Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Share Purchase Rights)
of
CHIREX INC.
at
$31.25 NET PER SHARE
by
COUSIN ACQUISITION, INC.
an indirect wholly owned subsidiary of
RHODIA
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, AUGUST 31, 2000, UNLESS THE OFFER IS EXTENDED
THE OFFER IS BEING MADE PURSUANT TO THE TERMS OF AN AGREEMENT AND PLAN OF
MERGER DATED AS OF JULY 24, 2000 (THE "MERGER AGREEMENT") AMONG RHODIA
("PARENT"), COUSIN ACQUISITION, INC. ("PURCHASER") AND CHIREX INC. (THE
"COMPANY"). THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE HAVING
BEEN VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT
LEAST THE NUMBER OF SHARES (AS DEFINED HEREIN) THAT WHEN ADDED TO SHARES
ALREADY OWNED BY PARENT, SHALL CONSTITUTE A MAJORITY OF THE THEN OUTSTANDING
SHARES ON A FULLY DILUTED BASIS (INCLUDING, WITHOUT LIMITATION, ALL SHARES
ISSUABLE UPON THE CONVERSION OF ANY CONVERTIBLE SECURITIES OR UPON THE EXERCISE
OF ANY OPTIONS, WARRANTS, OR RIGHTS (THE "MINIMUM CONDITION"), AND (II) ANY
APPLICABLE WAITING PERIODS UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS
ACT OF 1976, AS AMENDED (THE "HSR ACT"), AND THE GERMAN LAW AGAINST RESTRAINTS
ON COMPETITION, HAVING EXPIRED OR BEEN TERMINATED PRIOR TO THE EXPIRATION OF
THE OFFER. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER CONDITIONS CONTAINED IN
THIS OFFER TO PURCHASE. SEE SECTIONS 1 AND 14, WHICH SET FORTH IN FULL THE
CONDITIONS TO THE OFFER.
--------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY DETERMINED THAT THE
MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING EACH OF
THE OFFER AND THE MERGER (EACH AS DEFINED HEREIN), ARE FAIR TO, AND IN THE BEST
INTERESTS OF, THE HOLDERS OF SHARES, HAS APPROVED, ADOPTED AND DECLARED
ADVISABLE THE MERGER AGREEMENT, AND HAS RESOLVED TO RECOMMEND THAT THE HOLDERS
OF SHARES ACCEPT THE OFFER AND TENDER SHARES PURSUANT TO THE OFFER.
--------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares should either (i) complete and sign the accompanying Letter of
Transmittal (or a manually signed facsimile thereof) in accordance with the
instructions in the Letter of Transmittal and mail or deliver it together with
the certificate(s) evidencing tendered Shares, and any other required
documents, to the Depositary or tender such Shares pursuant to the procedure
for book-entry transfer set forth in Section 3 or (ii) request such
stockholder's broker, dealer, commercial bank, trust company or other nominee
to effect the transaction for such stockholder. Any stockholder whose Shares
are registered in the name of a broker, dealer, commercial bank, trust company
or other nominee must contact such broker, dealer, commercial bank, trust
company or other nominee if such stockholder desires to tender such Shares.
A stockholder who desires to tender Shares and whose certificates evidencing
such Shares are not immediately available, or who cannot comply with the
procedure for book-entry transfer on a timely basis, may tender such Shares by
following the procedure for guaranteed delivery set forth in Section 3.
Questions or requests for assistance may be directed to the Information Agent
or to the Dealer Manager at their respective addresses and telephone numbers
set forth on the back cover of this Offer to Purchase. Additional copies of
this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may also be obtained from the Information Agent or from brokers,
dealers, commercial banks or trust companies.
--------------
The Dealer Manager for the Offer is:
[BEAR STEARNS LOGO]
August 4, 2000
TABLE OF CONTENTS
Page
----
SUMMARY TERM SHEET....................................................... i
INTRODUCTION............................................................. 1
1. Terms of the Offer; Expiration Date.............................. 3
2. Acceptance for Payment and Payment for Shares.................... 5
3. Procedures for Accepting the Offer and Tendering Shares.......... 6
4. Withdrawal Rights................................................ 8
5. Certain Federal Income Tax Consequences.......................... 9
6. Price Range of Shares; Dividends................................. 10
7. Certain Information Concerning the Company....................... 10
8. Certain Information Concerning Purchaser and Parent.............. 12
9. Financing of the Offer and the Merger............................ 13
10. Background of the Offer; Contacts with the Company; the Merger
Agreement and Related Agreements................................. 13
11. Purpose of the Offer; Plans for the Company After the Offer and
the Merger....................................................... 30
12. Dividends and Distributions...................................... 32
13. Possible Effects of the Offer on the Market for Shares, Nasdaq
Listing, Margin Regulations and Exchange Act Registration........ 33
14. Certain Conditions of the Offer.................................. 34
15. Certain Legal Matters and Regulatory Approvals................... 35
16. Fees and Expenses................................................ 38
17. Miscellaneous.................................................... 38
SCHEDULES
Schedule I. Directors and Executive Officers of Parent and Purchaser
Schedule II. Schedule of Transactions in Shares During the Past 60 Days
SUMMARY TERM SHEET
This summary term sheet highlights selected information from this Offer to
Purchase, and may not contain all of the information that is important to you.
To better understand our offer to you and for a complete description of the
legal terms of the offer, you should read this entire offer to purchase and the
accompanying Letter of Transmittal carefully. Questions or requests for
assistance may be directed to the Information Agent or the Dealer Manager at
their respective addresses and telephone numbers on the last page of this offer
to purchase.
WHO IS OFFERING TO BUY MY SECURITIES?
. We are Cousin Acquisition, Inc., a newly formed Delaware corporation and
an indirect wholly owned subsidiary of Rhodia. We have been organized in
connection with this offer and have not carried on any activities other
than in connection with this offer.
. Rhodia is one of the world's largest specialty chemicals companies.
Rhodia has leading worldwide market positions in many of its major
businesses, ranking number one on the basis of 1999 net sales in products
such as food phosphates, vanillin, guar gum, acetyl-salicylic acid, mild
surfactants and highly dispensable silica and in services such as
sulfuric acid regeneration. Rhodia's fine organics division researches,
develops and produces customized molecules, usually in collaboration with
its customers. The common stock of Rhodia is listed on the monthly
settlement market of the Premier Marche of the Paris Bourse and the
American Depositary Shares of Rhodia are traded on the New York Stock
Exchange under the symbol "RHA".
WHAT ARE THE CLASSES AND AMOUNTS OF SECURITIES SOUGHT IN THIS OFFER?
. We are seeking to purchase all the issued and outstanding shares of
common stock, par value $0.01 per share, of ChiRex Inc., as well as the
preferred share purchase rights that are associated with the common
stock. See the "Introduction" and Section 1.
HOW MUCH ARE YOU OFFERING TO PAY AND WHAT IS THE FORM OF PAYMENT?
. We are offering to pay $31.25 per share, net to each seller in cash and
without interest thereon. See the "Introduction" and Section 1.
. If you tender your shares in the offer, you will not be obligated to pay
brokerage fees or commissions or, except as otherwise provided in
Instruction 6 of the Letter of Transmittal, stock transfer taxes with
respect to the sale of your shares pursuant to the offer. See the
"Introduction."
WHAT ARE THE MOST SIGNIFICANT CONDITIONS OF THE OFFER?
. We are not obligated to purchase any shares unless there are validly
tendered and not withdrawn prior to the expiration of the offer at least
the number of shares that when added to the shares already owned by
Rhodia shall constitute a majority of the then outstanding shares on a
fully diluted basis. See Section 1 and Section 14.
. We are not obligated to purchase any shares unless prior to the offer any
applicable waiting periods under the HSR Act and the German Law against
Restraints on Competition have expired or been terminated. See Section
15.
These and other conditions to our obligations to purchase shares tendered in
the offer are described in greater detail in Sections 1 and 14.
DO YOU HAVE FINANCIAL RESOURCES TO MAKE PAYMENT?
. Rhodia will cause to be provided to us, or a wholly owned subsidiary of
Rhodia will provide or cause to be provided to us, the funds necessary to
purchase the shares in the offer. See Section 9.
i
IS YOUR FINANCIAL CONDITION RELEVANT TO MY DECISION TO TENDER IN THE OFFER?
. Because the offer covers all outstanding shares of ChiRex Inc., the form
of payment consists solely of cash, there is no financing condition, all
of the funding which will be needed has already been arranged, and there
is no relevant historical information concerning Cousin Acquisition,
Inc., we do not think the financial condition of Cousin Acquisition, Inc.
is relevant to your decision to tender in the offer.
HOW LONG DO I HAVE TO DECIDE WHETHER TO TENDER IN THE OFFER?
. You will have at least until 12:00 midnight, New York City time, on
Thursday, August 31, 2000, to decide whether to tender your shares of
ChiRex Inc. common stock (and associated rights) 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 in Section 3 of this Offer to Purchase. See
Section 3.
CAN THE OFFER BE EXTENDED, AND UNDER WHAT CIRCUMSTANCES?
. We expressly reserve the right, in our sole discretion but subject to the
terms of the Merger Agreement and applicable law, to extend the period of
time during which the offer remains open. We have agreed in the Merger
Agreement that we may, or will, at the request of ChiRex Inc. extend the
offer if certain conditions to the offer have not been satisfied, but we
are not required to extend the offer beyond November 1, 2000 (or December
2, 2000 if the condition that has not been satisfied is clearance under
the HSR Act or the German Law Against Restraints on Competition). See
Section 1.
HOW WILL I BE NOTIFIED IF THE OFFER IS EXTENDED?
. If we decide to extend the offer, we will inform Wilmington Trust
Company, the Depositary, of that fact, and will issue a press release
giving the new expiration date no later than 9:00 a.m., New York City
time, on the business day after the date on which the offer was
previously scheduled to expire. See Section 1.
HOW DO I TENDER MY SHARES?
To tender your shares in the offer, you must:
. complete and sign the accompanying Letter of Transmittal (or a manually
signed facsimile of the Letter of Transmittal) in accordance with the
instructions in the Letter of Transmittal and mail or deliver it together
with your share certificates, and any other required documents, to the
Depositary;
. tender your shares pursuant to the procedure for book-entry transfer set
forth in Section 3; or
. if your share certificates are not immediately available or if you cannot
deliver your share certificates, and any other required documents, to
Wilmington Trust Company, prior to the expiration of the offer, or you
cannot complete the procedure for delivery by book-entry transfer on a
timely basis, you may still tender your shares if you comply with the
guaranteed delivery procedures described in Section 3.
UNTIL WHAT TIME CAN I WITHDRAW PREVIOUSLY TENDERED SHARES?
. You may withdraw previously tendered shares any time prior to the
expiration of the offer, and, unless we have accepted the shares pursuant
to the offer, you may also withdraw any tendered shares at any time after
October 2, 2000. See Section 4.
HOW DO I WITHDRAW PREVIOUSLY TENDERED SHARES?
. To withdraw previously tendered shares, you must deliver a written or
facsimile notice of withdrawal with the required information to
Wilmington Trust Company while you still have the right to withdraw.
ii
If you tendered shares by giving instructions to a broker or bank, you
must instruct the broker or bank to arrange for the withdrawal of your
shares. See Section 4.
WHAT DOES CHIREX'S BOARD OF DIRECTORS THINK OF THE OFFER?
. The Board of Directors of ChiRex Inc. has unanimously determined that the
Merger Agreement and the transactions contemplated thereby, including
each of the offer and the merger, are fair to, and in the best interests
of, the holders of shares, has approved, adopted and declared advisable
the Merger Agreement, and has resolved to recommend that the holders of
shares accept the offer and tender shares pursuant to the offer.
WILL CHIREX CONTINUE AS A PUBLIC COMPANY?
. No. If the merger occurs, ChiRex Inc. will no longer be publicly owned.
Even if the merger does not occur, if we purchase all the tendered
shares, there may be so few remaining stockholders and publicly held
shares that the shares will no longer be eligible to be traded through
the Nasdaq National Market, or any other securities market, there may not
be a public trading market for the shares and ChiRex Inc. may cease
making filings with the Securities and Exchange Commission or otherwise
cease being required to comply with the Securities and Exchange
Commission's rules relating to publicly held companies. See Section 13.
WILL THE TENDER OFFER BE FOLLOWED BY A MERGER IF ALL THE SHARES ARE NOT
TENDERED?
. If we accept for payment and pay for at least a majority of the
outstanding shares on a fully diluted basis, we will merge with and into
ChiRex Inc. or, at the election of Rhodia, ChiRex Inc. will be merged
with and into us. If the merger occurs, ChiRex Inc. will become a
privately owned company, and each issued and then outstanding share
(other than any shares held in the treasury of ChiRex Inc., or owned by
Rhodia, Cousin Acquisition, Inc. or any of their subsidiaries and any
shares held by stockholders seeking appraisal for their shares) shall be
canceled and converted automatically into the right to receive $31.25 per
share, in cash (or any greater amount per share paid pursuant to the
offer).
IF I DECIDE NOT TO TENDER, HOW WILL THE OFFER AFFECT MY SHARES?
. If you decide not to tender your shares in the offer and the merger
occurs, you will receive in the merger the same amount of cash per share
as you would have received if you had tendered your shares in the offer.
. If you decide not to tender your shares in the offer and the merger does
not occur, if we purchase all the tendered shares, there may be so few
remaining stockholders and publicly held shares that the shares will no
longer be eligible to be traded through the Nasdaq National Market, or
any other securities market, there may not be a public trading market for
the shares and ChiRex Inc. may cease making filings with the Securities
and Exchange Commission or otherwise cease being required to comply with
the Securities and Exchange Commission's rules relating to publicly held
companies. See Section 13.
WHAT IS THE MARKET VALUE OF MY SHARES AS OF A RECENT DATE?
. On July 21, 2000, the last full trading day before we announced our
offer, the last reported closing price per share reported on the Nasdaq
National Market was $20.13 per share. See Section 6.
WITH WHOM MAY I TALK IF I HAVE QUESTIONS ABOUT THE OFFER?
. You can call MacKenzie Partners, Inc., the Information Agent, at (212)
929-5500 or 1-800-322-2885 or Bear, Stearns & Co. Inc., the Dealer
Manager, at (877) 850-8074. See the back cover of this Offer to Purchase.
iii
To the Holders of Common Stock of
ChiRex Inc.:
INTRODUCTION
Cousin Acquisition, Inc., a Delaware corporation ("Purchaser") and an
indirect wholly owned subsidiary of Rhodia, a French corporation ("Parent"),
hereby offers to purchase all the shares of common stock, par value $0.01 per
share ("Common Shares"), of ChiRex Inc., a Delaware corporation (the
"Company"), that are issued and outstanding, together with the associated
preferred share purchase rights (the "Rights" and, together with the Common
Shares, the "Shares") issued pursuant to the Rights Agreement dated as of March
31, 1997 between the Company and the First National Bank of Boston, as Rights
Agent (the "Rights Agreement") for $31.25 per Share, net to the seller in cash,
without interest, upon the terms and subject to the conditions set forth in
this Offer to Purchase and in the related Letter of Transmittal (which,
together with this Offer to Purchase and any amendments or supplements hereto
or thereto, collectively constitute the "Offer"). See Section 8 for additional
information concerning Parent and Purchaser.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Purchaser pursuant to the Offer. However, any tendering stockholder or other
payee who fails to complete and sign the Substitute Form W-9 that is included
in the Letter of Transmittal may be subject to a required back-up U.S. federal
income tax withholding of 31% of the gross proceeds payable to such stockholder
or other payee pursuant to the Offer. See Section 5. Purchaser or Parent will
pay all charges and expenses of Bear, Stearns & Co. Inc. ("Bear Stearns"),
which is acting as Dealer Manager for the Offer (the "Dealer Manager"),
Wilmington Trust Company (the "Depositary") and MacKenzie Partners, Inc. (the
"Information Agent") incurred in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
DETERMINED THAT THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING EACH OF THE OFFER AND THE MERGER (EACH AS DEFINED HEREIN) ARE FAIR
TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF SHARES, HAS APPROVED, ADOPTED
AND DECLARED ADVISABLE THE MERGER AGREEMENT AND HAS RESOLVED TO RECOMMEND THAT
HOLDERS OF SHARES ACCEPT THE OFFER AND TENDER SHARES PURSUANT TO THE OFFER.
Chase Securities Inc. ("Chase Securities") has delivered to the Board its
written opinion dated July 23, 2000 to the effect that, based upon and subject
to various considerations and assumptions set forth in such opinion, the
consideration to be received by the stockholders (other than Parent and its
affiliates) pursuant to the Offer and the Merger, taken together as a whole and
not separately, is fair to such stockholders from a financial point of view. A
copy of the written opinion of Chase Securities is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which has been filed with the Securities and Exchange Commission (the
"Commission") in connection with the Offer and which is being mailed to
stockholders concurrently herewith, and stockholders are urged to read such
opinion carefully in its entirety for a description of the assumptions made,
matters considered and limitations of the review undertaken by Chase
Securities.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE HAVING BEEN
VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT
LEAST THE NUMBER OF SHARES THAT WHEN ADDED TO SHARES ALREADY OWNED BY PARENT,
SHALL CONSTITUTE A MAJORITY OF THE THEN OUTSTANDING SHARES ON A FULLY DILUTED
BASIS (INCLUDING, WITHOUT LIMITATION, ALL SHARES ISSUABLE UPON THE CONVERSION
OF ANY CONVERTIBLE SECURITIES OR UPON THE EXERCISE OF ANY OPTIONS, WARRANTS, OR
RIGHTS (THE "MINIMUM CONDITION")) AND (II) ANY APPLICABLE WAITING PERIODS UNDER
THE HART-SCOTT-RODINO ANTITRUST
1
IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"), AND THE GERMAN LAW
AGAINST RESTRAINTS ON COMPETITION HAVING EXPIRED OR BEEN TERMINATED, PRIOR TO
THE EXPIRATION OF THE OFFER. THE OFFER IS ALSO SUBJECT TO CERTAIN OTHER
CONDITIONS CONTAINED IN THIS OFFER TO PURCHASE. SEE SECTIONS 1 AND 14, WHICH
SET FORTH IN FULL THE CONDITIONS TO THE OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of July 24, 2000 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides, among other things, that as promptly as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with the relevant provisions of the General Corporation Law of the
State of Delaware ("Delaware Law"), Purchaser will be merged with and into the
Company (the "Merger") (provided that Parent may elect, at any time prior to
the fifth business day immediately preceding the date on which the Proxy
Statement (as defined in the Merger Agreement) is mailed initially to the
Company's stockholders, to merge the Company into Purchaser or another direct
or indirect wholly owned subsidiary of Parent, provided that the Offer and
Merger are not delayed and the holders of Shares are not adversely affected by
such election). As a result of the Merger, the Company will continue as the
surviving corporation (the "Surviving Corporation") and will become an indirect
wholly owned subsidiary of Parent. At the effective time of the Merger (the
"Effective Time"), each Share issued and outstanding immediately prior to the
Effective Time (other than Shares held in the treasury of the Company or Shares
owned by Purchaser, Parent or any direct or indirect wholly owned subsidiary of
Parent or of the Company, and other than Shares held by stockholders who shall
have demanded and perfected appraisal rights under Delaware Law) shall be
canceled and converted automatically into the right to receive $31.25 in cash,
or any higher price that may be paid per Share in the Offer, without interest
(the "Merger Consideration"). Stockholders who demand and fully perfect
appraisal rights under Delaware Law will be entitled to receive, in connection
with the Merger, cash for the fair value of their Shares as determined pursuant
to the procedures prescribed by Delaware Law. See Section 11. The Merger
Agreement is more fully described in Section 10. Certain federal income tax
consequences of the sale of Shares pursuant to the Offer and the Merger, as the
case may be, are described in Section 5.
The Merger Agreement provides that, promptly upon the purchase by Purchaser
of a majority of the then-outstanding Shares pursuant to the Offer and from
time to time thereafter, Purchaser shall be entitled to designate up to such
number of directors, rounded up to the next whole number, on the Board as will
give Purchaser representation on the Board equal to the product of the total
number of directors on the Board (giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Shares then beneficially owned by Purchaser or any affiliate of
Purchaser following such purchase bears to the total number of Shares then
outstanding. In the Merger Agreement, the Company has agreed, at such time, to
promptly take all actions necessary to cause Purchaser's designees to be
elected as directors of the Company, including increasing the size of the Board
or securing the resignations of incumbent directors, or both.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the consummation of the Offer, and, if necessary,
the approval and adoption of the Merger Agreement and the Merger by the
requisite vote of the stockholders of the Company. For a more detailed
description of the conditions to the Merger, see Section 10. Under the
Company's Certificate of Incorporation and Delaware Law, the affirmative vote
of the holders of a majority of the outstanding Shares is required to approve
and adopt the Merger Agreement and the Merger. Consequently, if Purchaser
acquires (pursuant to the Offer or otherwise) at least a majority of the
outstanding Shares, then Purchaser will have sufficient voting power to approve
and adopt the Merger Agreement and the Merger without the vote of any other
stockholder.
Under Delaware Law, if Purchaser acquires, pursuant to the Offer or
otherwise, at least 90% of the then outstanding Shares, Purchaser will be able
to effect the Merger without a vote of the Company's stockholders. In such
event, Parent, Purchaser and the Company have agreed to take all necessary and
appropriate action to
2
cause the Merger to become effective in accordance with Delaware Law as
promptly as reasonably practicable after such acquisition, without a meeting of
the Company's stockholders. If, however, Purchaser does not acquire at least
90% of the then outstanding Shares pursuant to the Offer or otherwise and a
vote of the Company's stockholders is required under Delaware Law, a
significantly longer period of time will be required to effect the Merger. See
Section 11.
The Company has advised Purchaser that as of July 24, 2000, 15,263,977
Shares were issued and outstanding and no Shares were held in the treasury of
the Company. In addition, 2,508,666 Shares were issuable pursuant to
outstanding Company Stock Options or other stock incentive rights granted by
the Company, 960,795 of which were exercisable as of such date. As a result, as
of such date, taking into account the 75,100 Shares already owned by Parent,
the Minimum Condition would be satisfied if Purchaser acquired an additional
8,037,287 Shares. Also, as of such date, Purchaser could cause the Merger to
become effective in accordance with Delaware Law, without a meeting of the
Company's stockholders, if Purchaser acquired 13,737,580 Shares.
No appraisal rights are available in connection with the Offer; however,
stockholders may have appraisal rights in connection with the Merger regardless
of whether the Merger is consummated with or without a vote of the Company's
stockholders. See Section 11.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
1. Terms of the Offer; Expiration Date.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered (and not withdrawn in accordance with the procedures set forth in
Section 4) on or prior to the Expiration Date. "Expiration Date" means 12:00
midnight, New York City time, on Thursday, August 31, 2000, unless and until
Purchaser (subject to the terms and conditions of the Merger Agreement) shall
have extended the period during which the Offer is open, in which case
Expiration Date shall mean the latest time and date at which the Offer, as may
be extended by Purchaser, shall expire.
The Offer is subject to the conditions set forth under Section 14, including
the satisfaction of the Minimum Condition, and any applicable waiting periods
under the HSR Act and the German Law Against Restraints on Competition having
expired or been terminated. Subject to the applicable rules and regulations of
the Securities and Exchange Commission (the "Commission") and subject to the
terms and conditions of the Merger Agreement, Purchaser expressly reserves the
right to waive any such condition in whole or in part, in its sole discretion.
Subject to the applicable rules and regulations of the Commission and subject
to the terms and conditions of the Merger Agreement, Purchaser also expressly
reserves the right to increase the price per Share payable in the Offer and to
make any other changes in the terms and conditions of the Offer; provided,
however, that the Purchaser may not, without the prior consent of the Company,
waive the Minimum Condition or, subject to the following paragraph, extend the
Offer and no change may be made which decreases the price per Share or changes
the form of consideration payable in the Offer or which reduces the maximum
number of Shares to be purchased in the Offer or which imposes conditions to
the Offer in addition to those set forth in Section 14 hereof or which
otherwise adversely affects the holders of Shares.
The Merger Agreement provides that the Purchaser may, without the consent of
the Company, (i) extend the Offer for additional periods of not more than 10
business days each beyond any scheduled expiration of the Offer, if, at the
initial or any extended scheduled expiration of the Offer (as the case may be),
any of the conditions to Purchaser's obligation to accept for payment Shares
shall not be satisfied or waived; provided that Purchaser shall not be
permitted to extend the Offer (without the consent of the Company) pursuant to
this clause (i) beyond the 89th day following the commencement of the Offer,
provided, further, that if, prior to the 89th day following the commencement of
the Offer, any applicable waiting period under the HSR Act has not
3
expired or been terminated or clearance has not been received under the German
Law Against Restraints on Competition with respect to the Transactions, then
Purchaser shall be permitted to extend the Offer (without the consent of the
Company) pursuant to this clause (i) until the earlier of (A) the fifth
business day following the later of the expiration or termination of any
applicable waiting period under the HSR Act and the receipt of clearance under
the German Law Against Restraints on Competition and (B) the 120th day
following commencement of the Offer; (ii) extend the Offer for any period
required by any rule, regulation or interpretation of the Commission, or the
staff thereof, applicable to the Offer, (iii) extend the Offer so that the
Offer remains open for at least five business days after any disclosure of an
Acquisition Proposal (as defined below), or (iv) extend the Offer for an
aggregate period of not more than 10 business days beyond the latest applicable
date that would otherwise be permitted under clause (i), (ii) or (iii) of this
sentence, if, as of such date, all of the conditions to Purchaser's obligations
to accept for payment Shares have been permanently satisfied or irrevocably
waived, but the number of Shares validly tendered and not withdrawn pursuant to
the Offer is less than 90% of outstanding Shares on a fully diluted basis. An
Acquisition Proposal is defined as any plan, proposal or offer of or from any
person relating to (i) any direct or indirect acquisition of (A) more than 15%
of the assets of the Company and its subsidiaries, taken as a whole, or (B)
more than 15% of any class of equity securities of the Company or any
subsidiary, (ii) any tender offer or exchange offer, as defined pursuant to the
Exchange Act, that, if consummated, would result in any person beneficially
owning more than 15% of any class of equity securities of the Company or any
subsidiary, (iii) any acquisition of the Company or of any of its five
principal subsidiaries through a merger, consolidation, business combination,
sale of all or substantially all of the assets, recapitalization, liquidation
or dissolution or any similar transaction, or (iv) any other transaction the
consummation of which would reasonably be expected to prevent or materially
impede, interfere with, or delay the transactions contemplated by the Merger
Agreement. In addition, at the initial or any extended expiration date of the
Offer, Purchaser shall extend the Offer at the request of the Company for
additional periods of not more than 10 business days each beyond such scheduled
expiration of the Offer, if, at such scheduled expiration date of the Offer,
any of the conditions to Purchaser's obligation to accept for payment Shares
shall not be satisfied or waived; provided that Purchaser shall in no event be
required to extend the Offer beyond the 89th day following the commencement of
the Offer, provided, further, that if, prior to the 89th day following the
commencement of the Offer, any applicable waiting period under the HSR Act has
not expired or been terminated or clearance has not been received under the
German Law Against Restraints on Competition with respect to the Transactions,
then the Purchaser may be required to extend the Offer until the earlier of (A)
the fifth business day following the later of the expiration or termination of
any applicable waiting period under the HSR Act and the receipt of clearance
under the German Law Against Restraints on Competition and (B) the 120th day
following commencement of the Offer. During any extension of the offer, all
Shares previously tendered and not withdrawn will remain subject to the Offer
and subject to the right of a tendering stockholder to withdraw such
stockholder's Shares. See Section 4. Under no circumstances will interest be
paid on the purchase price for tendered Shares, whether or not the Offer is
extended. Any extension of the Offer may be effected by Purchaser giving oral
or written notice of such extension to the Depositary.
If the conditions to the Offer have been satisfied or waived, Purchaser will
pay for all Shares validly tendered and not withdrawn promptly following the
expiration of the Offer. Notwithstanding the immediately preceding sentence and
subject to the applicable rules of the Commission and the terms and conditions
of the Offer and the Merger Agreement, Purchaser also expressly reserves the
right (i) to extend or terminate the Offer and not to accept for payment or pay
for any Shares not theretofore accepted for payment or paid for, upon the
occurrence of any of the conditions to the Offer specified in Section 14, and
(ii) to amend the Offer or to waive any conditions to the Offer in any respect
consistent with the provisions of the Merger Agreement described above, in each
case by giving oral or written notice of such delay, termination, waiver or
amendment to the Depositary and by making public announcement thereof.
Any such extension, delay, termination, waiver or amendment will be followed
as promptly as practicable by public announcement thereof, such announcement in
the case of an extension to be made no later than 9:00 a.m., New York City
time, on the next business day after the previously scheduled Expiration Date.
Subject to applicable law (including Rules 14d-4(d), 14d-6(c) and 14e-1 under
the Exchange Act, which require that material
4
changes be promptly disseminated to stockholders in a manner reasonably
designed to inform them of such changes) and without limiting the manner in
which Purchaser may choose to make any public announcement, Purchaser will have
no obligation to publish, advertise or otherwise communicate any such public
announcement other than by issuing a press release to the Dow Jones News
Service or the Public Relations Newswire.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, or if it waives a material condition of the
Offer, Purchaser will extend the Offer to the extent required by Rules l4d-
4(d), l4d-6(c) and 14e-1 under the Exchange Act. Subject to the terms of the
Merger Agreement, if, prior to the Expiration Date, Purchaser should decide to
increase the consideration being offered in the Offer, such increase in the
consideration being offered will be applicable to all stockholders whose Shares
are accepted for payment pursuant to the Offer and, if at the time notice of
any such increase in the consideration being offered is first published, sent
or given to holders of such Shares, the Offer is scheduled to expire at any
time earlier than the period ending on the tenth business day from and
including the date that such notice is first so published, sent or given, the
Offer will be extended at least until the expiration of such ten business day
period.
For purposes of the Offer, a "business day" means any day on which the
principal offices of the Commission in Washington, D.C. are open to accept
filings, or, in the case of determining a date when any payment is due, any day
on which banks are not required or authorized to close in The City of New York,
and consists of the time period from 12:01 a.m. through 12:00 midnight, New
York City time.
The Company's transfer agent has provided Purchaser with the Company's
stockholder list and security position listings, including the most recent list
of names, addresses and security positions of non-objecting beneficial owners
in the possession of the Company, for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of Transmittal
will be mailed by Purchaser to record holders of Shares whose names appear on
the Company's stockholder list and will be furnished, for subsequent
transmittal to beneficial owners of Shares, to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing.
2. Acceptance for Payment and Payment for Shares.
Upon the terms and subject to the conditions of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered (and not properly withdrawn in accordance with Section 4) prior to the
Expiration Date promptly following the Expiration Date.
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)
the certificates evidencing such Shares (the "Share Certificates") or
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in Section
3, (ii) the Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with any required signature guarantees or
an Agent's Message (as defined below), in connection with the book-entry
transfer and (iii) any other documents required under the Letter of
Transmittal. 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 the 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 are the subject of such
Book-Entry Confirmation, that such participant has received and agrees to be
bound by the Letter of Transmittal and that Purchaser may enforce such
agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to the
Offer. Upon the
5
terms and subject to the conditions of the Offer, payment for Shares accepted
for payment pursuant to the Offer will be made by deposit of the purchase price
therefor with the Depositary, which will act as agent for tendering
stockholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering stockholders whose Shares have been
accepted for payment. Under no circumstances will interest on the purchase
price for Shares be paid, regardless of any delay in making such payment.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are
submitted evidencing more Shares than are tendered, Share Certificates
evidencing unpurchased Shares will be returned, without expense to the
tendering stockholder (or, in the case of Shares tendered by book-entry
transfer into the Depositary's account at a Book-Entry Transfer Facility
pursuant to the procedure set forth in Section 3, such Shares will be credited
to an account maintained at such Book-Entry Transfer Facility), as promptly as
practicable following the expiration or termination of the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its affiliates, the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such transfer
or assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering stockholders to receive
payment for Shares validly tendered and accepted for payment pursuant to the
Offer.
3. Procedures for Accepting the Offer and Tendering Shares.
In order for a holder of Shares validly to tender Shares pursuant to the
Offer, the Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message, and
any other documents required by the Letter of Transmittal, must be received by
the Depositary at one of its addresses set forth on the back cover of this
Offer to Purchase and either (i) the Share Certificates evidencing tendered
Shares must be received by the Depositary at such address or such Shares must
be tendered pursuant to the procedure for book-entry transfer described below
and a Book-Entry Confirmation must be received by the Depositary (including an
Agent's Message if the tendering stockholder has not delivered a Letter of
Transmittal), in each case prior to the Expiration Date, or (ii) the tendering
stockholder must comply with the guaranteed delivery procedures described
below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer. The Depositary will establish accounts with respect to
the Shares at the Book-Entry Transfer Facility for purposes of the Offer within
two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of the Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing the Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at the Book-Entry Transfer
Facility, the Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, together with any required signature
guarantees, or an Agent's Message, 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 procedure
described below. Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Depositary.
6
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a member of the Security Transfer Agent Medallion
Signature Program, or by any other "eligible guarantor institution," as such
term is defined in Rule 17Ad-15 under the Exchange Act (each of the foregoing
being referred to as an "Eligible Institution"), except in cases where Shares
are tendered (i) by a registered holder of Shares who has not completed either
the box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution. If a Share Certificate is registered in the name of a
person other than the signer of the Letter of Transmittal, or if payment is to
be made, or a Share Certificate not accepted for payment or not tendered is to
be returned, to a person other than the registered holder(s), then the Share
Certificate must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name(s) of the registered holder(s) appear on
the Share Certificate, with the signature(s) on such Share Certificate or stock
powers guaranteed by an Eligible Institution. See Instructions 1 and 5 of the
Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates evidencing such Shares are
not immediately available or such stockholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such stockholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, such Shares may nevertheless be
tendered, provided that all the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is
received prior to the Expiration Date by the Depositary as provided below;
and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a manually signed facsimile thereof),
properly completed and duly executed, with any required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message,
and any other documents required by the Letter of Transmittal are received
by the Depositary within three Nasdaq National Market ("Nasdaq") trading
days after the date of execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or by
facsimile transmission 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 Purchaser.
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 the
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and the Letter of Transmittal (or a manually signed
facsimile thereof), properly completed and duly executed, with any required
signature guarantees or, in the case of a book-entry transfer, an Agent's
Message, and any other documents required by the Letter of Transmittal.
Determination of Validity. All questions as to the form of documents and the
validity, form, eligibility (including time of receipt) and acceptance for
payment of any tender of Shares will be determined by Purchaser, in its sole
discretion, which determination shall be final and binding on all parties.
Purchaser reserves the absolute right to reject any and all tenders determined
by it not to be in proper form or the acceptance for payment of which may, in
the opinion of its counsel, be unlawful. Purchaser also reserves the absolute
right to waive any condition of the Offer to the extent permitted by applicable
law and the Merger Agreement or any defect or irregularity in the tender of any
Shares of any particular stockholder, whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of
Shares will be deemed to have been validly made until all defects and
irregularities have been cured or waived. None of Purchaser, Parent or any of
their respective affiliates or assigns, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any
7
defects or irregularities in tenders or incur any liability for failure to give
any such notification. Purchaser's interpretation of the terms and conditions
of the Offer (including the Letter of Transmittal and the instructions thereto)
will be final and binding.
A tender of Shares pursuant to any of the procedures described above will
constitute the tendering stockholder's acceptance of the terms and conditions
of the Offer, as well as the tendering stockholder's representation and
warranty to Purchaser that (i) such stockholder has the full power and
authority to tender, sell, assign and transfer the tendered Shares (and any and
all other Shares or other securities issued or issuable in respect of such
Shares), and (ii) when the same are accepted for payment by Purchaser,
Purchaser will acquire good and unencumbered title thereto, free and clear of
all liens, restrictions, charges and encumbrances and not subject to any
adverse claims.
The acceptance for payment by Purchaser of Shares pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the
conditions of the Offer.
Appointment as Proxy. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's agents, attorneys-in-fact and proxies, each with full power
of substitution, in the manner set forth in the Letter of Transmittal, to the
full extent of such stockholder's rights with respect to the Shares tendered by
such stockholder and accepted for payment by Purchaser (and with respect to any
and all other Shares or other securities issued or issuable in respect of such
Shares on or after July 24, 2000). All such powers of attorney and proxies
shall be considered irrevocable and coupled with an interest in the tendered
Shares. Such appointment will be effective when, and only to the extent that,
Purchaser accepts such Shares for payment. Upon such acceptance for payment,
all prior powers of attorney and proxies given by such stockholder with respect
to such Shares (and such other Shares and securities) will be revoked, without
further action, and no subsequent powers of attorney or proxies may be given
nor any subsequent written consent executed by such stockholder (and, if given
or executed, will not be deemed to be effective) with respect thereto. The
designees of Purchaser will, with respect to the Shares for which the
appointment is effective, be empowered to exercise all voting and other rights
of such stockholder as they in their sole discretion may deem proper at any
annual or special meeting of the Company's stockholders or any adjournment or
postponement thereof, by written consent in lieu of any such meeting or
otherwise. Purchaser reserves the right to require that, in order for Shares to
be deemed validly tendered, immediately upon Purchaser's payment for such
Shares, Purchaser must be able to exercise full voting rights with respect to
such Shares (and such other Shares and securities).
Under the "backup withholding" provisions of U.S. federal income tax law,
the Depositary may be required to withhold 31% of any payments of cash pursuant
to the Offer. To prevent backup federal income tax withholding with respect to
payment to certain stockholders of the purchase price of Shares purchased
pursuant to the Offer, each such stockholder must provide the Depositary with
such stockholder's correct taxpayer identification number and certify that such
stockholder is not subject to backup federal income tax withholding by
completing the Substitute Form W-9 in the Letter of Transmittal. See
Instruction 10 of the Letter of Transmittal.
4. Withdrawal Rights.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by Purchaser pursuant to the Offer, may
also be withdrawn at any time after October 2, 2000. If Purchaser extends the
Offer, Shares may be withdrawn until the extended Expiration Date. If Purchaser
is delayed in its acceptance for payment of Shares or is unable to accept
Shares for payment pursuant to the Offer for any reason, then subject to Rule
14e-1(c) under the Exchange Act and without prejudice to Purchaser's rights
under the Offer, the Depositary may, nevertheless, on behalf of Purchaser,
retain tendered Shares, and such Shares may not be withdrawn except to the
extent that tendering stockholders are entitled to withdrawal rights as
described in this Section 4. Any such delay will be by an extension of the
Offer to the extent required by the Merger Agreement or by law.
8
For a withdrawal to be effective, a written or facsimile transmission notice
of withdrawal must be timely received by the Depositary at one of its addresses
set forth on the back cover page 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 such Shares, if different from that of the person who tendered such
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 such
Share Certificates must be submitted to the Depositary and the signature(s) on
the notice of withdrawal must be guaranteed by an Eligible Institution, unless
such Shares have been tendered for the account of an Eligible Institution. If
Shares have been tendered pursuant to the procedure for book-entry transfer as
set forth in Section 3, any notice of withdrawal must specify the name and
number of the account at the Book-Entry Transfer Facility to be credited with
the withdrawn Shares.
All questions as to the form and validity (including time of receipt) of any
notice of withdrawal will be determined by Purchaser, in its sole discretion,
whose determination will be final and binding. None of Purchaser, Parent or any
of their respective affiliates or assigns, the Dealer Manager, the Depositary,
the Information Agent or any other person will be under any duty to give any
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give any such notification.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date by following one of the procedures described in Section 3.
5. Certain Federal Income Tax Consequences.
The following is a summary of certain federal income tax consequences of the
Offer and the Merger to holders whose Shares are purchased pursuant to the
Offer or whose Shares are converted into the right to receive cash in the
Merger (whether upon receipt of the Merger Consideration or pursuant to the
proper exercise of dissenter's rights). The discussion applies only to holders
of Shares in whose hands Shares are capital assets, and may not apply to Shares
received pursuant to the exercise of employee stock options or otherwise as
compensation, or to holders of Shares who are not citizens or residents of the
United States of America.
The tax discussion set forth below is included for general information
purposes only and is based upon present law (which may be subject to change,
possibly on a retroactive basis). Because individual circumstances may differ,
each holder of Shares should consult such holder's own tax advisor to determine
the applicability of the rules discussed to such holder and the particular tax
effects of the Offer and the Merger, including the application and effect of
state, local and other tax laws.
The receipt of the offer price and the receipt of cash pursuant to the
Merger (whether as Merger Consideration or pursuant to the proper exercise of
dissenter's rights) will be a taxable transaction for U.S. federal income tax
purposes (and also may be a taxable transaction under applicable state, local
and other income tax laws). In general, for U.S. federal income tax purposes, a
holder of Shares will recognize gain or loss equal to the difference between
such holder's adjusted tax basis in the Shares sold pursuant to the Offer or
converted to cash in the Merger and the amount of cash received therefor. Gain
or loss must be determined separately for each block of Shares (i.e., Shares
acquired at the same cost in a single transaction) sold pursuant to the Offer
or converted to cash in the Merger. Such gain or loss will be capital gain or
loss. Individual holders will be subject to tax on the net amount of such gain
at a maximum rate of 20%, provided that the Shares were held for more than 12
months. The deduction of capital losses is subject to certain limitations under
U.S. federal income tax law. Holders of Shares should consult their own tax
advisors in this regard.
Payments in connection with the Offer or the Merger may be subject to backup
withholding at a 31% rate. Backup withholding generally applies if a holder of
Shares (i) fails to furnish such holder's social security number or taxpayer
identification number ("TIN"), (ii) furnishes an incorrect TIN, (iii) fails
properly to report
9
interest or dividends or (iv) under certain circumstances, fails to provide a
certified statement, signed under penalties of perjury, that the TIN provided
is such holder's correct number and that such holder is not subject to backup
withholding. Backup withholding is not an additional tax but merely an advance
payment, which may be refunded to the extent it results in an overpayment of
tax, provided that certain information is furnished to the Internal Revenue
Service. Certain persons, including corporations and financial institutions,
generally are exempt from backup withholding. Certain penalties apply for
failure to furnish correct information and for failure to include the
reportable payments in income. Each holder of Shares should consult with such
holder's own tax advisor as to such holder's qualifications for exemption from
withholding and the procedure for obtaining such exemption.
6. Price Range of Shares; Dividends.
The Shares are listed and principally traded on the Nasdaq National Market
System. The following table sets forth, for the quarters indicated, the high
and low daily closing prices per Share on the Nasdaq National Market System as
reported by the Dow Jones News Service. No cash dividends have been paid or
declared according to published financial sources.
Shares Market Data
High Low
------ ------
1998:
First Quarter............................................. $19.88 $10.25
Second Quarter............................................ 23.88 13.88
Third Quarter............................................. 19.25 9.50
Fourth Quarter............................................ 21.38 9.50
1999:
First Quarter............................................. $25.25 $17.25
Second Quarter............................................ 34.00 21.44
Third Quarter............................................. 36.75 24.75
Fourth Quarter............................................ 34.88 10.50
2000:
First Quarter............................................. $25.75 $14.00
Second Quarter............................................ 21.00 11.69
Third Quarter (through August 3, 2000).................... 31.00 19.00
On July 21, 2000, the last full trading day prior to the announcement of the
execution of the Merger Agreement and of Purchaser's intention to commence the
Offer, the closing price per Share as reported on the Nasdaq National Market
System was $20.13. On August 3, 2000, the last full trading day prior to the
commencement of the Offer, the closing price per Share as reported on the
Nasdaq National Market System was $30.81. As of August 3, 2000, the approximate
number of holders of record of the Shares was 120.
Stockholders are urged to obtain a current market quotation for the Shares.
7. Certain Information Concerning the Company.
Except as otherwise set forth in this Offer to Purchase, all of 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 Commission and other public sources. Neither Purchaser nor Parent assumes
any responsibility for the accuracy or completeness of the information
concerning the Company furnished by the Company or 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 Purchaser or Parent.
10
General. The Company is a Delaware corporation with its principal executive
offices located at 300 Atlantic Street, Suite 402, Stamford, Connecticut 06901,
and its telephone number is (203) 351-2300. The Company is an integrated
pharmaceutical outsourcing company that provides a comprehensive range of
services to pharmaceutical and biopharmaceutical companies, primarily contract
process research and development and contract manufacturing of active
pharmaceutical ingredients. The Company operates through two operating
divisions, the development division and the manufacturing division. The
Company's development division is engaged in every aspect of drug substance
development from discovery support before submission of an IND (Investigational
New Drug) and process research and development and manufacture of active
ingredients for clinical trials. The Company's manufacturing division produces
bulk active pharmaceutical ingredients. Together, the two divisions span all of
the steps needed to prepare the Drug Substance section of a FDA New Drug
Application.
Certain Projected Financial Data of the Company. Prior to entering into the
Merger Agreement, Parent conducted a due diligence review of the Company and in
connection with such review received certain projections of the Company's
future operating performance. The Company does not in the ordinary course
publicly disclose projections and these projections were not prepared with a
view to public disclosure. The Company has advised Parent and Purchaser that
these projections were prepared by the Company's management based on numerous
assumptions including, among others, projections of revenues, operating income,
benefits and other expenses, depreciation and amortization, capital expenditure
and working capital requirements. No assurances can be given with respect to
any such assumptions. These projections do not give effect to the Offer or the
potential combined operations of Parent and the Company or any alterations
Parent may make to the Company's operations or strategy after the consummation
of the Offer. The information set forth below is presented for the limited
purpose of giving the stockholders access to the material financial projections
prepared by the Company's management that were made available to Parent and
Purchaser in connection with the Merger Agreement and the Offer.
ChiRex Inc.*
Projected Financial Performance
Description FY 2000
----------- --------
Net sales........................................................ $133,350
Cost of sales.................................................... $ 95,131
Gross Profit..................................................... $ 38,219
Operating Income (EBITA)......................................... $ 16,818
Earnings before income taxes..................................... $ 12,066
Net Income....................................................... $ 7,851
- --------
* All amounts in thousands
Certain matters discussed herein, including, but not limited to these
projections, are forward-looking statements that involve risks and
uncertainties. Forward-looking statements include the information set forth
above under "Certain Projected Financial Data of the Company". Forward-looking
statements also include those preceded by, followed by or that include the
words "believes", "expects", "anticipates" or similar expressions. While
presented with numerical specificity, the projections set forth above were not
prepared by the Company in the ordinary course and are based upon a variety of
estimates and hypothetical assumptions which may not be accurate, may not be
realized, and are also inherently subject to significant business, economic and
competitive uncertainties and contingencies, all of which are difficult to
predict, and most of which are beyond the control of the Company. Accordingly,
there can be no assurance that any of the projections will be realized and the
actual results for the year ending December 31, 2000 may vary materially from
those shown above.
In addition, these projections were not prepared in accordance with
generally accepted accounting principles, and neither the Company's nor
Parent's independent accountants has examined or compiled any of
11
these projections or expressed any conclusion or provided any other form of
assurance with respect to these projections and accordingly assume no
responsibility for these projections. These projections were prepared with a
limited degree of precision, and were not prepared with a view to public
disclosure or compliance with the published guidelines of the Commission or the
guidelines established by the American Institute of Certified Public
Accountants regarding projections, which would require a more complete
presentation of data than as shown above. The inclusion of these projections
herein should not be regarded as a representation by the Company, Parent and
Purchaser or any other person to whom these projections were provided that the
projected results will be achieved. These projections should be read in
conjunction with the historical financial information of the Company. None of
Parent, Purchaser, or any other person to whom these projections were provided
assumes any responsibility for the accuracy or validity of the foregoing
projections.
Available Information. The Company is subject to the informational filing
requirements of the Exchange Act and, in accordance therewith, is required to
file periodic reports, proxy statements and other information with the
Commission relating to its business, financial condition and other matters.
Information as of particular dates concerning the Company's directors and
officers, their remuneration, stock options granted to them, the principal
holders of the Company's securities and any material interest of such persons
in transactions with the Company is required to be disclosed in proxy
statements distributed to the Company's stockholders and filed with the
Commission. Such reports, proxy statements and other information should be
available for inspection at the public reference facilities maintained by the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549,
and also should be available for inspection at the Commission's regional
offices located at Seven World Trade Center, 13th Floor, New York, New York
10048 and the Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such materials may also be obtained by
mail, upon payment of the Commission's customary fees, by writing to its
principal office at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission also maintains a World Wide Website on the Internet at
http://www.sec.gov that contains reports and other information regarding
issuers that file electronically with the Commission.
8. Certain Information Concerning Purchaser and Parent.
General. Purchaser is a newly incorporated Delaware corporation organized in
connection with the Offer and the Merger and has not carried on any activities
other than in connection with the Offer and the Merger. The principal offices
of Purchaser are located at 259 Prospect Plains Road, Cranbury, New Jersey
08512 and its telephone number is (609) 860-4000. Purchaser is an indirect
wholly owned subsidiary of Parent.
Until immediately prior to the time that Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger. Because Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial information regarding
Purchaser is available.
Parent is a corporation organized under the laws of France. Its principal
offices are located at 26, Quai Alphonse Le Gallo, 92512 Boulogne-Billancourt,
France and its telephone number is 011-33-1-55-38-4000. Parent is one of the
world's largest specialty chemicals companies. Parent has leading worldwide
market positions in many of its major businesses, ranking number one on the
basis of 1999 net sales in products such as food phosphates, vanillin, guar
gum, acetyl-salicyclic acid, mild surfactants and highly dispensable silica and
in services such as sulfuric acid regeneration. Parent's fine organics division
researches, develops and produces customized molecules, usually in
collaboration with its customers. The common stock of Parent is listed on the
monthly settlement market of the Premier Marche of the Paris Bourse and the
American Depositary Shares of Parent are traded on the New York Stock Exchange
under the symbol "RHA". Because the only consideration in the Offer and Merger
is cash and the Offer covers all outstanding Shares, and in view of the absence
of a financing condition, Purchaser believes that the financial condition of
Parent is not material to a decision by a holder of Shares whether to hold,
sell or tender Shares pursuant to the Offer.
12
The name, citizenship, business address, business telephone number,
principal occupation or employment, and five-year employment history for each
of the directors and executive officers of Purchaser and Parent and certain
other information are set forth in Schedule I hereto. Except as described in
this Offer to Purchase and in Schedule I hereto, none of Parent, Purchaser or,
to the best knowledge of such corporations, any of the persons listed on
Schedule I to the Offer of Purchase has during the last five years (i) been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) 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 finding any violation of such laws.
Parent owns 75,100 Shares, representing less than 0.5% of the 15,263,977
Shares outstanding at July 24, 2000, all of which were acquired in open market
transactions between May 17, 2000 and May 24, 2000 at prices ranging from
$16.50 per Share to $17.69 per Share. Schedule II hereto sets forth information
with respect to each purchase of Shares made by Parent during the past 60 days.
Except as described in this Offer to Purchase and in Schedule II hereto, (i)
none of Purchaser, Parent nor, to the best knowledge of Purchaser and Parent,
any of the persons listed in Schedule I to this Offer to Purchase or any
associate or majority owned subsidiary of Purchaser, Parent or any of the
persons so listed, beneficially owns or has any right to acquire any Shares and
(ii) none of Purchaser, Parent nor, to the best knowledge of Purchaser and
Parent, any of the persons or entities referred to above nor any director,
executive officer or subsidiary of any of the foregoing has effected any
transaction in the Shares during the past 60 days.
Except as provided in the Merger Agreement and as otherwise described in
this Offer to Purchase, none of Purchaser, Parent nor, to the best knowledge of
Purchaser and Parent, any of the persons listed in Schedule I to this Offer to
Purchase, has any agreement, arrangement, understanding, whether or not legally
enforceable, with any other person with respect to any securities of the
Company, including, but not limited to, the transfer or voting of such
securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss or the giving or withholding of
proxies, consents or authorizations. Except as set forth in this Offer to
Purchase, since January 1, 1998, neither Purchaser nor Parent nor, to the best
knowledge of Purchaser and Parent, any of the persons listed on Schedule I
hereto, has had any transaction 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 Commission applicable to the Offer. Except as set
forth in this Offer to Purchase, since January 1, 1998, there have been no
negotiations, transactions or material contacts between any of Purchaser,
Parent, or any of their respective subsidiaries or, to the best knowledge of
Purchaser and Parent, any of the persons listed in Schedule I to this Offer to
Purchase, on the one hand, and the Company or its affiliates, on the other
hand, concerning a merger, consolidation or acquisition, tender offer for or
other acquisition of any class of the Company's securities, an election of the
Company's directors or a sale or other transfer of a material amount of assets
of the Company.
9. Financing of the Offer and the Merger.
The total amount of funds required by Purchaser to consummate the Offer and
the Merger and to pay related fees and expenses is estimated to be
approximately $515 million. Parent will cause to be provided to us, or one of
Parent's subsidiaries will provide or cause to be provided, all of such funds
to Purchaser. Parent or the relevant subsidiary of Parent will provide or cause
to be provided such funds from existing resources.
10. Background of the Offer; Contacts with the Company; the Merger Agreement
and Related Agreements.
At the beginning of April 2000, Mr. Myron Galuskin, President of Rhodia
Inc., a subsidiary of Parent, telephoned the Company in order to organize a
meeting between Mr. Jean-Claude Bravard, Deputy President of Parent and Mr.
Michael A. Griffith, Chairman and Chief Executive Officer of the Company.
13
On April 27, 2000, Mr. Bravard and Mr. Galuskin met with Mr. Griffith and
Mr. Francis J. Wright, Executive Vice President, Corporate Development of the
Company, to discuss possible cooperations between Parent and the Company.
During the period from April 27, 2000 to May 26, 2000, Bear, Stearns & Co.
Inc., Parent's financial advisor, and Chase Securities, financial advisor to
the Company, discussed their respective clients' interest in exploring a
potential transaction.
On May 5, 2000, Mr. Joseph Blaker, consultant to Parent, visited the
facilities of the Company in Dudley and Annan.
On May 26, 2000, representatives of Parent and Mr. Thomas I.H. Dubin, Vice
President, General Counsel and Secretary of the Company negotiated a
confidentiality and standstill agreement, which Parent and the Company
executed on May 26, 2000. Thereafter, on May 26, 2000, Mr. Griffith, Mr.
Wright and representatives of Chase Securities met in New York with Mr.
Bravard and Mr. Galuskin and other representatives of Parent and Bear, Stearns
& Co. Inc. to discuss the potential transaction.
On June 6, 2000, Mr. Bravard and a representative of Parent's financial
advisor met with Mr. Griffith and confirmed Parent's interest in the
possibility of acquiring the Company through a transaction in which Parent or
one of its subsidiaries would acquire all of the outstanding shares of the
Company. Mr. Bravard informed Mr. Griffith that, subject to the results of the
due diligence review of the Company to be conducted by Parent, Parent could
contemplate offering a price of $28 per Share, and would consider increasing
such amount to $30 per Share if justified by additional positive information
developed in the course of the due diligence review. Parent requested to be
granted exclusivity for a limited period of time in order to negotiate a
potential transaction with the Company, but the Company informed Parent that
it was not seeking to be acquired, did not consider the suggested price
adequate and was not willing to grant Parent exclusivity at that time.
During the period between May 26, 2000 and June 25, 2000, the Company and
its financial advisor provided information to Parent and its financial advisor
regarding its business. Representatives of Parent and the Company continued
discussions regarding the possible transaction and the proposed price. At
Parent's initiative, Parent and the Company also began discussing the
possibility of new consulting or employment agreements between the Company and
the senior managers of the Company, which would provide for the continued
services of the relevant individuals after the consummation of the proposed
transaction. Parent and the Company also started discussing the ongoing
relationship between the Company and its scientific advisors.
On June 25, 2000, Parent's legal counsel sent a preliminary legal due
diligence request list to the Company, together with a draft confidentiality
agreement to be executed by the Company. This confidentiality agreement was
executed by Parent and the Company on June 27, 2000.
On June 27, 2000, Parent's legal counsel sent the initial draft of the
Merger Agreement to the Company.
On June 28, 2000, Mr. Bravard and a representative of Parent's legal
advisor discussed with Mr. Griffith the potential terms of employment after
consummation of the proposed transaction for Mr. Griffith, and each of Messrs.
Ian D. Shott, President, Manufacturing Division of the Company, Bruce P.
Shutts, President, Development Division of the Company, and Stuart E.
Needleman, Vice President, Business Development of the Company.
On June 29, 2000, Parent and its legal and financial advisors attended
presentations made by the management of the Company. Parent and its advisors
also conducted an oral preliminary legal due diligence review of the Company
with Mr. Dubin.
On June 29, 2000, Mr. Bravard sent a due diligence request list to Mr.
Griffith.
On June 30, 2000, Parent's legal advisor sent a supplemental due diligence
request list to the Company.
14
During the period from June 29, 2000 through July 6, 2000, Parent and its
advisors continued their due diligence review of the Company. In addition,
during this period, representatives of Parent visited the facilities of the
Company. Representatives of Parent and the Company continued discussions
regarding the possible transaction. The Company informed Parent that the
Company was unwilling to progress in the negotiations with Parent unless
Parent was prepared to increase the price at which it would be prepared to
make a proposal.
On July 2, 3 and 4, 2000, Mr. Bravard met successively with each of Messrs.
Shott, Shutts and Needleman to discuss their continuing relationship with the
Company should the proposed acquisition be successful.
On July 6, 2000, Parent telephoned the Company and sent a letter to the
Company, confirming its continuing interest in pursuing a potential
acquisition of the Company, and informing the Company that Parent would be
prepared to offer a price of $31 per Share, subject to certain conditions,
including completion of the due diligence review of the Company and execution
of satisfactory definitive agreements. Parent also stated that it required
each of Messrs. Griffith, Shott, Shutts, and Needleman, to enter into on-going
consulting or employment arrangements with the Company and that it needed
comfort that the Company would continue to enjoy the benefits of its
relationship with its key scientific advisors after consummation of the
proposed transaction.
On July 10, 2000, Mr. Griffith telephoned Mr. Bravard and informed him that
the board of directors of the Company had authorized the Company to continue
its discussions with Parent regarding a potential acquisition by Parent of all
of the outstanding Shares in cash, but that $31 per Share was below the price
that the board of directors of the Company would be prepared to accept.
On July 12, 2000, Parent's legal advisor sent a follow-up legal due
diligence request list to the Company.
On July 17, Parent, the Company and their respective legal advisors met to
negotiate the terms of the Merger Agreement and the employment and consulting
agreements of Messrs. Griffith, Wright, Shott, Shutts and Needleman and to
discuss the continuing relationship between the Company and its scientific
advisors.
On July 19, 2000, Mr. Bravard informed Mr. Griffith that Parent was
prepared to make a proposal to acquire all of the outstanding Shares for a
price of $31.25 per Share, subject to the finalization of the terms of the
Merger Agreement and completion of the due diligence review of the Company. On
July 19, 2000, Mr. Griffith informed Mr. Bravard that the Company would
consider the proposed acquisition by Parent at such price, subject to
satisfactory negotiation of the terms of the Merger Agreement and to the
approval of the board of directors of the Company.
During the period from July 18, 2000 through July 22, 2000, representatives
of Parent and its advisors conducted a further due diligence review of the
Company. During the same period of time, representatives of Parent and the
Company and their respective legal advisors negotiated the terms and
conditions of the Merger Agreement and the employment and consulting
agreements of Messrs. Griffith, Wright, Shott, Shutts and Needleman.
On July 21, 2000, Mr. Bravard, Mr. Michel Marien, President of the life
science chemicals enterprise of Parent, and Mr. Griffith met with
representatives of Glaxo Wellcome in order to discuss the continuing
relationship between the Company and Glaxo Wellcome.
On July 23, 2000, Mr. Griffith telephone Mr. Bravard and informed him that
the board of directors of the Company had approved the transaction, subject to
finalization of the Merger Agreement.
During the night of July 23, 2000, Mr. Bravard, a representative of
Parent's legal advisor, Mr. Griffith and a representative of the Company's
legal advisor telephoned Mr. Eric Jacobsen, a director of the Company and one
of the scientific consultants to the Company, in order to discuss the
continuing relationship between the Company, Mr. Jacobsen and the other
scientific advisors to the Company.
15
The Merger Agreement, the consulting agreements of Messrs. Griffith and
Wright, and the new employment agreements of Messrs. Shott, Shutts and
Needleman were finalized and executed, and a joint press release announcing the
proposed Offer and the Merger was issued, on July 24, 2000.
The Merger Agreement
The following is a summary of certain provisions of the Merger Agreement.
This summary is qualified in its entirety by reference to the Merger Agreement,
which is incorporated herein by reference, and a copy of which has been filed
as an Exhibit to the Tender Offer Statement on Schedule TO (the "Schedule TO")
filed by Purchaser and Parent with the Commission in connection with the Offer.
The Merger Agreement may be examined and copies may be obtained at the places
set forth in Section 7. Defined terms used herein and not defined herein shall
have the respective meanings assigned to those terms in the Merger Agreement.
The Offer. The Merger Agreement provides for the commencement of the Offer
as promptly as reasonably practicable, but in no event later than ten business
days after the initial public announcement of Purchaser's intention to commence
the Offer. The obligation of Purchaser to accept for payment Shares tendered
pursuant to the Offer is subject to the satisfaction of the Minimum Condition
and certain other conditions that are described in Section 14 hereof. Purchaser
and Parent have agreed that without the prior consent of the Company, Purchaser
may not waive the Minimum Condition or, subject to certain exceptions, extend
the Offer. Purchaser and Parent have further agreed that no change in the Offer
may be made without the prior consent of the Company which decreases the price
per Share payable in the Offer, changes the form of consideration payable in
the Offer, which reduces the maximum number of Shares to be purchased in the
Offer, which imposes conditions to the Offer in addition to those set forth in
Section 14 hereof or which otherwise adversely affects the holders of Shares.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, and in accordance with Delaware Law, Purchaser shall
be merged with and into the Company. The Merger Agreement also provides that
Parent may elect instead, at any time prior to the fifth business day
immediately preceding the date on which the Proxy Statement (as hereinafter
defined) is mailed initially to the Company's stockholders, to merge the
Company with and into Purchaser or another direct or indirect wholly owned
subsidiary of Parent, provided that the Offer and the Merger are not delayed
and the holders of Shares are not adversely affected by such election.
As a result of the Merger, the separate corporate existence of Purchaser
will cease and the Company will continue as the Surviving Corporation and will
become an indirect wholly owned subsidiary of Parent. Upon consummation of the
Merger, each issued and then outstanding Share (other than any Shares held in
the treasury of the Company, or owned by Purchaser, Parent or any direct or
indirect wholly owned subsidiary of Parent or of the Company and any Shares
which are held by stockholders who have not voted in favor of the Merger or
consented thereto in writing and who shall have demanded properly in writing
appraisal for such Shares in accordance with Delaware Law) shall be canceled
and converted automatically into the right to receive the Merger Consideration.
Pursuant to the Merger Agreement, each share of common stock, par value $.01
per share, of Purchaser issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one validly issued,
fully paid and non-assessable share of common stock, par value $.01 per share,
of the Surviving Corporation.
The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation and that the officers of the Company immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation.
Subject to the Merger Agreement, at the Effective Time, the Certificate of
Incorporation of Purchaser, as in effect immediately prior to the
16
Effective Time, will be the Certificate of Incorporation of the Surviving
Corporation; provided, however, that, at the Effective Time, Article I of the
Certificate of Incorporation of the Surviving Corporation will be amended to
read as follows: "The name of the corporation is Rhodia-ChiRex Inc." Subject to
the Merger Agreement, at the Effective Time, the By-laws of Purchaser, as in
effect immediately prior to the Effective Time, will be the By-laws of the
Surviving Corporation.
Stockholders' Meeting. Pursuant to the Merger Agreement, the Company shall,
if required by applicable law in order to consummate the Merger, duly call,
give notice of, convene and hold an annual or special meeting of its
stockholders as promptly as practicable following consummation of the Offer for
the purpose of considering and taking action on the Merger Agreement and the
Merger (the "Stockholders' Meeting"). If Purchaser acquires at least a majority
of the outstanding Shares, Purchaser will have sufficient voting power to
approve the Merger, even if no other stockholder votes in favor of the Merger.
Proxy Statement. The Merger Agreement provides that the Company shall, if
approval of the Company's stockholders is required by applicable law to
consummate the Merger, promptly following consummation of the Offer, file with
the Commission under the Exchange Act, and use its best efforts to have cleared
by the Commission promptly, a proxy statement and related proxy materials (the
"Proxy Statement") with respect to the Stockholders' Meeting and shall cause
the Proxy Statement and all required amendments and supplements thereto to be
mailed to stockholders of the Company at the earliest practicable time. The
Company has agreed to include in the Proxy Statement, and not subsequently
withdraw or modify in any manner adverse to Purchaser or Parent, the unanimous
recommendation of the Board that the stockholders of the Company approve and
adopt the Merger Agreement and the Merger and to use its best efforts to obtain
such approval and adoption. Parent and Purchaser have agreed to cause all
Shares then owned by them and their subsidiaries to be voted in favor of
approval and adoption of the Merger Agreement and the Merger. The Merger
Agreement provides that, in the event that Purchaser shall acquire at least 90%
of the then outstanding Shares, Parent, Purchaser and the Company will take all
necessary and appropriate action to cause the Merger to become effective, in
accordance with Delaware Law, as promptly as reasonably practicable after such
acquisition, without a meeting of the Company's stockholders.
Conduct of Business by the Company Pending the Merger. Pursuant to the
Merger Agreement, the Company has covenanted and agreed that, between the date
of the Merger Agreement and the Effective Time, unless Parent shall otherwise
agree in writing, the businesses of the Company and its subsidiaries (the
"Subsidiaries" and, individually, a "Subsidiary") shall be conducted only in,
and the Company and the Subsidiaries shall not take any action except in, the
ordinary course of business and in a manner consistent with past practice; and
the Company shall use its reasonable best efforts to preserve substantially
intact the business organization of the Company and the Subsidiaries, to keep
available the services of the current officers, employees and consultants of
the Company and the Subsidiaries and to preserve the current relationships of
the Company and the Subsidiaries with customers, suppliers and other persons
with which the Company or any Subsidiary has significant business relations.
The Merger Agreement provides that, by way of amplification and not limitation,
except as contemplated therein, neither the Company nor any Subsidiary shall,
between the date of the Merger Agreement and the Effective Time, directly or
indirectly, do, or propose to do, any of the following, without the prior
written consent of Parent: (a) amend or otherwise change its Certificate of
Incorporation or By-laws or equivalent organizational documents; (b) issue,
sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale,
pledge, disposition, grant or encumbrance of (i) any shares of any class of
capital stock of the Company or any Subsidiary, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of
such capital stock, or any other ownership interest (including, without
limitation, any phantom interest), of the Company or any Subsidiary (except for
the issuance of Shares issuable pursuant to Company Stock Options outstanding
on the date of the Merger Agreement or pursuant to the ESPP (as defined below),
or the issuance of Company Stock Options pursuant to offer letters outstanding
on the date of the Merger Agreement that have been given to potential new
employees of the Company or any Subsidiary) or (ii) any assets of the Company
or any Subsidiary, except in the ordinary course of business and in a manner
consistent with past practice; (c) declare, set aside, make or pay any dividend
or other distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock; (d) reclassify, combine,
17
split, subdivide or redeem or purchase or otherwise acquire, directly or
indirectly, any of its capital stock; (e) (i) acquire (including, without
limitation, by merger, consolidation, or acquisition of stock or assets or any
other business combination) any corporation, partnership, other business
organization or any division thereof or any assets except, in the case of
assets, (A) raw materials, supplies, intermediates or similar assets used in
the business on a day-to-day basis consistent with past practice, (B)
replacement parts or necessary replacement equipment or (C) other equipment
acquired for a price of no more than $50,000, individually, or $300,000, in the
aggregate; (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise become responsible
for, the obligations of any person, or make any loans or advances, or grant any
security interest in any of its assets, except in the ordinary course of
business and consistent with past practice, (iii) enter into any contract or
agreement other than in the ordinary course of business and consistent with
past practice, (iv) authorize, or make any commitment with respect to, or
undertake capital expenditures which are, in the aggregate, in excess of
$500,000 for the Company and the Subsidiaries taken as a whole, except for
completion of construction in process as of the date of the Merger Agreement or
capital expenditure contemplated by the capital expenditure plan disclosed by
the Company to Purchaser, or (v) enter into or amend any contract, agreement,
commitment or arrangement with respect to any of the foregoing matters; (f)
except as required by law or to fulfill obligations existing on the date of the
Merger Agreement and disclosed to Parent, increase the compensation payable or
to become payable or the benefits provided to its directors, officers or
employees, except for increases in the ordinary course of business and
consistent with past practice in salaries or wages of employees of the Company
or any Subsidiary who are not directors or officers of the Company or any
material subsidiary of the Company, or grant any severance or termination pay
to, or enter into any employment or severance agreement with any director,
officer or other employee of the Company or of any Subsidiary, or establish,
adopt, enter into or amend any collective bargaining, bonus, profit-sharing,
thrift, compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any director,
officer or employee (other than immaterial amendments, certain changes in
collective bargaining agreements and related changes in benefits plans); (g)
take any action, other than reasonable and usual actions in the ordinary course
of business and consistent with past practice or as required by GAAP or
Commission rules, with respect to accounting policies or procedures; (h) make
any tax election or settle or compromise any material United States federal,
state, local or non-United States income tax liability; (i) pay, discharge or
satisfy any claim, liability or obligation (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than in the ordinary course of
business and consistent with past practice; (j) amend, modify or consent to the
termination of any material contracts, or amend, waive, modify or consent to
the termination of the Company's or any Subsidiary's rights thereunder,
provided that, if beneficial ownership of 15% or more of the then-outstanding
Shares has been acquired by any person, other than Parent or any of its
affiliates, the Board may take all necessary action with respect to the Rights
Agreement (without redeeming the Rights) so that such ownership of Shares will
not result in such person being an Acquiring Person, the occurrence of a "flip-
in event" or a "flip-over event" (each, as defined in the Rights Agreement),
the Rights becoming exercisable or the triggering of any other provisions of
the Rights Agreement, and provided, further, that the Company may, after
consultation with Parent, amend or modify, or consent to the termination of, or
amend, waive or modify rights of the Company or of any Subsidiary under certain
categories of material contracts other than the supply agreement between Glaxo
Operations UK Limited, ChiRex (Annan) Limited and ChiRex (Holdings) Limited;
(k) commence or settle any litigation, suit, claim, action, proceeding or
investigation that would reasonably be expected to have a Material Adverse
Effect (defined as a result or effect arising out of or resulting from any
event, circumstance, change or effect that is or is reasonably likely to be
materially adverse to the business, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, or a material
adverse effect on the ability of the Company to consummate the Transactions, in
each case other than any result or effect arising out of or resulting from (i)
changes in general economic conditions, (ii) changes or developments in the
industries in which the Company and its subsidiaries operate, other than to the
extent any changes in such industries have a substantially disproportionate
effect on the Company and its subsidiaries, taken as a whole, or (iii) the
announcement or pendency of the Merger Agreement or the transactions
contemplated by the Merger Agreement (including any effect on the Company's
relationship with any customer)) (l) (i) abandon, sell, or assign any item of
the company intellectual property, other than in the
18
ordinary course of business and consistent with past practice; (ii) grant any
security interest in and to any item of Company Intellectual Property; or (iii)
disclose, or allow to be disclosed, any confidential Company Intellectual
Property, unless such Company Intellectual Property is subject to a
confidentiality or non-disclosure covenant protecting against unauthorized
disclosure thereof; (m) enter into (i) any license in which the Company or any
Subsidiary is a licensee or sublicensee or (ii) except for any License related
solely to the pharmaceutical industry, any License in which the Company or any
Subsidiary is a licensor or sublicensor; or (n) announce an intention, enter
into any formal or informal agreement or otherwise make a commitment, to do any
of the foregoing.
Company Board Representation. The Merger Agreement provides that, promptly
upon the purchase by Purchaser of a majority of the outstanding Shares on a
fully diluted basis pursuant to the Offer, and from time to time thereafter,
Purchaser shall be entitled to designate up to such number of directors,
rounded up to the next whole number, on the Board of Directors of the Company
as shall give Purchaser representation on the Board of Directors of the Company
equal to the product of the total number of directors on the Board of Directors
of the Company (giving effect to the directors elected pursuant to this
sentence), multiplied by the percentage that the aggregate number of Shares
beneficially owned by Purchaser or any affiliate of Purchaser following such
purchase bears to the total number of Shares then outstanding, and the Company
shall, at such time, promptly take all actions necessary to cause Purchaser's
designees to be elected as directors of the Company, including increasing the
size of the Board of Directors of the Company or securing the resignations of
incumbent directors, or both. The Merger Agreement also provides that, at such
times, the Company shall use its best efforts to cause persons designated by
Purchaser to constitute the same percentage as persons designated by Purchaser
shall constitute of the Board of Directors of the Company of (i) each committee
of the Board of Directors of the Company, (ii) each board of directors of each
Subsidiary, and (iii) each committee of each such board, in each case only to
the extent permitted by applicable law. Notwithstanding the foregoing, until
the Effective Time, the Company will designate two members of the Board of
Directors of the Company and each committee of the Board of Directors of the
Company and such boards and committees of the Subsidiaries, as of the date of
the Merger Agreement, who are not employees of the Company that shall remain
members of the Board and of such boards and committees.
The Merger Agreement provides that, following the election or appointment of
Purchaser's designees in accordance with the immediately preceding paragraph
and prior to the Effective Time, any amendment of the Merger Agreement or the
Certificate of Incorporation or By-laws of the Company, any termination of the
Merger Agreement by the Company, any extension by the Company of the time for
the performance of any of the obligations or other acts of Parent or Purchaser,
or waiver of any of the Company's rights thereunder, will require the
concurrence of a majority of those directors of the Company then in office who
were neither designated by Purchaser nor are employees of the Company or any
Subsidiary.
Access to Information. Pursuant to the Merger Agreement, until the Effective
Time, the Company shall, and shall cause the Subsidiaries and the officers,
directors, employees, auditors and agents of the Company and the Subsidiaries
to, afford the officers, employees and agents of Parent and Purchaser
reasonable access at all reasonable times to the officers, employees, agents,
properties, offices, plants and other facilities, books and records of the
Company and each Subsidiary, including without limitation, access to conduct or
have conducted any type of environmental investigation (except for any Phase
II-type sampling or other similarly intrusive testing) that Parent or Purchaser
deems appropriate, and shall furnish Parent and Purchaser with such financial,
operating and other data and information as Parent or Purchaser, through its
officers, employees or agents, may reasonably request.
No Solicitation of Transactions. The Company has agreed that neither it nor
any Subsidiary shall, directly or indirectly, through any officer, director,
agent or otherwise, solicit, initiate or encourage the submission of, any
Acquisition Proposal. The Company may, directly or indirectly, participate in
any discussions or negotiations regarding, or furnish information, or otherwise
cooperate with respect to, or assist or participate in, facilitate or
encourage, any unsolicited proposal that constitutes or, in the good faith
judgment of the Board may reasonably be expected to lead to, a Superior
Proposal, in each case, if and to the extent that the Board shall have
determined in good faith, after having received and considered advice from
outside legal
19
counsel, that the Company is required to do so by the fiduciary duties of the
Board under applicable law, and after giving prior written notice to Parent and
Purchaser and entering into a customary confidentiality agreement on terms no
less favorable to the Company than those contained in the Parent
Confidentiality Agreement (as defined below). "Superior Proposal" means any
Acquisition Proposal on terms which the Board of Directors of the Company
determines, in its good faith judgment (after having received and considered
the advice of a financial advisor of internationally recognized reputation), to
be more favorable to the Company's stockholders than the Offer and the Merger
and for which financing, to the extent required, is, in the good faith judgment
of the Board of Directors of the Company, reasonably likely to be obtained.
The Company has also agreed that neither the Board nor any committee thereof
shall (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Parent or Purchaser, the approval or recommendation by the Board or
any such committee of the Merger Agreement, the Offer, the Merger or any other
transaction contemplated thereby, (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. Notwithstanding the
foregoing, in the event that, prior to the time of acceptance for payment of
Shares pursuant to the Offer, the Board determines in good faith that it is
required to do so by its fiduciary duties under applicable law, or other
applicable law, including federal or state disclosure duties, after having
received and considered advice from outside legal counsel, the Board may
withdraw or modify its approval or recommendation of the Offer and the Merger,
but only to terminate the Merger Agreement in accordance with the termination
provisions specified therein. Notwithstanding the foregoing, the Company may
take or disclose to its stockholders a position contemplated by Rule 14e-2(a)
under the Exchange Act or make any required disclosure to the Company's
stockholders, in either case, if the Board of Directors of the Company shall
have determined in good faith, after having received and considered advice from
outside legal counsel, that the failure to take or disclose such a position or
make such required disclosure would breach the Board of Directors' obligations
under applicable law.
The Company agreed to, and to direct or cause its directors, officers,
employees, representatives and agents to, immediately cease and cause to be
terminated any discussions or negotiations with any parties that may be ongoing
prior to or on the date of the Merger Agreement with respect to any Acquisition
Proposal. The Company has also agreed to promptly advise Parent orally and in
writing of (i) any Acquisition Proposal or any request for information with
respect to any Acquisition Proposal, the material terms and conditions of such
Acquisition Proposal or request and the identity of the person making such
Acquisition Proposal or request and (ii) any changes in any such Acquisition
Proposal or request, in each case except to the extent the Board determines in
good faith, after having received and considered advice from outside legal
counsel, that to do so would breach their fiduciary duties.
Except as required by the Board's fiduciary duties under applicable law
after having received and considered advice from outside legal counsel, the
Company has agreed not to release any third party from, or waive any provision
of, any confidentiality or standstill agreement to which the Company is a
party.
Employee Stock Options and Other Employee Benefits. The Merger Agreement
also provides that, as soon as practicable after the date of the Merger
Agreement, the Company will take all necessary action to provide that each
option to acquire Shares (each, a "Company Stock Option") granted under the
Company's 1995 Employee Stock Purchase Plan (the "ESPP"), the Company's 1995
Stock Incentive Plan, the Company's 1997 Stock Incentive Plan and the Company's
1995 Director Stock Option Plan (collectively, the "Company Stock Plans") that
is outstanding and has not been exercised immediately prior to the Effective
Time, whether vested or unvested, shall be cancelled effective at the Effective
Time, with the holder thereof becoming entitled to receive an amount in cash
equal to the excess, if any, of (x) the amount per Share paid pursuant to the
Offer over (y) the per share exercise price of such Company Stock Option,
multiplied by the number of Shares subject to such Company Option.
As soon as practicable after the date of the Merger Agreement, the Company
will take all necessary actions to provide that (i) the exercise date in
respect of the then current offering period under the ESPP shall
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be accelerated (consistent with the provisions of the above paragraph), (ii)
any requirement to notify the Company of dispositions of Shares acquired
pursuant the ESPP in respect of any dispositions of such Shares in the Offer or
the Merger shall be waived, and (iii) the ESPP shall terminate as of the
Effective Time.
From and after the acceptance for payment of Shares in the Offer (the
"Specified Date") until the first anniversary of the Effective Time, Parent
will maintain, or cause the Surviving Corporation to maintain, employee benefit
plans and arrangements (specifically understood not to include equity-based
plans or other incentive compensation arrangements) which will provide benefits
that are no less favorable in the aggregate to employees of the Company and its
subsidiaries than those provided under the Plans in effect immediately prior to
the Specified Date. Notwithstanding anything to the contrary in the Merger
Agreement, from the Specified Date until the first anniversary of the Effective
Time, Parent shall, or shall cause the Surviving Corporation to, honor and
continue the Company's severance plans, programs and policies as in effect on
the Specified Date, without amendment or modification. In addition, from and
after the Specified Date, Parent will honor and will cause the Surviving
Corporation to honor in accordance with their respective terms the Company's
Plans and all of the Company's other employee benefit, compensation,
employment, severance and termination agreements, plans and policies, including
any rights or benefits arising as a result of the transactions contemplated by
the Merger Agreement (either alone or in combination with any other event).
Parent acknowledged and agreed that the consummation of the Offer and the other
transactions contemplated by the Merger Agreement constitute a "change of
control" under such agreements, plans and policies. For all purposes under the
employee benefit plans of Parent and its affiliates (including the Surviving
Corporation) providing benefits to any current employees of the Company or any
of its Subsidiaries (the "Company Employees") after the Effective Time, each
Company Employee shall be credited with his or her years of service with the
Company and its affiliates (and any predecessor entities thereof) before the
Effective Time, to the same extent as such Company Employee was entitled,
before the Effective Time (or if earlier, the Specified Date), to credit for
such service under any similar Company Plans, except for purposes of benefit
accrual under defined benefit pension plans or to the extent giving such credit
would result in a duplication of accrued benefits in respect of the same period
of service. Parent shall, or shall cause its subsidiaries to provide each
Company Employee with credit for any co-payments and deductibles incurred prior
to the Effective Time (or such earlier or later transition date to new welfare
benefits plans) for the calendar year in which the Effective Time (or such
earlier or later transition date) occurs, in satisfying any applicable
deductible or out-of-pocket requirements under any welfare plans that the
Company Employees are eligible to participate in after the Effective Time.
With respect to Company Employees who are employed or provide services
outside the United States, to the extent required by applicable local law,
Parent shall, or shall cause the Surviving Corporation to, immediately
following the Effective Time, continue the terms and conditions of employment
as in effect for such employees immediately prior to the Effective Time.
Directors' and Officers' Indemnification Insurance. The Merger Agreement
further provides that the Certificate of Incorporation of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification than are set forth in Article 9 of the Certificate of
Incorporation of the Company, which provisions shall not be amended, repealed
or otherwise modified for a period of six years from the Effective Time in any
manner that would affect adversely the rights thereunder of individuals who, at
or prior to the Effective Time, were directors, officers, employees,
fiduciaries or agents of the Company, unless such modification shall be
required by law.
The Merger Agreement also provides that the Surviving Corporation shall use
its reasonable best efforts to maintain in effect for six years from the
Effective Time, if available, the current directors' and officers' liability
insurance policies maintained by the Company (provided that the Surviving
Corporation may substitute therefor policies of at least the same coverage
containing terms and conditions that are not materially less favorable) with
respect to matters occurring prior to the Effective Time; provided, however,
that in no event shall the Surviving Corporation be required to expend more
than an amount per year equal to 150% of current annual
21
premiums, adjusted to reflect any increase in the Consumer Price Index over the
six-year period, paid by the Company for such insurance (which current annual
premiums the Company has represented to Parent and Purchaser to be $144, 475 in
the aggregate).
Parent, Purchaser and the Company have also agreed that in the event the
Company or the Surviving Corporation or any of their respective successors or
assigns (i) consolidates with or merges into any other person and shall not be
the continuing or surviving corporation or entity of such consolidation or
merger or (ii) transfers all or substantially all of its properties and assets
to any person, then and in each such case, proper provision shall be made so
that the successors and assigns of the Company or the Surviving Corporation, as
the case may be, or at Parent's option, Parent, shall assume the foregoing
indemnity obligations.
Further Action; Reasonable Best Efforts. The Merger Agreement provides that,
subject to its terms and conditions, each of the parties thereto shall (i) no
later than the tenth business day after the date of the Merger Agreement, file
its Premerger Notification and Report Form under the HSR Act and its
notification under the German Law Against Restraints of Competition with
respect to the transactions contemplated by the Merger Agreement, (ii) make
promptly all required filings and submissions under the merger control law of
Greece with respect to the transactions contemplated by the Merger Agreement,
and (iii) use its reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the Offer and the Merger including, without limitation, using its
reasonable best efforts to obtain all permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts with the Company and the Subsidiaries as are necessary for
the consummation of the Offer and the Merger and to fulfill the conditions to
the Offer and the Merger; provided that neither Purchaser nor Parent will be
required to take any action, including entering into a consent decree, hold
separate orders or other arrangements, that (A) requires the divestiture of any
material assets of any of the Purchaser, Parent, Company or any of their
respective subsidiaries or (B) materially limits Parent's freedom of action
with respect to, or its ability to retain, the Company and the Subsidiaries or
any portion thereof or any of Parent's or its affiliates' other assets or
businesses.
The Merger Agreement also provides that each of the parties thereto will
cooperate and use its reasonable best efforts to vigorously contest and resist
any action, including administrative or judicial action, and to have vacated,
lifted, reversed or overturned any decree, judgment, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and that
restricts, prevents or prohibits consummation of the Merger including, without
limitation, by vigorously pursuing all available avenues of administrative and
judicial appeal.
Transfer Taxes. The Merger Agreement also provides that either Purchaser or
the Surviving Corporation shall pay all stock transfer, real estate transfer,
documentary, stamp, recording and other similar taxes (and any penalties or
interest with respect to such taxes), incurred in connection with the
transactions contemplated by the Merger Agreement. The Merger Agreement
requires that the Company and Purchaser cooperate in the preparation and filing
of any required returns with respect to such taxes.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including
representations by the Company as to the absence of certain changes or events
concerning the Company's business, compliance with law, litigation, employee
benefit plans, labor matters, property and leases, intellectual property,
environmental matters, taxes, amendments to the Rights Agreement, material
contracts, insurance and brokers.
Conditions to the Merger. Under the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction,
at or prior to the Effective Time, of the following conditions: (a) if and to
the extent required by Delaware Law and the Certificate of Incorporation of the
Company, the Merger Agreement and the Merger shall have been approved and
adopted by the affirmative vote of the stockholders of the Company (provided
that Parent and Purchaser may not assert this condition unless all Shares
purchased pursuant to the Offer and all other Shares owned by Parent, Purchaser
and any other subsidiary of Parent have been voted in favor of such approval
and adoption); (b) no governmental authority in the United States, the
22
European Union, France, England or Scotland shall have enacted, issued,
promulgated, enforced or entered any statute, law, ordinance, regulation, rule,
code, executive order, injunction, decree or other order (whether temporary,
preliminary or permanent) which is then in effect and has the effect of making
the acquisition of Shares by Parent or Purchaser or any affiliate of either of
them illegal or otherwise preventing, prohibiting or materially restricting
consummation of the Merger (provided, however, that in the case of any
injunction, judgment, decree or order, a party may not assert this condition
unless it has used all reasonable efforts to prevent the entry of, to have
vacated or to appeal, such injunction, judgment, decree or order without undue
delay); and (c) Purchaser or its permitted assignee shall have purchased all
Shares validly tendered and not withdrawn pursuant to the Offer; provided,
however, that this condition shall not be applicable to the obligations of
Parent or Purchaser if, in breach of the Merger Agreement, Purchaser fails to
purchase any Shares validly tendered and not withdrawn pursuant to the Offer.
Termination. The Merger Agreement provides that it may be terminated and the
Merger may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite approval and adoption of the Merger Agreement and
the Merger by the stockholders of the Company (a) by mutual written consent of
each of Parent, Purchaser and the Company duly authorized by the Boards of
Directors of Parent, Purchaser and the Company; or (b) by either Parent,
Purchaser or the Company if (i) Purchaser shall not have accepted Shares for
payment pursuant to the Offer on or before the 90th day following the
commencement of the Offer (provided, however, that the right to terminate the
Merger Agreement under this clause (b)(i) will not be available to any party if
the failure to so accept Shares for payment has been caused by or resulted from
the failure by such party to perform any of its covenants contained in the
Merger Agreement or the breach by such party of any of its representations or
warranties contained in the Merger Agreement; provided, further, that such time
period shall be extended until the earlier to occur of (x) the fifth business
day following expiration or termination of any applicable waiting period under
the HSR Act and the receipt of clearance under the German Law Against
Restraints on Competition and (y) the 120th day following commencement of the
offer) or (ii) any Governmental Authority in the United States, the European
Union, France, England or Scotland shall have enacted, issued, promulgated,
enforced or entered any permanent injunction, order, decree or ruling which has
become final and nonappealable and has the effect of making consummation of the
Offer or the Merger illegal or otherwise preventing or prohibiting consummation
of the Offer or the Merger; or (c) by Parent if (i) Purchaser shall have (A)
failed to commence the Offer within 30 days following the date of the Merger
Agreement due to a failure to satisfy any condition set forth in Section 14
hereto or (B) terminated the Offer without having accepted any Shares for
payment thereunder in accordance with the terms of the Offer and the Merger
Agreement due to a failure to satisfy any condition set forth in paragraphs (a)
through (i) of Section 14 hereto, except if such action or inaction under (A)
or (B) shall have been caused by or resulted from the failure of Parent or
Purchaser to perform any of their covenants or agreements contained in the
Merger Agreement, or the breach by Parent or Purchaser of any of their
representations or warranties contained in the Merger Agreement or (ii) prior
to the purchase of Shares pursuant to the Offer, the Board of Directors of the
Company or any committee thereof shall have withdrawn or modified in a manner
adverse to Purchaser or Parent its approval or recommendation of the Merger
Agreement, the Offer, the Merger or any other transaction contemplated thereby,
or shall have recommended or approved any Acquisition Proposal, or shall have
resolved to do any of the foregoing; or (d) by the Company, upon approval of
the Board of Directors of the Company, if (i) Purchaser shall have (A) failed
to commence the Offer within 30 days following the date of the Merger Agreement
due to a failure to satisfy any condition set forth in paragraphs (a) through
(i) of Section 14 hereto or failed to commence the Offer within 10 business
days following the date of the Merger Agreement in breach thereof, (B)
terminated the Offer without having accepted any Shares for payment thereunder
unless such action or inaction under (A) or (B) shall have been caused by or
resulted from the failure of the Company to perform any of its covenants or
agreements contained in the Merger Agreement or breach of the Company of any of
its representations or warranties contained in the Merger Agreement or (ii)
prior to the purchase of Shares pursuant to the Offer, if the Board of
Directors of the Company determines in good faith that it is required to do so
by its fiduciary duties under applicable law after having received and
considered advice from outside legal counsel in order to enter into a
definitive agreement with respect to a Superior Proposal, upon five business
days' prior written notice to Parent, setting forth in reasonable detail the
identity of the person making,
23
and the final terms and conditions of, the Superior Proposal and after duly
considering any proposals that may be made by Parent during such five business
day period; provided, however, that any termination of the Merger Agreement
pursuant to (d)(ii) above shall not be effective until the Company has made
full payment of all amounts described below under the section entitled "Fees
and Expenses".
Effect of Termination. In the event of the termination of the Merger
Agreement, the Merger Agreement shall forthwith become void, and there shall be
no liability on the part of any party thereto, except (i) as set forth below
under the section entitled "Fees and Expenses" and (ii) nothing in the Merger
Agreement shall relieve any party from liability for any breach thereof prior
to the date of such termination, provided, however, that the Confidentiality
Agreements shall survive any termination of the Merger Agreement.
Fees and Expenses. The Merger Agreement provides that in the event that (i)
prior to the termination of the Merger Agreement, any person (including,
without limitation, the Company or any affiliate thereof), other than Parent or
any affiliate of Parent, shall have become the beneficial owner of more than
15% of the then-outstanding Shares, and the Board shall not have taken all
necessary action (without redeeming the Rights) so that such ownership of
Shares will not result in such person being an Acquiring Person (as defined in
the Rights Agreement), the occurrence of a "flip-in event" or a "flip-over
event" (each, as defined in the Rights Agreement), the Rights becoming
exercisable or evidenced by, and transferable pursuant to, certificates
separate from the Shares or the triggering of any other provisions of the
Rights Agreement, and the Merger Agreement shall have been terminated pursuant
to the provisions described above in clause (b)(i), (c) or (d); or (ii) prior
to the termination of the Merger Agreement, any person shall have commenced,
publicly proposed or communicated to the Company an Acquisition Proposal that
is publicly disclosed and (A) the Offer shall have remained open for at least
the longer of 20 business days from commencement or five business days from
disclosure of such Acquisition Proposal, (B) the Minimum Condition shall not
have been satisfied and (C) the Merger Agreement shall have been terminated
pursuant to the provisions described above in clause (b)(i) or (c)(i) on the
basis of the failure to meet the Minimum Condition, and, at the time of such
termination, there shall not be any right of Parent, Purchaser or the Company
to terminate the Merger Agreement pursuant to the provisions described above in
clause (b)(ii), and (D) the Company enters into an agreement with respect to an
Acquisition Transaction, or an Acquisition Transaction is consummated, in
either case within 12 months after the termination of the Merger Agreement; or
(iii) the Merger Agreement is terminated pursuant to the provisions described
above in (c)(ii) or (d)(ii); or (iv) the Company enters into an agreement with
respect to an Acquisition Transaction (defined as (i) any direct or indirect
acquisition of (A) more than 25% of the assets of the Company and its
subsidiaries, taken as a whole, or (B) more than 25% of any class of equity
securities of the Company or any subsidiary, (ii) any tender offer or exchange
offer, as defined pursuant to the Exchange Act that, if consummated, would
result in any person beneficially owning more than 25% of any class of equity
securities of the Company or any subsidiary, or (iii) any acquisition of the
Company or any of the five principal subsidiaries through a merger,
consolidation, business combination, sale of all or substantially all of the
assets, recapitalization, liquidation or dissolution or any similar
transaction), or an Acquisition Transaction is consummated, in each case within
12 months after the termination of the Merger Agreement pursuant to the
termination provision described above, on the basis of (A) the occurrence of a
condition describe in paragraph (e) of Section 14 hereto, (B) the occurrence of
the condition described in paragraph (f) of Section 14 hereto, if the
occurrence arises out of or results from any willful misrepresentation or
breach of warranty by the Company (other than a breach of the representation of
the Company regarding the absence of a Material Adverse Effect due to a
Material Adverse Effect that occurs after the date of the Merger Agreement) or
(C) the occurrence of a condition described in paragraph (g) of Section 14
hereto, and the Company shall not theretofore have been required to pay the Fee
to Parent pursuant to the provisions described above in (i), (ii) or (iii);
then, in any such event, but only once, the Company shall pay Parent promptly
(but in no event later than one business day after the first of such events
shall have occurred) a fee of $17 million (the "Fee"), which amount shall be
payable in immediately available funds, plus all Expenses (as hereinafter
defined).
The Merger Agreement provides that in the event the Company is obligated to
pay the Fee, the Company shall reimburse each of Parent, Purchaser and their
respective stockholders and affiliates (not later than one
24
business day after submission of statements therefor) for all documented out-
of-pocket expenses and fees up to $2 million, in the aggregate (including,
without limitation, fees and expenses payable to all banks, investment banking
firms, other financial institutions, and other persons and their respective
agents and counsel, and all fees of counsel, accountants, experts and
consultants to Parent and Purchaser and their respective stockholders and
affiliates, and all printing and advertising expenses and filing fees) actually
incurred or accrued by either of them or on their behalf in connection with the
Offer and the Merger, including, without limitation, the financing thereof, and
actually incurred or accrued by banks, investment banking firms, other
financial institutions and other persons, and for which Parent or Purchaser or
its stockholders or affiliates are liable in connection with the negotiation,
preparation, execution and performance of the Merger Agreement, the structuring
and financing of the Offer and the Merger and any financing commitments or
agreements relating thereto (all the foregoing being referred to herein
collectively as the "Expenses"). Except as set forth in this paragraph, all
costs and expenses incurred in connection with the Merger Agreement, the Offer
and the Merger shall be paid by the party incurring such expenses, whether or
not any transaction contemplated thereby is consummated.
Confidentiality Agreements
The following is a summary of certain provisions of the Confidentiality
Agreement dated May 26, 2000, between the Company and Parent (the "Parent
Confidentiality Agreement") and of the Confidentiality Agreement dated June 27,
2000 between Parent and the Company (the "Company Confidentiality Agreement"
and, together with the Parent Confidentiality Agreement, the "Confidentiality
Agreements"). This summary is qualified in its entirety by reference to the
Confidentiality Agreements, which are incorporated herein by reference, and
copies of which have been filed with the Commission as exhibits to the Schedule
TO. The Confidentiality Agreements may be examined and copies may be obtained
at the places set forth set forth in Section 7.
On May 26, 2000, the Company and Parent executed the Parent Confidentiality
Agreement. Pursuant to the Parent Confidentiality Agreement, the Company agreed
to make available to Parent certain information concerning its business,
operations and assets (the "Evaluation Material").
As a condition for the disclosure of the Evaluation Material to Parent,
Parent agreed, among other things: (1) to treat confidentially the Evaluation
Material, (2) to use the Evaluation Material only for the purposes of
evaluation of a potential acquisition (the "Transaction") by Parent of all or
any portion of the assets, securities or businesses of the Company, (3) to
disclose Evaluation Material to its directors, officers, agents, advisors,
financing sources, attorneys and other representatives (collectively, "Parent's
Representatives") on a need-to-know basis only, provided that they will be
informed by Parent of the confidential nature of such information and that
Parent will cause them to treat such information confidentially, (4) not to
disclose to any person the fact that the Evaluation Material has been made
available to Parent or Parent's Representatives or that discussions or
negotiations are taking place concerning the Transaction or any of the terms,
conditions or other facts with respect thereto, provided that Parent or
Parent's Representatives may make such disclosure if they have received the
written opinion of counsel that such disclosure must be made in order not to
commit a violation of law, (5) to promptly notify the Company in writing
(unless notice is prohibited by law) of any request or requirement by subpoena,
court order, or other similar process, to disclose any of the Evaluation
Material or that discussions or negotiations are taking place concerning the
Transaction or any of the terms, conditions or other facts with respect
thereto, and, if such disclosure is required, to exercise its best efforts to
obtain assurance that confidential treatment will be accorded to such
information, and (6) to promptly return to the Company, upon request, all
copies of the Evaluation Material. The obligations of Parent under the Parent
Confidentiality Agreement with regard to the confidentiality of the Evaluation
Material shall terminate on May 26, 2003.
In addition, Parent agreed, between May 26, 2000 and until May 26, 2002 (the
"Standstill Period"), without the Company's consent not to: (1) in any manner
acquire, agree to acquire or make any proposal to acquire ownership directly or
indirectly of any voting securities or other equity interests in, or property
of the Company or any rights or options to acquire such ownership; (2) propose
to enter into, directly or indirectly, any merger or business combination
involving the Company; (3) solicit proxies or consents, directly or
25
indirectly, or become a participant in any solicitation of proxies or consents
to vote, or seek to advise or influence any person with respect to the voting
of, any voting securities of the Company; (4) with respect to any voting
securities of the Company, (a) form or join any "group" that would be required
to file a statement on Schedule 13D or Schedule 13G if such group had not
previously filed such statement or (b) in the event that Parent or any of
Parent's affiliates have formed or joined any such group prior to the date of
the Parent Confidentiality Agreement, participate in or benefit from any
additional action by such group or any member thereof after the date of which
(i) would constitute a violation of this paragraph if undertaken by Parent
alone or (ii) would require such group to file a statement on Schedule 13D or
Schedule 13G if such group had not previously filed such a statement; (5)
otherwise act, alone or in concert with others, to seek to control or influence
the management, board or directors or policies of the Company; (6) initiate any
communications with any employee of the Company except as contemplated by the
Parent Confidentiality Agreement concerning the Evaluation Material or any
possible transaction involving the Company or solicit the employment of any
current employee of the Company; (7) disclose any intention, plan or
arrangement inconsistent with any of the foregoing; or (8) advise, assist or
encourage any other person in connection with any of the foregoing.
Parent also agreed that during the Standstill Period and other than as
authorized by the Parent Confidentiality Agreement or a definitive agreement
for the Transaction executed by the Company and Parent or any of Parent's
affiliates, (i) neither Parent nor any of Parent's Representatives will
request, directly or indirectly, that the Company (or its directors, officers,
employees or agents) amend or waive any provision of the preceding paragraph or
this sentence, (ii) neither Parent nor any of Parent's Representatives will
take any action that might require the Company to make a public announcement
regarding the possibility of a business combination, merger, sale of assets,
liquidation or other extraordinary corporate transaction involving the Company,
and (iii) if at any time during the Standstill Period, Parent or any of
Parent's Representatives is approached by any third party concerning its or
their participation in a transaction involving the Company's assets or
businesses or securities issued by the Company, Parent will inform the Company
promptly of the nature of such proposed transaction and the parties thereto.
Parent shall be released from its obligations during the Standstill Period
as set forth in the preceding two paragraphs if (i) any person or group of
persons acting in concert acquires, announces or commences a tender or exchange
offer to acquire, or otherwise announces its intent to commence or commences a
form of business combination which would result in the acquisition of 50% or
more of the then outstanding voting stock of the Company, or (ii) the Company
enters into or announces its intent to enter into any merger, sale or business
combination which would result in the sale of all or substantially all of the
Company's assets, or 50% or more of the Company's then outstanding voting
shares being owned by persons other than current the Company's shareholders
immediately prior to the consummation of such transaction.
On June 27, 2000, the Company and Parent executed the Company
Confidentiality Agreement. Pursuant to the Company Confidentiality Agreement,
Parent agreed to make available to the Company certain information concerning
its business, operations and assets (the "Parent Material").
As a condition for the disclosure of the Parent Material to the Company, the
Company agreed, among other things: (1) to treat confidentially the Parent
Material, (2) to use the Parent Material only for the purposes of the
evaluation of a Transaction by Parent of all or any portion of the assets,
securities or businesses of the Company, (3) to disclose Parent Material to its
directors, officers, employees, agents, advisors, the Company's attorneys and
other representatives (collectively, "the Company's Representatives") on a
need-to-know basis only, provided that they will be informed by the Company of
the confidential nature of such information and that the Company will cause
them to treat such information confidentially, (4) not to disclose to any
person the fact that discussions or negotiations are taking place between the
Company or the Company's Representatives and Parent or Parent's Representatives
concerning the Transaction, any of the terms, conditions or other facts of the
Transaction contained in any written communications to the Company or the
Company's Representatives from Parent or Parent's Representatives, including
any drafts of transaction documents with respect thereto, information regarding
either the price which may be proposed by Parent in connection with the
Transaction or the identity of Parent as a potential acquirer, or the fact that
Parent Material has been made available to the Company or the Company's
Representatives in connection with the Transaction, provided that the Company
or
26
the Company's Representatives may make such disclosure if they have received
the written opinion of outside counsel that such disclosure must be made in
order not to commit a violation of any legal obligations of the Company or the
Company's Representatives to make such disclosure, (5) to use its best efforts
to promptly notify Parent in writing (unless notice is prohibited by law ) of
any request or requirement by subpoena, court order, or other similar process,
to disclose any of the information whose disclosure is prohibited by the
Company Confidentiality Agreement, and, if such disclosure is required, to
exercise its best efforts to obtain assurance that confidential treatment will
be accorded to such information, and (6) to promptly return to Parent, upon
request, all copies of the Parent Material.
Consulting and Employment Agreements
The following is a summary of certain provisions of the consulting
agreements and arrangements dated July 24, 2000 between the Company, Parent,
and each of Messrs. Griffith, Wright and Sharpless, and of the employment
agreements dated July 24, 2000 between the Company, Parent and each of Messrs.
Shott, Shutts and Needleman. This summary is qualified in its entirety by
reference to these agreements, which are incorporated herein by reference, and
copies of which have been filed with the Commission as exhibits to the Schedule
TO. These agreements may be examined and copies may be obtained at the places
set forth in Section 7.
Simultaneously with the execution of the Merger Agreement, the Company and
Parent entered into a consulting agreement with each of Messrs. Griffith and
Wright, and into an employment agreement with each of Messrs. Shutts, Shott and
Needleman. All of these agreements will become effective at the time of the
consummation of the Offer.
Mr. Griffith's consulting agreement provides that he will provide consulting
services for the Company and Parent for a period of 18 months following the
date of consummation of the Offer, subject to earlier termination as provided
in the consulting agreement. During the first six months of the consulting
period, Mr. Griffith will provide consulting services on a full-time basis in
connection with the business of the Company. During the 12-month period
following the expiration of the initial six-month period, Mr. Griffith will not
be required to devote more than ten hours a month to such consulting services.
The consulting agreement provides that during the initial six-month period, Mr.
Griffith will be paid a total of $250,000 in consulting fees and during the
remaining 12-month period he will be paid a total of $200,000 in consulting
fees. The consulting agreement also provides that Mr. Griffith will be entitled
to receive an incentive payment (the "Executive Retention Payment") in an
amount of $1,050,000, payable in cash on the date of consummation of the Offer,
in the event that (i) each of Messrs. Shutts, Shott and Needleman signs an
employment agreement with the Company in accordance with certain terms and each
such new employment agreement remains in full force and effect on the date of
consummation of the Offer, and (ii) each of Messrs. Eric N. Jacobsen, Stephen
Buchwald, Andrew Myers and K. Barry Sharpless signs a consulting agreement (or
an amendment to his consulting agreement, as the case may be) with the Company
in accordance with certain terms and each such new (or amended) consulting
agreement remains in full force and effect on the date of consummation of the
Offer. The consulting agreement provides that the Executive Retention Payment
will be reduced (i) by $216,666 for each of Messrs. Shutts, Shott and Needleman
who does not have a new employment agreement in full force and effect on the
date of consummation of the Offer, and (ii) by $100,000 for each of Messrs.
Jacobsen, Buchwald, Myers and Sharpless who does not have a new (or amended)
consulting agreement in full force and effect on the date of consummation of
the Offer.
The consulting agreement further provides that Mr. Griffith will be entitled
to receive an additional incentive payment of $2,200,000 (the "Customer
Retention Payment") based on his efforts to retain the customers that are
anticipated to be the ten (10) largest customers of the Company during the 2001
calendar year (the "Specified Customers") through the first anniversary of the
consummation of the Offer, and the extent to which the business of such
customers has actually been retained through December 31, 2001. The aggregate
Customer Retention Payment will be reduced by the sum of (i) an amount equal to
$70,000 multiplied by the number of Specified Customers, if any, with respect
to which Mr. Griffith has not used his reasonable best efforts to retain
through the first anniversary of the consummation of the Offer, plus (ii) an
27
amount equal to $1,500,000 multiplied by a fraction, the numerator of which is
the amount by which the actual gross revenues from all Specified Customers,
taken as a whole, during calendar years 2000 and 2001, falls short of the
projected gross revenues from all Specified Customers, taken as a whole, during
the calendar years 2000 and 2001, and the denominator of which is the projected
gross revenues from all Specified Customers, taken as a whole, during calendar
years 2000 and 2001.
The consulting agreement provides that in the event the payments to Mr.
Griffith under the consulting agreement are subject to taxes imposed by Section
4999 of the Internal Revenue Code (the so-called "golden parachute" tax), the
Company will make payments to Mr. Griffith to make him whole for such tax.
The consulting agreement provides that if the Company terminates the
consulting agreement other than for cause, then within ten days of such
termination, the Company will pay Mr. Griffith a lump sum payment in cash equal
to the sum of (x) $450,000 less any consulting fees already paid to Mr.
Griffith, plus (y) $2,200,000 less any portion of the Customer Retention
Payment already paid to Mr. Griffith. Mr. Griffith will also remain eligible to
receive the $5,000,000 payment described below and the Company will continue to
provide Mr. Griffith with employee benefits through the expiration of the
eighteen-month period immediately following the date of consummation of the
Offer or, if earlier, through the date on which Mr. Griffith becomes employed
(other than self-employed) on a full-time basis.
Mr. Griffith's consulting agreement provides for a non-competition period of
two and a half years following the date of consummation of the Offer and a non-
solicitation period of five years following the date of consummation of the
Offer. In consideration for these non-competition and non-solicitation
covenants, Mr. Griffith will be paid $5,000,000.
Mr. Wright's consulting agreement provides that he will serve as a
consultant on a half-time basis to the Company and Parent for a period of six
months after the date of consummation of the Offer. This initial six-month
period may be extended for another consecutive six-month period (or longer) by
mutual agreement of the parties. Pursuant to his consulting agreement, Mr.
Wright will receive a total of $105,000 in consulting fees for the six-month
consulting period, and an additional $105,000 in the event the agreement is
extended for another six-month period. The consulting agreement also provides
that in the event Mr. Wright provides consulting services on a greater than
half-time basis, the amount of the consulting fees will be increased on a pro
rata basis. Mr. Wright's consulting agreement provides for a non-competition
period ending three years after the date of consummation of the Offer (or, if
longer, ending two years after the expiration of the consulting period) and a
non-solicitation period of five years after the date of consummation of the
Offer. In consideration for these non-competition and non-solicitation
covenants, Mr. Wright will be paid an aggregate amount in cash of $808,500,
$539,000 of which will be paid on the date of consummation of the Offer and
$269,500 (plus interest) of which will be paid on the last day of the non-
competition period.
The consulting agreement provides that in the event the payments to Mr.
Wright under the consulting agreement are subject to the golden parachute tax,
the Company will make payments to Mr. Wright to make him whole for such tax.
The consulting agreement provides that if the Company terminates the
consulting agreement other than for cause, then within ten days of such
termination, the Company will pay Mr. Wright a lump sum payment in cash equal
to the total amount of consulting fees payable for the full consulting period,
less any consulting fees already paid to Mr. Wright. Mr. Wright will also
remain eligible to receive the $808,500 (plus any interest thereon) described
above and the Company will continue to provide Mr. Wright with health and other
welfare benefits through the expiration of the twelve-month period immediately
following the date of consummation of the Offer or, if earlier, through the
date on which Mr. Wright becomes employed (other than self-employed) on a full-
time basis.
The employment agreement with each of Messrs. Shutts, Shott and Needleman
provides that they will continue their employment with the Company for a period
of three years after the date of consummation of the Offer, subject to earlier
termination as provided in the employment agreements, with the same title as
they hold immediately prior to such date and subject to such modification to
their responsibilities and reporting requirements as may be appropriate to
reflect the integration of the Company as a subsidiary of Parent.
28
Each of Messrs. Shott, Shutts and Needleman will receive an annual base
salary at a rate equal to their current base salary. In addition, they will be
eligible to receive an annual bonus with a target of 38.5% and a maximum of 77%
of their base salary, depending on performance. Mr. Shutts will also receive a
cash bonus of $250,000 on the date of consummation of the offer in recognition
of the 25 new customers he has brought to the Company during the 2000 calendar
year. Subject to approval of the board of directors of Parent, each of Messrs.
Shott, Shutts and Needleman will be permitted to purchase, through a third
party loan, Parent common stock with a fair market value on the date of
purchase equal to 30% of the amount of the annual bonus payable in respect of
each calendar year. On the third anniversary of the date of each stock
purchase, and subject to certain conditions, each of Messrs. Shott, Shutts, and
Needleman will receive an additional cash payment equal to the amount of the
then outstanding principal and accrued interest on the related loan. If such
stock purchase is not implemented, each of Messrs. Shott, Shutts and Needleman
will be provided with alternative equity-based (or stock appreciation rights)
awards that put them as nearly as reasonably possible in the economic position
that they would have been in had the stock purchase been made.
In addition, subject to the approval of the board of directors of Parent,
each of Messrs. Shott, Shutts, and Needleman will be granted on the date of
consummation of the Offer an option to purchase 50,000 shares of Parent common
stock, or, if this grant is not implemented, an alternative equity-based (or
stock appreciation rights) award that puts them as nearly as reasonably
possible in the economic position that they would have been in had they
received such stock option grants. The stock options will have a ten-year term
and an exercise price equal to the average trading price of Parent common stock
for the 20 trading days immediately preceding the date of grant. The stock
options will vest and become exercisable on the third anniversary of the date
of grant.
Messrs. Shott, Shutts and Needleman will receive a retention stay bonus in
an amount equal to (Pounds)420,000 in the case of Mr. Shott, $350,000 in the
case of Mr. Needleman, and in the case of Mr. Shutts, equal to 200% of the cash
severance amount that he would have been entitled to receive under his
employment agreement with the Company in effect immediately prior to the date
of execution of the new employment agreement if his employment were terminated
by the Company other than for cause (assuming for such purpose that his base
salary were $200,000).
The employment agreements for Messrs. Shott, Shutts and Needleman provide
that in the event the payments to each such executive under the employment
agreement are subject to the golden parachute tax, the Company will make
payments to such executive to make him whole for such tax.
The employment agreements provide that if the employment period is
terminated by the Company other than for cause or by the executive for good
reason (each as defined in the employment agreements), then (i) within ten days
of the date of termination, the Company will pay the executive a lump sum
payment in cash equal to the sum of (x) the base salary and maximum annual
bonuses that could have been payable to the executive during the remainder of
the employment period, plus (y) any unpaid installments of the retention stay
bonus, (ii) all stock options or stock appreciation rights held by the
executive will become fully vested and immediately exercisable, and (iii) an
amount equal to the amount of the then outstanding principal and accrued
interest on all loans taken to purchase Parent common stock as described above
will be paid to the executive in a lump sum in cash within ten days of the date
of termination. The executive will also remain eligible to receive the health
and other welfare benefits described in the employment agreement through the
expiration of the three-year period immediately following the date of
consummation of the Offer or, if earlier, through the date on which the
executive becomes employed (other than self-employed) on a full-time basis.
The employment agreements for each of Messrs. Shott, Shutts and Needleman
also provide for a non-competition and a non-solicitation period of one year
after the termination of the employment agreement.
On July 21, 2000, Mr. Sharpless agreed to extend his consulting agreement
with the Company until December 31, 2001, subject to the consummation of the
Offer. Parent also agreed to grant 5,000 stock
29
appreciation rights ("SARs") to Mr. Sharpless subject to the consummation of
the Offer. The SARs have a ten-year term and an exercise price equal to the
average trading price of Parent common stock for the 20 trading days
immediately preceding the date of grant. 50% of the SARs will vest and become
exercisable on each of December 31, 2001 and December 31, 2002, provided that
Mr. Sharpless's consulting agreement is in full force and effect on the
relevant date. The unvested SARs will be forfeited if Mr. Sharpless's
consulting services are terminated voluntarily by Mr. Sharpless or by the
Company or Parent for cause. If Mr. Sharpless's consulting services are
terminated by the Company or Parent other than for cause, then all SARs shall
be fully vested and immediately exercisable and will remain exercisable for the
full ten-year term.
11. Purpose of the Offer; Plans for the Company After the Offer and the Merger.
Purpose of the Offer. The Offer is being made pursuant to the Merger
Agreement. The purpose of the Offer and the Merger is for Parent to acquire
control of, and the entire equity interest in, the Company. The purpose of the
Merger is for Parent to acquire all Shares not purchased pursuant to the Offer.
Upon consummation of the Merger, the Company will become an indirect wholly
owned subsidiary of Parent.
Under Delaware Law, the approval of the Board and, if the "short-form"
procedure described below is unavailable, the affirmative vote of the holders
of a majority of the outstanding Shares is required to approve and adopt the
Merger Agreement and the transactions contemplated thereby, including the
Merger. The Board of Directors of the Company has unanimously determined that
each of the Offer and the Merger is fair to, and in the best interests of, the
stockholders of the Company, has approved, adopted and declared advisable the
Merger Agreement (such approval and adoption having been made in accordance
with Delaware Law, including, without limitation, Section 203 thereof) and has
resolved to recommend that stockholders accept the Offer and tender their
Shares pursuant to the Offer. Unless the Merger is consummated pursuant to the
short-form merger provisions under Delaware Law described below, the only
remaining required corporate action of the Company is the approval and adoption
of the Merger Agreement and the Merger by the affirmative vote of the holders
of a majority of the Shares. Accordingly, if the Minimum Condition is
satisfied, Purchaser will have sufficient voting power to cause the approval
and adoption of the Merger Agreement and the Merger without the affirmative
vote of any other stockholder.
In the Merger Agreement, the Company has agreed to duly call, give notice
of, convene and hold an annual or special meeting of its stockholders as
promptly as practicable following consummation of the Offer for the purpose of
considering and taking action on the Merger Agreement and the Merger, if such
action is required by Delaware Law. Parent and Purchaser have agreed that all
Shares owned by them and their subsidiaries will be voted in favor of the
approval and adoption of the Merger Agreement and the Merger.
The Merger Agreement provides that, promptly upon the purchase by Purchaser
of Shares pursuant to the Offer, Purchaser will be entitled to designate
representatives to serve on the Board in proportion to Purchaser's ownership of
Shares following such purchase. See Section 10. Purchaser expects that such
representation would permit Purchaser to exert substantial influence over the
Company's conduct of its business and operations.
Short-Form Merger. Under Delaware Law, if Purchaser acquires, pursuant to
the Offer or otherwise, at least 90% of the then outstanding Shares, Purchaser
will be able to effect the Merger without a vote of the Company's stockholders.
In such event, Parent, Purchaser and the Company have agreed in the Merger
Agreement to take, at the request of Purchaser, all necessary and appropriate
action to cause the Merger to become effective as promptly as reasonably
practicable after such acquisition, without a meeting of the Company's
stockholders. If, however, Purchaser does not acquire at least 90% of the
outstanding Shares pursuant to the Offer or otherwise and a vote of the
Company's stockholders is required under Delaware Law, a significantly longer
period of time would be required to effect the Merger.
Appraisal Rights. No appraisal rights are available in connection with the
Offer. However, if the Merger is consummated, stockholders who have not
tendered their Shares will have certain rights under Delaware Law to dissent
from the Merger and demand appraisal of, and to receive payment in cash of the
fair value of, their Shares. Stockholders who perfect such rights by complying
with the procedures set forth in Section 262 of the
30
Delaware Law ("Section 262") will have the "fair value" of their Shares
(exclusive of any element of value arising from the accomplishment or
expectation of the Merger) determined by the Delaware Court of Chancery and
will be entitled to receive a cash payment equal to such fair value from the
Surviving Corporation. In addition, such dissenting stockholders would be
entitled to receive payment of a fair rate of interest from the date of
consummation of the Merger on the amount determined to be the fair value of
their Shares. In determining the fair value of the Shares, the court is
required to take into account all relevant factors. Accordingly, such
determination could be based upon considerations other than, or in addition to,
the market value of the Shares, including, among other things, asset values and
earning capacity. In Weinberger v. UOP, Inc., the Delaware Supreme Court
stated, among other things, that "proof of value by any techniques or methods
which are generally considered acceptable in the financial community and
otherwise admissible in court" should be considered in an appraisal proceeding.
The Weinberger court also noted that under Section 262, fair value is to be
determined "exclusive of any element of value arising from the accomplishment
or expectation of the merger." In Cede & Co. v. Technicolor, Inc., however, the
Delaware Supreme Court stated that, in the context of a two-step cash merger,
"to the extent that value has been added following a change in majority control
before cash-out, it is still value attributable to the going concern," to be
included in the appraisal process. As a consequence, the value so determined in
any appraisal proceeding could be the same, more or less than the purchase
price per Share in the Offer or the Merger Consideration.
In addition, several decisions by Delaware courts have held that, in certain
circumstances, a controlling stockholder of a company involved in a merger has
a fiduciary duty to other stockholders which requires that the merger be fair
to such other stockholders. In determining whether a merger is fair to minority
stockholders, Delaware courts have considered, among other things, the type and
amount of consideration to be received by the stockholders and whether there
was fair dealing among the parties. The Delaware Supreme Court stated in
Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that the remedy
ordinarily available to minority stockholders in a cash-out merger is the right
to appraisal described above. However, a damages remedy or injunctive relief
may be available if a merger is found to be the product of procedural
unfairness, including fraud, misrepresentation or other misconduct.
Parent does not intend to object, assuming the proper procedures are
followed, to the exercise of appraisal rights by any stockholder and the demand
for appraisal of, and payment in cash for the fair value of, the Shares. Parent
intends, however, to cause the Surviving Corporation to argue in an appraisal
proceeding that, for purposes of such proceeding, the fair value of each Share
is less than or equal to the Merger Consideration. In this regard, stockholders
should be aware that an opinion of an investment banking firm as to the
fairness from a financial point of view (such as the opinion of Chase
Securities), is not necessarily an opinion as to "fair value" under Section
262.
The foregoing summary of the rights of dissenting stockholders under
Delaware Law does not purport to be a complete statement of the procedures to
be followed by stockholders desiring to exercise any dissenters' rights under
Delaware Law. The preservation and exercise of dissenters' rights require
strict adherence to the applicable provisions of Delaware Law.
Going Private Transactions. The Commission has adopted Rule 13e-3 under the
Exchange Act which is applicable to certain "going private" transactions and
which may under certain circumstances be applicable to the Merger or another
business combination following the purchase of Shares pursuant to the Offer in
which Purchaser seeks to acquire the remaining Shares not held by it. Purchaser
believes that Rule 13e-3 will not be applicable to the Merger. Rule 13e-3
requires, among other things, that certain financial information concerning the
Company and certain information relating to the fairness of the proposed
transaction and the consideration offered to minority stockholders in such
transaction be filed with the Commission and disclosed to stockholders prior to
consummation of the transaction.
Plans for the Company. It is expected that, initially following the Merger,
the business and operations of the Company will, except as set forth in this
Offer to Purchase, be continued by the Company substantially as they are
currently being conducted. Parent will continue to evaluate the business and
operations of the Company during the pendency of the Offer and after the
consummation of the Offer and the Merger, and will
31
take such actions as it deems appropriate under the circumstances then
existing. Parent intends to seek additional information about the Company
during this period. Thereafter, Parent intends to review such information as
part of a comprehensive review of the Company's business, operations,
capitalization and management with a view to optimizing exploitation of the
Company's potential in conjunction with Parent's businesses and resources. In
this regard, Parent intends to contribute to the Company the portion of
Parent's fine organics businesses relating to the fine chemicals for the
pharmaceuticals enterprise (excluding pharmaceutical ingredients). Parent also
intends to refinance the existing indebtedness of the Company. Parent intends
to keep the Company as a subsidiary within Parent's life science chemicals
enterprise with a large degree of operational autonomy. It is expected that the
business and operations of the Company would form an important part of Parent's
fine organics division's future business plans.
Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals which relate to or would result in (i) any
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, relocation of any operations of the Company or any of its
subsidiaries, (ii) any purchase, sale or transfer of a material amount of
assets, involving the Company or any of its subsidiaries, (iii) any material
change in the Company's present indebtedness, capitalization or dividend
policy, (iv) any change in the present board of directors or management of the
Company, (v) any other material change in the Company's corporate structure or
business, (vi) any class of equity security of the Company being delisted from
a national stock exchange or ceasing to be authorized to be quoted in an
automated quotation system operated by a national securities association, (vii)
any class of equity securities of the Company becoming eligible for termination
of registration under Section 12(g)(4) of the Exchange Act, (viii) the
suspension of the Company's obligation to file reports under Section 15(d) of
the Act, (ix) the acquisition by any person of additional securities of the
Company, or the disposition of securities of the Company, or (x) any changes in
the Company's charter, bylaws or other governing instruments or other actions
that could impede the acquisition of control of the Company.
12. Dividends and Distributions.
The Merger Agreement provides that the Company shall not, between the date
of the Merger Agreement and the Effective Time, without the prior written
consent of Parent, (a) issue, sell, pledge, dispose of, grant, encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i)
any shares of any class of capital stock of the Company or any Subsidiary, or
any options, warrants, convertible securities or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of the Company or any
Subsidiary (except for the issuance of Shares issuable pursuant to Company
Stock Options outstanding on the date hereof or pursuant to the ESPP or the
issuance of Company Stock Options pursuant to offer letters outstanding on the
date of this Agreement that have been given to potential new employees of the
Company or any Subsidiary) or (ii) any assets of the Company or any Subsidiary,
except for transactions in the ordinary course of business and in a manner
consistent with past practice; (b) declare, set aside, make or pay any dividend
or other distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock; or (c) reclassify, combine, split,
subdivide or redeem, or purchase or otherwise acquire, directly or indirectly,
any of its capital stock. See Section 10.
If, on or after July 24, 2000, the Company should declare, set aside, make
or pay any dividend on the Shares or make any other distribution (including the
issuance of additional shares of capital stock pursuant to a stock dividend or
stock split, the issuance of other securities or the issuance of rights for the
purchase of any securities) with respect to the Shares that is payable or
distributable to stockholders of record on a date prior to the transfer to the
name of Purchaser or its nominee or transferee on the Company's stock transfer
records of the Shares purchased pursuant to the Offer, then, without prejudice
to Purchaser's rights under Section 14, (i) the purchase price per Share
payable by Purchaser pursuant to the Offer will be reduced (subject to the
provisions of the Merger Agreement) to the extent any such dividend or
distribution is payable in cash and (ii) any non-cash dividend, distribution or
right shall be received and held by the tendering stockholder for the account
of Purchaser and will be required to be promptly remitted and transferred by
each tendering stockholder to the Depositary for the account of Purchaser,
accompanied by appropriate documentation of
32
transfer. Pending such remittance and subject to applicable law, Purchaser will
be entitled to all the rights and privileges as owner of any such non-cash
dividend, distribution or right and may withhold the entire purchase price or
deduct from the purchase price the amount or value thereof, as determined by
Purchaser in its sole discretion.
13. Possible Effects of the Offer on the Market for Shares, Nasdaq Listing,
Margin Regulations and Exchange Act Registration.
Possible Effects of the Offer on the Market for the Shares. The purchase of
Shares by Purchaser pursuant to the Offer will reduce the number of Shares that
might otherwise trade publicly and will reduce the number of holders of Shares,
which could adversely affect the liquidity and market value of the remaining
Shares held by the public.
Parent intends to cause the delisting of the Shares by Nasdaq following
consummation of the Offer.
Nasdaq Listing. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the standards for continued listing on
Nasdaq. According to Nasdaq's published guidelines, the Shares would not be
eligible to be included for listing if, among other things, the number of
Shares publicly held falls below 100,000, the number of holders of Shares falls
below 300 or the market value of such publicly held Shares is not at least
$200,000. If, as a result of the purchase of Shares pursuant to the Offer, the
Merger or otherwise, the Shares no longer meet the requirements of Nasdaq for
continued listing, the listing of the Shares will be discontinued. In such
event, the market for the Shares would be adversely affected. Furthermore,
Parent intends to cause the delisting of the Shares by Nasdaq following
consummation of the Offer whether or not such requirements for continued
listing are met. In the event the Shares were no longer eligible for listing on
Nasdaq, quotations might still be available from other sources. The extent of
the public market for the Shares and the availability of such quotations would,
however, depend upon the number of holders of 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 as described below and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Such registration may be terminated upon application by the
Company to the Commission if the Shares are not listed on a "national
securities exchange" and there are fewer than 300 record holders. The
termination of the registration of the Shares under the Exchange Act would
substantially reduce the information required to be furnished by the Company to
holders of Shares and to the Commission and would make certain provisions of
the Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), the requirement of furnishing a proxy statement in connection with
stockholders' meetings pursuant to Section 14(a) or 14(c) of the Exchange Act
and the related requirements of an annual report, and the requirements of Rule
13e-3 under the Exchange Act with respect to "going private" transactions, no
longer applicable to the Shares. In addition, "affiliates" of the Company and
persons holding "restricted securities" of the Company may be deprived of the
ability to dispose of such securities pursuant to Rule 144 promulgated under
the Securities Act of 1933, as amended. If registration of the Shares under the
Exchange Act were terminated, the Shares would no longer be eligible for Nasdaq
reporting. Purchaser currently intends to seek to cause the Company to
terminate the registration of the Shares under the Exchange Act as soon after
consummation of the Offer as the requirements for termination of registration
are met.
Margin Regulations. The Shares are currently "margin securities", as such
term is defined under the rules of the Board of Governors of the Federal
Reserve System (the "Federal Reserve Board"), which has the effect, among other
things, of allowing brokers to extend credit on the collateral of such
securities. Depending upon factors similar to those described above regarding
listing and market quotations, following the Offer it is possible that the
Shares might no longer constitute "margin securities" for purposes of the
margin regulations of the Federal Reserve Board, in which event such Shares
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".
33
14. Certain Conditions of the Offer.
Notwithstanding any other provision of the Offer, but subject to the terms
of the Merger Agreement, Purchaser shall not be required to accept for payment
any Shares tendered pursuant to the Offer, and may extend, terminate or amend
the Offer if (i) immediately prior to the expiration of the Offer, the Minimum
Condition shall not have been satisfied, (ii) any applicable waiting period
under the HSR Act and the German Law Against Restraints of Competition shall
not have expired or been terminated prior to the expiration of the Offer, or
(iii) any of the following conditions shall occur and continue to exist
immediately prior to the expiration of the Offer:
(a) there shall have been instituted or be pending any Action by or
before any Governmental Authority, (i) challenging or seeking to make
illegal, materially delay, or otherwise, directly or indirectly, restrain
or prohibit or make materially more costly, the making of the Offer, the
acceptance for payment of any Shares by Parent, Purchaser or any other
affiliate of Parent or the consummation of any other transaction
contemplated by the Merger Agreement, or seeking to obtain damages that are
material in relation to the Company and the Subsidiaries, taken as a whole,
in connection with any transaction contemplated by the Merger Agreement;
(ii) seeking to prohibit or materially limit the ownership or operation by
the Company, Parent or any of their subsidiaries of all or any material
portion of the business or any material assets of any of the Purchaser,
Parent, Company or any of their respective subsidiaries or to compel the
Company, Parent or any of their subsidiaries, as a result of, the
transactions contemplated by the Merger Agreement, to dispose of or to hold
separate all or any material portion of the business or any material assets
of any of the Purchaser, Parent, Company or any of their respective
subsidiaries; (iii) seeking to impose or confirm any limitation on the
ability of Parent, Purchaser or any other affiliate of Parent to exercise
effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Purchaser pursuant to
the Offer or otherwise on all matters properly presented to the Company's
stockholders, including, without limitation, the approval and adoption of
the Merger Agreement and the transactions contemplated thereby; (iv)
seeking to require divestiture by Parent, Purchaser or any other affiliate
of Parent of any Shares; or (v) which otherwise would prevent or materially
delay consummation of the Offer or the Merger or otherwise prevent or
materially delay the Company from performing its obligations under the
Merger Agreement or would have a Material Adverse Effect, except, in each
case, for (x) any Action, other than an Action brought by any Governmental
Authority, that does not have a reasonable possibility of success or (y) an
Action that would not have a reasonable possibility of success but for
claims that Purchaser, Parent or any of their affiliates has violated its
obligations under applicable United States Federal or state securities laws
or regulations;
(b) there shall have been any statute, rule, regulation, legislation or
interpretation enacted, promulgated, amended, issued or deemed applicable
to (i) Parent, the Company or any subsidiary or affiliate of Parent or the
Company or (ii) any transaction contemplated by the Merger Agreement, by
any United States or non-United States legislative body or Governmental
Authority with appropriate jurisdiction, other than the routine application
of the waiting period provisions of the HSR Act and the German Law Against
Restraints of Competition to the Offer, that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (v) of paragraph (a) above;
(c) any Material Adverse Effect shall have occurred;
(d) there shall have occurred (i) any general suspension of trading in,
or limitation on prices for, securities on the New York Stock Exchange, the
Nasdaq National Market System, or the French Premier Marche (other than a
shortening of trading hours or any coordinated trading halt triggered
solely as a result of a specified increase or decrease in a market index),
(ii) any decline, measured from July 24, 2000, in the Standard & Poor's 500
Index by an amount in excess of 25%, (iii) any suspension of, or material
limitation on, United States or European currency exchange markets, (iv) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States or France, (v) any material
limitation (whether or not mandatory) by any government or Governmental
Authority on the extension of credit by banks or other lending institutions
in the United States or France, (vi) a
34
commencement of a war or armed hostilities or other national or
international calamity in the United States, France, England or Scotland or
a war or armed hostilities or other national or international calamity
which could reasonably be expected to have a substantial effect on the
business or financial conditions in the United States, France, England or
Scotland or (vii) in the case of any of the foregoing existing on July 24,
2000, a material acceleration or worsening thereof;
(e) (i) it shall have been publicly disclosed, or Purchaser shall have
otherwise learned, that beneficial ownership (determined for the purposes
of this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of 15% or more of the then-outstanding Shares has been acquired by any
person, other than Parent or any of its affiliates, and the Board shall not
have taken all necessary action (without redeeming the Rights) so that such
ownership of Shares will not result in such person being an Acquiring
Person (as defined in the Rights Agreement), the occurrence of a "flip-in
event" or a "flip-over event" (each, as defined in the Rights Agreement),
the Rights becoming exercisable or evidenced by, and transferable pursuant
to, certificates separate from the Shares or the triggering of any other
provisions of the Rights Agreement, or (ii) (A) the Board, or any committee
thereof, shall have withdrawn or modified, in a manner adverse to Parent or
Purchaser, the approval or recommendation of the Offer, the Merger or the
Merger Agreement, or approved or recommended any Acquisition Proposal or
any other acquisition of Shares other than the Offer and the Merger or (B)
the Board, or any committee thereof, shall have resolved to do any of the
foregoing;
(f) any representation or warranty of the Company in the Merger
Agreement shall not be true and correct as if such representation or
warranty was made as of such time on or after the date of the Merger
Agreement (except to the extent such representation or warranty relates
solely to an earlier date) other than such failures to be true and correct
that, when taken together with all other failures of representations and
warranties to be true and correct, do not have and would not reasonably be
expected to have a Material Adverse Effect; it being agreed that for
purposes of determining whether any representation or warranty of the
Company is true and correct, the representations and warranties shall be
deemed not to be qualified by any reference therein to materiality
generally or any Material Adverse Effect;
(g) the Company shall have failed to perform, in any respect, any
material obligation or to comply, in any respect, with any material
agreement or covenant of the Company to be performed or complied with by it
under the Merger Agreement;
(h) the Merger Agreement shall have been terminated in accordance with
its terms; or
(i) Purchaser and the Company shall have agreed that Purchaser shall
terminate the Offer or postpone the acceptance for payment of Shares
thereunder;
which, in the sole judgment of Purchaser in any such case, and regardless of
the circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted by Purchaser or Parent regardless of the circumstances
giving rise to any such condition or, subject to the terms of the Merger
Agreement, may be waived by Purchaser or Parent in whole or in part at any time
and from time to time in their sole discretion, except that Purchaser and
Parent may not waive the Minimum Condition without the consent of the Company.
The failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right; the waiver of any such
right with respect to particular facts and other circumstances shall not be
deemed a waiver with respect to any other facts and circumstances; and each
such right shall be deemed an ongoing right that may be asserted at any time
and from time to time.
15. Certain Legal Matters and Regulatory Approvals.
General. Based upon its examination of publicly available information with
respect to the Company and the review of certain information furnished by the
Company to Parent and discussions between representatives of Parent and
representatives of the Company during Parent's investigation of the Company
(see Section 10),
35
neither Purchaser nor Parent is aware of (i) any license or other regulatory
permit that appears to be material to the business of the Company and its
subsidiaries, taken as a whole, which might be adversely affected by the
acquisition of Shares by Purchaser pursuant to the Offer or (ii) except as set
forth below, of any approval or other action by any domestic (federal or state)
or foreign Governmental Authority which would be required prior to the
acquisition of Shares by Purchaser pursuant to the Offer. Should any such
approval or other action be required, it is Purchaser's present intention to
seek such approval or action. Purchaser does not currently intend, however, to
delay the purchase of Shares tendered pursuant to the Offer pending the outcome
of any such action or the receipt of any such approval (subject to Purchaser's
right to decline to purchase Shares if any of the conditions in Section 14
shall have occurred). There can be no assurance that any such approval or other
action, if needed, would be obtained without substantial conditions or that
adverse consequences might not result to the business of the Company, Purchaser
or Parent or that certain parts of the businesses of the Company, Purchaser or
Parent might not have to be disposed of or held separate or other substantial
conditions complied with in order to obtain such approval or other action or in
the event that such approval was not obtained or such other action was not
taken. Purchaser's obligation under the Offer to accept for payment and pay for
Shares is subject to certain conditions, including conditions relating to the
legal matters discussed in this Section 15. See Section 14 for certain
conditions of the Offer.
State Takeover Laws. The Company is incorporated under the laws of the State
of Delaware. In general, Section 203 of Delaware Law prevents an "interested
stockholder" (generally a person who owns or has the right to acquire 15% or
more of a corporation's outstanding voting stock, or an affiliate or associate
thereof) from engaging in a "business combination" (defined to include mergers
and certain other transactions) with a Delaware corporation for a period of
three years following the date such person became an interested stockholder
unless, among other things, prior to such date the board of directors of the
corporation approved either the business combination or the transaction in
which the interested stockholder became an interested stockholder. On July 23,
2000, prior to the execution of the Merger Agreement, the Board by unanimous
vote of all directors present at a meeting held on such date, approved the
Merger Agreement and determined that each of the Offer and the Merger is fair
to, and in the best interest of, the stockholders of the Company. Accordingly,
Section 203 is inapplicable to the Offer and the Merger.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers of
corporations meeting certain requirements 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.
The Company, directly or through its subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws. Purchaser does not know whether any of these laws will, by their
terms, apply to the Offer or the Merger and has not complied with any such
laws. Should any person seek to apply any state takeover law, Purchaser will
take such action as then appears desirable, which may include challenging the
validity or applicability of any such statute in appropriate court proceedings.
In the event it is asserted that one or more state takeover laws is applicable
to the Offer or the Merger, and an appropriate court does not determine that it
is inapplicable or invalid as applied to the Offer, Purchaser might be required
to file certain information with, or receive approvals from, the relevant state
authorities. In addition, if enjoined, Purchaser might be unable to accept for
payment any Shares tendered pursuant to the Offer, or be delayed in continuing
or consummating the Offer and the Merger. In such case, Purchaser may not be
obligated to accept for payment any Shares tendered. See Section 14.
36
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and the
FTC and certain waiting period requirements have been satisfied. The
acquisition of Shares by Purchaser pursuant to the Offer is subject to such
requirements. See Section 2.
Pursuant to the HSR Act, on August 4, 2000, Parent filed a Premerger
Notification and Report Form in connection with the purchase of Shares pursuant
to the Offer with the Antitrust Division and the FTC. 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 Parent. Accordingly, the waiting period under
the HSR Act applicable to the purchase of Shares pursuant to the Offer will
expire at 11:59 p.m., New York City time, on August 19, 2000, unless such
waiting period is earlier terminated by the FTC and the Antitrust Division or
extended by a request from the FTC or the Antitrust Division for additional
information or documentary material prior to the expiration of the waiting
period. Pursuant to the HSR Act, Parent has requested early termination of the
waiting period applicable to the Offer. There can be no assurance, however,
that the 15-day HSR Act waiting period will be terminated early. If either the
FTC or the Antitrust Division were to request additional information or
documentary material from Parent with respect to the Offer, the waiting period
with respect to the Offer would expire at 11:59 p.m., New York City time, on
the tenth calendar day after the date of substantial compliance with such
request. If the acquisition of Shares is delayed pursuant to a request by the
FTC or the Antitrust Division for additional information or documentary
material pursuant to the HSR Act, Parent may extend the Offer, and the Company
would have the right to require Parent to extend the Offer, and, in either
event, the purchase of and payment for Shares will be deferred until 10 days
after the request is substantially complied with, unless the waiting period is
sooner terminated by the FTC and the Antitrust Division. Any such extension of
the waiting period will not give rise to any withdrawal rights not otherwise
provided for by applicable law. For a description of withdrawal rights, see
Section 4. It is a condition to the Offer that the waiting period applicable
under the HSR Act to the Offer expire or be terminated. See Section 1 and
Section 14.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares
by Purchaser pursuant to the Offer. At any time before or after the purchase of
Shares pursuant to the Offer by Purchaser, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking the divestiture of Shares purchased by
Purchaser or the divestiture of substantial assets of Parent, the Company or
their respective subsidiaries. Private parties and state attorneys general may
also bring legal action under federal or state antitrust laws under certain
circumstances. Based upon an examination of information available to Parent
relating to the businesses in which Parent, the Company and their respective
subsidiaries are engaged, Parent and Purchaser believe that the Offer will not
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such a
challenge is made, what the result would be. See Section 14 for certain
conditions to the Offer, including conditions with respect to litigation.
Other Laws and Legal Matters. According to the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999, the Company conducts
operations in a number of foreign countries. In connection with the acquisition
of the Shares in the Offer or Merger, a notification is required by German
competition law which Parent made on August 4, 2000 with the Federal Cartel
Office. The purchase of Shares in the Offer may not be completed until the
expiration of at least a thirty day waiting period following the German
notification, unless that waiting period is terminated earlier. The laws of
other of those foreign countries and jurisdictions where the Company conducts
operations may also require the filing of certain information or the receipt of
the approval of the relevant foreign authorities. Such foreign authorities may
also attempt to impose additional conditions on the Company's operations
conducted in such countries. After completion of the Offer, Purchaser will seek
further information regarding the applicability of any such laws and presently
intends to take such action as such laws may require.
37
16. Fees and Expenses.
Except as set forth below, Purchaser will not pay any fees or commissions to
any broker, dealer or other person for soliciting tenders of Shares pursuant to
the Offer.
Bear, Stearns & Co. Inc. is acting as Dealer Manager in connection with the
Offer and has provided certain financial advisory services to Parent in
connection with the acquisition of the Company. Parent has agreed to pay Bear,
Stearns & Co. Inc. reasonable and customary compensation for such services.
Parent has also agreed to reimburse Bear, Stearns & Co. Inc. for all reasonable
out-of-pocket expenses incurred by Bear, Stearns & Co. Inc., including the
reasonable fees and expenses of legal counsel, and to indemnify Bear, Stearns &
Co. Inc. against certain liabilities and expenses in connection with its
engagement, including certain liabilities under the federal securities laws.
Purchaser and Parent have retained MacKenzie Partners, Inc., as the
Information Agent, and Wilmington Trust Company, as the Depositary, in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, telecopy, telegraph and personal interview and may
request banks, brokers, dealers and other nominee stockholders to forward
materials relating to the Offer to beneficial owners. As compensation for
acting as Information Agent in connection with the Offer, MacKenzie Partners,
Inc. will be paid a fee of $4,000 and will also be reimbursed for certain out-
of-pocket expenses and may be indemnified against certain liabilities and
expenses in connection with the Offer, including certain liabilities under the
federal securities laws.
Purchaser will pay the Depositary reasonable and customary compensation for
its services in connection with the Offer, plus reimbursement for out-of-pocket
expenses, and will indemnify the Depositary against certain liabilities and
expenses in connection therewith, including under federal securities laws.
Brokers, dealers, commercial banks and trust companies will be reimbursed by
Purchaser for customary handling and mailing expenses incurred by them in
forwarding material to their customers.
17. Miscellaneous.
The Offer is being made solely by this Offer to Purchase and the related
Letter of Transmittal and is being made to holders of Shares. Purchaser is not
aware of any jurisdiction where the making of the Offer is prohibited by any
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of
the Offer or the acceptance of Shares pursuant thereto, Purchaser will make a
good faith effort to comply with any such state statute. If, after such good
faith effort, Purchaser cannot comply with any 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 Purchaser by the Dealer
Manager or by one or more registered brokers or dealers licensed under the laws
of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER NOT CONTAINED IN THIS OFFER TO PURCHASE
OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Parent and Purchaser have filed with the Commission the Schedule
TO, together with exhibits, furnishing certain additional information with
respect to the Offer. The Schedule TO and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same places
and in the same manner as set forth in Section 7 (except that they will not be
available at the regional offices of the Commission).
Cousin Acquisition, Inc.
Dated: August 4, 2000
38
SCHEDULE I
INFORMATION CONCERNING THE DIRECTORS AND
EXECUTIVE OFFICERS OF PARENT AND PURCHASER
1. Directors and Executive Officers of Parent.
The following table sets forth the name, current business address,
citizenship and current principal occupation or employment, and material
occupations, positions, offices or employments and business addresses thereof
for the past five years of each director and executive officer of Parent.
Unless otherwise indicated, the current business address of each person is
Rhodia, 26, Quai Alphonse Le Gallo, 92512 Boulogne-Billancourt, France. Unless
otherwise indicated, each occupation set forth opposite an individual's name
refers to employment with Parent.
Current Principal Occupation or Employment; Material
Positions
Name and Current Held During the Past Five Years and Business Addresses
Business Address Thereof Citizenship
---------------- ------------------------------------------------------ -----------
Jean-Pierre Tirouflet Chairman of the Board of Directors and Chief Executive France
Officer of Parent since March 1987. Mr. Tirouflet was a
member of the Executive Committee of Rhone-Poulenc (now
called Aventis) between 1990 and 1999. Mr. Tirouflet
currently serves as Chairman and chief executive officer
of Rhodia Inc., member of the supervisory board of Credit
Agricole Indosuez and as a member of the board of
directors of AXA Reassurance, Rhodia Asia Pacific, Rhodia
Iberia and Rhodia Holdings Ltd.
The business address of Rhone-Poulenc was 25 Quai Paul
Doumer, 92400 Courbevoie, France.
Thierry Breton Director of Parent since 1998. Chairman and Chief France
Executive Officer of Thomson S.A. and Thomson Multimedia
since March 1997. Between 1993 and 1997, Mr. Breton
served as Vice-Chairman of Groupe Bull. Mr. Breton
currently serves as a member of the board of directors of
Bouygues Telecom, CNES and Schneider Electric.
The business address of Thomson S.A. and Thomson
Multimedia is 46, Quai Alphonse Le Gallo, 92100 Boulogne-
Billancourt, France. The business address of Groupe Bull
was 68, route de Versailles, 78430 Louveciennes, France.
Paul Desmarais, Jr. Director of Parent since 1999. Chairman and Co-Chief Canada
Executive Officer of Power Corporation of Canada since
1996. Between 1990 and 1996, Mr. Desmarais was Chairman
of Power Financial Corporation. Mr. Desmarais currently
serves as a director and a member of the executive
committee of Power Financial Corporation, Investors Group
Inc., Great-West Lifeco Inc., The Great-West Life
Assurance Company, Great-West Life & Annuity Insurance
Company, London Insurance Group Inc., London Life
Insurance Company, Pargesa Holding S.A., and Groupe
Bruxelles Lambert S.A. Mr. Desmarais is also a director
of Power Corporation of Canada, Gesca Ltd., La Presse
Ltd., Les Journaux Trans-Canada (1996) Inc., Electrafina
S.A., Tractebel S.A., and Suez Lyonnaise des Eaux, and is
the Vice-President of the supervisory board of Imerys.
The business address of Power Corporation of Canada is
751 Square Victoria, Montreal, Quebec, Canada H2Y 2J3.
Current Principal Occupation or Employment; Material
Positions
Name and Current Held During the Past Five Years and Business Addresses
Business Address Thereof Citizenship
---------------- ------------------------------------------------------ -----------
Jean-Rene Fourtou Director of Parent since 1998. Vice-Chairman of the France
management board of Aventis since December 1999. Mr.
Fourtou was Chairman of the Board of Directors and Chief
Executive Officer of Rhone-Poulenc between 1986 and 1999.
Mr. Fourtou currently serves as Vice-Chairman of the
supervisory board of AXA, and as a member of the board of
directors of Pernod-Ricard, Schneider S.A., EADS and The
Equitable.
The business address of Aventis is Espace Europeen de
l'Entreprise, 16, avenue de l'Europe, 67300 Schiltigheim,
France.
The business address of Rhone-Poulenc was 25, Quai Paul
Doumer, 92400 Courbevoie, France.
Pierre-Gilles de Gennes Director of Parent since 1999. Scientific consultant for France
physico-chemicals at Parent since 1999. Mr. de Gennes has
been a Professor of the College de France since 1971,
Headmaster of the Ecole de Physique et de Chimie since
1976 and a member of the Academie des Sciences since
1979. Mr. de Gennes currently serves as a member of the
board of directors of Air Liquide and Sanofi-Synthelabo.
The business address of the Ecole de Physique et de
Chimie is 10, rue Vauquelin, 75005 Paris, France.
Igor Landau Director of Parent since 1997. Mr. Landau has been Group France
President of Aventis since December 1999. Between 1992
and 1999, Mr. Landau was Group President of Rhone-
Poulenc. Mr. Landau is currently Chairman and Chief
Executive Officer of Aventis Pharma and C.E.D.E.P., and a
director of Aventis Crop Science, IDI and Messer.
The business address of Aventis is Espace Europeen de
l'Entreprise, 16, avenue de l'Europe, 67300 Schiltigheim,
France.
The business address of Rhone-Poulenc was 25, Quai Paul
Doumer, 92400 Courbevoie, France.
Pierre Levi Director of Parent since 1999. Mr. Levi is currently France
Chairman and Chief Executive Officer of Faurecia. Prior
to serving as Chairman and Chief Executive Officer of
Faurecia, Mr. Levi served as Executive Vice-President of
Faurecia between 1999 and May 2000. Between 1998 and
1999, Mr. Levi was Deputy President of Rhodia. Between
1995 and 1998, Mr. Levi served as Vice-President of the
Fibers & Polymers division of Rhodia.
The business address of Faurecia is 276 rue Louis
Bleriot, 92100 Boulogne-Billancourt, France.
Thierry de Rudder Director of Parent since 1999. Mr. de Rudder has been Belgium
Managing Director of Groupe Bruxelles Lambert since 1986.
Mr. De Rudder is also the managing director of GBL and
Electrafina and a director of Imerys, Suez Industrie,
Total Fina Elf, Audiofina, CLT-UFA, Compagnie Nationale A
Portefeuille, Tractebel, Lasmo, Petrofina 5, Societe
Generale de Belgique. Mr. de Rudder was also a director
of Bernheim-Comofis, Fibelpar, Monument Oil and Gas and
Royale Belge
The business address of Groupe Bruxelles Lambert is 24,
avenue Marnix, B-100 Bruxelles, Belgium.
Current Principal Occupation or Employment; Material
Positions
Name and Current Held During the Past Five Years and Business Addresses
Business Address Thereof Citizenship
---------------- ------------------------------------------------------ -----------
Hubertus Sulkowski Director of Parent since 1999. Mr. Sulkowski has been a United States
partner with Shearman & Sterling since 1988. of America
The business address of Shearman & Sterling in France is
114, avenue des Champs-Elysees, 75008 Paris, France.
Pierre de Weck Director of Parent since 1999. Mr. de Weck has been Switzerland
Chairman and Chief Executive Officer of UBS Capital since
1999 and a member of the Group Executive Board of UBS SA
since 1994. Mr. de Wreck is also chairman of UBS Private
Equity S.A.
The business address of UBS Capital is 100 Liverpool
Street, London EC2M 2RH, England.
Gilles Auffret Deputy President, President of the Polyamide Division France
since September 1999. Between 1994 and 1999, Mr. Auffret
was President of the Primary Aluminium Department of
Pechiney. Mr. Auffret is also the President of Rhodia
Fiber & Resin Intermediate and the general manager of
Rhodianyl.
The business address of Pechiney was 7, place du
Chancelier Adenauer, 75016 Paris, France.
Jacques Becuwe Vice President of Parent and President of the Industrial France
Specialties Division since June 1999. Prior to being
named to his current position, Mr. Becuwe served as
President of Eco Services in 1998 and President of the
Environmental Services--Europe Enterprise of Rhone-
Poulenc from 1995 to 1998. Mr. Becuwe is also a director
of Rhodia Nederland and Rhodia Belgium, and was a
director of Teris and Scori as well as the President of
Orolis.
The business address of Rhone-Poulenc was 25 Quai Paul
Doumer, 92408 Courbevoie, France.
Yves Boisdron President of the Asia-Pacific Zone of Parent since France
January 1, 1998. Prior to assuming this position, Mr.
Boisdron served as Senior Vice President of Rhone-Poulenc
Chimie from 1994 to 1996. Mr. Boisdron currently serves
as Chairman of Qingdao RP Silica, Rhodia Asia Pacific,
Rhodia Specialty Chem-Wuxi and Rhodia New Zealand, as
vice chairman of Beijing RP Eastern Chemical, as
President Commissioner of Rhodia Indolatex, and as
director of Beijing RP Eastern Chemical, Jade Fine
Chemicals, Qingdao RP Silica, Pakistan Gum, Rhodia Asia
Pacific, Rhodia Nicca, Rhodia Singapore, Rhodia New
Zealand and RP Chemicals India.
The business address of Rhone-Poulenc Chimie was 25, quai
Paul Doumer, 92400 Courbevoie, France.
Current Principal Occupation or Employment; Material
Positions
Name and Current Held During the Past Five Years and Business Addresses
Business Address Thereof Citizenship
---------------- ------------------------------------------------------ -----------
Jean-Claude Bravard Deputy President of Parent and President of the Fine France
Organics Division since January 1, 1999. Mr. Bravard is
also Supervisor of the Research and Innovation Function
and of the Industrial Property of Rhodia. Mr. Bravard was
previously Vice President of Development and Industry
between January 1998 and December 1998. Between 1995 and
1997, Mr. Bravard was President of the paper, paint and
construction materials enterprise of Rhone-Poulenc
Chimie. Mr. Bravard is a director of Rhodia Services,
Rhodia Recherches, Rhodia Inc. and Rhodia Organique Fine
Ltd.
The business address of Rhone-Poulenc was 25 Quai Paul
Doumer, 92400 Courbevoie, France.
Yves Brissy General Counsel of Parent since December 16, 1999. Prior France
to being named to his current position, Mr. Brissy served
as General Counsel of Rhone-Poulenc from 1987 to 1999.
Mr. Brissy is a director of Rhodia Polska and Rhodia
Holdings Ltd.
The business address of Rhone-Poulenc was 25 Quai Paul
Doumer, 92400 Courbevoie, France.
Bernard Chambon Deputy President of Rhodia in charge of Human Resources France
and Communications since January 1, 1999, and Senior Vice
President in charge of Human Resources and Communication
between January 1, 1998 and January 1, 1999. Between 1996
and 1998, Mr. Chambon was senior Vice President in charge
of Human Resources and Communications for Rhone-Poulenc's
European operations.
The business address of Rhone-Poulenc was 25 Quai Paul
Doumer, 92400 Courbevoie, France.
Jean-Michel Delolme Vice President, Technology and Industrial Functions of France
Parent since January 1, 1998. Between 1996 and 1998, Mr.
Delolme was chief executive officer of the Fine Organics
Division of Rhone-Poulenc Chimie. Mr. Delolme is also the
president of Rhodia Chimie, and a director of ICMD and RP
Industrialisation.
The business address of Rhone-Poulenc Chimie was 25 Quai
Paul Doumer, 92400 Courbevoie, France.
David Eckert Deputy President of Rhodia and President of the Consumer United States
Specialties Division since January 1, 1999. Between 1998 of America
and 1999, Mr. Eckert was President of the Industrial
Specialties division of Rhodia. Between 1997 and 1998,
Mr. Eckert was President of Rhone-Poulenc Inc., and
between 1994 and 1997, he served as President of the
North American Chemicals operations of Rhone-Poulenc. Mr.
Eckert is also the President of RP Surfactants, RP
Surfactants and Specialties, RP of Wyoming Co., RP of
Wyoming L.P. and RP Inc., and is a director of RP
Surfactants, RP Surfactants & Specialties, RP of Wyoming
Holding, Rhodia Inc., Rhodia Holding Inc., Albright &
Wilson Ltd, andAlbright & Wilson Overseas Ltd.
The business address of Rhone-Poulenc was 25 Quai Paul
Doumer, 92400 Courbevoie, France.
Current Principal Occupation or Employment; Material
Positions
Name and Current Held During the Past Five Years and Business Addresses
Business Address Thereof Citizenship
---------------- ------------------------------------------------------ -----------
Myron Galuskin President of the North American Zone of Parent and United States
President of Rhodia Inc. since July 1998. Mr. Galuskin of America
served as Rhodia Inc.'s Vice President between January
1998 and July 1998. Prior to 1998, Mr. Galuskin held
various positions within the Rhone-Poulenc group.
The business address of Rhone-Poulenc Inc. was 259
Prospect Plains Road, Cranbury, New Jersey 08512, U.S.A.
Jose-Carlos Grubisich Vice President in charge of the Competitiveness and Brazil
Progress programs of Parent since January 1, 2000, and
President of the Latin American Zone since January 1,
1998. Mr. Grubisich has been president of Rhodia Brasil
Ltda since 1999. Mr. Grubisich is also a director of
Parseg Participacoes Ltda, Rhodia Acetow Brasil Ltda,
Rhodia Poliamida Ltda, Alexil Sociedade Anonima,
Rhodiapar Investimentos Ltda, and Alaver Sociedad
Anonima. In addition, Mr. Grubisich is the
superintendent-director of REI S/A, the president and a
director of Rhodia Venezuela S.A. and Rhodia Argentina
S.A., the president of the executive board of Rhodia-Ster
S/A, the president and manager of Rhodia de Mexico, S/A
de CV, and a member of the executive board of Rhodia
Fosfatados. Mr. Grubisich was also a director of RP Agro
Brasil, MTN, Rhodia Farma and RP Animal Nutrition do
Brasil and a member of the management of Teris do Brasil
S.A.
The business address of Rhodia Brazil is Sao Paulo,
Brazil.
Pierre Prot Chief Financial Officer of Parent since January 1, 1998. France
During 1996 and 1997, Mr. Prot was head of finance,
European Chemicals at Rhone-Poulenc Chimie and between
1995 and 1996 Mr. Prot was head of the financial strategy
at Rhone-Poulenc S.A.
The business address of Rhone-Poulenc was 25 Quai Paul
Doumer, 92400 Courbevoie, France.
Michel Ybert Deputy President of Rhodia in charge of Strategy since France
January 1, 2000, and Supervisor of the Service and
Specialties Division since January 1, 1999. From April
1995 to November 1997, Mr. Ybert worked at Moulinex S.A.,
and he joined Rhodia in November 1997. Mr. Ybert is also
president of Rhodia Chem Italia and Rhodia Italia,
President of the supervisory board of Rhodia Acetow GmbH,
director of Rhodia Nederland, Rhodia Belgium, Rhodia
Iberia, Viscosuisse, Rhodia Chem Italia and Rhodia Italia
and manager of Acetco.
The business address of Moulinex S.A. was 22, Place des
Vosges, 92979 Paris la Defense, France.
2. Directors and Executive Officers of Purchaser.
The following table sets forth the name, current business address,
citizenship and present principal occupation or employment, and material
occupations, positions, offices or employments and business addresses thereof
for the past five years of each director and executive officer of Purchaser.
Current Principal Occupation or Employment; Material
Positions
Name and Current Held During the Past Five Years and Business Addresses
Business Address Thereof Citizenship
---------------- ------------------------------------------------------ -----------
John P. Donahue Chairman, President, Secretary and Treasurer of United States
Purchaser. Senior Vice President and General Counsel of of America
Rhodia Inc. since 1998. Between 1996 and 1998, Mr.
Donahue was Vice President--Legal services and Secretary
of Rhone-Poulenc Inc. Mr. Donahue is also a director of
Rhodia Foreign Sales Corporation, Secretary of Rhodia
Engineering Plastics Corp. and Rhodia Rare Earths Inc.,
and Senior Vice President and Secretary of Rhodia Holding
Inc. Mr. Donahue was also sole director and president of
Danube Chemicals Acquisition Corporation, Secretary of RP
Technology Resources Inc. and Assistant Secretary of
Procatalyse USA Inc.
The business address of Rhodia Inc. is 259 Prospect
Plains Road, Cranbury, New Jersey 08512, U.S.A.
The business address of Rhone-Poulenc Inc. was 219 Black
Horse Lane, Princeton, New Jersey 08512, U.S.A.
SCHEDULE II
SCHEDULE OF TRANSACTIONS IN SHARES
DURING THE PAST 60 DAYS
The following table sets forth purchases of the Shares within the past 60
days by or on behalf of Parent. All transactions were effected on the Nasdaq
National Market.
Number of
Date Shares Purchased Price per Share*
---- ---------------- ----------------
May 17, 2000............................... 2,500 $16.500
May 18, 2000............................... 7,400 16.656
May 19, 2000............................... 500 16.938
May 22, 2000............................... 8,900 17.159
May 23, 2000............................... 33,200 17.522
May 24, 2000............................... 22,600 17.696
------
Total.................................... 75,100
======
--------
* Excluding commissions.
Manually signed facsimiles of the Letter of Transmittal, properly completed,
will be accepted. The Letter of Transmittal and certificates evidencing Shares
and any other required documents should be sent or delivered by each
stockholder or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
Wilmington Trust Company
By Facsimile transmission (for Eligible Institutions only): (302) 651-1079
Confirm by Telephone: (302) 651-8869
By Mail: By Hand or Overnight
Courier:
Wilmington Trust Company Wilmington Trust Company
Corporate Trust 1105 North Market Street,
Operations First Floor
PO Box 8861 Wilmington, DE 19801
Wilmington, DE 19899- Attention: Corporate
8861 Trust Operations
Other Information:
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Manager at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent. A stockholder may also contact brokers, dealers, commercial
banks or trust companies for assistance concerning the Offer.
The Information Agent for the Offer is:
[MACKENZIE PARTNERS, INC. LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
The Dealer Manager for the Offer is:
[BEAR STEARNS LOGO]
245 Park Avenue
New York, New York 10167
Call Toll-Free (877) 850-8074