
To Our Clients:
Enclosed for your consideration is the Offer to Purchase, dated May 12,
2000 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
each as amended or supplemented from time to time, together constitute the
"Offer") in connection with the offer by Tartan, Inc., a Delaware corporation
(the "Purchaser") and a wholly owned subsidiary of Eastman Chemical Company, a
Delaware corporation ("Parent"), to purchase all outstanding shares of common
stock, par value $0.01 per share of McWhorter Technologies, Inc., a Delaware
corporation (the "Company"), including the associated rights to purchase
preferred stock (collectively, the "Shares"), at a price of $19.70 per Share,
net to the seller in cash, without interest thereon, upon the terms and subject
to the conditions set forth in the Offer. The Offer is being made in connection
with the Agreement and Plan of Merger, dated as of May 3, 2000, by and among
Parent, the Purchaser and the Company (the "Merger Agreement"). Also enclosed is
a Letter to Stockholders of the Company from Jeffrey M. Nodland, President and
Chief Executive Officer of the Company, together with a Solicitation/
Recommendation Statement on Schedule 14D-9.
THE MATERIAL IS BEING SENT TO YOU AS THE BENEFICIAL OWNER OF SHARES HELD BY
US FOR YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. WE ARE THE HOLDER OF RECORD
OF SHARES HELD FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US
AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE ENCLOSED LETTER
OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED
BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT.
Accordingly, we request instructions as to whether you wish to have us
tender on your behalf any or all of the Shares held by us for your account, upon
the terms and subject to the conditions set forth in the Offer.
Your attention is invited to the following:
1. The offer price is $19.70 per Share, net to the seller in cash,
without interest thereon.
2. The Offer and withdrawal rights will expire at 12:00 midnight, New
York City time, on Friday, June 9, 2000, unless the Offer is
extended.
3. The Offer is being made for all outstanding Shares.
4. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT
THE TERMS OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER (AS DEFINED IN THE OFFER
TO PURCHASE), ARE ADVISABLE, FAIR TO AND IN THE BEST INTERESTS OF THE
COMPANY'S STOCKHOLDERS, HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND
THE MERGER, AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE
OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
5. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the Expiration Date that
number of Shares which, when added to the Shares beneficially owned
by Parent or the Purchaser (if any), represents at least a majority
of the
<PAGE> 2
Shares outstanding on a fully diluted basis on the date Shares are
accepted for payment. The Offer is also subject to other conditions
set forth in the Offer to Purchase.
6. Tendering stockholders of record who tender Shares directly will not
be obligated to pay brokerage fees or commissions or, except as set
forth in Instruction 6 of the Letter of Transmittal, stock transfer
taxes on the purchase of Shares by the Purchaser pursuant to the
Offer.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any supplements or amendments thereto. The Purchaser is not
aware of any state where the making of the Offer is prohibited by administrative
or judicial action pursuant to any valid state statute. If the Purchaser becomes
aware of any valid state statute prohibiting the making of the Offer or the
acceptance of Shares pursuant thereto, the Purchaser will make a good faith
effort to comply with such state statute. If, after such good faith effort, the
Purchaser cannot comply with such state statute, the Offer will not be made to
(nor will tenders be accepted from or on behalf of) the holders of Shares in
such state. In any jurisdiction where the securities, blue sky or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of the Purchaser by the Dealer Manager (as defined
in the Offer to Purchase) or one or more registered brokers or dealers which are
licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope to return your instructions to us is enclosed. If
you authorize the tender of your Shares, all such Shares will be tendered unless
otherwise specified on the instruction form set forth in this letter. YOUR
INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A
TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
- 2 -
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED RIGHTS TO PURCHASE PREFERRED STOCK)
OF
MCWHORTER TECHNOLOGIES, INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated May 12, 2000, and the related Letter of Transmittal
(which, each as amended or supplemented from time to time, together constitute
the "Offer"), in connection with the offer by Tartan, Inc., a Delaware
corporation (the "Purchaser") and a wholly owned subsidiary of Eastman Chemical
Company, a Delaware corporation ("Parent"), to purchase all outstanding shares
of common stock, par value $0.01 per share, including the associated rights to
purchase preferred stock (collectively, the "Shares"), of McWhorter
Technologies, Inc., a Delaware corporation (the "Company").
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or, if no number is indicated below, all Shares) held by you
for the account of the undersigned, upon the terms and subject to the conditions
set forth in the Offer.
NUMBER OF SHARES TO BE TENDERED:*
- ------------------------------------------- Shares
- ---------------------------------------------------
Account Number
Dated: ________ __, 2000
SIGN HERE
- ---------------------------------------------------
Signature(s)
- ---------------------------------------------------
Please Type or Print Name(s)
- ---------------------------------------------------
Please Type or Print Address(es) Here
- ---------------------------------------------------
Area Code and Telephone Number(s)
- ---------------------------------------------------
Taxpayer Identification or Social Security Number(s)
- ------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
- 3 -
<PAGE> 1
EXHIBIT (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine the number
to give the payer.
- ---------------------------------------------------------
---------------------------------------------------------
<TABLE>
<CAPTION>
FOR THIS TYPE OF ACCOUNT: GIVE THE
SOCIAL
SECURITY
NUMBER OF --
- ---------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE EMPLOYER
IDENTIFICATION
NUMBER OF --
- ---------------------------------------------------------
<C> <S> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint The actual owner of
account) the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint The adult or, if the
account) minor is the only
contributor, the
minor(1)
6. Account in the name of The ward, minor, or
guardian or committee for a incompetent person(3)
designated ward, minor, or
incompetent person
7. a. A revocable savings trust The grantor-
account (in which grantor trustee(1)
is also trustee)
b. Any "trust" account that The actual owner(1)
is not a legal or valid
trust under State Law
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or The legal entity (Do
pension not furnish the
identifying number of
the personal
representative or
trustee unless the
legal entity itself is
not designated in the
account title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization
account
12. Partnership account held in The partnership
the name of the business
13. Association, club, or other The organization
tax-exempt organization
14. A broker or registered The broker or nominee
nominee
15. Account with the Department The public entity
of Agriculture in the name
of a public entity (such as
a State or local government,
school district, or prison)
that receives agricultural
program payments
</TABLE>
- ---------------------------------------------------------
---------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE:If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
resident individuals), Form SS-4, Application for Employer Identification Number
(for businesses and all other entities), or Form W-7 for International Taxpayer
Identification Number (for alien individuals required to file U.S. Tax returns),
at an office of the Social Security Administration or the Internal Revenue
Service.
To complete the Substitute Form W-9, if you do not have a taxpayer
identification number, write "Applied For" in the space for the taxpayer
identification number in Part 1, sign and date the Form, and give it to the
requester. Generally, you will then have 60 days to obtain a taxpayer
identification number and furnish it to the requester. If the requester does not
receive your taxpayer identification number within 60 days, backup withholding,
if applicable, will begin and will continue until you furnish your taxpayer
identification number to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government, or a political subdivision, agency or instrumentality
thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An exempt charitable remainder trust, or a nonexempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals.
Note: You may be subject to backup withholding if this interest is $600 or more
and is paid in the course of the payer's trade or business and you have not
provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to non-resident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file a Substitute Form W-9 to avoid
possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND
RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE
DIVIDENDS, ALSO SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes. Payers must be given the numbers whether or not
recipients are required to file tax returns. Payers must generally withhold 31%
of taxable interest, dividends, and certain other payments to a payee who does
not furnish a taxpayer identification number to a payer. Certain penalties may
also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you
fail to furnish your taxpayer identification number to a payer, you are subject
to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS. -- If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to a penalty of 5% on any portion of an
under-payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
(3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
<PAGE> 1
EXHIBIT (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer is made solely by the Offer to
Purchase dated May 12, 2000 and the related Letter of Transmittal and is being
made to all holders of Shares. Tartan, Inc. is not aware of any state where the
making of the Offer is prohibited by administrative or judicial action pursuant
to any valid state statute. If Tartan, Inc. becomes aware of any valid state
statute prohibiting the making of the Offer or the acceptance of the Shares
pursuant thereto, Tartan, Inc. will make a good faith effort to comply with such
statute or seek to have such statute declared inapplicable to the Offer. If,
after such good faith effort, Tartan, Inc. cannot comply with such statute, the
Offer will not be made to (nor will tenders be accepted from or on behalf of)
holders of Shares in any such state. In any jurisdiction where securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of Tartan, Inc. by Chase
Securities Inc. or one or more registered brokers or dealers licensed under the
laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Rights to Purchase Preferred Stock)
of
McWhorter Technologies, Inc.
at
$19.70 Net Per Share in Cash
by
Tartan, Inc.
a wholly owned subsidiary of
Eastman Chemical Company
Tartan, Inc., a Delaware corporation (the "Purchaser") and a wholly
owned subsidiary of Eastman Chemical Company, a Delaware corporation ("Parent"),
is offering to purchase all outstanding shares of common stock, par value $0.01
<PAGE> 2
per share, of McWhorter Technologies, Inc., a Delaware corporation (the
"Company"), including the associated rights to purchase preferred stock
(collectively, the "Shares"), at a price of $19.70 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 the Offer to Purchase, dated May 12,
2000 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer"). Tendering stockholders who have Shares registered in their names and
who tender directly to ChaseMellon Shareholder Services, L.L.C. (the
"Depositary") will not be charged brokerage fees or commissions or, subject to
Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of
Shares pursuant to the Offer. Stockholders who hold their Shares through a
broker or bank should consult such institution as to whether it charges any
service fees. The Purchaser will pay all charges and expenses of Chase
Securities Inc., as Dealer Manager (in such capacity, the "Dealer Manager"), the
Depositary and Georgeson Shareholder Communications Inc., which is acting as
the information agent (the "Information Agent"), incurred in connection with
the Offer. Following consummation of the Offer, the Purchaser intends to effect
the Merger described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON FRIDAY, JUNE 9, 2000,
UNLESS THE OFFER IS EXTENDED.
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of May 3, 2000 (the "Merger Agreement"), by and among Parent, the
Purchaser and the Company. Pursuant to the Merger Agreement and the Delaware
General Corporation Law, as amended (the "DGCL"), as soon as practicable after
the completion of the Offer and satisfaction or waiver, if permissible, of all
conditions set forth in the Merger Agreement, including the purchase of Shares
pursuant to the Offer and the approval and adoption of the Merger Agreement by
the stockholders of the Company (if required by applicable law), the Purchaser
will be merged with and into the Company (the "Merger") and each Share then
outstanding, other than Shares held by (i) the Company or any of its
subsidiaries, (ii) Parent or any of its subsidiaries, including the Purchaser,
or (iii) stockholders who properly perfect their dissenters' rights under the
DGCL, will be converted into the right to receive $19.70 in cash or any higher
price per Share paid in the Offer, without interest thereon.
2
<PAGE> 3
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT
THE TERMS OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING THE OFFER AND THE MERGER, ARE ADVISABLE, FAIR TO AND IN THE BEST
INTERESTS OF THE COMPANY'S STOCKHOLDERS, HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE
MERGER, AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER
THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER
TO PURCHASE) THAT NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY
OWNED BY PARENT OR THE PURCHASER (IF ANY), REPRESENTS AT LEAST A MAJORITY OF THE
SHARES OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE SHARES ARE ACCEPTED FOR
PAYMENT PURSUANT TO THE OFFER.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment, and thereby purchased, tendered Shares if, as and when the
Purchaser gives oral or written notice to the Depositary of the Purchaser's
acceptance of such Shares for payment. Upon the terms and subject to the
conditions set forth in the Offer, payment for Shares accepted pursuant to the
Offer will be made by deposit of the aggregate purchase price therefor with the
Depositary, which will act as the agent for tendering stockholders for the
purpose of receiving payment from the Purchaser and transmitting payment to such
tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE
PRICE FOR SHARES BE PAID BY THE PURCHASER BY REASON OF ANY DELAY IN MAKING SUCH
PAYMENT. In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) certificates evidencing such Shares ("Share Certificates") or a timely
book-entry confirmation of the book-entry transfer of such Shares into the
Depositary's account at the Book-Entry Transfer Facility (as defined in the
Offer to Purchase) pursuant to Section 3 of the Offer to Purchase, (ii) a
properly completed and duly executed Letter of Transmittal (or manually signed
facsimile thereof) with all required signature guarantees or, in the case of
book-entry transfer, an Agent's Message (as defined in the Offer to Purchase),
and (iii) any other documents required by the Letter of Transmittal.
The Purchaser may, without the consent of the Company, extend the
Offer beyond the scheduled Expiration Date if any of the conditions to its
obligation to accept for payment and to pay for the Shares shall not be
satisfied or, to the extent permitted by the Merger Agreement, waived by 12:00
midnight, New York City time, on
3
<PAGE> 4
the Expiration Date (as it may be extended), but in no event beyond June 30,
2000, unless any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, or any foreign antitrust,
investment or competition law or regulation has not expired or been terminated,
in which case, the Offer may be extended, but in no event beyond July 31, 2000.
Notwithstanding the foregoing, if immediately prior to the Expiration Date (as
it may be extended), the Shares tendered and not withdrawn constitute less than
90% of the outstanding Shares, the Purchaser may extend the Offer for a period
not to exceed ten (10) business days. If all conditions to the Offer have been
satisfied or waived, the Purchaser will accept for payment and pay for all
Shares validly tendered and not withdrawn at such time (which Shares may not
thereafter be withdrawn) and may, in its sole discretion, extend the Offer to
provide a "subsequent offering period" for at least three (3) business days
and, as extended, not more than twenty (20) business days, during which time
stockholders may tender, but not withdraw, their Shares and receive the Offer
consideration.
The term "Expiration Date" means 12:00 midnight, New York City time,
on Friday, June 9, 2000, unless the Purchaser shall have extended the period
of time for which the Offer is open, in which event the term "Expiration Date"
shall mean the latest time and date at which the Offer, as so extended by the
Purchaser, shall expire.
Any extension of the period during which the Offer is open will be
followed, as promptly as practicable, by public announcement thereof, such
announcement to be issued no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date. During any
such extension, all Shares previously tendered and not withdrawn will remain
subject to the Offer, subject to the rights of a tendering stockholder to
withdraw such stockholder's Shares (except during the subsequent offering
period).
Except as otherwise provided in Section 4 of the Offer to Purchase,
tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered
pursuant to the Offer may be withdrawn at any time prior to the Expiration Date
(except during the subsequent offering period) and, unless theretofore accepted
for payment pursuant to the Offer, also may be withdrawn at any time after July
10, 2000. For a withdrawal of Shares tendered pursuant to the Offer to be
effective, a written, telegraphic or facsimile transmission notice of withdrawal
must be timely received by the Depositary at one of its addresses set forth on
the back cover of the Offer to Purchase. Any such notice of withdrawal must
specify the name of the
4
<PAGE> 5
person who tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and (if Share Certificates have been tendered) the name of the
registered holder, if different from that of the person who tendered the Shares.
If Share Certificates evidencing Shares to be withdrawn have been delivered or
otherwise identified to the Depositary, then, prior to the physical release of
such Share Certificates, the serial numbers shown on the particular certificates
evidencing the Shares to be withdrawn must be submitted to the Depositary and,
unless such Shares have been tendered for the account of an Eligible Institution
(as defined in the Offer to Purchase), the signature on the notice of withdrawal
must be guaranteed by an Eligible Institution. If Shares have been tendered
pursuant to the procedures for book-entry transfer as set forth in Section 3 of
the Offer to Purchase, any notice of withdrawal must also specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares. Withdrawals of Shares may not be rescinded, and any Shares
properly withdrawn will thereafter be deemed not validly tendered for purposes
of the Offer. However, withdrawn Shares may be retendered by again following
one of the procedures described in Section 3 of the Offer to Purchase at any
time prior to the Expiration Date or during the subsequent offering period. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by the Purchaser, in its sole discretion, which
determination will be final and binding.
Subject to the terms of the Merger Agreement and the applicable
regulations of the Securities and Exchange Commission, the Purchaser expressly
reserves the right, in its sole discretion, at any time or from time to time, to
extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and the payment for, any Shares by giving oral or
written notice of such extension to the Depositary. During any such extension,
all Shares previously tendered and not withdrawn will remain subject to the
Offer, subject to the rights of a tendering stockholder to withdraw such Shares.
The information required to be disclosed by Paragraph (d)(1) of Rule
14d-6 of the General Rules and Regulations under the Securities Exchange Act of
1934, as amended, is contained in the Offer to Purchase and is incorporated
herein by reference.
The Company has provided to the Purchaser its list of stockholders and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase, the related Letter of Transmittal and other
related materials are being mailed to record holders of Shares and will be
furnished to brokers, dealers, commercial banks, trust companies, and similar
persons whose
5
<PAGE> 6
names, or the names of whose nominees, appear on the stockholder list or, if
applicable, are listed as participants in a clearing agency's security position
listing, for subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the
Information Agent or the Dealer Manager at their respective addresses and
telephone numbers set forth below. Requests for copies of the Offer to Purchase,
the related Letter of Transmittal and other related materials may be directed
to the Information Agent or to brokers, dealers, commercial banks or trust
companies. No fees or commissions will be payable by the Purchaser to any
broker, dealer or other person (other than the Dealer Manager and the
Information Agent) for soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
[GEORGESON LOGO]
17 State Street, 10th Floor
New York, New York 10004
Banks and Brokers Call Collect: (212) 440-9800
All Others Call Toll-Free: (800) 223-2064
The Dealer Manager for the Offer is:
CHASE SECURITIES INC.
270 Park Avenue, 10th Floor
New York, New York 10017
(212)270-3272
May 12, 2000
6
<PAGE> 1
EXHIBIT (a)(8)
For Immediate Release
EASTMAN CHEMICAL COMPANY:
CONTACT: Nancy Ledford
PHONE: 423.229-5264
EASTMAN CHEMICAL COMMENCES $19.70 PER SHARE
TENDER OFFER FOR ALL OUTSTANDING SHARES OF
McWHORTER TECHNOLOGIES, INC.
KINGSPORT, Tenn. -- May 12, 2000 -- Eastman Chemical Company (NYSE:EMN)
announced today that its wholly-owned subsidiary, Tartan, Inc., has commenced a
cash tender offer for all the outstanding shares of McWhorter Technologies, Inc.
(NYSE:MWT) common stock at a price of $19.70 per McWhorter share. The tender
offer is scheduled to expire at 12:00 midnight, New York City time, on Friday,
June 9, 2000, unless extended.
Following the completion of the tender offer, Eastman intends to consummate a
second step merger in which all remaining McWhorter stockholders will also
receive the same cash price paid in the tender offer.
As previously announced, on May 3, 2000, Eastman, Tartan and McWhorter signed a
definitive merger agreement for the acquisition of McWhorter for $19.70 per
share in cash. McWhorter's board of directors has unanimously approved the
tender offer and the merger and determined that the tender offer and the merger
are in the best interests of McWhorter's stockholders. The McWhorter board
unanimously recommended that McWhorter stockholders accept the Eastman offer and
tender their shares. McWhorter will mail its formal recommendation to
stockholders at the same time Eastman mails its tender offer materials.
The tender offer is conditioned upon, among other things, (1) there being
validly tendered and not withdrawn before the expiration date, a number of
shares, which when added to the number of shares beneficially owned by Eastman
and Tartan, will represent a majority of the total number of outstanding shares
of McWhorter on a fully diluted basis at the time the shares are accepted for
payment pursuant to the offer; and (2) expiration or termination of any
applicable waiting period under the
<PAGE> 2
Hart-Scott-Rodino Antitrust Improvements Act of 1976 and any applicable foreign
antitrust, investment, or competition laws or regulations. The complete terms
and conditions of the tender offer are set forth in the offering documents
being filed today with the Securities and Exchange Commission.
Chase Securities Inc. is acting as Dealer Manager for Eastman's offer and
Georgeson Shareholder Communications Inc. is acting as Information Agent. Copies
of Eastman's tender offer materials can be obtained from the Information Agent
by calling 800-223-2064.
Headquartered in Kingsport, Tenn., Eastman manufactures and markets plastics,
chemicals and fibers. The company employs 15,000 people in more than 30
countries and had 1999 sales of US$4.6 billion.
###
<PAGE> 1
EXHIBIT (d)(1)
=====================================================================
AGREEMENT AND PLAN OF MERGER
by and among
EASTMAN CHEMICAL COMPANY,
TARTAN, INC.
and
McWHORTER TECHNOLOGIES, INC.
dated as of
May 3, 2000
=====================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
THE OFFER AND MERGER
<S> <C> <C>
Section 1.1 The Offer............................................................................2
Section 1.2 Company Actions......................................................................4
Section 1.3 Directors............................................................................5
Section 1.4 The Merger...........................................................................6
Section 1.5 Effective Time.......................................................................7
Section 1.6 Closing..............................................................................7
Section 1.7 Directors and Officers of the Surviving Corporation..................................7
Section 1.8 Subsequent Actions...................................................................8
Section 1.9 Stockholders' Meeting................................................................8
Section 1.10 Merger Without Meeting of Stockholders...............................................9
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock.........................................................10
Section 2.2 Exchange of Certificates............................................................10
Section 2.3 Dissenting Shares...................................................................12
Section 2.4 Company Option Plans................................................................13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1 Organization; Subsidiaries..........................................................14
Section 3.2 Capitalization......................................................................15
Section 3.3 Authorization; Validity of Agreement; Company Action................................16
Section 3.4 Vote Required.......................................................................17
Section 3.5 No Violations; Consents and Approvals...............................................17
Section 3.6 SEC Reports and Financial Statements................................................19
Section 3.7 Absence of Certain Changes or Events................................................19
Section 3.8 No Undisclosed Liabilities..........................................................20
Section 3.9 Schedule 14D-9; Offer Documents; Proxy Statement....................................20
Section 3.10 Employee Benefit Plans; ERISA.......................................................20
Section 3.11 Litigation..........................................................................22
Section 3.12 Environmental Protection............................................................23
Section 3.13 Taxes...............................................................................25
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C> <C>
Section 3.14 Labor and Employment Matters.......................................................26
Section 3.15 Compliance with Laws...............................................................27
Section 3.16 Insurance..........................................................................27
Section 3.17 Contracts..........................................................................28
Section 3.18 Properties.........................................................................28
Section 3.19 Permits............................................................................28
Section 3.20 Intellectual Property..............................................................29
Section 3.21 Year 2000..........................................................................31
Section 3.22 Major Customers....................................................................31
Section 3.23 Opinion of Financial Advisor.......................................................31
Section 3.24 Rights Plan........................................................................31
Section 3.25 Full Disclosure....................................................................32
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND THE PURCHASER
Section 4.1 Organization.......................................................................32
Section 4.2 Authorization; Validity of Agreement; Necessary Action.............................33
Section 4.3 No Violations; Consents and Approvals..............................................33
Section 4.4 Information in the Offer Documents; Proxy Statement;
Schedule 14D-9.....................................................................34
Section 4.5 Financing..........................................................................34
Section 4.6 Purchaser's Operations.............................................................35
Section 4.7 Vote Required......................................................................35
Section 4.8 Ownership of Shares................................................................35
Section 4.9 Compliance.........................................................................35
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company..................................................35
Section 5.2 HSR Act; Foreign Antitrust Laws....................................................39
Section 5.3 Access to Information..............................................................40
Section 5.4 Reasonable Best Efforts; Consents and Approvals....................................40
Section 5.5 No Solicitation....................................................................40
Section 5.6 Brokers or Finders.................................................................42
Section 5.7 Additional Agreements..............................................................42
Section 5.8 Publicity..........................................................................42
Section 5.9 Notification of Certain Matters....................................................43
Section 5.10 Directors' and Officers' Insurance and Indemnification.............................43
Section 5.11 State Takeover Laws................................................................45
Section 5.12 Resignations.......................................................................45
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<S> <C> <C>
Section 5.13 Interim Directors..................................................................45
Section 5.14 Rights Plan........................................................................45
Section 5.15 Employee Benefits..................................................................46
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation To Effect the Merger.........................47
ARTICLE VII
TERMINATION
Section 7.1 Termination........................................................................47
Section 7.2 Effect of Termination..............................................................50
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses..................................................................50
Section 8.2 Amendment and Modification.........................................................51
Section 8.3 Nonsurvival of Representations and Warranties......................................52
Section 8.4 Notices............................................................................52
Section 8.5 Interpretation.....................................................................53
Section 8.6 Waivers............................................................................53
Section 8.7 Counterparts.......................................................................53
Section 8.8 Entire Agreement; No Third Party Beneficiaries.....................................53
Section 8.9 Severability.......................................................................54
Section 8.10 Governing Law......................................................................54
Section 8.11 Assignment.........................................................................54
Section 8.12 Headings...........................................................................54
Section 8.13 Specific Performance...............................................................54
</TABLE>
-iii-
<PAGE> 5
<TABLE>
<CAPTION>
DEFINED TERM PAGE NUMBER
<S> <C>
Acquisition Proposal......................................................................................41
Affected Employees .......................................................................................46
CERCLA....................................................................................................23
Certificate of Merger......................................................................................7
Certificates..............................................................................................11
Claim.....................................................................................................44
Closing....................................................................................................7
Closing Date...............................................................................................7
Code......................................................................................................21
Company....................................................................................................1
Company Agreements........................................................................................18
Company Common Stock.......................................................................................1
Company Material Adverse Effect...........................................................................14
Company Material Contracts................................................................................28
Company Required Approvals................................................................................18
Company Required Consents.................................................................................19
Company SEC Documents.....................................................................................14
Company SEC Reports.......................................................................................19
Confidentiality Agreement.................................................................................40
DGCL.......................................................................................................1
Dissenting Shares.........................................................................................12
Effective Time.............................................................................................7
Employee Option...........................................................................................13
Employee Option Plans.....................................................................................13
Environmental Lien........................................................................................24
Environmental or Safety Requirements......................................................................23
Environmental Reports.....................................................................................25
ERISA.....................................................................................................20
ERISA Affiliate...........................................................................................22
Exchange Act...............................................................................................2
GAAP......................................................................................................19
Governmental Entity.......................................................................................18
Hazardous Substances......................................................................................23
HSR Act...................................................................................................18
Indemnified Party.........................................................................................44
Independent Directors......................................................................................6
Intellectual Property.....................................................................................29
IT........................................................................................................31
Joint Venture.............................................................................................15
Knowledge.................................................................................................53
Lehman....................................................................................................31
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<S> <C>
License Agreements........................................................................................30
Lien......................................................................................................18
Made Available............................................................................................53
Major Customers...........................................................................................31
Merger.....................................................................................................6
Merger Consideration......................................................................................10
Minimum Condition..........................................................................................2
MWT (Thailand)............................................................................................15
Offer......................................................................................................2
Offer Documents............................................................................................3
Offer Price................................................................................................2
Offer to Purchase..........................................................................................2
Option Plans..............................................................................................13
Options...................................................................................................13
Parent.....................................................................................................1
Parent Material Adverse Effect............................................................................32
Paying Agent..............................................................................................10
Permits...................................................................................................28
Plans.....................................................................................................20
Preferred Stock...........................................................................................15
Proxy Statement............................................................................................9
Purchaser..................................................................................................1
Purchaser Common Stock....................................................................................10
Release...................................................................................................23
Rights Agreement..........................................................................................16
Schedule 14D-9.............................................................................................4
Schedule TO................................................................................................3
SEC........................................................................................................3
Securities Act............................................................................................13
Series A Preferred Stock..................................................................................15
Shares.....................................................................................................1
Special Meeting............................................................................................8
Stock Option Agreement.....................................................................................4
Subsequent Offering Period.................................................................................3
Subsidiary................................................................................................15
Superior Proposal.........................................................................................41
Surviving Corporation......................................................................................7
Tax.......................................................................................................26
Tax Return................................................................................................26
Termination Fee...........................................................................................51
Title IV Plan.............................................................................................21
Trade Secrets.............................................................................................29
Transactions...............................................................................................1
</TABLE>
-v-
<PAGE> 7
<TABLE>
<S> <C>
Trigger Event.............................................................................................51
Voting Debt...............................................................................................16
WARN Act..................................................................................................27
Year 2000 Compliant.......................................................................................31
</TABLE>
-vi-
<PAGE> 8
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 3, 2000, by and among
Eastman Chemical Company, a Delaware corporation ("Parent"), Tartan, Inc., a
Delaware corporation and a direct, wholly owned subsidiary of Parent (the
"Purchaser"), and McWhorter Technologies, Inc., a Delaware corporation (the
"Company").
WHEREAS, the Boards of Directors of Parent, the Purchaser and the
Company have approved, and deem it advisable and in the best interests of their
respective stockholders to consummate, the acquisition of the Company by Parent
upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance thereof, it is proposed that the Purchaser
make the Offer (as defined in Section 1.1 hereof) to acquire all shares of the
issued and outstanding common stock, par value $0.01 per share, of the Company
(referred to herein as either the "Shares" or "Company Common Stock") for $19.70
per share, net to the seller in cash;
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of Parent, the Purchaser and the Company have approved this Agreement
and the Merger (as defined in Section 1.4 hereof) following the Offer in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL") and upon the terms and subject to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company has determined that the
consideration to be paid for each Share in the Offer and the Merger is fair to
the holders of such Shares and has resolved to recommend that the holders of
such Shares accept the Offer and approve this Agreement and each of the
transactions contemplated by this Agreement, including the Offer and the Merger
(the "Transactions"), upon the terms and subject to the conditions set forth
herein; and
WHEREAS, Parent, the Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and Merger.
<PAGE> 9
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 THE OFFER. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 7.1 and none of the events set forth
in Annex A hereto shall have occurred and be continuing, as promptly as
practicable and in any event within ten (10) business days of the date hereof,
the Purchaser shall commence (within the meaning of Rule 14d-2 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) an offer (the
"Offer") to purchase for cash all Shares at a price of $19.70 per Share, net to
the seller in cash (such price, or such higher price per Share as may be paid in
the Offer, being referred to herein as the "Offer Price"), subject to there
being validly tendered and not withdrawn prior to the expiration of the Offer
that number of Shares which, together with the Shares beneficially owned by
Parent or the Purchaser, represents at least a majority of the Shares
outstanding on a fully diluted basis (the "Minimum Condition") and to the other
conditions set forth in Annex A hereto. Subject to the prior satisfaction or
waiver (except that the Minimum Condition may not be waived) of the Minimum
Condition and the other conditions of the Offer set forth in Annex A, the
Purchaser shall consummate the Offer in accordance with its terms and accept for
payment and pay for all Shares tendered pursuant to the Offer as soon as it is
legally permitted to do so under applicable law. The obligations of the
Purchaser to commence the Offer and to accept for payment and to pay for any
Shares validly tendered on or prior to the expiration of the Offer and not
withdrawn shall be subject only to the Minimum Condition and the other
conditions set forth in Annex A hereto. The Offer shall be made by means of an
offer to purchase (the "Offer to Purchase") containing the terms set forth in
this Agreement, the Minimum Condition and the other conditions set forth in
Annex A hereto. The Purchaser shall not amend or waive the Minimum Condition and
shall not decrease the Offer Price, change the form of consideration payable in
the Offer, decrease the number of Shares sought in the Offer, impose additional
conditions to the Offer, or amend any other condition of the Offer in any manner
adverse to the holders of the Shares without the prior written consent of the
Company (such consent to be authorized by the Board of Directors of the Company
or a duly authorized committee thereof), PROVIDED, HOWEVER, that if on the
initial
2
<PAGE> 10
scheduled expiration date of the Offer (as it may be extended), all conditions
to the Offer shall not have been satisfied or waived, the Purchaser may, from
time to time, in its sole discretion, extend the Offer, PROVIDED, FURTHER, that
no such extension pursuant to this sentence shall extend the Offer beyond June
30, 2000 unless any applicable waiting period under the HSR Act (as hereinafter
defined) or any foreign antitrust, investment or competition law or regulation
has not expired or terminated, in which case no such extension pursuant to this
sentence shall extend the Offer beyond July 31, 2000. In addition, the Offer
Price may be increased and the Offer may be extended to the extent required by
law in connection with such increase, in each case without the consent of the
Company. If, immediately prior to the expiration date of the Offer (as it may be
extended), the Shares tendered and not withdrawn pursuant to the Offer
constitute less than 90% of the outstanding Shares, the Purchaser may extend the
Offer for a period not to exceed ten business days, notwithstanding that all
conditions to the Offer are satisfied as of such expiration date of the Offer.
Following expiration of the Offer, the Purchaser may, in its sole discretion,
provide a subsequent offering period (a "Subsequent Offering Period") in
accordance with Rule 14d-11 under the Exchange Act.
(b) As soon as practicable on the date the Offer is commenced,
Parent and the Purchaser shall file with the United States Securities and
Exchange Commission (the "SEC") a Tender Offer Statement on Schedule TO with
respect to the Offer (together with all amendments and supplements thereto and
including the exhibits thereto, the "Schedule TO"). The Schedule TO will include
the summary term sheet required thereby and, as exhibits, the Offer to Purchase
and a form of letter of transmittal and summary advertisement (collectively,
together with any amendments and supplements thereto, the "Offer Documents").
Parent and the Purchaser further agree to take all steps necessary to cause the
Offer Documents to be filed with the SEC and to be disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws. Parent and the Purchaser, on the one hand, and the Company, on
the other hand, agree to correct promptly any information provided by it for use
in the Offer Documents if and to the extent that it shall have become false and
misleading in any material respect and the Purchaser further agrees to take all
steps necessary to cause the Offer Documents as so corrected to be filed with
the SEC and to be disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws. The Company and its
counsel shall be given the opportunity to review the Schedule TO before it is
filed with the SEC. In addition, Parent and the Purchaser agree to provide the
Company and its counsel in writing with any comments, whether written or oral,
Parent, the Purchaser or their counsel may receive from time to time from the
SEC or
3
<PAGE> 11
its staff with respect to the Offer Documents promptly after the receipt of such
comments, and any written or oral responses thereto.
(c) In the event that, following a Subsequent Offering Period, if
any, the Purchaser has acquired less than 90% of the Shares, but not less than
75% of the Shares, the parties agree that they shall enter into a Stock Option
Agreement (the "Stock Option Agreement"), on customary terms, pursuant to which
the Company shall grant to the Purchaser an option to purchase that number of
Shares equal to the number of Shares that, when added to the number Shares owned
by the Purchaser and its affiliates immediately following expiration of the
Subsequent Offering Period, shall constitute 90% of the Shares then outstanding
on a fully diluted basis.
Section 1.2 COMPANY ACTIONS.
(a) Concurrently with the commencement of the Offer, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule 14D-9") which shall, subject to the fiduciary
duties of the Company's directors under applicable law as advised by its legal
counsel and to any applicable provisions of this Agreement, contain the
recommendation referred to in clause (iii) of Section 3.3(b) hereof. The Company
further agrees to take all steps necessary to cause the Schedule 14D-9 to be
filed with the SEC and to be disseminated to holders of Shares, in each case as
and to the extent required by applicable federal securities laws. The Company,
on the one hand, and Parent and the Purchaser, on the other hand, agree to
correct promptly any information provided by it for use in the Schedule 14D-9 if
and to the extent that it shall have become false and misleading in any material
respect and the Company further agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated
to holders of the Shares, in each case as and to the extent required by
applicable federal securities laws. Parent, the Purchaser and their counsel
shall be given the opportunity to review the Schedule 14D-9 before it is filed
with the SEC. In addition, the Company agrees to provide Parent, the Purchaser
and their counsel in writing with any comments, whether written or oral, the
Company or its counsel may receive from time to time from the SEC or its staff
with respect to the Schedule 14D-9 promptly after the receipt of such comments,
and any written or oral responses thereto.
4
<PAGE> 12
(b) In connection with the Offer, the Company will promptly
furnish or cause to be furnished to the Purchaser mailing labels, security
position listings and any available listing or computer file containing the
names and addresses of the record holders of the Shares as of a recent date, and
shall furnish the Purchaser with such information and assistance as the
Purchaser or its agents may reasonably request in communicating the Offer to the
record and beneficial holders of the Shares. Except for such steps as are
necessary to disseminate the Offer Documents, Parent and the Purchaser shall
hold in confidence the information contained in any of such labels and lists and
the additional information referred to in the preceding sentence, will use such
information only in connection with the Offer, and, if this Agreement is
terminated, will deliver or cause to be delivered to the Company all copies of
such information then in its possession or the possession of its agents or
representatives.
Section 1.3 DIRECTORS.
(a) Promptly upon the purchase of and payment for any Shares by
Parent or any of its subsidiaries which represents at least a majority of the
outstanding Shares (on a fully diluted basis), Parent shall be entitled to
designate such number of directors, rounded up to the next whole number, on the
Board of Directors of the Company as is equal to the product of the total number
of directors on such Board (giving effect to the directors designated by Parent
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Shares beneficially owned by the Purchaser, Parent and any of their
affiliates bears to the total number of Shares then outstanding. The Company
shall, upon request of Parent, use its reasonable best efforts promptly either
to increase the size of its Board of Directors, including by amending the
by-laws of the Company if necessary to so increase the size of the Board of
Directors, or secure the resignations of such number of its incumbent directors,
or both, as is necessary to enable Parent's designees to be so elected or
appointed to the Company's Board of Directors, and shall use its reasonable best
efforts to cause Parent's designees to be so elected or appointed at such time.
At such time, the Company shall, upon the request of Parent, also cause persons
designated by Parent to constitute the same percentage (rounded up to the next
whole number) as is on the Company's Board of Directors of (i) each committee of
the Company's Board of Directors, (ii) each board of directors (or similar body)
of each Subsidiary (as defined in Section 3.1(c)) of the Company and (iii) each
committee (or similar body) of each such board, in each case only to the extent
permitted by applicable law or the rules of any stock exchange on which the
Company Common Stock is listed. The Company's obligations under this Section
1.3(a) shall be subject
5
<PAGE> 13
to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The
Company shall promptly take all actions required pursuant to such Section 14(f)
and Rule 14f-1 in order to fulfill its obligations under this Section 1.3(a)
(subject to Parent's timely notification to the Company of such information as
is necessary to fulfill such obligations), including mailing to stockholders
(together with the Schedule 14D-9 if Parent has then provided the necessary
information) the information required by such Section 14(f) and Rule 14f-1 as is
necessary to enable Parent's designees to be elected or appointed to the
Company's Board of Directors. Parent or the Purchaser will supply the Company
any information with respect to either of them and their nominees, officers,
directors and affiliates required by such Section 14(f) and Rule 14f-1. The
provisions of this Section 1.3(a) are in addition to and shall not limit any
rights which the Purchaser, Parent or any of their affiliates may have as a
holder or beneficial owner of Shares as a matter of law with respect to the
election of directors or otherwise.
(b) In the event that Parent's designees are elected to the
Company's Board of Directors, until the Effective Time, the Company shall cause
its Board of Directors to have at least three directors who are directors on the
date hereof (the "Independent Directors"), provided that if any Independent
Directors may not serve due to death or disability, the remaining Independent
Directors (or Independent Director, if there is only one remaining) shall be
entitled to designate another person or persons who served as a director on the
date hereof to fill such vacancies who shall be deemed to be Independent
Directors for purposes of this Agreement or, if no Independent Director then
remains, the other directors shall designate three persons who were directors on
the date hereof to fill such vacancies and such persons shall be deemed to be
Independent Directors for purposes of this Agreement. Notwithstanding anything
in this Agreement to the contrary, in the event that Parent's designees
constitute a majority of the Company's Board of Directors, after the acceptance
for payment of Shares pursuant to the Offer and prior to the Effective Time, the
affirmative vote of a majority of the Independent Directors shall be required to
(i) amend or terminate this Agreement by the Company, (ii) exercise or waive any
of the Company's rights, benefits or remedies hereunder, (iii) amend the
Certificate of Incorporation or By-laws of the Company or (iv) take any other
action of the Company's Board of Directors under or in connection with this
Agreement; provided, that if there shall be no Independent Directors as a result
of such persons' deaths, disabilities or refusal to serve, such actions may be
effected by majority vote of the entire Board of Directors of the Company.
Section 1.4 THE MERGER.
6
<PAGE> 14
(a) Subject to the terms and conditions of this Agreement, at the
Effective Time, the Company and the Purchaser shall consummate a merger (the
"Merger") pursuant to which (i) the Purchaser shall be merged with and into the
Company and the separate corporate existence of the Purchaser shall thereupon
cease, (ii) the Company shall be the successor or surviving corporation in the
Merger and shall continue to be governed by the laws of the State of Delaware,
and (iii) the separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger. The corporation surviving the Merger is sometimes hereinafter referred
to as the "Surviving Corporation." The Merger shall have the effects set forth
in the DGCL.
(b) The Certificate of Incorporation of the Purchaser, as in
effect immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation, except as to the name of the
Surviving Corporation, until thereafter amended as provided by law and such
Certificate of Incorporation.
(c) The By-laws of the Purchaser, as in effect immediately prior
to the Effective Time, shall be the By-laws of the Surviving Corporation, except
as to the name of the Surviving Corporation, until thereafter amended as
provided by law, the Certificate of Incorporation of the Surviving Corporation
and such By-laws.
Section 1.5 EFFECTIVE TIME. Parent, the Purchaser and the Company will
cause an appropriate Certificate of Merger (the "Certificate of Merger") to be
executed and filed on the date of the Closing (as defined in Section 1.6 hereof)
(or on such other date as Parent and the Company may agree) with the Secretary
of State of the State of Delaware as provided in the DGCL. The Merger shall
become effective on the date on which the Certificate of Merger has been duly
filed with the Secretary of State of the State of Delaware or such time as is
agreed upon by the parties and specified in the Certificate of Merger, and such
time is hereinafter referred to as the "Effective Time."
Section 1.6 CLOSING. The closing of the Merger (the "Closing") will
take place at 10:00 a.m., Eastern Standard Time, on a date to be specified by
the parties, which shall be no later than the second business day after
satisfaction or waiver of all of the conditions set forth in Article VI hereof
(the "Closing Date"), at the offices of Kirkland & Ellis, 200 East Randolph
Drive, Chicago, Illinois, unless another date or place is agreed to in writing
by the parties hereto.
7
<PAGE> 15
Section 1.7 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The
directors of the Purchaser immediately prior to the Effective Time shall, from
and after the Effective Time, be the directors of the Surviving Corporation, and
the officers of the Company immediately prior to the Effective time shall, from
and after the Effective Time, be the officers of the Surviving Corporation, in
each case until their respective successors shall have been duly elected or
appointed or qualified or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's Certificate of Incorporation and
By-laws.
Section 1.8 SUBSEQUENT ACTIONS. If at any time after the Effective
Time the Surviving Corporation will consider or be advised that any deeds, bills
of sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either of the Company or the Purchaser acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with, the
Merger or otherwise to carry out this Agreement, the officers and directors of
the Surviving Corporation shall be authorized to execute and deliver, in the
name and on behalf of either the Company or the Purchaser, all such deeds, bills
of sale, instruments of conveyance, assignments and assurances and to take and
do, in the name and on behalf of each of such corporations or otherwise, all
such other actions and things as may be necessary or desirable to vest, perfect
or confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
Section 1.9 STOCKHOLDERS' MEETING.
(a) If required by applicable law in order to consummate the
Merger, the Company, acting through its Board of Directors, shall, in accordance
with applicable law:
(i) duly call, give notice of, convene and hold a special meeting
of its stockholders (the "Special Meeting") as soon as reasonably
practicable following the acceptance for payment and purchase of
Shares by the Purchaser pursuant to the Offer for the purpose of
considering and taking action upon this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement and
use its
8
<PAGE> 16
reasonable best efforts to obtain and furnish the information
required to be included by the SEC in the Proxy Statement (as
hereinafter defined) and, after consultation with Parent, to respond
promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement and cause a definitive
proxy or information statement (the "Proxy Statement") to be mailed to
its stockholders;
(iii) subject to the applicable provisions of this Agreement,
include in the Proxy Statement the recommendation of the Board that
stockholders of the Company vote in favor of the approval of the
Merger and the adoption of this Agreement; and
(iv) use its reasonable best efforts to solicit from holders of
Shares proxies in favor of the Merger and shall take all other action
reasonably necessary or advisable to secure the approval of
stockholders required by the DGCL to effect the Merger.
(b) Parent agrees that it will vote, or cause to be voted, all of
the Shares then owned by it, the Purchaser or any of its other subsidiaries and
affiliates in favor of the approval of the Merger and the adoption of this
Agreement.
Section 1.10 MERGER WITHOUT MEETING OF STOCKHOLDERS. Notwithstanding
Section 1.9 hereof, in the event that Parent, the Purchaser or any other
subsidiary of Parent shall acquire at least 90% of the outstanding shares of
each class of capital stock of the Company, pursuant to the Offer or otherwise,
the parties hereto agree, at the request of Parent and subject to Article VI
hereof, to take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after such acquisition, without a
meeting of stockholders of the Company, in accordance with Section 253 of the
DGCL.
9
<PAGE> 17
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holders of any
shares of Company Common Stock or common stock, par value $.01 per share, of the
Purchaser (the "Purchaser Common Stock"):
(a) PURCHASER COMMON STOCK. Each issued and outstanding share of
the Purchaser Common Stock shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK. All
shares of Company Common Stock that are owned by the Company as treasury stock
and any shares of Company Common Stock owned by Parent, the Purchaser or any
other wholly owned Subsidiary of Parent shall be cancelled and retired and shall
cease to exist and no consideration shall be delivered in exchange therefor.
(c) CONVERSION OF SHARES. Each issued and outstanding share of
Company Common Stock (other than shares to be cancelled in accordance with
Section 2.1(b) hereof and other than Dissenting Shares (as defined in Section
2.3 hereof)) shall be converted into the right to receive the Offer Price,
payable to the holder thereof in cash, without interest (the "Merger
Consideration"). From and after the Effective Time, all such shares of Company
Common Stock shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration therefor upon the
surrender of such certificate in accordance with Section 2.2 hereof, without
interest.
Section 2.2 EXCHANGE OF CERTIFICATES.
(a) PAYING AGENT. Parent shall designate a bank or trust company
to act as agent for the holders of Shares in connection with the Merger (the
"Paying Agent") to receive the funds to which holders of Shares shall become
entitled pursuant to Section 2.1(c) hereof. Prior to the Effective Time, Parent
or the Purchaser shall deposit, or cause to be deposited, with the Paying Agent
the aggregate Merger Consideration. For purposes of determining the amount of
Merger
10
<PAGE> 18
Consideration to be so deposited, Parent and the Purchaser shall assume that no
stockholder of the Company will perfect any right to appraisal of his, her or
its Shares. Such funds shall be invested by the Paying Agent as directed by
Parent or the Surviving Corporation pending payment thereof by the Paying Agent
to the holders of the Shares. Earnings from such investments shall be the sole
and exclusive property of Parent and the Surviving Corporation, and no part of
such earnings shall accrue to the benefit of holders of Shares.
(b) EXCHANGE PROCEDURES. Promptly after the Effective Time, the
Paying Agent shall mail to each holder of record of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock (the "Certificates"), whose shares
were converted pursuant to Section 2.1 hereof into the right to receive the
Merger Consideration (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall be in
such form and have such other provisions as Parent may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for payment of the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration for each share of Company Common
Stock formerly represented by such Certificate and the Certificate so
surrendered shall forthwith be cancelled. If payment of the Merger Consideration
is to be made to a person other than the person in whose name the surrendered
Certificate is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the person requesting such payment shall have
paid any transfer and other taxes required by reason of the payment of the
Merger Consideration to a person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of the
Surviving Corporation that such tax either has been paid or is not payable.
Until surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration in cash as contemplated by this Section 2.2,
without interest thereon.
(c) TRANSFER BOOKS; NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON
STOCK. At the Effective Time, the stock transfer books of the Company shall be
closed and thereafter there shall be no further registration of transfers of
Shares on the records of the Company. From and after the Effective Time, the
11
<PAGE> 19
holders of Certificates evidencing ownership of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares, except as otherwise provided for herein or by applicable law. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be cancelled and exchanged as provided in this Article
II.
(d) TERMINATION OF FUND; NO LIABILITY. At any time following six
months after the Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) which had been made available to the Paying Agent
and which have not been disbursed (or of which disbursement is not pending
subject only to the Paying Agent's routine administrative procedures) to holders
of Certificates, and thereafter such holders shall be entitled to look only to
the Surviving Corporation (subject to abandoned property, escheat or other
similar laws) for payment of the Merger Consideration in respect of their
Certificates, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
Section 2.3 DISSENTING SHARES.
(a) Notwithstanding anything in this Agreement to the contrary,
Shares outstanding immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Merger or consented thereto in writing and who
has complied with all of the relevant provisions of Section 262 of the DGCL
("Dissenting Shares") shall not be converted into a right to receive the Merger
Consideration, unless such holder fails to perfect or withdraws or otherwise
loses his or her right to appraisal. A holder of Dissenting Shares shall be
entitled to receive payment of the appraised value of such Shares held by him or
her in accordance with the provisions of Section 262 of the DGCL, unless, after
the Effective Time, such holder fails to perfect or withdraws or loses his or
her right to appraisal, in which case such Shares shall be converted into and
represent only the right to receive the Merger Consideration, without interest
thereon, upon surrender of the Certificate or Certificates representing such
Shares pursuant to Section 2.2.
(b) The Company shall give Parent (i) prompt notice of any
written demands for appraisal of any Shares, attempted withdrawals of such
demands and any other instruments served pursuant to the DGCL and received by
the Com-
12
<PAGE> 20
pany relating to rights of appraisal and (ii) the opportunity to share in the
conduct of all negotiations and proceedings with respect to demands for
appraisal under the DGCL. Except with the prior written consent of Parent, the
Company shall not voluntarily make any payment with respect to any demands for
appraisal or settle or offer to settle any such demands for appraisal.
Section 2.4 COMPANY OPTION PLANS. Parent and the Company shall
take all actions necessary to provide that, effective as of the Effective Time,
(i) each outstanding employee stock option, stock equivalent right or right to
acquire Shares (an "Employee Option") granted under the Company's 1994 Stock
Incentive Plan or the Company's 1996 Incentive Stock Plan (the "Employee Option
Plans"), and each outstanding non-employee director option to purchase Shares
(collectively with Employee Options, "Options") granted under the 1996
Non-employee Director Stock Option and Award Plan (collectively with the
Employee Option Plan, the "Option Plans") whether or not then exercisable or
vested, shall be cancelled and (ii) in consideration of such cancellation,
Parent shall, or shall cause the Surviving Corporation to, pay to such holders
of Options, whether or not then exercisable or vested, an amount in respect
thereof equal to the product of (A) the excess, if any, of the Offer Price over
the exercise price of each such Option (which, in the case of any stock
equivalent right, shall be zero) and (B) the number of Shares subject thereto
(such payment, if any, to be net of applicable withholding and excise taxes). As
of the Effective Time, the Option Plans 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 shall be cancelled. The Company shall take all action
necessary to ensure that, after the Effective Time, no person shall have any
right under the Option Plans or any other plan, program or arrangement with
respect to equity securities of the Surviving Corporation or any Subsidiary
thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in forms, reports, schedules, statements and other
documents filed by the Company since October 31, 1999, under the Exchange Act or
the Securities Act of 1933, as amended (the "Securities Act"), and filed prior
to the date hereof (as such documents have been amended since the time of their
filing and
13
<PAGE> 21
prior to the date hereof, collectively, the "Company SEC Documents"), the
Company represents and warrants to Parent and the Purchaser as follows:
Section 3.1 ORGANIZATION; SUBSIDIARIES.
(a) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, has the requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as now being conducted and is duly qualified or licensed
to do business and in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to be
so qualified or in good standing would not, individually or in the aggregate,
have a Company Material Adverse Effect. The term "Company Material Adverse
Effect" shall mean any material adverse effect on the business, operations,
properties, assets or financial condition of the Company and its Subsidiaries,
taken as a whole (other than changes or effects that are the result of economic
factors affecting the economy or financial markets as a whole or generally
affecting the resins or paint markets), or on the ability of the Company to
consummate the Transactions.
(b) The Company SEC Documents set forth the name and jurisdiction
of incorporation of each of the Company's Subsidiaries. Except as set forth in
Schedule 3.1(b), the Company does not own, directly or indirectly, any capital
stock or other equity securities of any corporation or have any direct or
indirect equity or ownership interest in any business other than publicly traded
securities constituting less than five percent of the outstanding equity of the
issuing entity. Except as set forth in Schedule 3.1(b), all the outstanding
shares of capital stock of each of the Company's Subsidiaries are owned directly
or indirectly by the Company free and clear of all liens, options or
encumbrances of any kind and all material claims or charges of any kind, and are
validly issued, fully paid and nonassessable, and there are no outstanding
options, rights or agreements of any kind relating to the issuance, sale or
transfer of any capital stock or other equity securities of any such Subsidiary
to any person except the Company. The Company has heretofore made available to
Parent complete and correct copies of the certificate of incorporation and
by-laws (or similar organizational documents) of each of the Company's
Subsidiaries, as presently in effect.
(c) Each of the Company's Subsidiaries is a corporation,
partnership or other entity duly organized, validly existing and in good
standing
14
<PAGE> 22
under the laws of the jurisdiction of its incorporation or organization, has all
requisite corporate or other power and authority to own, lease and operate its
properties and to carry on its business as now being conducted and is duly
qualified or licensed to do business and in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
where the failure to be so qualified or in good standing would not, individually
or in the aggregate, have a Company Material Adverse Effect. The term
"Subsidiary" of a person shall mean any corporation or other entity (including
partnerships and other business associations and joint ventures) in which such
person directly or indirectly owns at least a majority of the voting power
represented by the outstanding capital stock or other voting securities or
interests having voting power under ordinary circumstances to elect a majority
of the directors or similar members of the governing body, or otherwise to
direct the management and policies, of such corporation or entity.
(d) The Company is not a party to or involved in any Joint
Ventures other than McWhorter Technologies (Thailand) Co., Ltd., a Thailand
limited liability joint venture ("MWT (Thailand)"), which is not currently an
operating entity. There are no liabilities arising from the Company's investment
in MWT (Thailand) that, individually or in the aggregate, would be reasonably
likely to have a Company Material Adverse Effect. The term "Joint Venture" of a
person shall mean any corporation or other entity (including partnerships and
other business associations and joint ventures) in which such person directly or
indirectly owns an equity interest that is less than a majority of any class of
the outstanding voting securities or equity of any such entity, other than
equity interests held for passive investment purposes that are less than 5% of
any class of the outstanding voting securities or equity of any such entity.
Section 3.2 CAPITALIZATION. (a) The authorized capital stock of the
Company consists of 30,000,000 shares of Company Common Stock and 1,000,000
shares of preferred stock, par value $1.00 per share (the "Preferred Stock"), of
which 150,000 shares of Preferred Stock are designated as Series A Junior
Participating Preferred Stock (the "Series A Preferred Stock"). As of March 31,
2000, (i) 9,950,685 shares of Company Common Stock are issued and outstanding,
(ii) 920,508 shares of Company Common Stock are issued and held in the treasury
of the Company and (iii) 917,847 shares of Company Common Stock are reserved for
issuance upon exercise of outstanding Options (of which 812,272 were with
respect to stock options and 71,071 were with respect to stock equivalent
rights, which stock equivalent rights include 34,504 shares attributable to
director deferred compensa-
15
<PAGE> 23
tion). As of the date hereof, there are no shares of Preferred Stock issued and
outstanding. All the outstanding shares of the Company's capital stock are, and
all shares of Company Common Stock which may be issued pursuant to the exercise
of outstanding Options will be, when issued in accordance with the terms
thereof, duly authorized, validly issued, fully paid and non-assessable. There
are no bonds, debentures, notes or other indebtedness having general voting
rights (or convertible into securities having such rights) ("Voting Debt") of
the Company or any of its Subsidiaries issued and outstanding. Except as set
forth above and except for the transactions contemplated by this Agreement and
except as provided by the Rights Agreement dated as of February 1, 1994, as
amended, between the Company and Equiserve Trust Company, N.A. as successor to
Wachovia Bank of North Carolina, N.A. (the "Rights Agreement"), as of the date
hereof, (i) there are no shares of capital stock of the Company authorized,
issued or outstanding and (ii) there are no existing options, warrants, calls,
pre-emptive rights, subscriptions or other rights, agreements, arrangements or
commitments of any character, relating to the issued or unissued capital stock
of the Company or any of its Subsidiaries, obligating the Company or any of its
Subsidiaries to issue, transfer or sell or cause to be issued, transferred or
sold any shares of capital stock or Voting Debt of, or other equity interest in,
the Company or any of its Subsidiaries or securities convertible into or
exchangeable for such shares or equity interests or obligations of the Company
or any of its Subsidiaries to grant, extend or enter into any such option,
warrant, call, subscription or other right, agreement, arrangement or
commitment. Except as contemplated by this Agreement, there are no outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any Shares, or the capital stock of the Company or
any Subsidiary or affiliate of the Company, or to provide funds to make any
investment (in the form of a loan, capital contribution or otherwise) in any
Subsidiary or any other entity.
(b) There are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a party with
respect to the voting of the capital stock of the Company or any of its
Subsidiaries.
(c) Except as set forth in Schedule 3.2(c), the Company has no
indebtedness for borrowed money.
Section 3.3 AUTHORIZATION; VALIDITY OF AGREEMENT; COMPANY ACTION.
(a) The Company has all necessary corporate power and authority to execute and
deliver this Agreement and, subject to obtaining any necessary approval of its
stockholders for the Merger, to consummate the transactions contemplated hereby.
The
16
<PAGE> 24
execution, delivery and performance by the Company of this Agreement, and the
consummation by it of the transactions contemplated hereby, have been duly
authorized by its Board of Directors and no other corporate action on the part
of the Company is necessary to authorize the execution and delivery by the
Company of this Agreement and the consummation by it of the transactions
contemplated hereby (other than, with respect to the Merger, obtaining any
approval of its stockholders as contemplated by Section 1.9 hereof and the
filing of the Certificate of Merger as required by the DGCL). This Agreement has
been duly executed and delivered by the Company and, assuming due and valid
authorization, execution and delivery thereof by Parent and the Purchaser,
constitutes a valid and binding obligation of the Company enforceable against
the Company in accordance with their terms, except that (i) such enforcement may
be subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
(b) The Board of Directors of the Company, at a meeting duly called
and held, has unanimously (i) determined that each of the Agreement, the Offer
and the Merger are fair to and in the best interests of the stockholders of the
Company; (ii) duly and validly approved and taken all corporate action required
to be taken by the Board of Directors to authorize the consummation of the
Transactions; and (iii) resolved to recommend that the stockholders of the
Company accept the Offer, tender their Shares to the Purchaser pursuant to the
Offer and approve and adopt this Agreement and the Merger, and none of the
aforesaid actions by the Board of Directors of the Company has been amended,
rescinded or modified. The action taken by the Board of Directors of the Company
constitutes approval of the Transactions by the Board of Directors of the
Company under the provisions of Section 203 of the DGCL and no other state
takeover statute, is applicable to the Transactions.
Section 3.4 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock is the only vote of
the holders of any class or series of the Company's capital stock necessary to
approve the Merger and is only necessary in the event that the number of shares
of Company Common Stock tendered pursuant to the Offer represents less than 90%
of the issued and outstanding shares of Company Common Stock.
Section 3.5 NO VIOLATIONS; CONSENTS AND APPROVALS.
17
<PAGE> 25
(a) Neither the execution, delivery or performance of this
Agreement or, if applicable, the Stock Option Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby or thereby
nor compliance by the Company with any of the provisions hereof or thereof will
(i) conflict with or result in any breach of any provision of the certificate of
incorporation or by-laws or similar organizational documents of the Company or
any of its Subsidiaries, (ii) subject to obtaining the Company Required
Approvals (as defined in Section 3.5(b) hereof) and the approval of the
stockholders of the Company, require any filing with, or permit, authorization,
consent or approval of, any court, arbitral tribunal, administrative agency or
commission or other governmental or other regulatory authority or agency (a
"Governmental Entity"), (iii) subject to obtaining the Company Required Consents
(as defined in Section 3.5(b) hereof), result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration
or result in the creation of any lien, mortgage, security interest, charge,
claim or encumbrance of any kind (collectively, a "Lien") upon any of the
properties or assets of the Company or its Subsidiaries) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease,
license, permit, franchise, concession, contract, agreement or other instrument
or obligation to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their properties or assets may be bound (the
"Company Agreements") or (iv) subject to obtaining the Company Required
Approvals, violate any order, writ, injunction, judgment, decree, statute, law,
rule, regulation, ordinance, permit or license applicable to the Company or any
of its Subsidiaries or any of their properties or assets, excluding from the
foregoing clauses (ii), (iii) and (iv) violations, breaches, defaults, Liens and
failures to obtain filings, permits, authorizations, consents and approvals,
which would not, individually or in the aggregate, have a Company Material
Adverse Effect.
(b) Except as set forth in Schedule 3.5(b), no material
declaration, filing, permit, consent, registration or notice to or authorization
or approval of any Governmental Entity is necessary for the execution, delivery
or performance of this Agreement or the Stock Option Agreement by the Company,
the consummation by the Company of the transactions contemplated hereby or
thereby or compliance by the Company with any of the provisions hereof or
thereof, except for declarations, filings, permits, consents, registrations,
notices, authorizations and approvals as may be required under, and other
applicable requirements of, the Exchange Act, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), foreign antitrust,
investment or competition laws or regulations, state securities or blue sky laws
and the DGCL (the "Company Required Approvals"). There are no
18
<PAGE> 26
third party consents required to be obtained under the Company Agreements to
consummate the Transactions, except for third party consents set forth on
Schedule 3.5(b) hereto (the "Company Required Consents").
Section 3.6 SEC REPORTS AND FINANCIAL STATEMENTS. The Company has
filed with the SEC all forms, reports, schedules, statements and other documents
required to be filed by it since April 1, 1997 under the Exchange Act or the
Securities Act (as such documents have been amended since the time of their
filing, collectively, the "Company SEC Reports"). As of their respective dates
or, if amended, as of the date of the last such amendment, the Company SEC
Reports, including, without limitation, any financial statements or schedules
included therein (a) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading and (b) complied as to form in all material
respects with the applicable requirements of the Exchange Act and the Securities
Act, as the case may be, and the applicable rules and regulations of the SEC
thereunder. None of the Subsidiaries is required to file any forms, reports or
other documents with the SEC. The financial statements of the Company (including
the related notes thereto) included in the Company SEC Reports have been
prepared from the books and records of the Company and its consolidated
Subsidiaries in accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present the
consolidated financial position and the consolidated results of operations and
cash flows (and changes in financial position, if any) of the Company and its
consolidated Subsidiaries as at the dates thereof and for the periods presented
therein (subject, in the case of unaudited statements, to normal year-end audit
adjustments which were not and are not expected, individually or in the
aggregate, to be material in amount and the absence of certain footnote
disclosures).
Section 3.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the Company SEC Documents filed prior to the date hereof or as set forth on
any Schedule hereto, since January 31, 2000, (i) the Company and its
Subsidiaries have conducted their respective businesses only in the ordinary and
usual course, (ii) there has not occurred any events or changes (including the
incurrence of any liabilities of any nature, whether or not accrued, contingent
or otherwise) that have had or would be reasonably likely to have, individually
or in the aggregate, a Company Material Adverse Effect, and (iii) neither the
Company nor any of its Subsidiaries has taken any action that would have been
prohibited under Section 5.1
19
<PAGE> 27
hereof (other than subsections (f) and (q) of Section 5.1) if such section
applied to the period between January 31, 2000 and the date of this Agreement.
Section 3.8 NO UNDISCLOSED LIABILITIES. Except (i) as disclosed in the
Company SEC Documents filed prior to the date hereof, (ii) as disclosed on
Schedule 3.8 hereto and (iii) for liabilities and obligations incurred in the
ordinary course of business and consistent with past practice, since January 31,
2000, neither the Company nor any of its Subsidiaries has incurred any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, that have had, or would be reasonably likely to have, a Company
Material Adverse Effect.
Section 3.9 SCHEDULE 14D-9; OFFER DOCUMENTS; PROXY STATEMENT. Neither
the Schedule 14D-9, any other document required to be filed by the Company with
the SEC in connection with the Transactions, nor any information supplied by the
Company for inclusion in the Offer Documents will, at the respective times the
Schedule 14D-9, any such other filings by the Company, the Offer Documents or
any amendments or supplements thereto are filed with the SEC or are first mailed
to Company stockholders, as the case may be, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy Statement (or
any amendment thereof or supplement thereto), if any, will not, at the date
mailed to Company stockholders and at the time of the Special Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. Notwithstanding the foregoing, the Company makes no representation
or warranty with respect to statements made in any of the foregoing documents
based on information supplied by Parent or the Purchaser for inclusion therein.
The Schedule 14D-9, any such other filings by the Company and the Proxy
Statement, if any, will comply as to form in all material respects with the
provisions of the applicable federal securities laws and the rules and
regulations thereunder.
Section 3.10 EMPLOYEE BENEFIT PLANS; ERISA.
All employee benefit programs, plans, or arrangements (including but
not limited to employee benefit plans within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
maintained by the Company or any of its ERISA Affiliates (collectively, the
"Plans")
20
<PAGE> 28
are in compliance with, and at all times have been administered and
operated in accordance with, the terms of such Plans and applicable law, except
for any failure to so comply, operate or administer the Plans that would not,
individually or in the aggregate, be reasonably likely to result in a Company
Material Adverse Effect. The Internal Revenue Service has issued a determination
letter to the effect that each such Plan which is intended to be "qualified"
within meaning of Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code") is so qualified (and no circumstances exist that are
reasonably expected to result in the revocation of any such determination).
Except as set forth in Schedule 3.10 or in written documents made available to
Parent or the Purchaser prior to the date hereof, neither the Company, its
Subsidiaries nor the ERISA Affiliates maintains or within the last six (6) years
has maintained any plan, program or arrangement subject to Title IV of ERISA (a
"Title IV Plan"). No event which constitutes a "reportable event" as defined in
Section 4043 of ERISA has occurred with respect to any Title IV Plan which
presents a material risk of the termination or partial termination of any such
Plan or would reasonably be expected to result in a material liability of the
Company or any of its Subsidiaries. No Title IV Plan has been terminated in
connection with which any liability has been incurred which has not been
satisfied in full. Full payment has been made, or provision has been made
therefor, of all amounts which the Company or any of its Subsidiaries or ERISA
Affiliates were required under the terms of the Plans and applicable law to have
paid as contributions to such Plans and no Plan which is subject to Part 3 of
Subtitle B of the Title I of ERISA has incurred any "accumulated funding
deficiency" (within the meaning of Section 302 of ERISA or Section 412 of the
Code), whether or not waived. Neither the Company nor any of its Subsidiaries
has at any time during the prior six years engaged in any nonexempt prohibited
transactions in connection with any Plan (or its related trust) with respect to
which the Company, any of its Subsidiaries, or any officer, director or employee
of the Company or any of its Subsidiaries, would be subject to either a penalty
pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code
nor, to the knowledge of the Company, will the consummation of the transactions
contemplated by this Agreement constitute such a transaction which penalty or
tax would, individually or in the aggregate, result in a Company Material
Adverse Effect. Neither the Company nor any of its Subsidiaries has, at any time
during the prior six years, incurred any liability under the fiduciary
provisions of ERISA, other than any liability that would not individually, or in
the aggregate, result in a Company Material Adverse Effect. Except for claims
for benefits in the ordinary course of business, no claim, action or litigation
has been made, commenced or, to the knowledge of the Company, expressly
threatened with respect to any Plan that would, if adversely determined, result
in a Company Material Adverse Effect.
21
<PAGE> 29
Except as set forth in Schedule 3.10, neither the Company nor any of its
Subsidiaries or ERISA Affiliates has participated in or contributed to or been
required to contribute to any multiemployer plan as defined in Section 3(37) of
ERISA at any time during the prior six years. With respect to each employee
pension benefit plan (as defined in Section 3(2) of ERISA) which is a defined
benefit plan and is not a multiemployer plan, on the date of the most recent
actuarial valuation, the assets of such Plan available to meet the accrued
liabilities of such Plan exceeded the projected benefit obligation with respect
to the Plan based on the actuarial assumptions most recently used by the Company
with respect to the Plan for financial accounting purposes. Except as set forth
on Schedule 3.10, no Plan provides medical, surgical, hospitalization, death or
similar benefits (whether or not insured) for employees or former employees of
the Company or any of its Subsidiaries for periods extending beyond their
retirement or other termination of service, other than (i) coverage mandated by
applicable law, (ii) death benefits under any employee pension benefit plan, or
(iii) benefits the full cost of which is borne by the current or former employee
(or his or her beneficiary). The Company has delivered to Parent true and
correct copies of any agreement, contract or arrangement, and any amendments
thereto, that could result, separately or in the aggregate, in the payment of
any "excess parachute payments" within the meaning of Section 280G of the Code.
With respect to each Plan, the Company has heretofore delivered or made
available to Parent a true and complete copy of the Plan and any amendments
thereto, the two most recent annual reports and actuarial reports, if required
under ERISA, and the most recent report prepared with respect thereto in
accordance with FASB 87. For purposes of this Agreement, "ERISA Affiliate" shall
mean, with respect to any trade or business, another trade or business, whether
or not incorporated, that is treated under Section 414(b), (c), (m), or (o) of
the Code as part of the controlled group of, under common control with, or a
member of an affiliated service group including the first trade or business.
Section 3.11 LITIGATION. Except as set forth in Schedule 3.11, there
is no litigation, arbitration, suit, claim, action, proceeding, investigation or
review by or before any Governmental Entity pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries
(i) which, if adversely decided, individually or in the aggregate, could
reasonably be expected to have a Company Material Adverse Effect or (ii) which
questions or challenges the validity of this Agreement or any action to be taken
by the Company or any of its Subsidiaries pursuant to this Agreement or in
connection with the Transactions, and there is not actually known to the
executive officers of the Company any reasonable basis for any such suit, claim,
action, proceeding or investigation. Except as set forth
22
<PAGE> 30
in Schedule 3.11, neither the Company nor any of its Subsidiaries is subject to
any judgments, awards, decrees, injunctions or orders of any Governmental Entity
applicable to the Company or any of its Subsidiaries. As to any litigation,
arbitrations, suits, claims, actions, proceedings, investigations and reviews
disclosed in the Company SEC Documents filed prior to the date of this
Agreement, since October 31, 1999, there have not been any significant
developments with respect thereto.
Section 3.12 ENVIRONMENTAL PROTECTION.
Except as singularly or in the aggregate could not reasonably be
expected to result in a Company Material Adverse Effect or as is set forth in
Schedule 3.12:
(a) The Company and its Subsidiaries have complied and are in
compliance with all applicable Environmental or Safety Requirements.
"Environmental or Safety Requirements" means all federal, state, local and
foreign statutes, regulations, ordinances and other provisions having the force
or effect of law, all judicial and administrative orders and determinations and
all binding agreements in each case concerning public health and safety, worker
health and safety, and pollution or protection of the environment (including
without limitation all those relating to the presence, use, production,
generation, handling, transportation, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, Release or threatened
Release (whether onsite or offsite), control, or cleanup of any Hazardous
Substance. "Hazardous Substance" means any hazardous or toxic materials,
substances, wastes, mixtures or chemicals (or words of similar import),
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation. "Release"
has the meaning set forth in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), as amended, or similar state
Environmental or Safety Requirements.
(b) Without limiting the generality of the foregoing, the Company and
its Subsidiaries have obtained and complied with, and are in compliance with,
all material permits, licenses and other authorizations that are required
pursuant to Environmental or Safety Requirements for the occupation of their
facilities and the operation of their business.
(c) Without regard to whether there is a Company Material Adverse
Effect and except as set forth in written documents made available to Parent or
the
23
<PAGE> 31
Purchaser prior to the date hereof, the Company and its Subsidiaries have not
received any written notice, report or other information regarding any
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise)
or investigatory, removal, remedial or corrective obligations, relating to the
Company or its Subsidiaries, any of their respective current or former
properties and facilities or any current or former offsite properties and
facilities used in the business of the Company or its Subsidiaries, and arising
under Environmental or Safety Requirements.
(d) Except as set forth in written documents made available to Parent
or the Purchaser prior to the date hereof, no landfills, surface impoundments,
waste piles or other waste management, treatment, storage or disposal areas
exist at any property or facility currently owned or operated by the Company or
its Subsidiaries.
(e) Except as set forth in written documents made available to Parent
or the Purchaser prior to the date hereof, the Company and its Subsidiaries have
not treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or Released, either onsite or offsite, any Hazardous
Substance, or owned, operated or used in any facility or property (and no such
property or facility is contaminated by any such substance), in such a manner
that has resulted in, or, to the knowledge of the Company, is reasonably likely
to result in, any liabilities of the Company or its Subsidiaries for cleanup,
remediation response costs or natural resource damages pursuant to any
Environmental or Safety Requirements.
(f) Neither the Company nor its Subsidiaries have, either expressly or
by operation of law, assumed or undertaken any liability, including without
limitation any obligation for removal, corrective or remedial action, of any
other person relating to any Environmental or Safety Requirements.
(g) No Environmental Lien has attached to any property currently
owned, leased or operated by the Company or any of its Subsidiaries.
"Environmental Lien" means a lien, either recorded or unrecorded, in favor of
any Governmental Entity, relating to any liability arising under Environmental
or Safety Requirements.
(h) Without limiting the foregoing and except as set forth in written
documents made available to Parent or the Purchaser prior to the date hereof, no
facts, events or conditions relating to the past or present facilities,
properties or operations of the Company or its Subsidiaries, or, to the
Company's knowledge, any predecessor or affiliate thereof, will prevent, hinder
or limit continued compliance in all material respects by the Company with
applicable Environmental or Safety
24
<PAGE> 32
Requirements, give rise to any investigatory, removal, remedial or corrective
obligations pursuant to Environmental or Safety Requirements, result in on
Environmental Lien or give rise to any other liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise) pursuant to Environmental or
Safety Requirements, including without limitation any relating to onsite or
offsite Release or threatened Release of a Hazardous Substance, personal injury,
property damage or natural resource damage.
(i) The Company has made available to Parent true, complete and
correct copies and results of any reports, studies, analyses, tests or
monitoring ("Environmental Reports") possessed or initiated by the Company or
any of its Subsidiaries pertaining to Hazardous Substances in, on, beneath or
adjacent to any property currently or formerly owned, operated or leased by the
Company or any of its Subsidiaries, or regarding the Company's or its
Subsidiaries' compliance with applicable Environmental or Safety Requirements.
Section 3.13 TAXES.
Except as set forth in Schedule 3.13 hereto:
(i) The Company and its Subsidiaries have duly and timely filed
(taking into account any extension of time within which to file) all material
Tax Returns required to be filed by any of them and all such filed Tax Returns
are complete and accurate in all material respects; (ii) the Company and its
Subsidiaries have paid all Taxes that are shown as due on such filed Tax Returns
or that the Company or any of its Subsidiaries is obligated to withhold from
amounts owing to any employee, creditor or third party, except with respect to
matters contested in good faith or for such amounts that, individually or in the
aggregate, could not reasonably be expected to have a Company Material Adverse
Effect; (iii) as of the date of this Agreement, there are no pending or, to the
knowledge of the Company, threatened in writing audits, examinations,
investigations or other proceedings with respect to Taxes or Tax matters
relating to the Company or any of its Subsidiaries which, if determined
adversely to the Company or such Subsidiary, could reasonably be expected to
have a Company Material Adverse Effect; (iv) there are no deficiencies or claims
for any Taxes that have been proposed, asserted or assessed against the Company
or any of its Subsidiaries which, if such deficiencies or claims were finally
resolved against the Company or such Subsidiary, could reasonably be expected to
have a Company Material Adverse Effect; (v) there are no material liens or
claims for Taxes upon the assets of the Company or any of its Subsidiaries,
other than liens or claims for current Taxes not yet due and payable and liens
or claims for Taxes that
25
<PAGE> 33
are being contested in good faith by appropriate proceedings; (vi) neither the
Company nor any of its Subsidiaries has made an election under Section 341(f) of
the Code; (vii) neither the Company nor any of its Subsidiaries is, or has been,
a United States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code; (viii) neither the Company nor any of its
Subsidiaries has constituted either a "distributing corporation" or a
"controlled corporation" (within the meaning of Section 355(a)(1)(A) of the
Code) in a distribution of stock qualifying for tax-free treatment under Section
355 of the Code (a) in the two years prior to the date of this Agreement or (b)
in a distribution which could otherwise constitute part of a "plan" or "series
of related transactions" (within the meaning of Section 355(e) of the Code) in
connection with the Offer or the Merger; and (ix) neither the Company nor any of
its Subsidiaries has taken any action, or failed to take any action, that has
resulted in, or is reasonably likely to result in, a claim for indemnification
against the Company pursuant to the Tax Sharing Agreement, dated as of February
18, 1994, by and between The Valspar Corporation and the Company. "Tax" means
all federal, state, local and foreign income, profits, franchise, gross
receipts, environmental, customs duty, capital stock, severance, stamp, payroll,
sales, employment, unemployment disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties, fines and additions to
tax imposed with respect to such amounts and any interest in respect of such
penalties and additions to tax. "Tax Return" means all returns and reports
(including elections, claims, declarations, disclosures, schedules, estimates,
computations and information returns) required to be supplied to a Tax authority
in any jurisdiction relating to Taxes.
Section 3.14 LABOR AND EMPLOYMENT MATTERS.
(a) Except as set forth in Schedule 3.14 hereto, since January 1,
1997, neither the Company nor any of its Subsidiaries has been a party to any
collective bargaining agreement or other labor agreement with any union or labor
organization and there has not, to the knowledge of the Company, been any
activity or proceeding of any labor organization or employee group to organize
any such employees. Except as set forth in Schedule 3.14; (i) there are no
unfair labor practice charges or complaints against the Company or any of its
Subsidiaries pending before the National Labor Relations Board; (ii) there are
no labor strikes, slowdowns or stoppages actually pending or threatened against
or affecting the Company or any of its Subsidiaries; (iii) there are no
representation claims or petitions pending before the National Labor Relations
Board and there are no questions concerning represen-
26
<PAGE> 34
tation with respect to the employees of the Company or its Subsidiaries; and
(iv) there are no grievance or pending arbitration proceedings against the
Company or any of its Subsidiaries that arose out of or under any collective
bargaining agreement, except, with respect to clauses (i) through (iv), such
events as would not, individually or in the aggregate, have a Company Material
Adverse Effect.
(b) Except as set forth in Schedule 3.14, neither the Company nor
any of its Subsidiaries has effectuated (i) a "plant closing" (as defined in the
Worker Adjustment and Retraining Notification Act (the "WARN Act")) affecting
any site of employment or one or more facilities or operating units within any
site of employment or facility of the Company or any of its Subsidiaries or (ii)
a "mass layoff" (as defined in the WARN Act), nor has the Company or any of its
Subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state, local or foreign law or regulation that could result in a
material liability of the Company and its Subsidiaries, taken as a whole.
(c) Except as set forth in Schedule 3.14(c), there are no
employment contracts or severance agreements with any employees of the Company
or any of its Subsidiaries.
Section 3.15 COMPLIANCE WITH LAWS. Other than with respect to
Environmental or Safety Requirements (which are addressed in Section 3.12), the
Company and its Subsidiaries have complied in all respects with all laws and
governmental regulations and orders applicable to any of the property owned,
leased or used by them, or applicable to their business, except for such
non-compliance as could not reasonably be expected to have a Company Material
Adverse Effect. Except as set forth in Schedule 3.15, no notice, charge, claim,
action or assertion has been received by the Company or any of its Subsidiaries
alleging any violation of such laws, regulations and orders, except for such
violations which could not reasonably be expected to have, a Company Material
Adverse Effect.
Section 3.16 INSURANCE. As of the date hereof, the Company and each of
its Subsidiaries are, and continually since 1995 have been, insured by insurers,
reasonably believed by the Company to be of recognized financial responsibility
and solvency, against such losses and risks and in such amounts as are customary
in the businesses in which they are engaged. Except as set forth in Schedule
3.16, all policies of insurance providing material coverage in favor of the
Company, its Subsidiaries or any of their respective properties and assets are
in full force and effect in all material respects, all premiums with respect
thereto covering all periods
27
<PAGE> 35
up to and including the Closing Date have been paid and no notice of
cancellation or termination has been received by the Company or any of its
Subsidiaries with respect to any such policy.
Section 3.17 CONTRACTS. Each contract filed as an exhibit to the
Company SEC Documents (the "Company Material Contracts") is valid and binding on
the Company (or, to the extent a Subsidiary of the Company is a party, such
Subsidiary) and is in full force and effect, and the Company or such Subsidiary
has performed in all material respects all obligations required to be performed
by it to date under each Company Material Contract. Neither the Company nor any
of its Subsidiaries has knowledge of, or has received notice of, any violation
or default under (nor, to the knowledge of the Company, does there exist any
condition which with the passage of time or the giving of notice or both would
result in such a violation or default under) any Company Material Contract by
either the Company or any of its Subsidiaries, as the case may be, or any other
party to a Company Material Contract.
Section 3.18 PROPERTIES.
(a) The Company and each of its Subsidiaries has good title to
all of the properties and assets which it purports to own (real, personal and
mixed, tangible and intangible), except as would not be reasonably likely to
have a Company Material Adverse Effect.
(b) A list and description of all material real property owned or
leased to or by the Company or any of its Subsidiaries or in which any of them
has an interest is set forth in Schedule 3.18(b) hereto.
(c) The properties and assets presently owned, leased or licensed
by the Company and its Subsidiaries include all properties and assets necessary
to permit the Company and its Subsidiaries to conduct their businesses in the
same manner as their businesses have been conducted prior to the date hereof,
except for such failures to own, lease or license such properties or assets that
would not be reasonably likely to have a Company Material Adverse Effect.
Section 3.19 PERMITS. Except as would not be reasonably likely to have
a Company Material Adverse Effect or as set forth on Schedule 3.19, the Company
has all permits, licenses, certificates, approvals, notices, easements,
rights-of-way, qualifications and authorizations issued or granted by
Governmental Entities (collectively, the "Permits") necessary to carry on the
business of the Company and
28
<PAGE> 36
its Subsidiaries as presently conducted and at each location where such business
is being conducted, and (i) all such Permits are in full force and effect and
are validly held by the Company or a Subsidiary of the Company, (ii) neither the
Company nor any of its Subsidiaries has engaged in any activity which would
cause or permit revocation or suspension of any such Permit, and no action or
proceeding looking to or contemplating the revocation or suspension of any such
Permit is pending or, to the knowledge of the Company, threatened, (iii) there
are no existing defaults or events of default or event or state of facts which
with notice or lapse of time or both would constitute a default by the Company
or any of its Subsidiaries under any such Permit, (iv) the Company has no
knowledge of any claimed or purported or alleged defaults or state of facts
which with notice or lapse of time or both would constitute a default on the
part of any other party in the performance of any obligation to be performed or
paid by any other party under any Permit, and (v) neither the Company nor any of
its Subsidiaries has received any written warning, notice, notice of violation
or probable violation, statement of deficiencies, notice of revocation, or other
written communication from or on behalf of any Governmental Entity that remains
unresolved or which has resulted in any restriction on the permissible
operations of the Company or any of its Subsidiaries, alleging (A) any violation
of any such Permit or of any law, rule or regulation or (B) that the Company or
any of its Subsidiaries requires any Permit for the operation of their
respective business, as such businesses are currently conducted, that is not
currently held by it.
Section 3.20 INTELLECTUAL PROPERTY.
(a) As used herein, the term "Intellectual Property" means all United
States and foreign trademarks, service marks, trade names, Internet domain
names, designs, logos, slogans and general intangibles of like nature, together
with goodwill, registrations and applications relating to the foregoing;
patents, mask works, copyrights (including registrations and applications for
any of the foregoing); computer programs, including any and all software
implementations of algorithms, models and methodologies whether in source code
or object code form, databases and compilations, including any and all data and
collections of data, all documentation, including user manuals and training
materials, related to any of the foregoing and the content and information
contained on any Web site; confidential information, technology, know-how,
inventions, processes, formulae, algorithms, models and methodologies (such
confidential items, collectively "Trade Secrets") held for use or used in the
business of the Company or its Subsidiaries as conducted as of the date hereof,
or as presently contemplated to be conducted and any licenses to use any of the
foregoing.
29
<PAGE> 37
(b) As used herein, the term "License Agreements" means all agreements
granting or obtaining any right to use or practice any rights under any
Intellectual Property, to which the Company or any of its Subsidiaries is a
party or otherwise bound, as licensee or licensor thereunder, including, without
limitation, license agreements, settlement agreements and covenants not to sue.
(c) Except as would not have a Company Material Adverse Effect:
(i) except as set forth on Schedule 3.20, the Company or its
Subsidiaries own or have the right to use all Intellectual Property, free and
clear of all Liens;
(ii) except as set forth on Schedule 3.20, the Company has not
received written notice from any third party regarding any actual or potential
infringement or misappropriation by the Company or any of its Subsidiaries of
any intellectual property of such third party, and the Company has no knowledge
of any basis for such a claim against the Company or any of its Subsidiaries;
(iii) except as set forth on Schedule 3.20, the Company has not
received written notice from any third party regarding any material assertion or
claim challenging the validity of any Intellectual Property owned or used by the
Company or any of its Subsidiaries and the Company has no knowledge of any basis
for such a claim;
(iv) neither the Company nor any of its Subsidiaries have
licensed or sublicensed its rights in any Intellectual Property to unaffiliated
third parties, or received or been granted any such rights from unaffiliated
third parties, other than pursuant to the License Agreements;
(v) to the knowledge of the Company, no third party is
misappropriating, infringing, diluting or violating any Intellectual Property
owned by the Company or any of its Subsidiaries;
(vi) the material License Agreements are valid and binding
obligations of the Company or of its Subsidiaries, enforceable in accordance
with their terms, and there exists no event or condition which will result in a
violation or breach of, or constitute a default by the Company or of its
Subsidiaries or, to the knowledge of the Company, the other party thereto, under
any such License Agreement; and
30
<PAGE> 38
(vii) the Company and each of its Subsidiaries takes reasonable
measures to protect the confidentiality of Trade Secrets.
Section 3.21 YEAR 2000. The Company's and its Subsidiaries'
information technology ("IT") (whether in the form of computer hardware,
operating system or software, telecommunications hardware, operating system or
software, any other type of hardware, operating system or software, embedded
microchips, security or locking systems or otherwise) is Year 2000 Compliant,
and to the knowledge of the Company, other information technology being acquired
or used in combination with IT is Year 2000 Compliant, except for such
noncompliance, if any, which would not have a Company Material Adverse Effect.
For purposes of this Section 3.21, "Year 2000 Compliant" means that such
information technology is designed to be used prior to, during, and after
calendar year 2000 A.D., and during each such time period, will accurately
receive, provide and process date/time data (including calculating, comparing
and sequencing) from, into and between the twentieth and twenty-first centuries,
including the years 1999 and 2000, and will not malfunction, cease to function,
or provide invalid or incorrect results as a result of data/time data.
Section 3.22 MAJOR CUSTOMERS. To the knowledge of the Company,
since January 31, 2000, there has not been any material adverse change in the
business relationship between the Company and/or its Subsidiaries, on the one
hand, and any of the ten (10) most significant customers ("Major Customers") of
the Company and its Subsidiaries for the fiscal year 1999, on the other hand. As
of the date hereof, neither the Company nor any of its Subsidiaries has received
notice, nor do they reasonably believe, that any Major Customer intends to
terminate its relationship with the Company and its Subsidiaries. From and after
the date hereof, neither the Company nor any of its Subsidiaries shall have
received notice, nor do they reasonably believe, that any Major Customer intends
to terminate its relationship with the Company and its Subsidiaries not due in
part or in whole to the identity of Parent or the Purchaser.
Section 3.23 OPINION OF FINANCIAL ADVISOR. The Company has
received an opinion from Lehman Brothers Inc. ("Lehman") to the effect that the
consideration to be received by the stockholders of the Company pursuant to the
Offer and the Merger is fair to such stockholders from a financial point of
view, a copy of which opinion has been, or promptly upon receipt thereof will
be, provided to Parent. The Company has been authorized by Lehman to permit the
inclusion of such opinion in its entirety in the Schedule 14D-9 and Proxy
Statement, if any.
31
<PAGE> 39
Section 3.24 RIGHTS PLAN. The Board of Directors of the Company
has authorized an amendment to the Rights Agreement to provide that (i) so long
as this Agreement has not been terminated pursuant to Section 7.1, a
Distribution Date (as such term is defined in the Rights Agreement) shall not
occur or be deemed to occur, and neither Parent nor the Purchaser shall become
an Acquiring Person (as such term is defined in the Rights Agreement), as a
result of the execution, delivery or performance of this Agreement, the
announcement, making or consummation of the Offer, the acquisition of Shares
pursuant to the Offer or the Merger, the consummation of the Merger or any other
transaction contemplated by this Agreement and (ii) the Rights shall expire
immediately prior to the consummation of the Offer.
Section 3.25 FULL DISCLOSURE. The Company has not failed to
disclose to Parent any fact materially adverse to the business, operations,
properties, assets or financial condition of the Company and its Subsidiaries,
taken as a whole. No representation or warranty in this Agreement (including the
schedules hereto) and no statement contained in any document or certificate
required by this Agreement to be delivered to Parent or the Purchaser contains
or will contain any untrue statement of material fact or omits or will omit to
state any material fact necessary, in light of the circumstances under which it
was made, in order to make the statements herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser represent and warrant to the Company as
follows:
Section 4.1 ORGANIZATION. Each of Parent and the Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, has the requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted and is duly qualified or licensed to do business and in good standing
in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or licensing
necessary, except where the failure to be so duly qualified or licensed and in
good standing would not, individually or in the aggregate, have a Parent
Material Adverse Effect. The term "Parent Material Adverse Effect" shall mean
any material adverse affect on the ability of Parent or the Purchaser to
consummate the Offer or the Merger. Parent has heretofore
32
<PAGE> 40
made available to the Company a complete and correct copy of the certificate of
incorporation and by-laws, each as amended to date, of Parent and the Purchaser,
and such certificates of incorporation and by-laws are in full force and effect.
Section 4.2 AUTHORIZATION; VALIDITY OF AGREEMENT; NECESSARY
ACTION. Each of Parent and the Purchaser has all necessary corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by
Parent and the Purchaser of this Agreement, and the consummation by them of the
transactions contemplated hereby, have been duly authorized by all necessary
corporate action on the part of Parent and the Purchaser and no other corporate
action on the part of Parent or the Purchaser is necessary to authorize the
execution and delivery by Parent and the Purchaser of this Agreement and the
consummation by them of the transactions contemplated hereby (other than, with
respect to the Merger, the filing of the Certificate of Merger as required by
the DGCL). This Agreement has been duly executed and delivered by Parent and the
Purchaser, as the case may be, and, assuming due and valid authorization,
execution and delivery thereof by the Company, constitutes a valid and binding
obligation of each of Parent and the Purchaser, as the case may be, enforceable
against them in accordance with its terms, except that (i) such enforcement may
be subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
Section 4.3 NO VIOLATIONS; CONSENTS AND APPROVALS.
(a) Neither the execution, delivery or performance of this
Agreement or, if applicable, the Stock Option Agreement by Parent and the
Purchaser nor the consummation by Parent and the Purchaser of the transactions
contemplated hereby or thereby nor compliance by Parent and the Purchaser with
any of the provisions hereof or thereof will (i) conflict with or result in any
breach of any provision of the respective certificate of incorporation or
by-laws of Parent and the Purchaser, (ii) subject to obtaining the Company
Required Approvals, require any filing with, or permit, authorization, consent
or approval of, any Governmental Entity, (iii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration
or result in the creation of any Lien upon any of the properties or assets of
Parent or its Subsidiaries) under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, license, permit, franchise,
concession, contract, agreement
33
<PAGE> 41
or other instrument or obligation to which Parent or any of its Subsidiaries is
a party or by which any of them or any of their properties or assets may be
bound or (iv) violate any order, writ, injunction, judgment, decree, statute,
law, rule, regulation, ordinance, permit or license applicable to Parent, any of
its Subsidiaries or any of their properties or assets, excluding from the
foregoing clauses (ii), (iii) and (iv) violations, breaches, defaults, Liens and
failures to obtain filings, permits, authorizations, consents and approvals,
which would not, individually or in the aggregate, have a Parent Material
Adverse Effect.
(b) No material declaration, filing, permit, consent,
registration or notice to or authorization or approval of any Governmental
Entity is necessary for the execution, delivery or performance of this Agreement
or the Stock Option Agreement by Parent and the Purchaser, the consummation by
them of the transactions contemplated hereby or thereby or compliance by them
with any of the provisions hereof or thereof, except for declarations, filings,
permits, consents, registrations, notices, authorizations and approvals as may
be required under, and other applicable requirements of, the Exchange Act, the
HSR Act, foreign antitrust, investment or competition laws or regulations, state
securities or blue sky laws and the DGCL.
Section 4.4 INFORMATION IN THE OFFER DOCUMENTS; PROXY STATEMENT;
SCHEDULE 14D-9. The Offer Documents and any other document required to be filed
by Parent or Purchaser with the SEC in connection with the Offer will comply as
to form in all material respects with the provisions of the applicable federal
securities laws and the rules and regulations thereunder and, on the date filed
with the SEC and on the date first mailed to Company stockholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading, except that no representation is made by Parent or the Purchaser
with respect to information furnished by the Company for inclusion in the Offer
Documents. None of the information supplied by Parent or the Purchaser for
inclusion or incorporation by reference in the Proxy Statement, if any, or the
Schedule 14D-9 or any other SEC filing made by the Company in connection with
the Offer will, at the date mailed to Company stockholders and, in the case of
the Proxy Statement, if any, at the time of the Special Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
Section 4.5 FINANCING. At the time of execution of this
Agreement, expiration of the Offer and at the Effective Time, either the
Purchaser will have
34
<PAGE> 42
available or Parent will make available the funds necessary to purchase all of
the Shares pursuant to the Offer and the Merger and to pay all fees and expenses
in connection therewith.
Section 4.6 PURCHASER'S OPERATIONS. The Purchaser was formed
solely for the purpose of engaging in the transactions contemplated hereby and
has not engaged in any business activities or conducted any operations other
than in connection with the transactions contemplated hereby.
Section 4.7 VOTE REQUIRED. No vote of the holders of any of the
outstanding shares of capital stock of Parent is necessary to approve this
Agreement and the transactions contemplated hereby.
Section 4.8 OWNERSHIP OF SHARES. As of the date of this
Agreement, neither Parent nor any of its subsidiaries nor, to the best of its
knowledge, any of its affiliates or associates (as such terms are defined under
the Exchange Act) (i) beneficially owns, directly or indirectly, or (ii) is
party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in case of either clause (i) or
(ii), any Shares.
Section 4.9 COMPLIANCE. Neither Parent nor the Purchaser is in
conflict with, or in default or violation of, (a) any law, rule, regulation,
order, judgment or decree applicable to Parent or the Purchaser or by which any
property or asset of Parent or the Purchaser is bound or affected, or (b) any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent or the Purchaser is
a party or by which Parent or the Purchaser or any property or asset of Parent
or the Purchaser is bound or affected, except for any such conflicts, defaults
or violations that would not, individually or in the aggregate, have a Parent
Material Adverse Effect.
ARTICLE V
COVENANTS
Section 5.1 INTERIM OPERATIONS OF THE COMPANY. The Company
covenants and agrees that, except (i) as expressly contemplated by this
Agreement, (ii) as set forth in Schedule 5.1, or (iii) as consented to in
writing by Parent (such consent not to be unreasonably withheld), after the date
hereof, and prior to the Effective Time:
35
<PAGE> 43
(a) the business of the Company and each of its Subsidiaries
shall be conducted only in the ordinary and usual course and, to the extent
consistent therewith, each of the Company and its Subsidiaries shall use its
reasonable best efforts to preserve its business organization substantially
intact and maintain its existing relations with customers, suppliers, employees,
creditors, business partners and others having significant business dealings
with them;
(b) the Company shall not, and shall not permit any of its
Subsidiaries to: (i) amend its certificate of incorporation or by-laws or
similar organizational documents; (ii) declare, set aside or pay any dividend or
other distribution payable in cash, stock or property with respect to its
capital stock, except that a wholly owned Subsidiary of the Company may declare
and pay a dividend or make advances to its parent or the Company; (iii) issue,
sell, transfer, pledge, dispose of or encumber any shares of, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire any shares of, capital stock of any class or
Voting Debt of the Company or any of its Subsidiaries, other than shares of
Company Common Stock reserved for issuances pursuant to the exercise of Options
outstanding on the date hereof; (iv) split, combine or reclassify the
outstanding Company Common Stock or any outstanding capital stock of any of the
Subsidiaries of the Company; or (v) redeem, purchase or otherwise acquire
directly or indirectly any of its capital stock or any instrument or security
which consists of or includes a right to acquire such shares;
(c) the Company shall not, and shall not permit any of its
Subsidiaries to, transfer, lease, license, sell, mortgage, pledge, dispose of,
or encumber any assets other than in the ordinary and usual course of business
and consistent with past practice and other than sales of assets that do not
exceed $250,000 per transaction and $1,500,000 in the aggregate;
(d) the Company shall not, and shall not permit any of its
Subsidiaries to, acquire or publicly propose to acquire or agree to acquire (i)
by merging or consolidating with, or by purchasing an equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, joint venture, association or other business
organization or division thereof or (ii) any assets outside of the ordinary and
usual course of business;
(e) the Company shall not grant any increase in the compensation
payable or to become payable by the Company to any executive officers of the
Company, and the Company shall not, and shall not permit any of its Subsidiaries
to (i) grant any increase in the compensation payable or to become payable,
except for
36
<PAGE> 44
increases in the ordinary and usual course of business, including in connection
with internal promotions, and consistent with past practice, to employees of the
Company or its Subsidiaries or any executive officer of the Company's
Subsidiaries or enter into or adopt any new, or amend or otherwise increase or
accelerate the payment or vesting of any benefit or amount payable or to become
payable under any, bonus, incentive compensation, deferred compensation,
severance, profit sharing, stock option, stock purchase, insurance, pension,
retirement or other employee benefit plan, or other contract, agreement,
commitment, arrangement, plan, trust fund or policy maintained or contributed to
or entered into by the Company or any of its Subsidiaries for the benefit of any
employee; or (ii) enter into any employment (other than "at will") or severance
agreement with or, except in accordance with the policies and practices of the
Company existing on the date hereof with respect to non-executive employees,
grant any severance or termination pay to any officer, director or employee of
the Company or any of its Subsidiaries;
(f) the Company shall not, and shall not permit any of its
Subsidiaries to, other than with respect to contracts terminable upon no more
than ninety (90) days notice without penalty, (i) enter into new contracts,
modify, amend, terminate, renew or fail to use reasonable business efforts to
renew any contract or agreement to which the Company or any of its Subsidiaries
is a party, which is material to the Company and its Subsidiaries taken as a
whole and provided that the term of any new contract or any contract
modification, amendment or renewal does not exceed twelve months, and, provided
further, that no loans or advances shall be made or extended to any customer in
connection with any such contract, modification, amendment or renewal, or waive,
release or assign any material rights or claims therein, or (ii) enter into,
modify, amend, or renew any contract or agreement if the dollar value of such
new contract or agreement, or existing contract or agreement as so amended,
modified, or renewed, is or would be in excess of $150,000 (not to exceed
$1,500,000 in the aggregate);
(g) the Company shall, and shall cause each of its Subsidiaries
to, maintain insurance coverage that in the aggregate is not materially
different from that which is currently in effect;
(h) the Company shall not, and shall not permit any of its
Subsidiaries to: (i) incur or assume any long-term debt or incur or assume any
short-term indebtedness or assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for the obligations
of any other person, in each case except pursuant to the borrowings under
existing bank lines of credit (or replacement lines of credit of equal or lesser
amounts which have terms
37
<PAGE> 45
no less favorable to the Company than the lines of credit being replaced or,
with respect to overnight facilities, which have terms no less favorable than
market rates) in the ordinary and usual course of business; (ii) make any loans,
advances or capital contributions to, or investments in, any other person (other
than to wholly owned Subsidiaries of the Company consistent with past practice);
or (iii) make any new capital expenditure or expenditures which exceed the
amounts budgeted therefor in the 2000 capital expenditure budget for the
Company, a copy of which has been provided to Parent;
(i) the Company shall not, and shall not permit any of its
Subsidiaries to, change any of the accounting principles used by it except as
required by law, rule, regulation or GAAP;
(j) the Company shall not, and shall not permit any of its
Subsidiaries to, make any material Tax election other than in the ordinary
course of business and consistent with past practice, change any material Tax
election already made, adopt any material accounting method relating to Taxes,
change any material accounting method relating to Taxes unless required by GAAP,
settle or compromise any Tax liability in excess of $100,000 arising from or in
connection with any single issue or consent to any waiver of the statute of
limitations for any such Tax liability;
(k) the Company shall not, and shall not permit any of its
Subsidiaries to, pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction of any such
claims, liabilities or obligations (i) in the ordinary course of business and
consistent with past practice, (ii) properly reflected or reserved against in
the consolidated financial statements (or the notes thereto) as of and for the
fiscal quarter ended January 31, 2000 of the Company and its consolidated
Subsidiaries, or (iii) not in excess of $100,000 individually or $1,000,000 in
the aggregate; provided, however, that notwithstanding the foregoing, the
Company shall be entitled to pay on a timely basis all reasonable, documented
advisory fees and expenses related to this Agreement and the transactions
contemplated hereby;
(l) the Company shall not, and shall not permit any of its
Subsidiaries to adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or any of its Subsidiaries (other than the Merger);
(m) the Company shall not, and shall not permit any of its
Subsidiaries to, amend, renew, terminate or cause to be extended any material
lease,
38
<PAGE> 46
agreement or arrangement relating to any of its leased properties or enter into
any material lease, agreement or arrangement with respect to any real property;
(n) the Company shall, and shall cause each of its Subsidiaries
to, use reasonable best efforts to maintain in effect all existing Permits that
are material to the operations of the Company or any of its Subsidiaries;
(o) subject to the other restrictions set forth in this Section
5.1, the Company shall not, and shall not permit any of its Subsidiaries to,
enter into any agreement or arrangement with any of their respective officers,
directors, 10% stockholders or any persons affiliated with the foregoing, other
than such agreements and arrangements as are entered into in the usual, ordinary
and regular course of business and which have been negotiated on an arms-length
basis and are no less favorable to the Company or its Subsidiaries than the
Company or such Subsidiary would have obtained from an unaffiliated third party,
and provided that the Company shall have scheduled such items pursuant to
Schedule 3.7 or, if after the date of this Agreement, the Company shall have
notified Parent in writing prior to entering into any such affiliate
transaction;
(p) the Company shall not, and shall not permit any of its
Subsidiaries to, take, or agree to commit to take, any action that would
materially impair the ability of the Company, Parent or Purchaser to consummate
the Offer or the Merger in accordance with the terms hereof or materially delay
such consummation; and
(q) the Company shall not, and shall not permit any of its
Subsidiaries to, enter into an agreement, contract, commitment or arrangement to
do any of the foregoing, or to publicly announce an intention to do any of the
foregoing.
Section 5.2 HSR ACT; FOREIGN ANTITRUST LAWS. The Company and Parent
shall cooperate with one another and shall take all reasonable actions necessary
to prepare and file as soon as practicable following the date hereof
notifications under the HSR Act and any foreign antitrust, investment or
competition law or regulation and to respond as promptly as practicable to any
inquiries received from the Federal Trade Commission or the Antitrust Division
of the Department of Justice or any foreign Governmental Entity for additional
information or documentation and to respond as promptly as practicable to all
inquiries and requests received from any State Attorney General or any other
Governmental Entity in connection with antitrust or competition matters.
39
<PAGE> 47
Section 5.3 ACCESS TO INFORMATION. Upon reasonable prior notice, the
Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel, investment bankers, financial
advisors and other representatives of Parent, access, during normal business
hours during the period prior to the Effective Time, to all of its offices,
properties, books, contracts, commitments and records and such financial and
operating data as such representatives of Parent may reasonably request. Unless
otherwise required by law and until the Effective Time, Parent will hold any
such information which is nonpublic in confidence in accordance with the
provisions of the Confidentiality Agreement, dated November 12, 1999, between
the Company and Parent (the "Confidentiality Agreement").
Section 5.4 REASONABLE BEST EFFORTS; CONSENTS AND APPROVALS. Upon the
terms and subject to the conditions hereof, each of the parties hereto shall use
its reasonable best efforts to obtain in a timely manner all necessary waivers,
consents and approvals and to effect all necessary registrations and filings,
and to use all reasonable best efforts to take, or cause to be taken, all other
actions and to do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement. Each of the Company, Parent and the
Purchaser will take all reasonable actions necessary to comply promptly with all
legal requirements which may be imposed on it with respect to this Agreement and
the transactions contemplated hereby (which actions shall include, without
limitation, furnishing all information determined by their respective counsel to
be required under the HSR Act and any foreign antitrust, investment or
competition law or regulation and in connection with approvals of or filings
with any other Governmental Entity) and will promptly cooperate with and furnish
information to each other in connection with any such requirements imposed upon
any of them or any of their Subsidiaries in connection with this Agreement and
the transactions contemplated hereby. Each of the Company, Parent and the
Purchaser will, and will cause its Subsidiaries to, take all reasonable actions
determined by their respective counsel to be necessary to obtain (and will
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, or to provide any required notice to, any
Governmental Entity or other public or private third party required to be
obtained or made by Parent, the Purchaser, the Company or any of their
Subsidiaries in connection with the Merger or the taking of any action
contemplated thereby or by this Agreement.
Section 5.5 NO SOLICITATION. From the date hereof until the
termination of this Agreement in accordance with its terms, neither the Company
nor any of its Subsidiaries or affiliates shall (and the Company shall use its
reasonable best
40
<PAGE> 48
efforts to cause its and each of its Subsidiaries' officers, directors,
employees, representatives and agents, including, but not limited to, investment
bankers, attorneys and accountants, not to), directly or indirectly, solicit,
participate in, initiate or knowingly encourage discussions or negotiations
with, provide any information to, or enter into any agreement with, any
corporation, partnership, person or other entity or group (other than Parent,
any of its affiliates or representatives) concerning any merger, business
combination, tender offer, exchange offer, sale of all or substantially all of
its business, assets, capital stock or debt securities or similar transactions
involving the Company (an "Acquisition Proposal"). The Company further agrees
that it will immediately cease any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. Notwithstanding the foregoing, prior to the time of acceptance of
Shares for payment pursuant to the Offer, the Company may, directly or
indirectly, provide access and furnish information concerning its business,
properties or assets to any corporation, partnership, person or other entity or
group pursuant to customary confidentiality agreements, and may negotiate and
participate in discussions and negotiations with such entity or group if (x)
such entity or group has submitted an unsolicited bona fide written proposal to
the Board of Directors of the Company relating to any such transaction, (y) such
proposal provides for the acquisition for cash and/or publicly traded securities
of all of the outstanding Shares, and (z) the Board of Directors of the Company
determines in good faith, after consultation with its independent financial
advisor, that such proposal is financially superior to the Offer and the Merger
and fully financed or reasonably capable of being financed. A proposal meeting
all of the criteria in the preceding sentence is referred to herein as a
"Superior Proposal." Nothing contained in this Section 5.5 shall prohibit the
Company or its Board of Directors from taking and disclosing to the Company's
stockholders a position with respect to a tender offer by a third party pursuant
to Rules l4d-9 and l4e-2(a) promulgated under the Exchange Act. The Company will
immediately notify Parent of any Superior Proposal, or if an inquiry is made,
will keep Parent fully apprised of all developments with respect to any Superior
Proposal, will immediately provide to Parent copies of any written materials
received by the Company in connection with any Superior Proposal, discussion,
negotiation or inquiry and the identity of the party making any Superior
Proposal or inquiry or engaging in such discussion or negotiation. The Company
will promptly provide to Parent any non-public information concerning the
Company provided to any other party which was not previously provided to Parent.
The Company agrees not to release any third party from, or waive any provisions
of, any confidentiality or standstill agreement to which the Company is a party.
Notwithstanding anything to the contrary contained in this Agreement, only in
connection with the valid termination of this Agreement pursuant to Section
7.1(c)(i) hereof, the Board of Directors of the Company may (i) withdraw, or
modify or change in a
41
<PAGE> 49
manner adverse to Parent or the Purchaser, or propose to withdraw, or propose to
modify or change in a manner adverse to Parent or the Purchaser, the approval or
recommendation by such Board of Directors of the Offer, this Agreement or the
Merger, (ii) approve or recommend, or propose to approve or recommend, any
Acquisition Proposal or (iii) enter into any agreement with respect to any
Acquisition Proposal.
Section 5.6 BROKERS OR FINDERS. The Company represents, as to itself,
its Subsidiaries and its affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any brokers'
or finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement except Lehman, whose fees and
expenses will be paid by the Company in accordance with the Company's agreement
with such firm (a copy of which has been delivered by the Company to Parent
prior to the date of this Agreement). Parent represents, as to itself, the
Purchaser, and their affiliates, that no agent, broker, investment banker,
financial advisor or other firm or person is or will be entitled to any brokers'
or finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated by this Agreement except Chase Securities Inc.,
whose fees and expenses will be paid by the Parent in accordance with the
Parent's agreement with such firm. Each of Parent and the Company agrees to
indemnify and hold the other harmless from and against any and all claims,
liabilities or obligations with respect to any other fees, commissions or
expenses asserted by any person on the basis of any act or statement alleged to
have been made by such party or its affiliates.
Section 5.7 ADDITIONAL AGREEMENTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations, or
to remove any injunctions or other impediments or delays, legal or otherwise, to
consummate and make effective the Merger and the other transactions contemplated
by this Agreement. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of this Agreement,
the proper officers and directors of the Company and Parent shall use all
reasonable efforts to take, or cause to be taken, all such necessary actions.
Section 5.8 PUBLICITY. The initial press release with respect to the
execution of this Agreement shall be a joint press release acceptable to Parent
and the Company. Thereafter, so long as this Agreement is in effect, neither the
Company, Parent nor any of their respective affiliates shall issue or cause the
publication of any
42
<PAGE> 50
press release or other announcement with respect to the Merger, this Agreement
or the other transactions contemplated hereby without the prior consultation of
the other party, except as may be required by law or by any listing agreement
with a national securities exchange. Any announcement made prior to filing a
Schedule TO with the SEC by the Purchaser shall bear the appropriate legend and
otherwise comply with federal securities laws.
Section 5.9 NOTIFICATION OF CERTAIN MATTERS. The Company shall give
prompt notice to Parent and Parent shall give prompt notice to the Company, of
(i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty of any party
contained in this Agreement to be untrue or inaccurate in any material respect
at or prior to the Effective Time and (ii) any material failure of the Company
or Parent to comply with or satisfy any covenant, condition or agreement of any
party to be complied with or satisfied by it hereunder; PROVIDED, HOWEVER, that
the delivery of any notice pursuant to this Section 5.9 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice, and PROVIDED, FURTHER, that the breaching party shall have up to one (1)
business day prior to the then scheduled expiration date of the Offer (or, if
applicable, the offer in any Subsequent Offering Period) in which to cure such
event or failure to the reasonable satisfaction of the non-breaching party.
Section 5.10 DIRECTORS' AND OFFICERS' INSURANCE AND INDEMNIFICATION.
(a) The certificate of incorporation and by-laws of the Surviving
Corporation shall contain indemnification provisions, solely with respect to
directors and officers of the Company prior to Effective Time, as set forth in
Schedule 5.10 hereto. Such indemnification provisions shall not be amended,
repealed or otherwise modified for a period of six (6) years after the Effective
Time in any manner that would adversely affect the rights thereunder of
individuals who at any time prior to the Effective Time were directors or
officers of the Company in respect of actions or omissions occurring at or prior
to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement), unless such modification is required by law.
Notwithstanding the foregoing, in the event that the Surviving Corporation or
any successor corporation is merged with and into Parent, Parent's certificate
of incorporation and by-laws shall not be required to contain the
indemnification provisions otherwise required by this Section 5.10(a).
(b) For six years after the Effective Time, the Surviving
Corporation (and any successor corporation) shall indemnify, defend and hold
harmless to the fullest extent permitted under Delaware law the present and
former
43
<PAGE> 51
officers and directors of the Company (each an "Indemnified Party") against all
losses, claims, damages, liabilities, fees and expenses (including reasonable
fees and disbursements of counsel and judgments, fines, losses, claims,
liabilities and amounts paid in settlement (provided that any such settlement is
effected with the written consent of the Parent or the Surviving Corporation))
(a "Claim") in connection with any claim, suit, action, proceeding or
investigation that is, in whole or in part, based on or arising out of the fact
that such person is or was a director or officer of the Company and arising out
of actions or omissions occurring at or prior to the Effective Time (including
the transactions contemplated by this Agreement) (and shall pay expenses in
advance of the final disposition of any such action or proceeding to each
Indemnified Party to the fullest extent permitted under the DGCL, upon receipt
from the Indemnified Party to whom expenses are advanced of the undertaking to
repay such advances contemplated by Section 145(e) of the DGCL).
(c) Without limiting the foregoing, in the event any Claim is
brought against any Indemnified Party after the Effective Time (i) the
Indemnified Parties may retain the Surviving Corporation's regularly engaged
independent legal counsel or other independent legal counsel satisfactory to
them, provided that such other counsel shall be reasonably acceptable to the
Surviving Corporation and (ii) the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received, provided that the Surviving
Corporation shall not be liable for any settlement of any Claim effected without
its written consent, which consent shall not be unreasonably withheld. Any
Indemnified Party wishing to claim indemnification under this Section 5.10 upon
learning of any such Claim shall notify the Surviving Corporation (although the
failure so to notify the Surviving Corporation shall not relieve the Surviving
Corporation from any liability which the Surviving Corporation may have under
this Section 5.10, except to the extent such failure materially prejudices the
Surviving Corporation's position with respect to such claim), and shall deliver
to the Surviving Corporation the undertaking contemplated by Section 145(e) of
the DGCL. The Indemnified Parties as a group may retain no more than one law
firm (in addition to local counsel) to represent them with respect to each such
matter unless there is, under applicable standards of professional conduct (as
determined by counsel to the Indemnified Parties), an actual conflict between
the interests of any two or more Indemnified Parties, in which event such
additional counsel as may be required may be retained by the Indemnified
Parties.
(d) For a period of six years after the Effective Time, Parent,
shall, or shall cause the Surviving Corporation to, maintain in effect, if
available, directors' and officers' liability insurance covering those persons
who are currently
44
<PAGE> 52
covered by the Company's directors' and officers' liability insurance policy (a
copy of which has been made available to Parent) to the extent that it provides
coverage for events occurring on or prior to the Effective Time, on terms
(including the amounts of coverage and the amounts of deductibles, if any) that
are no less favorable to the terms now applicable to them under the Company's
current policies.
(e) Each Indemnified Party shall have rights as a third party
beneficiary under this Section 5.10 as separate contractual rights for his or
her benefit and such right shall be enforceable by such Indemnified Party, its
heirs and personal representatives.
(f) This Section 5.10 shall survive the consummation of the
Merger at the Effective Time, and shall be binding on all successors and assigns
of the Surviving Corporation.
Section 5.11 STATE TAKEOVER LAWS. If Section 203 of the DGCL or any
other state takeover statute becomes or is deemed to become applicable to the
Company, the Offer, the acquisition of Shares pursuant to the Offer or the
Merger, the Board of Directors of the Company shall, subject to its fiduciary
duties, take all action necessary to render such statute inapplicable to all of
the foregoing.
Section 5.12 RESIGNATIONS. At or prior to the Effective Time, the
Company shall obtain the resignations as of the Effective Time of each director
of the Company (other than Parents' designees elected or appointed pursuant to
Section 1.3) and, if so requested by Parent, of any director of any of
Subsidiary of the Company.
Section 5.13 INTERIM DIRECTORS. Pursuant to Section 1.3(b) hereof, the
Company shall take all action necessary to cause a sufficient number of its
current directors to continue as Independent Directors of the Company until the
Effective Time.
Section 5.14 RIGHTS PLAN. The Board of Directors of the Company shall
take all action necessary to amend the Rights Agreement within five (5) business
days following the date of execution of this Agreement to provide that (i) so
long as this Agreement has not been terminated pursuant to Section 7.1, a
Distribution Date (as such term is defined in the Rights Agreement) shall not
occur or be deemed to occur, and neither Parent nor the Purchaser shall become
an Acquiring Person (as such term is defined in the Rights Agreement), as a
result of the execution, delivery or performance of this Agreement, the
announcement, making or consummation of the
45
<PAGE> 53
Offer, the acquisition of Shares pursuant to the Offer or the Merger, the
consummation of the Merger or any other transaction contemplated by this
Agreement and (ii) the Rights shall expire immediately prior to the consummation
of the Offer. The Company shall not amend the Rights Agreement other than
pursuant to this Section 5.14.
Section 5.15 EMPLOYEE BENEFITS. Except as may otherwise be provided in
an applicable collective bargaining agreement, for one (1) year following the
Effective Time, Parent shall cause the Surviving Corporation and its
Subsidiaries to provide to employees of the Surviving Corporation or any of its
Subsidiaries (as applicable) who were employees of the Company or any of its
Subsidiaries (as applicable) immediately before the Effective Time and who
remain employed by the Surviving Corporation or any of its Subsidiaries after
the Effective Time ("Affected Employees") compensation (including base and
variable pay) no less than the compensation provided by the Company and its
Subsidiaries immediately before the Effective Time and benefits that in the
aggregate are substantially comparable to the benefits provided by the Company
and its Subsidiaries to the Affected Employees immediately before the Effective
Time; PROVIDED, HOWEVER, that the foregoing shall not require the establishment
or maintenance of, or prevent the termination or partial termination of, any
particular compensation or benefit plan, program or arrangement. For purposes of
determining eligibility to participate, vesting and accrual or entitlement to
benefits under any employee benefit plan, program, or arrangement of the
Surviving Corporation or its Subsidiaries, Parent shall cause each Affected
Employee to be credited as of the Effective Time with the service credited to
the Affected Employee for such respective purposes immediately before the
Effective Time under the employee benefit plans, programs or arrangements
maintained by the Company and its Subsidiaries (subject, in the case of defined
benefit arrangements, to offsets for previously accrued benefits and no
duplication of benefits). For the year in which the Effective Time occurs,
Parent shall cause each Affected Employee to be credited under the employee
welfare benefit plans maintained by the Surviving Corporation or its
Subsidiaries with all deductible payments and copayments and payments toward
out-of-pocket maximums credited to the Affected Employee under the employee
welfare benefit plans of the Company and its Subsidiaries immediately before the
Effective Time.
46
<PAGE> 54
ARTICLE VI
CONDITIONS
Section 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions:
(a) STOCKHOLDER APPROVAL. This Agreement and the Merger shall
have been approved and adopted by the requisite vote of the holders of Company
Common Stock, if required by applicable law, in order to consummate the Merger;
(b) STATUTES; CONSENTS. No statute, rule, order, decree,
regulation, executive order, ruling or temporary or permanent injunction shall
have been enacted, entered, promulgated or enforced by any Governmental Entity
of competent jurisdiction which, as of the Closing Date, prohibits the
consummation of the Merger or otherwise materially limits or restricts ownership
or operation of the business of the Surviving Corporation and all foreign or
domestic governmental consents, orders and approvals required for the
consummation of the Merger and the transactions contemplated hereby shall have
been obtained and shall be in effect at the Effective Time and shall not
materially limit or restrict ownership or the operation of the business of the
Surviving Corporation;
(c) Purchase of Shares in Offer. Parent, the Purchaser or their
affiliates shall have purchased shares of Company Common Stock pursuant to the
Offer.
ARTICLE VII
TERMINATION
Section 7.1 Termination. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated and the Merger contemplated
herein may be abandoned at any time prior to the Effective Time, whether before
or after stockholder approval thereof:
47
<PAGE> 55
(a) By the mutual consent of the Board of Directors of Parent and the
Board of Directors of the Company.
(b) By either of the Board of Directors of the Company or the Board of
Directors of Parent:
(i) if shares of Company Common Stock shall not have been purchased
pursuant to the Offer on or prior to August 18, 2000; PROVIDED, HOWEVER,
that the right to terminate this Agreement under this Section 7.1(b)(i)
shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been the cause of, or resulted in, the failure of
the Purchaser to purchase shares of Company Common Stock pursuant to the
Offer on or prior to such date; or
(ii) if any Governmental Entity shall have issued an order, decree or
ruling or taken any other action (which order, decree, ruling or other
action the parties hereto shall use their reasonable efforts to lift), in
each case, permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling
or other action shall have become final and non-appealable.
(c) By the Board of Directors of the Company:
(i) if, prior to the purchase of shares of Company Common Stock
pursuant to the Offer, the Board of Directors of the Company shall have
withdrawn, or modified or changed in a manner adverse to Parent or the
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 Proposal; provided that (A)
at least three (3) business days prior to terminating this Agreement
pursuant to this Section 7.1(c)(i) the Company has provided Parent with
written notice advising Parent that the Board of Directors of the Company
has received a Superior Proposal that it intends to accept, specifying the
material terms and conditions of such Superior Proposal and identifying the
person making such Superior Proposal and (B) the Company shall have caused
its financial and legal advisors to negotiate in good faith with Parent to
make such adjustments in the financial terms of a revised Agreement that
are equal or superior to the financial terms of such Superior Proposal; and
further provided that simultaneously with any termination of this Agreement
pursuant to this Section 7.1(c)(i), the Company
48
<PAGE> 56
shall pay to Parent the Termination Fee (as defined in Section 8.1(b)
hereof); and further provided that the Company may not terminate this
Agreement pursuant to this Section 7.1(c)(i) if the Company is in material
breach of this Agreement; or
(ii) if, prior to the purchase of shares of Company Common Stock
pursuant to the Offer, Parent or the Purchaser breaches or fails in any
material respect to perform or comply with any of its material covenants
and agreements contained herein or breaches its representations and
warranties in any material respect; or
(iii) if Parent or the Purchaser, as the case may be, shall have
terminated the Offer, or the Offer shall have expired, without Parent or
the Purchaser, as the case may be, purchasing any shares of Company Common
Stock pursuant thereto; provided that the Company may not terminate this
Agreement pursuant to this Section 7.1(c)(iii) if the Company is in
material breach of this Agreement.
(d) By the Board of Directors of Parent:
(i) if, due to an occurrence that if occurring after the commencement
of the Offer would result in a failure to satisfy any of the conditions set
forth in Annex A hereto as of the expected initial scheduled expiration
date of the Offer, Parent, the Purchaser, or any of their affiliates shall
have failed to commence the Offer on or prior to ten business days
following the date of the initial public announcement of the Offer;
provided that Parent may not terminate this Agreement pursuant to this
Section 7.1(d)(i) if Parent or the Purchaser is in material breach of this
Agreement; or
(ii) if prior to the purchase of shares of Company Common Stock
pursuant to the Offer, the Board of Directors of the Company shall have
withdrawn, or modified or changed in a manner adverse to Parent or the
Purchaser, its approval or recommendation of the Offer, this Agreement or
the Merger or shall have recommended an Acquisition Proposal or offer, or
shall have executed an agreement in principle (or similar agreement) or
definitive agreement providing for a tender offer or exchange offer for any
shares of capital stock of the Company, or a merger, consolidation or other
business combination with a person or entity other than Parent, the
Purchaser or their affiliates (or the Board of Directors of the Company
resolves to do any of the
49
<PAGE> 57
foregoing); provided that Parent may not terminate this Agreement pursuant
to this Section 7.1(d)(ii) if Parent or the Purchaser is in material breach
of this Agreement; or
(iii) if Parent or the Purchaser, as the case may be, shall have
terminated the Offer, or the Offer shall have expired, without Parent or
the Purchaser, as the case may be, purchasing any shares of Company Common
Stock thereunder; provided that Parent may not terminate this Agreement
pursuant to this Section 7.1(d)(iii) if it or the Purchaser is in material
breach of this Agreement.
Section 7.2 EFFECT OF TERMINATION. In the event of the termination
of this Agreement as provided in Section 7.1 hereof, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
hereof pursuant to which such termination is made, and this Agreement shall
forthwith become null and void, except for the second sentence of Section 5.3
and all of Article VIII, each of which shall survive such termination, and there
shall be no liability on the part of the Parent, the Purchaser or the Company
except (a) for fraud or for breach of this Agreement and (b) as set forth in
this Section 7.2 and Section 8.1.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 FEES AND EXPENSES. (a) Except as contemplated by this
Agreement, including Section 8.1(b) hereof, all costs and expenses incurred in
connection with this Agreement and the consummation of the transactions
contemplated hereby shall be paid by the party incurring such expenses.
(b) If (w) the Board of Directors of the Company shall terminate
this Agreement pursuant to Section 7.1(c)(i) hereof, (x) the Board of Directors
of Parent shall terminate this Agreement pursuant to Section 7.1(d)(ii) hereof,
(y)(I) the Board of Directors of the Company shall terminate this Agreement
pursuant to Section 7.1(b)(i) or Section 7.1(c)(iii) and prior thereto there
shall have been publicly announced another Acquisition Proposal or (II) the
Board of Directors of Parent shall terminate this Agreement pursuant to Section
7.1(b)(i) or Section 7.1(d)(iii) due to a failure to satisfy the Minimum
Condition or the conditions contained in paragraphs (h) or (i) of Annex A hereto
and Parent shall have reasonably
50
<PAGE> 58
determined that such failure is attributable to there having been publicly
announced another Acquisition Proposal, or (z)(I) the Board of Directors of
Parent shall, due to a material breach by the Company of any covenant or
agreement contained in Section 1.9(a), 5.5 or 5.14 of this Agreement, terminate
this Agreement pursuant to Section 7.1(d)(i) or Section 7.1(d)(iii) hereof or
(II)(A) the Board of Directors of Parent shall, due to a material breach by the
Company of any covenant or agreement contained in this Agreement other than in
Section 1.9(a), 5.5 or 5.14 hereof, terminate this Agreement pursuant to Section
7.1(d)(i) or Section 7.1(d)(iii) hereof and (B) within ninety (90) days of such
termination, the Company shall have entered into a definitive agreement with
respect to an Acquisition Proposal (regardless of the timing of consummation of
such Acquisition Proposal) or an Acquisition Proposal shall have been otherwise
consummated, then in any such case as described in clause (w), (x), (y) or (z)
(each such case of termination being referred to as a "Trigger Event"), the
Company shall pay to Parent (not later than two (2) business days after such
termination of this Agreement or, in the case of any termination by the Company
pursuant to Section 7.1(c)(i) hereof, simultaneously with such termination or,
in the case of the circumstances described in clause (z)(II), not later than
simultaneously with the consummation of an Acquisition Proposal) an amount equal
to $8 million (the "Termination Fee").
(c) Parent and the Company agree that the agreement contained in
Section 8.1(b) is an integral part of the transactions contemplated by this
Agreement and constitute liquidated damages and not a penalty. If the Company
fails to promptly pay any amounts due under such Section 8.1(b), it shall pay
the costs and expenses (including legal fees and expenses) in connection with
any action, including the filing of any lawsuit or other legal action, taken to
collect payment, together with interest on any unpaid amounts at the publicly
announced prime rate of Chase Manhattan Bank from the date such amount was
required to be paid.
Section 8.2 AMENDMENT AND MODIFICATION. Subject to applicable law,
this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto, by action taken
by their respective Boards of Directors (which in the case of the Company shall
include approvals as contemplated in Section 1.3(b) hereof), at any time prior
to the Closing Date with respect to any of the terms contained herein; PROVIDED,
HOWEVER, that after the approval of this Agreement by the stockholders of the
Company, no such amendment, modification or supplement shall (i) reduce or
change the Merger Consideration or (ii) alter or change any of the terms or
conditions of this Agreement if such alteration or
51
<PAGE> 59
change would adversely affect the holders of any shares of capital stock of the
Company.
Section 8.3 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any schedule, instrument
or other document delivered pursuant to this Agreement shall survive the
Effective Time. This Section 8.3 shall not limit any covenant or agreement of
the parties hereto which by its terms contemplates performance after the
Effective Time.
Section 8.4 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to Parent or the Purchaser, to:
Eastman Chemical Company
100 North Eastman Road
Kingsport, Tennessee 37662
Attention: General Counsel
Telephone No.: (423) 229-2000
Telecopy No.: (423) 229-4137
with a copy to:
Skadden, Arps, Slate, Meagher
& Flom LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005
Attention: Michael P. Rogan, Esq.
Telephone No.: (202) 371-7000
Telecopy No.: (202) 393-5760
and
52
<PAGE> 60
(b) if to the Company, to:
McWhorter Technologies, Inc.
400 East Cottage Place
Carpentersville, Illinois 60110
Attention: General Counsel
Telephone No.: (847) 428-2657
Telecopy No.: (847) 428-9440
with a copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Telephone No.: (312) 861-2000
Telecopy No.: (312) 861-2200
Attention: R. Scott Falk, Esq.
Section 8.5 INTERPRETATION. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Whenever the words "include", "includes" or "including" are
used in this Agreement they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. The phrases "the date of this
Agreement", "the date hereof", and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to May 3, 2000. As used in this
Agreement, the term "affiliate(s)" shall have the meaning set forth in Rule
l2b-2 of the Exchange Act. The term "knowledge" means, with respect to the
Company and/or any Subsidiary of the Company, actual knowledge of the officers
and managerial personnel thereof after undertaking reasonable inquiry.
Section 8.6 WAIVERS. Except as otherwise provided in this Agreement,
any failure of any of the parties to comply with any obligation, covenant,
agreement or condition herein may be waived by the party or parties entitled to
the benefits thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
53
<PAGE> 61
Section 8.7 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
Section 8.8 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement (including the documents and the instruments referred to herein): (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Sections 5.10 and 5.15
hereof is not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
Section 8.9 SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, the remainder of the terms, provisions, covenants and restrictions of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
Section 8.10 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without giving
effect to the principles of conflicts of law thereof.
Section 8.11 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that the Purchaser may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned Subsidiary of Parent, provided
that Parent shall guarantee the performance of any such Subsidiary under this
Agreement. Subject to the preceding sentence, this Agreement will be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
Section 8.12 HEADINGS. The Article, Section and paragraph headings
herein are for convenience of reference only, do not constitute part of this
Agreement and shall not be deemed to limit or otherwise affect any of the
provisions hereof.
Section 8.13 SPECIFIC PERFORMANCE. Each of the parties hereto
acknowledges and agrees that in the event of any breach of this Agreement, each
non-breaching party would be irreparably and immediately harmed and could not be
made
54
<PAGE> 62
whole by monetary damages. It is accordingly agreed that the parties hereto (a)
will waive, in any action for specific performance, the defense of adequacy of a
remedy at law and (b) shall be entitled, in addition to any other remedy to
which they may be entitled at law or in equity, to compel specific performance
of this Agreement in any action instituted in a court of competent jurisdiction.
55
<PAGE> 63
IN WITNESS WHEREOF, Parent, the Purchaser and the Company have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
EASTMAN CHEMICAL COMPANY
By: /s/ ALLAN R. ROTHWELL
--------------------------------------------
Name: Allan R. Rothwell
Title: President Chemicals Business Group
TARTAN, INC.
By: /s/ ALLAN R. ROTHWELL
--------------------------------------------
Name: Allan R. Rothwell
Title: President
McWHORTER TECHNOLOGIES, INC.
By: /s/ JEFF M. NODLAND
--------------------------------------------
Name: Jeff M. Nodland
Title: President and CEO
<PAGE> 64
ANNEX A
CONDITIONS TO THE TENDER OFFER
Notwithstanding any other provisions of the Offer, and in addition to
(and not in limitation of) the Purchaser's rights to extend and amend the Offer
at any time in its sole discretion (subject to the provisions of the Merger
Agreement), the Purchaser shall not be required to accept for payment or,
subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to pay
for or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment of or, subject to the
restriction referred to above, the payment for, any tendered Shares, and may
terminate the Offer as to any Shares not then paid for, if (i) any applicable
waiting period under the HSR Act or any foreign antitrust, investment or
competition law or regulation has not expired or terminated, (ii) the Minimum
Condition has not been satisfied, or (iii) at any time on or after the date of
this Agreement and before the time of payment for any such Shares, any of the
following events shall occur or shall be determined by the Purchaser to have
occurred:
(a) there shall be threatened or pending any suit, action or
proceeding by any Governmental Entity (i) seeking to prohibit or impose any
material limitations on Parent's or the Purchaser's ownership or operation (or
that of any of their respective Subsidiaries or affiliates) of all or a material
portion of their or the Company's businesses or assets, or to compel Parent or
the Purchaser or their respective Subsidiaries and affiliates to dispose of or
hold separate any material portion of the business or assets of the Company or
Parent and their respective Subsidiaries, in each case taken as a whole, (ii)
challenging the acquisition by Parent or the Purchaser of any Shares under the
Offer, seeking to restrain or prohibit the making or consummation of the Offer
or the Merger or the performance of any of the other transactions contemplated
by this Agreement, or seeking to obtain from the Company, Parent or the
Purchaser any damages that are material in relation to the Company and its
Subsidiaries taken as a whole, (iii) seeking to impose material limitations on
the ability of the Purchaser, or rendering the Purchaser unable, to accept for
payment, pay for or purchase some or all of the Shares pursuant to the Offer and
the Merger, or (iv) seeking to impose material limitations on the ability of the
Purchaser or Parent effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares purchased by
it on all matters properly presented to the Company's stockholders;
(b) there shall be any statute, rule, regulation, judgment, order
or injunction enacted, entered, enforced, promulgated or deemed applicable to
the Offer or the Merger, or any other action shall be taken by any Governmental
Entity, other than the
A-1
<PAGE> 65
application to the Offer or the Merger of applicable waiting periods under the
HSR Act or any foreign antitrust, investment or competition law or regulation,
that is reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (iv) of paragraph (a) above;
(c) there shall have occurred and continue to exist (i) any
general suspension of trading in, or limitation on prices for, securities on the
New York Stock Exchange for a period in excess of three hours (excluding
suspensions or limitations resulting solely from physical damage or interference
with such exchanges not related to market conditions) or (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory);
(d) any of the representations and warranties of the Company set
forth in this Agreement, when read without any exception or qualification as to
materiality or Company Material Adverse Effect, shall not be true and correct,
as if such representations and warranties were made at the time of such
determination (except as to any such representation and warranty which speaks as
of a specific date, which must be untrue or incorrect as of such specific date),
except where the failure to be so true and correct would not, individually or in
the aggregate, reasonably be likely to have a Company Material Adverse Effect;
(e) the Company shall have breached or failed to perform any
material obligation or to comply with any material agreement or covenant of the
Company to be performed or complied with by it under this Agreement;
(f) there shall have occurred any events or changes which have
had or which are reasonably likely to have or constitute, individually or in the
aggregate, a Company Material Adverse Effect;
(g) the Merger Agreement shall have been terminated in accordance
with its terms;
(h) (i) it shall have been publicly disclosed or Parent or the
Purchaser shall have otherwise learned that any person, entity or "group" (as
defined in Section 13(d)(3) of the Exchange Act), other than Parent or its
affiliates or any group of which any of them is a member, shall have acquired
beneficial ownership (determined pursuant to Rule 13d-3 promulgated under the
Exchange Act) of 15% or more of any class or series of capital stock of the
Company (including the Shares) (or any person beneficially owning 15% or more of
any class or series of capital stock of the Company (including the Shares) on
the date of the Agreement shall increase such person's beneficial ownership by
1% or
A-2
<PAGE> 66
more in excess of such beneficial ownership as reported in an SEC filing
publicly filed prior to the date of this Agreement), through the acquisition of
stock, the formation of a group or otherwise, or shall have been granted an
option, right or warrant, conditional or otherwise, to acquire beneficial
ownership of 15% or more of any class or series of capital stock of the Company
(including the Shares); or (ii) any person or group shall have entered into a
definitive agreement or agreement in principle with the Company with respect to
a merger, consolidation or other business combination with the Company; or
(i) the Company's Board of Directors or any committee thereof (i)
shall have withdrawn, or modified or changed in a manner adverse to Parent or
the Purchaser (including by amendment of the Schedule 14D-9), its recommendation
of the Offer, the Merger Agreement, or the Merger, (ii) shall have recommended
another proposal or offer, (iii) shall have resolved to do any of the foregoing
or (iv) shall have taken a neutral position or made no recommendation, unless
the Company's Board of Directors determines in good faith, based upon an opinion
of independent legal counsel, that the failure to take such position would be
reasonably likely to violate their fiduciary duties to the Company's
stockholders under applicable law, with respect to another proposal or offer
(other than by Parent or the Purchaser) after a reasonable amount of time (and
in no event more than ten business days following receipt thereof) has elapsed
for the Company's Board of Directors or any committee thereof to review and make
a recommendation with respect thereto;
which in the sole judgment of Parent or the Purchaser, in any such case, makes
it inadvisable to proceed with the Offer or with such acceptance for payment or
payments.
The foregoing conditions are for the sole benefit of the
Purchaser and Parent and may be waived by Parent or the Purchaser, in whole or
in part at any time and from time to time in the sole discretion of Parent or
the Purchaser. 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 which may be asserted at any
time and from time to time.
A-3
<PAGE> 1
EXHIBIT(d)(2)
[Letterhead of Eastman Chemical Company]
November 12, 1999
Mr. John R. Stevenson
Chairman
McWhorter Technologies, Inc.
400 East Cottage Place
Carpentersville, IL 60110
Dear Mr. Stevenson:
In connection with a possible transaction (the "Transaction") between us
or one of our affiliates (collectively, "we" or "us") and McWhorter
Technologies, Inc. (the "Company"), we have requested information concerning the
Company. As a condition to our being furnished such information, we agree to
treat as confidential, in accordance with the provisions of this letter, any
such information (herein collectively referred to as the "Evaluation Material")
concerning the Company (whether prepared by us, the Company, or any of their or
our agents or advisors, or otherwise) that is to be, or has been, furnished to
us by or on behalf of the Company, and to take or abstain from taking certain
other actions herein set forth. The term "Evaluation Material" includes all
non-public information concerning the Company and its operations, including but
not limited to, any information regarding products, projects, business plans,
programs, plants, processes, equipment, financial data and customers and
includes such portions of all notes, analyses and studies prepared by us or our
representatives (which term shall include, without limitation, affiliates,
managers, officers, employees, agents, attorneys, capital sources, lenders,
affiliates and advisors) which reflect or are based upon, in whole or in part,
the non-public information furnished to us or our representatives pursuant
hereto. The Evaluation Material does not include information that (i) is already
in our possession, as evidenced by our written records, from a source other than
the Company or its representatives, (ii) is or becomes generally available to
the public other than as a result of a disclosure by us or our representatives
(iii) becomes available to us or our representatives on a non-confidential basis
from a source other than the Company or its representatives; provided, however,
that such source has legitimate possession of such information and is not under
any obligation to keep such information confidential.
We hereby agree that the Evaluation Material will be used by us and our
representatives solely for the purpose of evaluating the Transaction, will not
be used in any way detrimental to the Company, and will be kept confidential by
us; provided, however, that (i) any such information may be disclosed to our
representatives who need to know such information for the purpose of evaluating
the Transaction (it being
1
<PAGE> 2
understood that such representatives shall be informed by us of the confidential
nature of such information and shall be directed by us to treat such information
confidentially) and (ii) any disclosure of such information may be made to which
the Company consents in writing.
In the event that we receive a request to disclose all or any part of the
Evaluation Material under the terms of a valid and effective subpoena or order
issued by a court of competent jurisdiction or by a governmental body, we agree
to (i) immediately notify the Company of the existence, terms, and circumstances
surrounding such a request so that the Company may take action to seek an
appropriate protective order and/or waive our compliance with the provisions of
this agreement, and (ii) if disclosure of all or part of such requested
information is required in the written opinion of our counsel, exercise
reasonable efforts to obtain an order or other reliable assurance that (x)
confidential treatment will be accorded to the portion of the requested
information that is required to be disclosed and (y) only that portion of the
Evaluation Material required to be publicly disclosed is so disclosed.
In addition, without the prior written consent of the Company, neither we
nor our representatives will disclose to any person (i) that we and the Company
are having or have had discussions or negotiations concerning the Transaction,
(ii) that we have received Evaluation Material, (iii) that we are considering
the Transaction or (iv) any of the terms, conditions, or other facts with
respect to the Transaction, including the status thereof; provided, however,
that we may make such disclosure if it has received the written opinion of
counsel that such disclosure must be made by it in order that it not commit a
violation of law or regulation and, prior to such disclosure, it provides notice
to the Company reasonably practicable under the circumstances regarding, and
shall consult with the Company and its counsel concerning, the Transaction or
the Evaluation Material shall be made to Lehman Brothers Inc. (Mr. Paul Collins
or another member of the Lehman Brothers team), or another representative of the
Company designated by it in writing, and not to any director, officer or
employee of the Company or to any of the Company's suppliers or customers.
The confidentiality and non-use obligations set forth in this agreement
shall continue for a period of two (2) years from the date of this letter.
Although the Company has endeavored to include in the Evaluation Material
information known to it that it believes to be relevant for the purpose of our
investigation, we understand that neither the Company nor any of its
representatives or advisors have made or make any representation or warranty as
to the accuracy or completeness of the Evaluation Material.
At the Company's request or in the event that we do not proceed with the
Transaction that is the subject of this letter within a reasonable time, we
shall promptly
2
<PAGE> 3
redeliver to the Company all written Evaluation Material and we
shall destroy any other written material containing or reflecting the Evaluation
Material (whether prepared by us, the Company, their or our advisors,
representatives or otherwise) and will not retain any copies, extracts or other
reproductions in whole or in part of such written material. Notwithstanding the
return of the Evaluation Material, we and our representatives will continue to
be bound by the confidentiality and other obligations hereunder.
We hereby acknowledge that the Evaluation Material is being furnished to
us in consideration of our agreement that, for a period of one hundred and
eighty (180) days from the date hereof, neither we nor our affiliates (as
defined in Rule 12b-2 under the Exchange Act) will (nor will we assist, provide
or arrange financing to or for others or encourage others to), directly or
indirectly, acting alone or in concert with others, unless specifically
requested in writing in advance by the Board of Directors of the Company:
(1) acquire or agree, offer, seek or propose to acquire (or request
permission to do so), ownership (including, but not limited to,
beneficial ownership as defined in Rule 13d-3 under the Exchange
Act) of any of the assets or businesses of the Company or any
securities issued by the Company, or any rights or options to
acquire such ownership (including from a third party), or make any
public announcement (or request permission to make any such
announcement) with respect to any of the foregoing; or
(2) seek or propose to influence or control the management or the
policies of the Company or to obtain representation on the Company's
Board of Directors, or solicit, or participate in the solicitation
of any proxies or consents with respect to any securities of the
Company, or make any public announcement with respect to any of the
foregoing or request permission to do any of the foregoing; or
(3) take any action which might require the Company to make a public
announcement regarding the types of matters set forth in
subparagraphs (1) (2) above; or
(4) enter into any discussions, negotiations, arrangements or
understandings with any third party with respect to any of the
foregoing; or
(5) seek to have the Company amend or waive any provision of this
paragraph (the "Standstill Paragraph").
We hereby acknowledge that the Evaluation Material is being furnished to
us also in consideration for our agreement that, for a period of one (1) year
beginning on the date of this letter agreement, neither we nor any of our
affiliates will hire any of the members of management or any other current
employees of the Company, without
3
<PAGE> 4
obtaining prior written consent of the Company, except that we shall not be
precluded from hiring any such employee who: (A) initiates discussions regarding
such employment without any solicitation by us; (B) responds to any public
advertisement placed by us in periodicals of general circulation; (C) has been
terminated by Company or its contractor prior to commencement of employment
discussions between us and such employee; or (D) is solicited by a placement
firm or similar organization so long as we have not provided to that
organization the name or other information concerning company or such employee;
or (E) had been in discussions with us regarding such employment prior to the
date of this letter.
If at any time during such period we are approached by any third party
concerning our or their participation in a transaction involving the assets or
businesses of the Company or securities issued by the Company, we will promptly
inform the Company of the nature of such contact and the parties thereto.
We agree that remedies at law for any actual or threatened breach by it
or its representatives of the covenants contained in this agreement would be
inadequate and that the Company shall be entitled to equitable relief, including
injunction and specific performance, in the event of any breach of the
provisions of this agreement, in addition to all other remedies available to the
Company.
It is further understood and agreed that no failure or delay by the
Company in exercising any right, power, or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any right, power, or
privilege hereunder. Any agreement set forth herein may be modified or waived
only by a separate writing executed by the Company and us expressly so modifying
or waiving such agreement.
We agree that unless and until a definitive agreement between us and the
Company with respect to the Transaction has been executed and delivered, neither
we nor our affiliates nor the Company will be under any legal obligation of any
kind whatsoever with respect to such Transaction except for the matters
specifically agreed to in this letter. We further agree (i) that the Company
shall have no obligation to authorize or pursue with us or nay other party and
transaction referred to in the first paragraph of this letter and we understand
that the Company has not, as of the date hereof, authorized any such transaction
and (ii) that the Company and its representatives shall be free to conduct any
process for any transaction involving the Company if and as they in their sole
discretion shall determine (including, without limitation, negotiating with any
other interested parties and entering into a definitive agreement without prior
notice to you or any other person) and that any procedures relating to such
process or transaction may be changed at any time without notice to us or any
other person.
4
<PAGE> 5
If any term, provision, covenant or restriction of this letter agreement
is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
This letter agreement may be executed in two or more counterparts, each
of which shall be deemed to be an original, but all of which shall constitute
the same agreement and shall become a binding agreement when one or more
counterparts have been signed by all three parties and delivered to all parties,
thereby constituting the entire agreement among the parties pertaining to the
subject matter hereof. This letter agreement supersedes all prior and
contemporaneous agreements, understandings and representations, whether oral or
written of the parties in connection herewith. No covenant or condition or
representation not expressed in this letter agreement shall affect or otherwise
be effective to interpret, change or restrict this letter agreement. No
modification, waiver, termination, rescission, discharge or cancellation of this
letter agreement and no waiver of any provision of or default under this letter
agreement shall affect the right of any party thereafter to enforce any other
provision or to exercise any right or remedy in the event of any other default,
whether or not similar. Any agreement set forth herein may be modified or waived
only by a separate writing executed by the Company and us expressly so modifying
or waiving such agreement.
This letter shall be governed by, and construed in accordance with, the
laws of the State of Illinois.
If the Company is in agreement with the foregoing, please sign and return
one copy of this letter, which will constitute our agreement with respect to the
subject matter of this letter.
Respectfully,
EASTMAN CHEMICAL COMPANY
By: /s/ Leonard Hite, Jr.
-----------------------
Name: Leonard Hite
-----------------------
Date: 11/12/99
-----------------------
Confirmed and Agreed to:
LEHMAN BROTHERS INC.,
As financial advisor to
5
<PAGE> 6
McWHORTER TECHNOLOGIES, INC.
By: /s/ PAUL COLLINS
---------------------------
Name: Paul Collins
-------------------------
Date: 11/15/99
-------------------------
McWHORTER TECHNOLOGIES, INC.
By: /s/ JOHN STEVENSON
---------------------------
Name: John R. Stevenson
-------------------------
Date: 12/10/99
-------------------------
6
