-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MZX9nCMduznlzeBD4ZyZqPDy5jmPUrqx8I4c/8BYRJ77Ik5J9Tyr/rVsKTo5hV25 c+/KXQGETojKG0LtTDe3+g== 0000950124-98-005101.txt : 19980922 0000950124-98-005101.hdr.sgml : 19980922 ACCESSION NUMBER: 0000950124-98-005101 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 18 FILED AS OF DATE: 19980921 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DRAVO CORP CENTRAL INDEX KEY: 0000030067 STANDARD INDUSTRIAL CLASSIFICATION: MINING, QUARRYING OF NONMETALLIC MINERALS (NO FUELS) [1400] IRS NUMBER: 250447860 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-10201 FILM NUMBER: 98712306 BUSINESS ADDRESS: STREET 1: 11 STANWIX ST. STREET 2: 11TH FLOOR CITY: PITTSBURGH STATE: PA ZIP: 15222 BUSINESS PHONE: 412-995-5535 MAIL ADDRESS: STREET 1: 11 STANWIX ST., 11TH FLOOR CITY: PITTSBURGH STATE: PA ZIP: 15222 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: DLC ACQUISITION CORP CENTRAL INDEX KEY: 0001070609 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 364248543 STATE OF INCORPORATION: PA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 390 EAST JOE ORR RD STREET 2: PO BOX 488 CITY: CHICAGO HEIGHTS STATE: IL ZIP: 60411-0488 BUSINESS PHONE: 7087576201 MAIL ADDRESS: STREET 1: 390 EAST JOE ORR RD STREET 2: PO BOX 488 CITY: CHICAGO HEIGHTS STATE: IL ZIP: 60411-0488 SC 14D1 1 SCHEDULE 14D-1 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ DRAVO CORPORATION (NAME OF SUBJECT COMPANY) DLC ACQUISITION CORP., A WHOLLY OWNED SUBSIDIARY OF CARMEUSE LIME, INC. (BIDDERS) ------------------------ COMMON STOCK, $1.00 PAR VALUE (TITLE OF CLASS OF SECURITIES) ------------------------ 261471106 (CUSIP NUMBER OF CLASS OF SECURITIES) ------------------------ SUZANNE E. RITZLER, ESQ. EXECUTIVE VICE PRESIDENT CARMEUSE LIME, INC. 390 EAST JOE ORR ROAD CHICAGO HEIGHTS, ILLINOIS 60411 (708) 757-1240 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS) ------------------------ WITH A COPY TO: MICHAEL E. BLOUNT, ESQ. SEYFARTH, SHAW, FAIRWEATHER & GERALDSON 55 EAST MONROE, SUITE 4200 CHICAGO, ILLINOIS 60603 TELEPHONE: (312) 346-8000 CALCULATION OF FILING FEE - -------------------------------------------------------------------------------- - --------------------------------------------------------------------------------
TRANSACTION VALUATION* AMOUNT OF FILING FEE** ---------------------- ---------------------- $230,664,837 $46,133
* For purposes of calculating the filing fee only. This calculation assumes the purchase of 17,743,449 shares of Common Stock, $1.00 par value, of Dravo Corporation at $13.00 per share in cash. ** The amount of the filing fee, calculated in accordance with Rule 0-11(d) of the Securities Exchange Act of 1934, as amended, equals 1/50th of one percent of the aggregate value of cash offered by DLC Acquisition Corp. for such number of shares. [ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. AMOUNT PREVIOUSLY PAID: NOT APPLICABLE. FILING PARTY: NOT APPLICABLE. FORM OR REGISTRATION NO.: NOT APPLICABLE. DATE FILED: NOT APPLICABLE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 SCHEDULE 14D-1
- ------------------------------ ------------------------------ CUSIP NO. 261471106 PAGE 2 OF 8 PAGES - ------------------------------ ------------------------------ - ----------------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON DLC ACQUISITION CORP. 36-4248543 - ----------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] - ----------------------------------------------------------------------------------------- 3 SEC USE ONLY - ----------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF, BK, OO - ----------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(e) or 2(f) [ ] - ----------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Pennsylvania - ----------------------------------------------------------------------------------------- 7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON None - ----------------------------------------------------------------------------------------- 8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [ ] - ----------------------------------------------------------------------------------------- 9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 0.0% - ----------------------------------------------------------------------------------------- 10 TYPE OF REPORTING PERSON CO - -----------------------------------------------------------------------------------------
3 SCHEDULE 14D-1
- ------------------------------ ------------------------------ CUSIP NO. 261471106 PAGE 3 OF 8 PAGES - ------------------------------ ------------------------------ - ----------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON CARMEUSE LIME, INC. 36-3933140 - ----------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [X] - ----------------------------------------------------------------------------------- 3 SEC USE ONLY - ----------------------------------------------------------------------------------- 4 SOURCE OF FUNDS AF, BK, OO - ----------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) [ ] - ----------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ----------------------------------------------------------------------------------- 7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON None - ----------------------------------------------------------------------------------- 8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [ ] - ----------------------------------------------------------------------------------- 9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 0.0% - ----------------------------------------------------------------------------------- 10 REPORTING PERSON HC and CO - -----------------------------------------------------------------------------------
4 SCHEDULE 14D-1 - ------------------------------ ------------------------------ CUSIP NO. 261471106 PAGE 4 OF 8 PAGES - ------------------------------ ------------------------------ The item numbers and responses thereto below are in accordance with the requirements of Schedule 14D-1. ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is Dravo Corporation, a Pennsylvania corporation (the "Company"). The address of the Company's principal executive office is 11 Stanwix Street, Pittsburgh, PA, 15222. (b) This Schedule 14D-1 relates to the offer by DLC Acquisition Corp. ("Purchaser"), a Pennsylvania corporation and a wholly owned direct subsidiary of Carmeuse Lime, Inc. ("Parent"), a Delaware corporation and indirect subsidiary of LVI Holding N.V., a Dutch corporation ("LVI"), to purchase all outstanding shares of common stock, $1.00 par value (the "Shares"), of the Company, upon the terms and subject to the conditions set forth in the Offer to Purchase dated September 21, 1998 (the "Offer to Purchase") and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, constitute the "Offer") at a purchase price of $13.00 per Share, in cash. At September 15, 1998, 14,718,693 Shares were outstanding, 1,373,300 Shares were issuable upon the exercise of outstanding options (whether or not vested), 51,456 Shares were issuable upon conversion of the Series B Preference Stock and 1,600,000 Shares were issuable upon conversion of the Series D Preferred Stock. The information set forth under "INTRODUCTION" in the Offer to Purchase annexed hereto as Exhibit (a)(1) is incorporated herein by reference. (c) The information set forth under "THE TENDER OFFER -- Price Range of Shares; Dividends" in the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d); (g) This Schedule 14D-1 is being filed by Purchaser and Parent. Parent is a wholly owned direct subsidiary of Carmeuse North America, B.V., a Dutch corporation ("Carmeuse NA"), which is a wholly owned direct subsidiary of Carfin, S.A., a Belgian corporation ("Carfin"). Carfin is a direct subsidiary of LVI. Carmeuse S.A. ("Carmeuse SA"), a Belgian corporation, is an affiliate of Purchaser and Parent and is the guarantor of the obligations of Purchaser and Parent under the Agreement and Plan of Merger, dated as of September 15, 1998, among Purchaser, Parent and the Company. The information set forth under "INTRODUCTION" and "THE TENDER OFFER -- Certain Information Concerning Purchaser, Parent, Carmeuse NA, Carfin, LVI, and Carmeuse SA" in the Offer to Purchase and Schedule I thereto is incorporated herein by reference. (e)-(f) During the last five years, none of Purchaser, Parent, Carmeuse NA, Carfin, LVI, Carmeuse SA or any persons controlling Purchaser, nor, to the best knowledge of Purchaser or Parent, any of the persons listed on Schedule I to the Offer to Purchase (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which any such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, Federal or State securities laws or finding any violation of such laws. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a)-(b) The information set forth under "INTRODUCTION," "THE TENDER OFFER -- Certain Information Concerning the Company," "-- Certain Information Concerning Purchaser, Parent, Carmeuse NA, Carfin, LVI, and Carmeuse SA" "-- Background of the Offer; Contacts with the Company" and "-- Purpose of the Offer; Plans for the Company; Merger Agreement; and Other Agreements," in the Offer to Purchase is incorporated herein by reference. 5 SCHEDULE 14D-1 - ------------------------------ ------------------------------ CUSIP NO. 261471106 PAGE 5 OF 8 PAGES - ------------------------------ ------------------------------ ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a)-(b) The information set forth under "INTRODUCTION" and "THE TENDER OFFER -- Source and Amount of Funds" in the Offer to Purchase is incorporated herein by reference. (c) Not applicable. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. (a)-(e) The information set forth under "INTRODUCTION," "THE TENDER OFFER -- Background of the Offer; Contacts with the Company" and "-- Purpose of the Offer; Plans for the Company; Merger Agreement; and Other Agreements" in the Offer to Purchase is incorporated herein by reference. (f)-(g) The information set forth under "INTRODUCTION" and "THE TENDER OFFER -- Effect of the Offer on the Market for the Shares; NYSE Listing and Exchange Act Registration" in the Offer to Purchase is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) The information set forth under "THE TENDER OFFER -- Purpose of the Offer; Plans for the Company; Merger Agreement; and Other Agreements" in the Offer to Purchase is incorporated herein by reference. (b) Not applicable. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth under "INTRODUCTION," "THE TENDER OFFER -- Background of the Offer; Contacts with the Company" and "-- Purpose of the Offer; Plans for the Company; Merger Agreement; and Other Agreements" in the Offer to Purchase is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth under "THE TENDER OFFER -- Fees and Expenses" in the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth under "THE TENDER OFFER -- Certain Information Concerning Purchaser, Parent, Carmeuse NA, Carfin, LVI and Carmeuse SA" in the Offer to Purchase is incorporated herein by reference. The information set forth in the audited financial statements of Parent, copies of which are attached hereto under the heading "Financial Statements Exhibit," is incorporated herein by reference. Parent's audited financial statements have been prepared in accordance with generally accepted accounting principles; however, because Parent is not a reporting company under the Exchange Act, its financial statements have not been prepared in accordance with Regulation S-X, as promulgated by the Securities and Exchange Commission. ITEM 10. ADDITIONAL INFORMATION. (a) Not applicable. 6 SCHEDULE 14D-1 - ------------------------------ ----------------------------- CUSIP NO. 261471106 PAGE 6 OF 8 PAGES - ------------------------------ -----------------------------
(b)-(c) The information set forth under "INTRODUCTION" and "THE TENDER OFFER -- Regulatory Approvals; State Takeover Laws" in the Offer to Purchase is incorporated herein by reference. (d) The information set forth under "THE TENDER OFFER -- Effect of the Offer on the Market for the Shares; NYSE Listing and Exchange Act Registration" in the Offer to Purchase is incorporated herein by reference. (e) The information set forth under "THE TENDER OFFER -- Regulatory Approvals; State Takeover Laws" in the Offer to Purchase is incorporated herein by reference. (f) The information set forth in the Offer to Purchase and the Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively, is incorporated herein by reference. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase dated September 21, 1998. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) Tender Offer Instructions for Participants of Dravo Corporation Dividend Reinvestment Plan. (a)(8) Text of joint Press Release issued by Parent and the Company on September 15, 1998. (a)(9) Form of Summary Advertisement, dated September 21, 1998. (a)(10) Text of Subchapter 25E of the Pennsylvania Business Corporation Law. (a)(11) Letter to shareholders of the Company, dated September 21, 1998. (b)(1) Letter dated September 14, 1998 from Bank Brussels Lambert SA to Carmeuse SA. (b)(2) Letter dated September 14, 1998 from Lafarge, S.A. to Carmeuse SA. (b)(3) Agreement dated September 18, 1998 between Parent and Carmeuse SA. (c)(1) Agreement and Plan of Merger, dated as of September 15, 1998, by and among Parent, Purchaser and the Company. (c)(2) Confidentiality Agreement, dated April 29, 1998, by and between the Company and Parent. (d) Not applicable. (e) Not applicable. (f) Not applicable. Financial Statements Exhibit
7 SCHEDULE 14D-1 - ------------------------------ ------------------------------ CUSIP NO. 261471106 PAGE 7 OF 8 PAGES - ------------------------------ ------------------------------ SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Dated: September 21, 1998 DLC ACQUISITION CORP. By:/s/ SUZANNE E. RITZLER ----------------------------------- Name: Title: CARMEUSE LIME, INC. By:/s/ SUZANNE E. RITZLER ----------------------------------- Name: Title: 8 SCHEDULE 14D-1 - ------------------------------ ------------------------------ CUSIP NO. 261471106 PAGE 8 OF 8 PAGES - ------------------------------ ------------------------------ EXHIBIT INDEX EXHIBIT NUMBER - ------- (a)(1) Offer to Purchase dated September 21, 1998. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) Tender Offer Instructions for Participants of Dravo Corporation Dividend Reinvestment Plan. (a)(8) Text of joint Press Release issued by Parent and the Company on September 15, 1998. (a)(9) Form of Summary Advertisement, dated September 21, 1998. (a)(10) Text of Subchapter 25E of the Pennsylvania Business Corporation Law. (a)(11) Letter to shareholders of the Company, dated September 21, 1998. (b)(1) Letter dated September 14, 1998 from Bank Brussels Lambert, SA to Carmeuse SA. (b)(2) Letter dated September 14, 1998 from Lafarge, S.A. to Carmeuse SA. (b)(3) Agreement dated September 18, 1998 between Parent and Carmeuse SA. (c)(1) Agreement and Plan of Merger, dated as of September 15, 1998, by and among Parent, Purchaser and the Company. (c)(2) Confidentiality Agreement dated April 29, 1998 by and between the Company and Parent. (d) Not applicable. (e) Not applicable. (f) Not applicable. Financial Statements Exhibit EX-99.(A)(1) 2 OFFER TO PURCHASE 1 EXHIBIT (a)(1) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF DRAVO CORPORATION AT $13.00 NET PER SHARE BY DLC ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF CARMEUSE LIME, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, OCTOBER 19, 1998 UNLESS THE OFFER IS EXTENDED. THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER DATED AS OF SEPTEMBER 15, 1998, AMONG DRAVO CORPORATION (THE "COMPANY"), CARMEUSE LIME, INC. ("PARENT") AND DLC ACQUISITION CORP. ("PURCHASER"). THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT EACH OF THE OFFER AND THE MERGER (AS HEREINAFTER DEFINED) IS FAIR TO, AND IN THE BEST INTERESTS OF, THE SHAREHOLDERS OF THE COMPANY, AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. THE SHARES ARE LISTED FOR TRADING ON THE NEW YORK STOCK EXCHANGE UNDER THE SYMBOL "DRV." SEE "SECTION 6 -- PRICE RANGE OF SHARES; DIVIDENDS." THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH NUMBER OF SHARES WHICH CONSTITUTES AT LEAST A MAJORITY OF THE ACTUAL SHARES OUTSTANDING ON A FULLY DILUTED BASIS AND OF THE VOTING POWER OF THE COMPANY'S OUTSTANDING VOTING SECURITIES ENTITLED TO VOTE ON THE MERGER (AS HEREINAFTER DEFINED) (THE "MINIMUM CONDITION"). ALTHOUGH UNDER THE TERMS OF THE MERGER AGREEMENT (AS HEREINAFTER DEFINED) PARENT AND PURCHASER MAY WAIVE THE MINIMUM CONDITION, THEY DO NOT CURRENTLY INTEND TO DO SO, AND PARENT AND PURCHASER MAY TERMINATE THE MERGER AGREEMENT IF THE MINIMUM CONDITION IS NOT SATISFIED. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE "SECTION 14 -- CONDITIONS OF THE OFFER." ------------------------ IMPORTANT Any shareholder desiring to tender all or any portion of such shareholder's shares of common stock, $1.00 par value, of the Company (the "Shares") should either (i) complete and sign the Letter of Transmittal (or a facsimile thereof) in accordance with the instructions in the Letter of Transmittal and mail or deliver it together with the Certificates(s) evidencing tendered Shares, and any other required documents, to the Depositary, or tender such Shares pursuant to the procedures for book-entry transfer set forth in "Section 3 -- Procedure for Tendering Shares" or (ii) request such shareholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such shareholder. A shareholder 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 shareholder desires to tender such Shares. A shareholder who desires to tender Shares and whose certificates evidencing such Shares are not immediately available, or who cannot comply with the procedures for book-entry transfer described in this Offer to Purchase on a timely basis, may tender such Shares by following the procedures for guaranteed delivery set forth in "Section 3 -- Procedure for Tendering Shares." Questions and requests for assistance, or for additional copies of this Offer to Purchase, the Letter of Transmittal or other tender offer materials, may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. A shareholder may also contact brokers, dealers, commercial banks and trust companies for assistance concerning the Offer. ------------------------ The Dealer Manager for the Offer is: ING BARING FURMAN SELZ LLC September 21, 1998 2 TABLE OF CONTENTS PAGE ---- INTRODUCTION................................................ 1 THE TENDER OFFER............................................ 3 1. Terms of the Offer................................. 3 2. Acceptance for Payment and Payment for Shares...... 4 3. Procedures for Tendering Shares.................... 5 4. Withdrawal Rights.................................. 7 5. Certain Federal Income Tax Consequences............ 8 6. Price Range of Shares; Dividends................... 9 7. Certain Information Concerning the Company......... 9 8. Certain Information Concerning Purchaser, Parent, Carmeuse NA, Carfin, LVI, and Carmeuse SA.......... 11 9. Source and Amount of Funds......................... 13 10. Background of the Offer; Contacts with the Company............................................ 14 11. Purpose of the Offer; Plans for the Company; Merger Agreement; and Other Agreements.................... 15 12. Dividends and Distributions; Changes in Stock...... 23 13. Effect of the Offer on the Market for the Shares; NYSE Listing and Exchange Act Registration......... 24 14. Conditions of the Offer............................ 24 15. Regulatory Approvals; State Takeover Laws.......... 26 16. Fees and Expenses.................................. 30 17. Miscellaneous...................................... 30 SCHEDULE I -- Information Concerning the Directors and Executive Officers of Parent, Purchaser and LVI........... I-1 ANNEX A -- Text of Subchapter 25E of the Pennsylvania Business Corporation Law.................................. A-1 3 TO THE HOLDERS OF COMMON STOCK OF DRAVO CORPORATION: INTRODUCTION DLC Acquisition Corp. ("Purchaser"), a Pennsylvania corporation and wholly owned subsidiary of Carmeuse Lime, Inc. ("Parent"), a Delaware corporation and indirect subsidiary of LVI Holding N.V. ("LVI"), a Dutch corporation, hereby offers to purchase all outstanding shares of common stock, $1.00 par value (the "Shares"), of Dravo Corporation, a Pennsylvania corporation (the "Company"), at a price of $13.00 per Share, net to the seller in cash, without interest thereon (the "Offer Price"), upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"). The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of September 15, 1998 (the "Merger Agreement"), by and among Parent, Purchaser and the Company. The Merger Agreement provides that, among other things, as soon 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 Pennsylvania Business Corporation Law ("Pennsylvania Law"), Purchaser will be merged with and into the Company (the "Merger"). Following consummation of the Merger, the Company will continue as the surviving corporation (the "Surviving Corporation") and will be a wholly owned subsidiary of Parent. At the effective time of the Merger (the "Effective Time"), which will occur when Articles of Merger are filed with the Pennsylvania Department of State, each Share issued and outstanding immediately prior to the Effective Time (other than Shares held by the Company or any subsidiary of the Company or owned by Purchaser, Parent or any other subsidiary of Parent, or Shares held by dissenting shareholders who perfect their dissenter's rights under Pennsylvania Law), will be converted into the right to receive the Offer Price, without interest thereon. The Merger Agreement is more fully described in "Section 11 -- Purpose of the Offer; Plans for the Company; Merger Agreement; and Other Agreements." THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD"), BY UNANIMOUS VOTE, HAS APPROVED EACH OF THE OFFER AND THE MERGER (AS HEREINAFTER DEFINED), HAS DETERMINED THAT EACH OF THE OFFER AND THE MERGER IS FAIR TO AND IN THE BEST INTERESTS OF THE COMPANY'S SHAREHOLDERS AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. The Offer is conditioned upon, among other things, there having been validly tendered and not withdrawn prior to the expiration of the Offer at least a majority of the actual Shares outstanding on a fully diluted basis and of the voting power of the Company's outstanding voting securities entitled to vote on the Merger (the "Minimum Condition"). Although under the terms of the Merger Agreement (as hereinafter defined) Parent and Purchaser may waive the Minimum Condition, they do not currently intend to do so, and Parent and Purchaser may terminate the Merger Agreement if the Minimum Condition is not satisfied. See "Section 14 -- Conditions of the Offer." The Offer is not conditioned upon obtaining financing. See "Section 9 -- Source and Amount of Funds." The Company has advised Purchaser and Parent that Salomon Smith Barney Inc. ("Salomon Smith Barney"), the Company's financial advisor, has delivered to the Board its written opinion dated September 15, 1998 to the effect that, as of such date and based upon and subject to certain matters stated therein, the $13.00 per Share cash consideration to be received in the Offer and the Merger by holders of Shares (other than Parent and its affiliates) was fair, from a financial point of view, to such holders. A copy of the written opinion dated September 15, 1998 of Salomon Smith Barney, which sets forth the assumptions made, matters considered and limitations on the review undertaken by Salomon Smith Barney, is contained in the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"), which is being mailed to the Company's shareholders together with this Offer to Purchase. Tendering shareholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase by Purchaser of Shares pursuant to the Offer. However, any tendering shareholder or other payee who fails to complete and sign the 4 Substitute Form W-9 included in the Letter of Transmittal may be subject to a required backup federal income tax withholding of 31% of the gross proceeds payable to such shareholder or other payee pursuant to the Offer. Purchaser will pay all charges and expenses of ING Baring Furman Selz LLC ("ING Barings"), as Dealer Manager (the "Dealer Manager"), Continental Stock Transfer & Trust Company, as Depositary (the "Depositary"), and Morrow & Co., Inc., as Information Agent (the "Information Agent") incurred in connection with the Offer. See "Section 16 -- Fees and Expenses." The Merger Agreement provides that, promptly upon the purchase by Purchaser, pursuant to the Offer and in accordance with the Merger Agreement, of such number of Shares as represents a majority of the Shares, on a fully diluted basis, Purchaser will be entitled to designate such number of directors, rounded up to the next whole number, on the Board as is equal to the product of (a) the total number of directors (after giving effect to the appointment of such directors) and (b) the percentage that such number of Shares so purchased bears to the number of Shares outstanding; provided that in no event will the number of directors be less than a majority of the total number of directors of the Company. The Company must, upon written request of Purchaser, increase the size of the Board and/or take all action necessary to secure the resignations of such number of its incumbent directors as is necessary to enable Parent's designees to be so elected or appointed to the Board, and to cause Parent's designees to be so elected or appointed. The Merger Agreement requires that, in the event that Purchaser's designees are elected or appointed to the Board, until the Effective Time the Board must have at least two directors who are neither an officer of the Company or its subsidiaries nor a designee, stockholder, affiliate or associate of Parent (the "Independent Directors"); provided that if the number of Independent Directors is reduced below two for any reason, any remaining Independent Directors will be entitled to fill such vacancy(ies) and if no Independent Directors remain, the other directors will designate one person who will not be either an officer of the Company or its subsidiaries or a designee, shareholder, affiliate or associate of Parent to fill one of the vacancies, which person will be deemed to be an Independent Director for purposes of the Merger Agreement and will be entitled to fill any remaining vacancy in the number of Independent Directors. The consummation of the Merger is subject to the satisfaction or waiver of certain conditions, including, if required by law, the approval and adoption of the Merger Agreement by the requisite vote of the shareholders of the Company. See "Section 11 -- Purpose of the Offer; Plans for the Company; Merger Agreement; and Other Agreements." Under Pennsylvania Law, except as otherwise described below, the Merger contemplated by the Merger Agreement must be approved by the affirmative vote of a majority of the shares voted on a proposal to approve the Merger at a duly convened meeting of the shareholders of the Company. However, under Pennsylvania Law, if Purchaser acquires at least 80% of each class of the then outstanding shares of the Company, the parties will be able to cause the Merger under the Merger Agreement to become effective without the approval of the Company's shareholders. In the event that Parent, Purchaser or any permitted assignee of Purchaser acquires at least 80% of each class of the then outstanding shares of the Company, Parent, Purchaser and the Company have agreed to take, at the request of Parent and subject to the conditions of the Merger Agreement, all necessary and appropriate action to cause the Merger to become effective as soon as practicable after such acquisition, without approval of the Company's shareholders. See "Section 11 -- Purpose of the Offer; Plans for the Company; Merger Agreement; and Other Agreements." If, however, Purchaser does not acquire at least 80% of each class of the then outstanding shares of the Company and a vote of the Company's shareholders is required under Pennsylvania Law, a significantly longer period of time will be required to effect the Merger. Although under the terms of the Merger Agreement, Parent and Purchaser may waive the Minimum Condition, they do not currently intend to do so and Parent and Purchaser may terminate the Merger Agreement if the Minimum Condition is not satisfied. The obligations of Parent and Purchaser under the Merger Agreement are guaranteed by Carmeuse S.A., a Belgian corporation and an affiliate of Parent and Purchaser ("Carmeuse SA"). The Company has informed Purchaser that, as of September 15, 1998, there were 14,718,693 Shares issued and outstanding, 392,413 Shares issued and held in the treasury of the Company, 51,456 Shares reserved for issuance upon conversion of the issued and outstanding shares of Series B Preference Stock, par value $1.00 per share (the "Series B Preference Stock") and 1,600,000 Shares reserved for issuance upon conversion of the issued and outstanding shares of Series D Preferred Stock, par value $1.00 per share (the 2 5 "Series D Preferred Stock" and, together with the Series B Preference Stock, the "Preference Stock") and 1,373,300 Shares reserved for issuance upon exercise of outstanding options granted under the Company's option plans. THIS OFFER TO PURCHASE AND THE LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. THE TENDER OFFER 1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of the Offer (including without limitation the Minimum Condition and, if the Offer is extended or amended, the terms and conditions of any extension or amendment), Purchaser will accept for payment and pay for all Shares validly tendered prior to the Expiration Date (as hereinafter defined) and not withdrawn, subject to the Minimum Condition and in accordance with "Section 4 -- Withdrawal Rights." The term "Expiration Date" means 12:00 Midnight, New York City time, on Monday, October 19, 1998, unless and until Purchaser, in its sole discretion (but subject to the terms of the Merger Agreement), has extended the period of time during which the Offer is open, in which event the term "Expiration Date" will mean the latest time and date at which the Offer, as so extended by Purchaser, will expire. Purchaser expressly reserves the right, in its sole discretion (but subject to the terms of the Merger Agreement), at any time and from time to time, to extend for any reason the period of time during which the Offer is open, including the occurrence of any of the events specified in "Section 14 -- Conditions of the Offer," by giving oral or written notice of such extension to the Depositary. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the rights of a tendering shareholder to withdraw its Shares. See "Section 4 -- Withdrawal Rights." UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY PURCHASER FOR THE TENDERED SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. Subject to the applicable regulations of the Securities and Exchange Commission (the "Commission"), Purchaser expressly reserves the right, in its sole discretion (but subject to the terms of the Merger Agreement), at any time and from time to time, (i) to delay acceptance for payment of, or, regardless of whether such Shares were theretofore accepted for payment, payment for, any Shares pending receipt of any regulatory approval specified in "Section 15 -- Regulatory Approvals; State Takeover Laws" or in order to comply in whole or in part with any other applicable law, (ii) to terminate the Offer and not accept for payment any Shares if any of the conditions referred to in "Section 14 -- Conditions of the Offer" has not been satisfied or upon the occurrence of any of the events specified in "Section 14 -- Conditions of the Offer" and (iii) to waive any condition or otherwise amend the Offer in any respect by giving oral or written notice of such delay, termination, waiver or amendment to the Depositary and by making a public announcement thereof. The Merger Agreement provides that, without the consent of the Company, Purchaser will not decrease, or change the form of, the Offer Price, decrease the number of Shares sought, amend any condition of or impose additional conditions on the Offer, amend any term of the Offer, amend the Minimum Condition, or amend any other term of the Offer in any manner adverse to the shareholders, except that Purchaser must extend the Offer (i) for ten business days beyond the initial scheduled Expiration Date until Monday, November 2, 1998 if the Minimum Condition has not then been satisfied; and (ii) on one or more occasions, in each instance for up to ten business days, beyond the then scheduled Expiration Date, but not beyond December 14, 1998, if the Company, Parent or Purchaser receives a request for additional information with respect to their filings under the Hart-Scott Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), in which case the Offer will be extended until the waiting period under the HSR Act is terminated or until the Merger Agreement is terminated in accordance with its terms. Purchaser acknowledges that (i) Rule 14e-1(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires Purchaser to pay the consideration offered or return the Shares tendered promptly after the termination or withdrawal of the Offer, and (ii) Purchaser may not delay acceptance for payment of, or payment for (except as provided in clause (i) of the first sentence of the second preceding 3 6 paragraph), any Shares upon the occurrence of any of the conditions specified in "Section 14 -- Conditions of the Offer" without extending the period of time during which the Offer is open. Any such extension, delay, termination, waiver or amendment will be followed as promptly as practicable by public announcement thereof, with 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(c), 14d-6(d) and 14e-1 under the Exchange Act, which require that material changes be promptly disseminated to shareholders 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. 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 14d-4(c), 14d-6(d) 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 decrease the number of Shares being sought or to increase or decrease the consideration being offered in the Offer, such decrease in the number of Shares being sought or such increase or decrease in the consideration being offered will be applicable to all shareholders whose Shares are accepted for payment pursuant to the Offer and, if at the time notice of any such decrease in the number of Shares being sought or such increase or decrease 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 other than a Saturday, Sunday or Federal holiday and consists of the time period from 12:01 a.m. through 12:00 Midnight, New York City time. The Company has provided Purchaser with the Company's shareholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase, the related Letter of Transmittal, and other relevant materials, will be mailed to record holders of Shares whose names appear on the Company's shareholder 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 shareholder 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 purchase, by accepting for payment, and will pay for, all Shares validly tendered prior to the Expiration Date (and not properly withdrawn in accordance with "Section 4 -- Withdrawal Rights") promptly after the later to occur of (i) the Expiration Date and (ii) the satisfaction or waiver of the conditions set forth in "Section 14 -- Conditions of the Offer." Subject to applicable rules of the Commission and the terms of the Merger Agreement, Purchaser expressly reserves the right, in its discretion, to delay acceptance for payment of, or payment for, Shares pending receipt of any regulatory approvals specified in "Section 15 -- Regulatory Approvals; State Takeover Laws." In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (i) the certificates evidencing such Shares (the "Share Certificates") or timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Shares, if such procedure is available, into the Depositary's account at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures set forth in "Section 3 -- Procedures for Tendering Shares," (ii) the Letter of Transmittal (or facsimile thereof), properly completed and duly executed and (iii) any other documents required by the Letter of Transmittal. For purposes of the Offer, Purchaser will be deemed to have accepted for payment, and thereby purchased, tendered Shares if, as and when Purchaser gives oral or written notice to the Depositary of 4 7 Purchaser's acceptance of such Shares for payment. Payment for Shares accepted pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payments from Purchaser and transmitting payments to such tendering shareholders. Under no circumstances will interest on the purchase price for Shares be paid by Purchaser, regardless of any extension of the Offer or 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 shareholder (or, in the case of Shares tendered by book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility pursuant to the procedure set forth in "Section 3 -- Procedures for Tendering Shares," such Shares will be credited to an account maintained at the Book-Entry Transfer Facility), as promptly as practicable following the expiration, termination or withdrawal of the Offer. If, prior to the Expiration Date, Purchaser increases the consideration to be paid per Share pursuant to the Offer, Purchaser will pay such increased consideration for all such Shares purchased pursuant to the Offer, whether or not such Shares were tendered prior to such increase in consideration. Purchaser reserves the right to transfer or assign, in whole at any time, or in part from time to time, to one or more direct or indirect subsidiaries of Parent, the right to purchase all or any portion of the Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering shareholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 3. PROCEDURES FOR TENDERING SHARES. Valid Tender of Shares. In order for Shares to be validly tendered pursuant to the Offer, either (i) the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message, and any other required documents, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date and either the Share Certificates evidencing tendered Shares must be received by the Depositary at such address or 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, in each case prior to the Expiration Date, or (ii) the tendering shareholder 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 SHAREHOLDER, 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 an account 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, and any financial institution that is a participant in the Book-Entry Transfer Facility's system may make book-entry delivery of Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account at the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility's procedures for transfer. However, although delivery of Shares may be effected through book-entry transfer at the Book-Entry Transfer Facility, the Letter of Transmittal (or facsimile thereof), with any required signature guarantees, and any other required documents, must, in any case, be transmitted to and received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date or the tendering shareholder must comply with the guaranteed delivery procedures described below. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. 5 8 Signature Guarantee. Signatures on all Letters of Transmittal must be guaranteed by a participant in the Securities Transfer Association Medallion Program or the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (each, an "Eligible Institution"), unless the Shares tendered thereby are tendered (i) by a registered holder of Shares who has not completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" on the Letter of Transmittal, or (ii) for the account of an Eligible Institution. See Instruction 1 of the Letter of Transmittal. 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 as described above. See Instructions 1 and 5 of the Letter of Transmittal. Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to the Offer and such shareholder's Share Certificates are not immediately available or time will not permit all required documents to reach the Depositary prior to the Expiration Date or the procedure for book-entry transfer cannot be completed on a timely basis, such Shares may nevertheless be tendered if all the following conditions are satisfied: (i) the tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by Purchaser herewith, is received by the Depositary, as provided below, prior to the Expiration Date; and (iii) in the case of a guarantee of Shares, the Share Certificates for all tendered Shares, in proper form for transfer, or a Book-Entry Confirmation, together with a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof) with any required signature guarantee and any other documents required by such Letter of Transmittal, are received by the Depositary within three New York Stock Exchange ("NYSE") trading days after the date of execution of the Notice of Guaranteed Delivery. Any Notice of Guaranteed Delivery may be delivered by hand or transmitted by telegram, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in the Notice of Guaranteed Delivery. Notwithstanding any other provision hereof, payment for Shares purchased pursuant to the Offer will, in all cases, be made only after timely receipt by the Depositary of (i) the Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the delivery of such Shares, if available, (ii) a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof) and (iii) any other documents required by the Letter of Transmittal. Determination of Validity. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tendered Shares pursuant to any of the procedures described above will be determined by Purchaser, in its sole discretion, whose determination will be final and binding on all parties. Purchaser reserves the absolute right to reject any or all tenders of any Shares determined by it not to be in proper form or if the acceptance for payment of, or payment for, such Shares may, in the opinion of Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right, in its sole discretion, to waive any of the conditions of the Offer or any defect or irregularity in any tender with respect to Shares of any particular shareholder, whether or not similar defects or irregularities are waived in the case of other shareholders. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived. 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. None of Parent, Purchaser, the Dealer Manager, the 6 9 Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or will incur any liability for failure to give any such notification. Appointment as Proxy. By executing a Letter of Transmittal as set forth above, a tendering shareholder irrevocably appoints designees of Purchaser as such shareholder's proxies, each with full power of substitution, to the full extent of such shareholder's rights with respect to the Shares tendered by such shareholder and accepted for payment by Purchaser (and any and all non-cash dividends, distributions, rights, other Shares, or other securities issued or issuable in respect of such Shares on or after September 15, 1998). All such proxies will be considered coupled with an interest in the tendered Shares. This appointment will be effective if, when, and only to the extent that, Purchaser accepts such Shares for payment pursuant to the Offer. Upon such acceptance for payment, all prior proxies given by such shareholder with respect to such Shares and other securities will, without further action, be revoked, and no subsequent proxies may be given. The designees of Purchaser will, with respect to the Shares and other securities for which the appointment is effective, be empowered to exercise all voting and other rights of such shareholder as they in their sole discretion may deem proper at any annual, special, adjourned or postponed meeting of the Company's shareholders, by written consent or otherwise, and Purchaser reserves the right to require that, in order for Shares or other securities to be deemed validly tendered, immediately upon Purchaser's acceptance for payment of such Shares Purchaser must be able to exercise full voting rights with respect to such Shares, except as otherwise limited by applicable Pennsylvania Law. Backup Withholding. To prevent federal income tax "backup withholding" with respect to payment to certain shareholders of the purchase price of Shares purchased pursuant to the Offer, each such shareholder must provide the Depositary with such shareholder's correct taxpayer identification number ("TIN") and certify that such shareholder is not subject to federal income tax backup withholding by completing the substitute Form W-9 in the Letter of Transmittal. If backup withholding applies with respect to a shareholder, the Depositary is required to withhold 31% of any payments made to such shareholder. Certain shareholders (including, among others, all corporations and certain foreign individuals and entities) are not subject to backup withholding. Noncorporate foreign shareholders should complete and sign the main signature form and a Form W-8, certificate of foreign status, a copy of which may be obtained from the Depositary, in order to avoid backup withholding. See Instruction 9 of the Letter of Transmittal. Acceptance of Shares. Purchaser's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering shareholder and Purchaser upon the terms and subject to the conditions of the Offer. 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 November 20, 1998. If Purchaser extends the Offer, 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, 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 shareholders 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 law. For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder, 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 -- Procedures for Tendering Shares," any notice of 7 10 withdrawal must also 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 notices of withdrawal will be determined by Purchaser, in its sole discretion, whose determination will be final and binding. None of Parent, Purchaser, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. Any Shares properly withdrawn will thereafter be deemed to not 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 -- Procedures for Tendering Shares." 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for Shares pursuant to the Offer or in the Merger will be a taxable transaction for Federal income tax purposes and may also be a taxable transaction under applicable state, local or foreign tax laws. In general, a shareholder will recognize gain or loss for Federal income tax purposes equal to the difference between the amount of cash received in exchange for the Shares sold and the shareholder's adjusted tax basis in such Shares. Assuming the Shares constitute capital assets in the hands of the shareholder, such gain or loss will be capital gain or loss and will be long term capital gain or loss if the holder has held the Shares for more than one year at the time of the sale. Gain or loss will be calculated separately for each block of Shares tendered pursuant to the Offer. The foregoing discussion may not be applicable to certain types of shareholders, including shareholders who acquired Shares pursuant to the exercise of stock options or otherwise as compensation, individuals who are not citizens or residents of the United States and foreign corporations, or entities that are otherwise subject to special tax treatment under the Internal Revenue Code of 1986, as amended (the "Code"). A shareholder (other than certain exempt shareholders including, among others, all corporations and certain foreign individuals) that tenders Shares may be subject to 31% backup withholding unless the shareholder provides its TIN and certifies that such number is correct or properly certifies that it is awaiting a TIN and certifies as to no loss of exemption from backup withholding and otherwise complies with the applicable requirements of the backup withholding rules. A shareholder that does not furnish its correct TIN or that does not otherwise establish a basis for exemption from backup withholding may be subject to a penalty imposed by the Internal Revenue Service ("IRS"). Each shareholder should complete and sign the Substitute Form W-9 included as part of the Letter of Transmittal so as to provide the information and certification necessary to avoid backup withholding. If backup withholding applies to a shareholder, the Depositary is required to withhold 31% from payments to such shareholder. Backup withholding is not an additional tax. Rather, the amount of backup withholding can be credited against the Federal income tax liability of the person subject to the backup withholding, provided that the required information is given to the IRS. If backup withholding results in an overpayment of tax, a refund can be obtained by the shareholder upon filing an income tax return. THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW. SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL AND FOREIGN TAX LAWS. 8 11 6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are quoted on the NYSE under the symbol "DRV." The following table sets forth, for the quarters indicated, the high and low sales prices per Share on the NYSE as reported in publicly available sources for each of the quarters indicated.
SALES PRICES ---------------------------------- HIGH LOW -------------- ------------ 1996: First Quarter...................................... $13 3/4 $11 1/4 Second Quarter..................................... $14 7/8 $12 3/4 Third Quarter...................................... $14 5/8 $12 Fourth Quarter..................................... $15 3/4 $12 1/2 1997 First Quarter...................................... $14 1/8 $10 1/8 Second Quarter..................................... $11 3/4 $ 8 3/4 Third Quarter...................................... $11 15/16 $10 Fourth Quarter..................................... $12 9/16 $ 9 1/2 1998 First Quarter...................................... $11 5/8 $ 9 3/4 Second Quarter..................................... $12 $ 9 Third Quarter through September 14, 1998........... $ 9 5/8 $ 6 1/2
On September 14, 1998, the last full trading day prior to the public announcement of the execution of the Merger Agreement, the reported closing sales price of the Shares on the NYSE was $6 15/16 per Share. On September 18, 1998, the last full trading day prior to the date of this Offer to Purchase, the reported closing sales price of the Shares on the NYSE was $12 7/16 per Share. SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES. The Company has not paid a dividend on the Shares since April, 1987. In the Merger Agreement, the Company has agreed that it will not declare, set aside or pay any dividends on or make other distributions in respect of any shares of its capital stock (other than regularly scheduled dividends on the Preference Stock in accordance with the terms of the Preference Stock). Moreover, under certain loan agreements, the Company would be required to obtain the lenders' consent prior to paying dividends in excess of certain amounts. 7. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning the Company contained in this Offer to Purchase, including financial information, has been taken from or based upon publicly available documents and records on file with the Commission and other public sources. Neither Parent nor Purchaser assumes any responsibility for the accuracy or completeness of the information concerning the Company contained in such documents and records or for any failure by the Company to disclose events which may have occurred or may affect the significance or accuracy of any such information but which are unknown to Parent or Purchaser. The Company is a Pennsylvania corporation and its principal executive offices are located at 11 Stanwix Street, Pittsburgh, Pennsylvania 15222. The telephone number of the Company at such offices is (412) 995-5535. The Company, through a wholly owned subsidiary, produces lime for utility, metallurgical, pulp and paper, municipal, construction and miscellaneous chemical and industrial applications. The Company also develops and markets related environmental technologies, products and services. Financial Information. Set forth below is certain selected consolidated financial information relating to the Company and its subsidiaries which has been excerpted or derived from the financial statements contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997 (the "1997 Form 10-K") and the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998 (the "June 30, 1998 Form 10-Q"). More comprehensive financial information is included in such reports and other 9 12 documents filed by the Company with the Commission. The financial information that follows is qualified in its entirety by reference to such reports and other documents, including the financial statements and related notes contained therein. The 1997 Form 10-K, the June 30, 1998 Form 10-Q and other documents may be examined and copies may be obtained from the offices of the Commission in the manner set forth below. DRAVO CORPORATION SELECTED CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, ------------------ -------------------------------- 1998 1997 1997 1996 1995 ---- ---- ---- ---- ---- Income Statement Data Revenue................................... $84,257 $80,059 $162,476 $158,133 $146,067 Gross profit.............................. 20,905 19,300 40,835 39,968 36,526 Earnings from operations.................. 10,948 8,519 16,971 18,998 15,289 Other income (expense), net............... (3,125) (2,723) (5,928) (4,870) (3,968) Earnings before taxes..................... 7,823 5,796 11,043 14,128 11,321 Net earnings.............................. 6,376 5,386 15,116 14,128 10,981 Preference dividends...................... 1,255 1,259 2,517 2,529 2,535 Per share information Earnings per share -- diluted............. $ .35 $ .28 $ .85 $ .78 $ .57 Number of shares used in computation...... 14,758 14,851 14,835 14,894 14,875
AT DECEMBER 31, AT JUNE 30, -------------------------------- 1998 1997 1996 1995 ----------- ---- ---- ---- Balance Sheet Data Total current assets.............................. $ 41,342 $ 45,655 $ 43,018 $ 43,072 Total assets...................................... 249,556 255,230 225,409 213,261 Current portion of long-term notes................ 9,767 9,736 6,166 6,099 Total current liabilities......................... 41,198 41,745 34,541 33,307 Long-term notes................................... 64,549 74,396 63,535 64,292 Redeemable preference stock....................... 15,000 15,000 20,000 20,000 Total shareholders' equity........................ 114,845 109,666 93,915 79,855
The Company is subject to the information and reporting requirements of the Exchange Act and is required to file reports 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, any material interests of such persons in transactions with the Company and other matters is required to be disclosed in proxy statements distributed to the Company's shareholders and filed with the Commission. These reports, proxy statements and other information should be available for inspection at the public reference facilities of the Commission located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and also should be available for inspection and copying at prescribed rates at the following regional offices of the Commission: Seven World Trade Center, New York, New York 10048; and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this material may also be obtained by mail, upon payment of the Commission's customary fees, from the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains an Internet web site at http://www.sec.gov that contains reports, proxy statements and other information. Reports, proxy statements and other information concerning the Company should also be available for inspection at the offices of the NYSE. Except as otherwise noted in this Offer to Purchase, all of the information with respect to the Company and its affiliates set forth in this Offer to Purchase has been derived from publicly available information. 10 13 8. CERTAIN INFORMATION CONCERNING PURCHASER, PARENT, CARMEUSE NA, CARFIN, LVI AND CARMEUSE SA. Purchaser. Purchaser, a newly incorporated Pennsylvania corporation, has not conducted any business other than in connection with the Offer and the Merger Agreement. All of the issued and outstanding shares of capital stock of Purchaser are beneficially owned by Parent. The principal executive offices of Purchaser are located at 390 E. Joe Orr Road, Chicago Heights, Illinois 60411. The telephone number of Purchaser at such offices is (708) 757-6201. Parent. Parent is a Delaware corporation. All of the issued and outstanding shares of capital stock of Parent are beneficially owned by Carmeuse NA. The principal executive offices of Parent are located at 390 E. Joe Orr Road, Chicago Heights, Illinois 60411. The telephone number of Parent at such offices is (708) 757-6201. Parent is the principal holding company for the U.S. operations of LVI. Carmeuse NA. Carmeuse North America, B.V. ("Carmeuse NA") is a Dutch corporation. All of the issued and outstanding shares of capital stock of Carmeuse NA are beneficially owned by Carfin. The principal executive offices of Carmeuse NA are located at Nijverheidsstraat 34, P.O. Box 648, 2800 AP Gouda, The Netherlands. The telephone number of Carmeuse NA at such offices is 011-31-182-527-255. Carmeuse NA is a holding company for Parent and certain other subsidiaries of LVI. Carfin. Carfin S.A. ("Carfin") is a Belgian corporation, 99.9% of the issued and outstanding shares of capital stock of which are beneficially owned by LVI. The principal executive offices of Carfin are located at Parc Scientifique Athena, Boulevard de Lauzelle 65, 1348 Louvain-la-Neuve Nord, Belgium. The telephone number of Carfin at such offices is 011-32-10-48-1600. Carfin is a holding company for Carmeuse NA, the parent company of Parent, and certain other subsidiaries of LVI. LVI. LVI is a Dutch corporation. The principal executive offices of LVI are located at Nijverheidsstraat 34, P.O. Box 648, 2800 AP Gouda, The Netherlands. The telephone number of LVI at such offices is 011-31-182-527-255. Through its subsidiaries, LVI is a leading worldwide manufacturer and marketer of limestone, lime and lime-related products. Carmeuse SA. Carmeuse SA is a Belgian corporation and an affiliate of Parent and Purchaser, 99.9% of the issued and outstanding shares of capital stock of which are beneficially owned by LVI. The principal executive offices of Carmeuse SA are located at Parc Scientifique Athena, Boulevard de Lauzelle 65, 1348 Louvain-la-Neuve Nord, Belgium. The telephone number of Carmeuse SA at such offices is 011-32-10-48-1600. Carmeuse SA is the principal European operating company of LVI and has guaranteed the obligations of Parent and Purchaser under the Merger Agreement. None of Purchaser, Parent or LVI is subject to the informational and reporting requirements of the Exchange Act. However, in connection with the Offer, Purchaser and Parent have filed a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") with the Commission. The Schedule 14D-1 should be available for inspection and copies may be obtained from the Commission in the same manner as set forth for the Company in Section 7. 11 14 Set forth below are certain selected consolidated financial data with respect to Parent and its subsidiaries for Parent's last three fiscal years, excerpted or derived from audited financial statements and, for Parent's fiscal quarter ended June 30, 1998, excerpted or derived from unaudited financial statements. Parent's audited financial statements have been filed with the Commission as an exhibit to the Schedule 14D-1. Parent's audited financial statements have been prepared in accordance with generally accepted accounting principles; however, because Parent is not a reporting company under the Exchange Act, its financial statements have not been prepared in accordance with the Commission's Regulation S-X. The financial information summary set forth below is qualified in its entirety by reference to the Schedule 14D-1 which has been filed with the Commission and all the financial information and related notes contained therein. CARMEUSE LIME, INC. SELECTED CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS)
SIX MONTHS ENDED JUNE 30, YEAR ENDED DECEMBER 31, ----------------- ---------------------------- 1998 1997 1997 1996 1995 ---- ---- ---- ---- ---- Income Statement Data Revenue..................................... $62,175 $56,663 $124,550 $80,695 $91,727 Gross profit................................ 8,633 7,100 16,665 6,667 5,982 Earnings (loss) from operations............. 4,428 2,699 8,512 308 (2,127) Other income (expense), net................. (2,289) (2,631) (4,845) (316) (841) Earnings (loss) before taxes................ 2,139 68 3,667 (8) (2,968) Net earnings (loss)......................... 1,343 42 3,511 (130) (1,820)
AT DECEMBER 31, AT JUNE 30, ------------------------------- 1998 1997 1996 1995 ----------- ---- ---- ---- Balance Sheet Data Total current assets............................... $ 42,569 $ 46,345 $ 45,791 $35,927 Total assets....................................... 110,297 112,755 103,047 44,902 Total current liabilities.......................... 18,594 23,843 23,301 19,269 Long-term debt..................................... 61,000 70,000 64,500 12,000 Total shareholder's equity......................... 27,615 16,230 12,683 12,790
The name, citizenship, business address, principal occupation or employment and five-year employment history for each of the directors and executive officers of Purchaser, Parent and LVI are set forth in Schedule I hereto. Except as described in this Offer to Purchase, (i) none of Carmeuse SA, LVI, Carfin, Carmeuse NA, Purchaser, Parent or, 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 Carmeuse SA, LVI, Carfin, Carmeuse NA, Purchaser, Parent or any of the persons so listed (other than William S. Brown III who currently beneficially owns 125 Shares, an insignificant percentage of the outstanding Shares) beneficially owns or has any right to acquire, directly or indirectly, any Shares and (ii) none of Carmeuse SA, LVI, Carfin, Carmeuse NA, 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 Carmeuse SA, LVI, Carfin, Carmeuse NA, Purchaser, Parent or, to the best knowledge of Purchaser and Parent, any of the persons listed in Schedule I to this Offer to Purchase, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning 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. Except as set forth in this Offer to Purchase, since January 1, 1995, none of Carmeuse SA, LVI, Carfin, Carmeuse NA, 12 15 Purchaser, Parent or, to the best knowledge of Purchaser and Parent, any of the persons listed on Schedule I hereto, has had any business relationship or 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, 1995, there have been no contacts, negotiations or transactions between any of Carmeuse SA, LVI, Carfin, Carmeuse NA, 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 or other acquisition of securities, an election of directors or a sale or other transfer of a material amount of assets. 9. SOURCE AND AMOUNT OF FUNDS. The amount required to fund the purchase of Shares tendered in the Offer, consummate the Merger, refinance existing indebtedness of the Company and to pay all related fees and expenses of the transaction, is estimated to be approximately $311 million. Purchaser plans to obtain the necessary funds through capital contributions made by Parent. Parent plans to obtain the funds for such capital contributions from advances made by Carmeuse SA pursuant to a loan agreement dated September 18, 1998 between Parent and Carmeuse SA (the "Intercompany Loan Agreement"), which agreement is incorporated herein by reference and a copy of which has been filed with the Commission as an Exhibit to the Schedule 14D-1. Pursuant to the Intercompany Loan Agreement, Parent will be permitted to borrow an amount up to US $350 million. Interest is payable at a rate equal to the London Interbank Offered Rate ("LIBOR") plus 0.75%, for interest periods of one, three or six months. Amounts borrowed pursuant to the Intercompany Loan Agreement, together with accrued and unpaid interest, are required to be repaid in six months. Carmeuse SA plans to obtain the funds for advances made to Parent pursuant to the Intercompany Loan Agreement from borrowings under the Lafarge Facility (as hereinafter defined) and the BBL Facility (as hereinafter defined). LVI and Lafarge S.A. (Lafarge S.A., together with its affiliates, "Lafarge"), a French corporation, have entered into a Memorandum of Understanding dated June 3, 1998 (the "Memorandum of Understanding") pursuant to which they have agreed to establish a joint venture (the "Joint Venture") to which each party has agreed to contribute its North American lime operations. As described below, LVI and Lafarge currently intend that, following establishment of the Joint Venture, the business of the Company will be contributed by LVI to the Joint Venture. See "Section 10 -- Purpose of the Offer; Plans for the Company; Merger Agreement; and Other Agreements." Consummation of the Offer is not subject to the timing or the consummation of the Joint Venture. Pursuant to a letter dated September 14, 1998 from Olivier Legrain, Deputy General Manager of Lafarge, to Dominique Collinet, Chairman of the Board of Directors of LVI, which letter is incorporated herein by reference and a copy of which has been filed with the Commission as an Exhibit to the Schedule 14D-1, Lafarge has agreed to provide financing to Carmeuse SA for up to 40% of the funds required to consummate the Offer and the Merger, not to exceed US$124 million (the "Lafarge Facility"). Under the Lafarge Facility, Carmeuse SA is not required to pay interest on amounts borrowed unless LVI and Lafarge are unable to establish the Joint Venture. If LVI and Lafarge are unable for any reason to establish the Joint Venture, Carmeuse SA has agreed (i) to pay interest on the amounts borrowed at a rate equal to LIBOR plus 0.25%, determined on the basis of three month interest periods, (ii) to repay such amounts at any time upon six months prior notice and, in any event, no later than December 31, 1999, and (iii) to pledge, or cause to be pledged, the shares of common stock of the Company or equivalent security, equivalent to the value of the credit, until such amounts are repaid. In connection with the Offer and the Merger, Bank Brussels Lambert SA ("BBL") has agreed to provide credit to Carmeuse SA in the amount of US $230 million (the "BBL Facility") pursuant to a letter dated September 14, 1998 from BBL to Carmeuse SA, which letter is incorporated herein by reference and a copy of which has been filed with the Commission as an Exhibit to the Schedule 14D-1. Proceeds of the BBL Facility will be used by Carmeuse SA to advance funds to Parent pursuant to the Intercompany Loan Agreement, which in turn will be used by Parent to finance the purchase of Shares pursuant to the Offer and the Merger. 13 16 Under the BBL Facility, amounts may be borrowed by Carmeuse SA for a period ending on December 14, 1998, which period may be renewed at the option of Carmeuse SA for an additional three month period ending on March 14, 1999. Full repayment of amounts borrowed is required at the end of the three or six month period, as the case may be. Under the BBL Facility, interest rates for outstanding loans are based upon three month LIBOR plus 0.25%. It is anticipated that the indebtedness incurred by Carmeuse SA under the BBL Facility will be refinanced with permanent financing. It is anticipated that the indebtedness incurred by Carmeuse SA under the Lafarge Facility will be assumed by, or converted into capital in, the Joint Venture when established. If LVI and Lafarge are unable to establish the Joint Venture and the indebtedness incurred under the Lafarge Facility is required to be repaid, it is anticipated that such indebtedness will be refinanced with permanent financing. In each case, no final decisions have been made concerning the amount or terms of such permanent financing. Such decisions, when made, will be based on a review from time to time of the advisability of particular actions, as well as on prevailing interest rates and financial and other economic conditions. 10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. INFORMATION SET FORTH BELOW REGARDING THE COMPANY, OR DISCUSSIONS TO WHICH REPRESENTATIVES OF LVI, PARENT AND PURCHASER WERE NOT PARTICIPANTS, WAS PROVIDED BY THE COMPANY. In April, 1998, Parent learned that the Company was receptive to acquisition proposals. Following informal telephone conversations between Mr. Brown, then President of Carmeuse North American Group, and Mr. Carl A. Gilbert, President and Chief Executive Officer of the Company, Parent was invited to conduct due diligence of the Company and its operations. On April 29, 1998, Parent and the Company entered into the Confidentiality Agreement (as hereinafter defined). On May 14 and 15, 1998, members of Parent's senior management and legal and accounting representatives conducted a due diligence review of certain non-public information regarding the Company at the offices of the Company's attorneys and participated in due diligence discussions with the Company's senior officers, legal counsel and accountants. Subsequent to the due diligence meetings, informal discussions continued between senior officers of Parent and the Company during which Parent expressed continued interest in the Company; however, Parent and the Company did not engage in substantive discussions regarding the terms and conditions of a potential transaction. Following the execution of the Memorandum of Understanding with Lafarge, Parent renewed its discussions with the Company. On August 6, 1998, Mr. Dominique Collinet, President of LVI, and Mr. Alain R. Crouy, President and Chief Executive Officer of Lafarge, delivered a letter to Mr. Arthur E. Byrnes, Chairman of the Board of the Company, setting forth the interest of LVI and Lafarge to acquire all of the outstanding shares of capital stock of the Company for $13 per share in cash, subject to negotiation of a definitive agreement, approval of the transaction by the Board of Directors of each party and certain other conditions. Messrs. Collinet and Crouy requested a meeting to discuss more fully the proposed transaction. On August 10, 1998, Mr. Gilbert indicated to Mr. Brown that the Company desired to pursue negotiations with Parent regarding a potential transaction and Mr. Brown requested an update to the previous due diligence conducted by Parent. On August 11, 1998, the Confidentiality Agreement was amended to include Lafarge. From August 27 through September 1, 1998, senior management of Parent and Lafarge met with senior management and legal counsel of the Company to conduct further due diligence, including an investigation of the financial performance of the Company since the May, 1998 due diligence meetings. In addition, a representative of Lafarge conducted a physical inspection of Company facilities. Thereafter, on September 2 and 3, 1998, Parent and the Company, together with their legal and financial advisors, conducted negotiations regarding the terms of a proposed tender offer and merger. On September 8, 1998, Carmeuse SA's Board of Directors authorized the proposed transaction, on September 11, 1998, Parent's Board of Directors authorized the proposed transaction, and on September 14, 1998, Lafarge authorized the Lafarge Facility. In the afternoon of September 14, 1998, immediately prior to a meeting of the Company's Board of Directors, Mr. Jacques Germay, Chairman of the Board of Parent, 14 17 delivered a letter to the Company's Board of Directors reasserting Parent's intent to commence a tender offer to purchase all of the outstanding shares of common stock of the Company for a purchase price of $13 per share in cash upon the terms and conditions set forth in the form of the Merger Agreement previously negotiated by the parties and their respective counsel. The letter further indicated that the Boards of Directors of Purchaser, Parent and Carmeuse SA had each approved the tender offer and the Merger Agreement and executed the Merger Agreement, and enclosed an executed signature page to the Merger Agreement. The letter also indicated that unless Parent's offer was accepted by the Company prior to 11:59 p.m. (Pittsburgh time) on September 14, 1998, Parent would not proceed with its offer. On September 14, 1998, Mr. Gilbert called Mr. Brown and Mr. Germay to inform Parent that the Company's Board of Directors unanimously had accepted Parent's proposal, authorized the execution of the Merger Agreement and agreed to recommend that the Company's shareholders accept the Offer and tender their Shares pursuant thereto. The Merger Agreement was executed by the Company as of September 15, 1998, and on September 15, 1998, Parent and the Company issued a joint press release announcing the Offer and the execution of the Merger Agreement. 11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; MERGER AGREEMENT; AND OTHER AGREEMENTS. Purpose of the Offer. The purpose of the Offer, the Merger and the Merger Agreement is to enable Parent to acquire control of the Board and all of the Shares. Upon consummation of the Merger, the Company will become a wholly owned subsidiary of Parent. The Offer is being made pursuant to the Merger Agreement. Plans for the Company. As promptly as practicable following the purchase of and payment for Shares representing a majority of the outstanding Shares of Common Stock, on a fully diluted basis, under the Offer, Parent intends (i) to exercise its right under the Merger Agreement to designate such number of directors for the Board as it is then entitled to designate and (ii) cause a merger of Purchaser and the Company under Pennsylvania Law. It is expected that initially following the Merger, except as set forth below, the business and operations of the Company will be conducted in a manner substantially similar to how they are conducted currently. Pursuant to the Memorandum of Understanding, LVI and Lafarge have agreed to establish a Joint Venture to which LVI and Lafarge will contribute each of their businesses within North America relating to lime, dolomite and limestone, but not including construction, buildings and public works (the "Limestone Businesses"). In each case, the Limestone Businesses to be contributed will include title to deposits and quarries, title to industrial extraction and production facilities, permits and authorizations to operate, production quantities, customers, personnel, and all other assets required by the Joint Venture to operate such business. The Limestone Businesses will also include the limestone business of each subsidiary in which either party owns a controlling interest. Pursuant to the Memorandum of Understanding, each party has agreed to conduct all of its Limestone Businesses exclusively through the Joint Venture. The Memorandum of Understanding provides that LVI will own 60% of the Joint Venture and Lafarge will own 40% of the Joint Venture. If, following contribution by either party of its Limestone Businesses, such party owns less than its anticipated percentage of the Joint Venture, such party may be required to make additional contributions in cash in order to achieve the agreed percentage. LVI and Lafarge currently anticipate that the Joint Venture will be established following receipt of all necessary regulatory approvals, including expiration of the applicable waiting period under the HSR Act. Following establishment of the Joint Venture, and consistent with the Memorandum of Understanding, LVI plans to cause to be contributed to the Joint Venture all of the equity interest in or assets of Parent, including its equity interest in or assets of Purchaser, or, following the Merger, the Company. Purchaser and Parent have no present plans regarding the Preference Stock, but prior to the Merger, may engage in discussions with the holders of the Preference Stock regarding various alternatives including the possible purchase of the Preference Stock. If those discussions do not result in a satisfactory resolution, then following the Merger, the Company will consider what, if any, rights it may exercise under the terms of the Preference Stock and applicable law. 15 18 Merger Agreement. The following is a summary of certain provisions of the Merger Agreement. The summary is qualified in its entirety by reference to the full text of the Merger Agreement which is incorporated herein by reference and a copy of which has been filed with the Commission as an exhibit to the Schedule 14D-1. The Merger Agreement may be examined and copies may be obtained at the place and in the manner set forth in "Section 7 -- Certain Information Concerning the Company" of this Offer to Purchase. The Offer. The Merger Agreement provides that Purchaser will commence the Offer and that, upon the terms and subject to the prior satisfaction or waiver of the conditions of the Offer, including the valid tender prior to the expiration of the Offer of such number of Shares that represents at least a majority of (i) the actual outstanding Shares on a fully diluted basis and (ii) the voting power of the Company's outstanding voting securities entitled to vote on the Merger (the "Minimum Condition"), Purchaser will accept for payment and pay for Shares tendered as soon as practicable after it is legally permitted to do so under applicable law. The Merger Agreement provides that, without the written consent of the Company, Purchaser will not decrease, or change the form of, the Offer Price, decrease the number of Shares sought, amend the conditions or impose additional conditions to the Offer, amend any term of the Offer, amend the Minimum Condition, or amend any other term of the Offer in a manner adverse to the holders of the Common Stock, except that Purchaser may, at any time, in its sole discretion extend the Offer. In addition, Purchaser must extend the Offer for (i) ten business days beyond the initial scheduled expiration date if the Minimum Condition has not then been satisfied; and (ii) on one or more occasions, in each instance for up to ten business days beyond the then scheduled expiration date, but not beyond December 14, 1998, if the Company, Parent or Purchaser receives a request for additional information with respect to their filings under the HSR Act, in which case, the Offer will be extended until the waiting period under the HSR Act is terminated or until the Merger Agreement is terminated in accordance with its terms. The Merger. The Merger Agreement provides that subject to the terms and conditions thereof, and pursuant to Pennsylvania Law, at the Effective Time, Purchaser will be merged with and into the Company. As a result of the Merger, the separate corporate existence of Purchaser will cease and the Company will continue as the Surviving Corporation. The respective obligations of Parent and Purchaser, on the one hand, and the Company, on the other hand, to effect the Merger are subject to the conditions that: (i) the Offer shall have been consummated in accordance with its terms; (ii) the waiting period applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated; (iii) the Merger Agreement shall have been adopted by the requisite vote of the Company's shareholders or, if permitted under Pennsylvania law, by the Board; and (iv) no preliminary or permanent injunction or other order by any Federal or state court in the United States which prevents the consummation of the Merger shall have been issued and remain in effect. The Merger Agreement provides that at the Effective Time, (a) all issued and outstanding Shares owned by the Company or any subsidiary of the Company or by Parent, Purchaser or any other subsidiary of Parent will be canceled, and (b) each remaining Share issued and outstanding immediately prior to the Effective Time will be converted into the right to receive the Offer Price, without interest. Pursuant to the Merger Agreement, each issued and outstanding share of common stock of Purchaser will be converted into one fully paid and non-assessable share of common stock of the Company. After the Effective Time, the Articles of Incorporation of the Company will remain the Articles of Incorporation of the Company and the Bylaws of the Purchaser will be the Bylaws of the Company. Guarantee. Carmeuse SA has executed the Merger Agreement for the limited purpose of guaranteeing the obligations of Parent and Purchaser under the Merger Agreement. The Company's Board of Directors. The Merger Agreement provides that promptly upon the purchase by Purchaser, pursuant to the Offer and in accordance with the Merger Agreement, of such number of Shares as represents a majority of the Shares, on a fully diluted basis, Purchaser will be entitled to designate such number of directors, rounded up to the next whole number, on the Board as is equal to the product of (a) the total number of directors (after giving effect to the appointment of such directors) and (b) the percentage 16 19 that such number of Shares so purchased bears to the number of Shares outstanding; provided that in no event will the number of directors be less than a majority of the total number of directors of the Company. The Company must, upon written request of Purchaser, increase the size of the Board and/or take all action necessary to secure the resignations of such number of its incumbent directors as is necessary to enable Parent's designees to be so elected or appointed to the Board, and cause Parent's designees to be so elected or appointed. The Merger Agreement requires that, in the event that Purchaser's designees are elected or appointed to the Board, until the Effective Time the Board must have at least two directors who are neither an officer of the Company or its subsidiaries nor a designee, stockholder, affiliate or associate of Parent (the "Independent Directors"); provided that if the number of Independent Directors is reduced below two for any reason, any remaining Independent Directors will be entitled to fill such vacancy(ies) and if no Independent Directors remain, the other directors will designate one person who will not be either an officer of the Company or its subsidiaries or a designee, shareholder, affiliate or associate of Parent to fill one of the vacancies, which person will be deemed to be an Independent Director and will be entitled to fill any remaining vacancy in the number of Independent Directors. The Merger Agreement further provides that, at the request of Purchaser, the Company will promptly take all actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, including mailing to shareholders as part of the Company's Schedule 14D-9 the information required by such Section 14(f) and Rule 14f-1, as is necessary to enable Parent's designees to be elected to the Board. Upon consummation of the Offer and prior to the Effective Time, any amendment or termination of the Merger Agreement by the Company, any waiver of any of the Company's rights or exercise of any of its remedies under the Merger Agreement, any extension of the time for performance of any of the obligations of Purchaser thereunder, and any other action by the Company thereunder required to be taken by the Board may be effected only if the action is approved by the affirmative vote of a majority of the Independent Directors. Shareholders Meeting. Pursuant to the Merger Agreement, the Company will, if required by applicable law in order to consummate the Merger: (i) duly call, give notice of, convene and hold a special meeting of its shareholders (the "Special Meeting") as soon as practicable following consummation of the Offer for the purpose of considering and taking action upon the Merger Agreement and the Merger; (ii) file with the Commission, and use all reasonable efforts to have processed to completion by the Commission, a proxy or information statement relating to the Merger and the Merger Agreement; and (iii) include in the proxy statement or information statement the recommendation of the Board that shareholders of the Company vote in favor of the approval of the adoption of the Merger Agreement. Purchaser has agreed that it will vote, or will cause to be voted, all of the Shares entitled to vote which are then owned by it or any of its subsidiaries in favor of the Merger and adoption of the Merger Agreement. The Merger Agreement provides that in the event Purchaser acquires at least 80% of the outstanding shares of each class of the Company, the parties will take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after expiration of the Offer, without approval of the Company's shareholders. In the event Purchaser does not acquire 80% of the Shares and 80% of each class of the Preference Stock which remains outstanding, a shareholder vote will be required. No offer is being made hereunder to acquire the Preference Stock. There can be no assurance that Purchaser will acquire 80% of the Shares and 80% of each series of the Preference Stock. Interim Operations. In the Merger Agreement, the Company has agreed that, prior to the Effective Time, unless Parent otherwise agrees in writing: (a) the business of the Company and its subsidiaries will be conducted only in the ordinary and usual course and in compliance with all applicable material legal requirements and, to the extent inconsistent therewith, each of the Company and its subsidiaries will use its commercially reasonable efforts to preserve its business organization intact and to maintain its existing relations with customers, suppliers, employees, creditors and business partners; (b) the Company will not, directly or indirectly, amend its or any of its subsidiaries' articles or certificates of incorporation or bylaws or similar organizational documents; 17 20 (c) the Company will not, and it will not permit any of its subsidiaries to: (i) (A) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to the Company's capital stock or that of any of its subsidiaries (other than regularly scheduled dividends on the Preference Stock in accordance with its terms) or (B) redeem, purchase, or otherwise acquire directly or indirectly any of the Company's capital stock (or options, warrants, calls, commitments or rights of any kind to acquire any shares of capital stock) or that of any of its subsidiaries, other than redemptions of Preference Stock required by the Company's articles of incorporation; (ii) issue, sell, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or any of its subsidiaries, other than common stock issuable upon the exercise of options, or upon the conversion of the Series B Preference Stock or the Series D Preferred Stock outstanding on the date of the Merger Agreement; or (iii) split, combine or reclassify the outstanding capital stock of the Company or any of its subsidiaries; (d) the Company will not, and it will not permit any of its subsidiaries to, acquire or agree to acquire, or dispose of or agree to dispose of, any material assets other than in the ordinary course of business, either by purchase, merger, consolidation, sale of shares in any of its subsidiaries or otherwise; (e) the Company will not, and it will not permit any of its subsidiaries to, transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any of its owned real property or leased real property (except for mortgages on such real property existing on the date of the Merger Agreement) or, other than in the ordinary course of business, intellectual properties; (f) neither the Company nor any of its subsidiaries will: (i) grant any increase in the compensation payable or to become payable by the Company or any of its subsidiaries to any of its officers, directors or key employees, except for (A) increases in the ordinary course of business consistent with past practices or to the extent required by any contract, and (B) payment immediately prior to consummation of the Offer, of a pro rata portion of the 1998 target award under the Company's Annual Incentive Plan for which amounts have been accrued on the Company's financial statements; or (ii) (A) adopt any new, (B) grant any award under any, or (C) amend or otherwise increase, or accelerate the payment or vesting of the amounts payable or to become payable under, any existing employee benefit or compensation plan other than as contemplated by the Merger Agreement or in accordance with the provisions of such benefit plan; or (iii) increase the number of directors of the Company, enter into or modify or amend any existing employment or severance agreements with, or grant any severance or termination rights to any officer, director or employee of the Company or any of its subsidiaries or terminate any of the employees of the Company other than in the ordinary course of business; or (iv) enter into or modify in any material respect any collective bargaining agreement; (g) neither the Company nor any of its subsidiaries will modify, amend or terminate in any material respect any of its material contracts or waive, release or assign any material rights or claims; (h) neither the Company nor any of its subsidiaries will: (i) incur or assume any indebtedness other than indebtedness with respect to working capital in amounts consistent with past practice; (ii) materially modify any existing indebtedness or obligation; (iii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person (other than a subsidiary), other than immaterial amounts in the ordinary course of business consistent with past practice; (iv) make any loans, advances or capital contributions to, or investments in, any other person (other than to wholly owned subsidiaries of the Company or customary advances to employees in accordance with past practice); or (v) enter into any material commitment or transaction other than in the ordinary course of business; (i) neither the Company nor any of its subsidiaries will change any of the accounting methods, practices or policies used by it, unless required by generally accepted accounting principles or Commission rules and regulations; 18 21 (j) the Company will not, and it will not permit any of its subsidiaries to, make or agree to make any capital expenditures, except for capital expenditures that are not materially inconsistent with the Company's 1998 strategic plan; (k) the Company will not, and it will not permit any of its subsidiaries to, make any material tax election (unless required by law) or settle or compromise any material income tax liability; (l) the Company will not, and it will not permit any of its subsidiaries to, (i) waive the benefits of, or agree to modify in any material manner, any confidentiality, standstill or similar agreement to which the Company or any of its subsidiaries is a party, or (ii) pay, discharge or satisfy any legal proceeding, other than a payment, discharge or satisfaction, (A) involving payments by the Company or its subsidiaries of less than $100,000 in the aggregate or (B) for which liabilities are fully reflected on or are fully reserved against in the Company's most recent consolidated financial statements (or the notes thereto) included in the reports filed by the Company with the Commission, in each case in complete satisfaction, and with a complete release, of such matter with respect to all parties to such matter; (m) the Company will not, and will not permit any of its subsidiaries to, make any payment or incur any liability or obligation for the purpose of obtaining any consent from any third party to the transactions contemplated hereby; and (n) neither the Company nor any of its subsidiaries will enter into an agreement, contract, commitment or arrangement to do any of the foregoing, or to authorize, recommend, propose or announce an intention to do any of the foregoing. No Solicitation. In the Merger Agreement, the Company has agreed that the Company and its subsidiaries and affiliates will not, and will use their reasonable efforts to ensure that their respective officers, directors, employees, counsel, investment bankers, financial advisors, accountants, other representatives and agents do not, directly or indirectly, initiate, solicit, encourage or participate in, or enter into any agreement with respect to a Takeover Proposal (as hereinafter defined). The Company has agreed and will cause its subsidiaries and affiliates, and their respective officers, directors, employees, counsel, investment bankers, financial advisors, accountants, other representatives and agents to, immediately cease discussions and negotiations, if any, with any parties conducted heretofore with respect to such matters. Nonetheless, the Company may, directly or indirectly, furnish information concerning the Company to any person pursuant to an appropriate confidentiality agreement, and may participate in discussions and negotiations with such person concerning a Takeover Proposal if, in the opinion of the Board after consultation with legal counsel to the Company, the failure to provide such information or to engage in such discussions or negotiations would be inconsistent with their fiduciary duties under applicable law. Under the Merger Agreement, neither the Board nor any committee thereof may (i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to Parent, the approval or recommendation by the Board or such committee of the Merger Agreement or the Offer or the Merger, (ii) approve or recommend, or propose to approve or recommend, any Takeover Proposal, or (iii) cause the Company to enter into any agreement with respect to any Takeover Proposal. However, in the event that prior to the Effective Time the Board determines in good faith, in consultation with its legal counsel as to legal matters, that it is necessary to do so in order to comply with its fiduciary duties, the Board may withdraw or modify its approval or recommendation of the Merger Agreement, the Offer and the Merger, approve or recommend a Superior Proposal (as hereinafter defined) or cause the Company to enter into an agreement with respect to a Superior Proposal, but in each case only at a time that is after the fifth business day following Parent's receipt of written notice advising Parent that the Board has received a Superior Proposal. The Company is also required to promptly advise Parent orally of any request for information or of any Takeover Proposal, including the terms of the Takeover Proposal. "Takeover Proposal" means any inquiry, proposal or offer from any person relating to any: (A) merger, consolidation or similar transaction involving the Company, (B) sale, lease or other disposition directly or indirectly by merger, consolidation, share exchange or otherwise of assets of the Company or its subsidiaries outside the ordinary course of business representing 10% or more of the consolidated assets of the Company 19 22 and its subsidiaries, (C) issue, sale, or other disposition of (including by way of merger, consolidation, share exchange or any similar transaction) securities (or options, rights or warrants to purchase, or securities convertible into, such securities) representing 20% or more of the voting power of the Company or (D) transaction in which any person will acquire beneficial ownership or the right to acquire beneficial ownership or any group is formed which beneficially owns or has the right to acquire beneficial ownership of more than 20% of the outstanding Shares, in each case, other than the transactions with Parent contemplated by the Merger Agreement. "Superior Proposal" means any bona fide written offer for a Takeover Proposal to acquire, directly or indirectly, for consideration consisting of cash or securities, more than 20% of the outstanding Shares on a fully diluted basis or all or substantially all of the assets of the Company and otherwise on terms which the Board determined in its good faith judgment in consultation with a financial advisor of nationally recognized reputation that the consideration offered pursuant to such Takeover Proposal is more favorable to the shareholders than the Offer and the Merger from a financial point of view. Directors' and Officers' Indemnification. For six years after the Effective Time, Parent will indemnify, defend and hold harmless the present and former officers, directors, employees and agents of the Company and its subsidiaries (each an "Indemnified Party") against all losses, obligations, expenses, claims, damages or liabilities (including interest, penalties, out-of-pocket expenses and attorneys' fees) resulting from or arising out of actions or omissions occurring on or prior to the Effective Time to the full extent permitted under applicable law, the Company's Articles of Incorporation or Bylaws in effect as of the date of the Merger Agreement or certain written indemnification agreements, including provisions therein relating to the advancement of expenses incurred in the defense of any action or suit; provided that in the event any claim or claims are asserted or made within such six-year period, all rights to indemnification in respect of any such claim or claims will continue until final disposition of any and all such claims. If Parent or the Company (i) reorganizes or consolidates with or merges into any other person and is not the resulting corporation or (ii) liquidates, dissolves or transfers all or substantially all of its assets to any person, then in either case, provision will be made so that the successors and assigns of Parent or the Company assume the indemnification obligations of Parent or the Company, as the case may be. Parent must use commercially reasonable efforts for a period of six years after the Effective Time to provide officers' and directors' liability insurance in respect of acts or omissions occurring prior to the Effective Time, including but not limited to the transactions contemplated by the Merger Agreement, covering each person currently covered by the Company's existing officers' and directors' liability insurance policy, or who becomes covered by such policy prior to the Effective Time, on terms with respect to coverage and amount no less favorable than those of such policy in effect on the date of the Merger Agreement; provided that in satisfying such obligation, Parent will not be obligated to pay premiums in excess of 150% of the per annum amount the Company paid in 1997; and provided further that Parent will nevertheless be obligated to provide such coverage as may be obtained for such amount. Benefit Plans and Certain Contracts. Under the Merger Agreement, until at least December 31, 1999, Parent has agreed to cause the Company to maintain either the employee benefit plans of the Company and its subsidiaries in effect on the date of the Merger Agreement or other benefits to employees of the Company and its subsidiaries that are not materially less favorable in the aggregate to such employees than those in effect on the date of the Merger Agreement; provided that the Company will not maintain any plan that provides for the issuance of securities of the Company. Prior to consummation of the Merger, the Company may pay eligible participants a pro rata portion of the 1998 target award under the Company's Annual Incentive Plan for which amounts have been accrued on the Company's financial statements from January 1, 1998 through the Effective Time. Under the Merger Agreement, Parent has also acknowledged the existence of certain agreements between the Company and various employees and former employees of the Company and has agreed that after the Effective Time such agreements will continue to remain an obligation of the Company and will remain in full force and effect. Company Stock Options. Under the Merger Agreement, each option (an "Option") to purchase Common Stock issued by the Company which is outstanding at the Effective Time will be canceled by virtue of the Merger, without consideration, and will cease to exist. Each holder of an Option, whether or not such Option is immediately exercisable, will be entitled to receive at the Effective Time, for each share of Common 20 23 Stock issuable upon exercise of such Option, an amount in cash equal to the excess of (x) the Offer Price over (y) the per share exercise price of the Option as in effect immediately prior to the Effective Time. No consideration will be payable with respect to any Option if the exercise price of such Option exceeds the Offer Price. Representations and Warranties. The Company has made customary representations and warranties to Parent and Purchaser with respect to, among other things, its organization and qualification, subsidiaries, capitalization, the reports filed by the Company with the Commission, financial statements, title to assets, liens, information supplied, consents and approvals, no violations, no default, no undisclosed liabilities, litigation, compliance with applicable law, employee plans, environmental matters, tax matters, intangible property, opinion of financial advisor, brokers, labor matters, absence of certain changes, millennium, full disclosure, real property and contracts. Termination; Fees. The Merger Agreement may be terminated at any time prior to the Effective Time, whether before or after shareholder approval thereof: (i) by mutual consent of the Board of Directors of Parent and the Board; (ii) by either Parent or the Company if the Offer has not been consummated on or before December 14, 1998 (provided the terminating party is not otherwise in material breach of its representations, warranties or obligations under the Merger Agreement); (iii) by the Company if any of the conditions to the Merger have not been satisfied or waived by the Company at such time as such condition is no longer capable of satisfaction; (iv) by Parent if any of any of the conditions to the Merger have not been satisfied or waived by Parent at such time as such condition is no longer capable of satisfaction; (v) by the Company, if Parent or Purchaser has breached or failed to perform in any material respect any of its representations, warranties or covenants contained in the Merger Agreement, which breach or failure to perform would give rise to a failure of a condition to the Merger or to the Offer and cannot be or has not been cured within 30 days after the giving of notice to Parent of such breach; or (vi) by the Company, in connection with entering into an agreement for a Superior Proposal as permitted by the Merger Agreement; provided the Company has complied with all provisions of the Merger Agreement related thereto. If either (A)(i) the Company receives a bona fide Takeover Proposal at any time after the date of the Merger Agreement and prior to the termination of the Merger Agreement, (ii) the Merger Agreement terminates prior to the consummation of the Offer for any reason (other than a breach of the Merger Agreement by Parent or Purchaser), and (iii) by the date which is six months after the date of termination of the Merger Agreement, either (1) a Takeover Proposal with a third party is thereafter consummated, or (2) the Company enters into an agreement for a Takeover Proposal with a third party which is thereafter consummated, or (B) the Company terminates the Merger Agreement by reason of its entering into an agreement for a Superior Proposal, then, in either event, the Company must pay to Parent, by wire transfer of immediately available funds, within two days after the consummation of the Takeover Proposal or Superior Proposal, as the case may be, a fee of $9,500,000 (the "Topping Fee"). For purposes of the requirement regarding payment of the Topping Fee only, "Takeover Proposal" means any proposal or offer from any person relating to any: (A) merger, consolidation or similar transaction involving the Company, (B) sale, lease or other disposition directly or indirectly by merger, consolidation, share exchange or otherwise of assets of the Company or its subsidiaries outside the ordinary course of business representing 10% or more of the consolidated assets of the Company and its subsidiaries, (C) issue, sale, or other disposition of (including by way of merger, consolidation, share exchange or any similar transaction) securities (or options, rights or warrants to purchase, or securities convertible into, such securities) representing 20% or more of the voting power of the Company or (D) transaction in which any person will acquire beneficial ownership or the right to acquire beneficial ownership or any group is formed which beneficially owns or has the right to acquire 21 24 beneficial ownership of more than 50% of the outstanding Shares, in each case, other than the transactions with Parent and Purchaser contemplated by the Merger Agreement. Confidentiality Agreement. The following is a summary of the material terms of the confidentiality agreement. This summary is qualified in its entirety by reference to the full text of the confidentiality agreement which is incorporated herein by reference and a copy of which has been filed with the commission as an Exhibit to the Schedule 14D-1. The confidentiality agreement may be examined and copies may be obtained at the place and in the manner as set forth in "Section 7 -- Certain Information concerning the Company." Parent entered into a Letter Agreement dated April 29, 1998 (the "Confidentiality Agreement") with the Company pursuant to which Parent has agreed, among other things, to keep confidential certain non-public confidential or proprietary information of the Company furnished to Parent by or on behalf of the Company. Pursuant to the Confidentiality Agreement, Parent agreed that, without the prior written consent of the Board, for a period of eighteen months from the date of the Confidentiality Agreement, neither Parent nor its affiliates will acquire or offer or agree to acquire, directly or indirectly, by purchase or otherwise, any voting securities of the Company, or otherwise seek to influence or control the management or policies of the Company. Notwithstanding the foregoing, Parent and its affiliates are not prohibited from making an offer to acquire the voting securities of the Company if the Board has authorized an auction of such securities or Parent is making a counteroffer to a proposed transaction for such securities. Vote Required to Approve Merger. Pennsylvania Law provides that the adoption of any plan of merger or consolidation by the Company requires the approval of the Board and the affirmative vote of a majority of the votes cast by all shareholders entitled to vote thereon (including the votes of any Shares owned by Parent and Purchaser that have voting rights at such time), if the "short form" merger procedure described below is not available. The Board has authorized and approved the Offer and the Merger; consequently, the only additional action of the Company that may be necessary to effect the Merger is approval by such shareholders at a meeting of the Company's shareholders convened for that purpose (the "Shareholders Meeting"). If the Minimum Condition is satisfied, then Purchaser will own a majority of the outstanding Shares on a fully diluted basis, and upon voting its Shares in favor of the Merger, the Merger will be approved. Although under the terms of the Merger Agreement, Parent and Purchaser may waive the Minimum Condition, they do not currently intend to do so and Parent and Purchaser may terminate the Merger Agreement if the Minimum Condition is not satisfied. Pennsylvania Law also provides that the Merger will not require the approval of the Company's shareholders, and can be adopted by Purchaser's Board of Directors, if Purchaser owns at least 80% of each class of the outstanding shares of the Company. Consequently, unless Purchaser acquires 80% of the Shares and 80% of each class of the Preference Stock which remains outstanding, a shareholder vote will be required. No offer is being made hereunder to acquire the Preference Stock. There can be no assurance that Purchaser will acquire 80% of the Shares and 80% of each series of the Preference Stock. 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, however, that Rule 13e-3 will not be applicable to the Merger because it is anticipated that the Merger will be effected within one year following consummation of the Offer. 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 shareholders in such transaction, be filed with the Commission and disclosed to shareholders prior to consummation of the transaction. Appraisal Rights. Notwithstanding anything in the Merger Agreement to the contrary, any issued and outstanding Shares held by persons who object to the Merger and comply with all the provisions of Pennsylvania Law concerning the right of holders of Shares to dissent from the Merger and require appraisal of their Shares ("Dissenting Shareholder") will not be converted into the right to receive the Offer Price, without interest, pursuant to the Merger Agreement, but will be converted into the right to receive such consideration as may be determined to be due to such Dissenting Shareholder pursuant to Pennsylvania Law; 22 25 provided, however, that the Shares outstanding immediately prior to the Effective Time and held by a Dissenting Shareholder who will, after the Effective Time, withdraw his demand for appraisal or lose his right of appraisal, in either case pursuant to the Pennsylvania Law, will be deemed to be converted as of the Effective Time into the right to receive the Offer Price, payable to the holder thereof, without interest. In addition, each holder of issued and outstanding shares of Preference Stock who objects to the Merger and complies with all the provisions of Pennsylvania Law concerning the right of holders of shares of Preference Stock to dissent from the Merger and require appraisal of their shares ("Dissenting Preference Holder") will, unless such Dissenting Preference Holder withdraws or loses his right of appraisal, be entitled to payment of the fair value of his shares determined in accordance with Pennsylvania Law. If such Dissenting Preference Holder withdraws or loses his right of appraisal, his shares of Preference Stock will remain outstanding and unaffected by the Merger. The Company will give Parent (i) prompt notice of any written demands for appraisal of the Shares or shares of Preference Stock received by the Company and (ii) the opportunity to direct all negotiations and proceedings with respect to any such demands. The Company will not, without the prior written consent of Parent, voluntarily settle or compromise any such demands. In addition to the appraisal rights discussed above, shareholders also have certain rights ("Subchapter 25E Rights") under Subchapter 25E of the Pennsylvania Law ("Subchapter 25E") which will become applicable prior to the Effective Time in the event that the Purchaser (or a group of related persons, or any other person or group of related persons) were to acquire Shares representing at least 20% of the voting power of the Company, in connection with the Offer or otherwise (a "Control Transaction"). In such event, shareholders of the Company would have the right to demand "fair value" of such shareholders' Shares and to be paid such fair value upon compliance with the requirements of Subchapter 25E. Under Subchapter 25E, "fair value" may not be less than the highest price per share paid by the controlling person or group at any time during the 90-day period ending on and including the date of the Control Transaction, plus an increment, if any, representing any value, including, without limitation, any proportion of value payable for acquisition of control of the Company, that may not be reflected in such price. Purchaser believes that the Offer Price represents fair value of the Shares within the meaning of Subchapter 25E. Subchapter 25E Rights would attach immediately upon consummation of a Control Transaction and require that any shareholder seeking such appraisal must make a demand for fair value within a reasonable time after the notice to shareholders that a Control Transaction has occurred is given by the controlling person or group in accordance with Subchapter 25E, which time period may be specified in such notice, as well as comply with the other procedures of Subchapter 25E. Subchapter 25E Rights are available only with respect to shares of a registered corporation held by a shareholder after the occurrence of a Control Transaction; accordingly, Subchapter 25E Rights would not be available with respect to any Shares tendered in the Offer and accepted for payment. Although under the terms of the Merger Agreement, Parent and Purchaser may waive the Minimum Condition, they do not currently intend to do so; and Parent and Purchaser may terminate the Merger Agreement and the transactions contemplated thereby (including, without limitation, the Offer) if the Minimum Condition is not satisfied. The foregoing summary of rights under Subchapter 25E is qualified in its entirety by reference to the full text of Subchapter 25E, which is attached hereto as Annex A. Except as noted in this Offer to Purchase, neither Parent nor Purchaser has any present plans or proposals that would result in an extraordinary corporate transaction, such as a merger, reorganization, liquidation, relocation of operations, or sale or transfer of assets, involving the Company or any material changes in the Company's corporate structure, business or composition of its management or personnel. 12. DIVIDENDS AND DISTRIBUTIONS; CHANGES IN STOCK. The Merger Agreement provides that prior to the Effective Time, unless Parent otherwise agrees in writing the Company will not, and it will not permit any of its subsidiaries to: (i) (A) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to the Company's capital stock or that of any of its subsidiaries (other than regularly scheduled dividends on the Preference Stock in accordance with its terms) or (B) redeem, purchase, or otherwise acquire directly or indirectly any of the Company's capital stock (or options, warrants, calls, commitments or rights of any kind to acquire any shares of capital stock) or that of any of its subsidiaries, other than redemptions of Preference Stock required by the Company's articles of incorporation; (ii) issue, sell, pledge, dispose of or encumber any additional shares of, or 23 26 securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or any of its subsidiaries, other than Shares issuable upon the exercise of the Options, or upon the conversion of the Series B Preference Stock or Series D Preferred Stock outstanding on the date of the Merger Agreement; or (iii) split, combine or reclassify the outstanding capital stock of the Company or any of its subsidiaries. 13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NYSE LISTING AND EXCHANGE ACT REGISTRATION. 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. According to the NYSE's published guidelines, the NYSE would consider delisting the Shares if, among other things, the number of record holders of at least 100 Shares should fall below 1,200, the number of publicly held Shares (exclusive of holdings of officers, directors and their families and other concentrated holdings of 10% or more ("NYSE Excluded Holdings")) should fall below 600,000 or the aggregate market value of publicly held Shares (exclusive of NYSE Excluded Holdings) should fall below $5,000,000. If, as a result of the purchase of Shares pursuant to the Offer, the Shares no longer meet the requirements of the NYSE for continued listing and the listing of Shares is discontinued, the market for the Shares could be adversely affected. If the NYSE were to delist the Shares, it is possible that the Shares would continue to trade on another securities exchange or in the over-the-counter market and that price or other quotations would be reported by other sources. The extent of the public market for such and the availability of such quotations would depend, however, upon such factors as the number of shareholders and/or the aggregate market value of such securities remaining at such time, the interest in maintaining a market in the Shares on the part of securities firms, the possible termination of registration under the Exchange Act as described below, and other factors. The Purchaser cannot predict whether the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for, or marketability of, the Shares or whether it would cause future market prices to be greater or lesser than the Offer Price. 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. The Shares are currently registered under the Exchange Act. Such registration may be terminated upon application of the Company to the Commission if the Shares are not listed on a national securities exchange and there are fewer than 300 record holders of the Shares. The termination of 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), and the requirement of furnishing a proxy statement in connection with shareholders' meetings pursuant to Section 14(a), 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 "margin securities" or be eligible for NYSE reporting. In addition, if registration of the Shares under the Exchange Act is terminated, Pennsylvania Law provides that the applicability of Chapter 25 thereof to the Company (see below) shall terminate immediately upon the termination of the Company's status as a "registered corporation." 24 27 Purchaser 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 the registration of the Shares are met. 14. CONDITIONS OF THE OFFER. Notwithstanding any other provisions of the Offer, and in addition to (and not in limitation of) Purchaser's rights to extend and amend the Offer at any time in its sole discretion (subject to the provisions of the Merger Agreement), Purchaser will not be required to accept for payment or, subject to any applicable rules and regulations of the Commission, including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for, and may delay the acceptance for payment of or, subject to the restriction referred to above, the payment for, any tendered Shares, and may terminate the Offer as to any Shares not then paid for, if (i) the applicable waiting period under the HSR Act or the Exon-Florio Amendment (as hereinafter defined) has not expired or terminated, (ii) the Minimum Condition has not been satisfied or waived, or (iii) at any time on or after September 15, 1998 and before the time for payment of any such Shares, any of the following events occur or are determined by Purchaser to have occurred: (a) there shall be pending or in effect an injunction or other order, decree, judgment or ruling by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission of competent jurisdiction or a statute, rule, regulation, executive order or other action shall have been promulgated, enacted, or taken by a governmental authority or a governmental, regulatory or administrative agency or commission of competent jurisdiction which in any case (i) restrains or prohibits the making or consummation of the Offer or the consummation of the Merger, (ii) prohibits or restricts the ownership or operation by Parent (or any of its affiliates or subsidiaries) of any portion of its or the Company's business or assets which is material in light of the size and scope of the business of the Company and its subsidiaries taken as a whole, or compels Parent (or any of its affiliates or subsidiaries) to dispose of or hold separate any portion of its or the Company's business or assets which is material to the business of the Company and its subsidiaries taken as a whole, (iii) imposes material limitations on the ability of Parent effectively to acquire or to hold or to exercise full rights of ownership of the Shares, including, without limitation, the right to vote the Shares purchased by Purchaser on all matters properly presented to the shareholders of the Company, or (iv) imposes any material limitations on the ability of Parent or any of its affiliates or subsidiaries effectively to control in any material respect the business and operations of the Company and its subsidiaries (each of clauses (i) through (iv) being referred to as a "Prohibited Result"); or (b) an action or a proceeding shall have been commenced by a governmental entity under federal or state antitrust laws or any other applicable law before any court or any governmental or other administrative or regulatory authority or agency, domestic or foreign, which would reasonably be expected to have a Prohibited Result; or (c) there shall have occurred (i) any general suspension of, or limitation on prices for, trading in securities on any national securities exchange or the over-the-counter market for a period in excess of 24 hours (excluding suspensions or limitations resulting solely from physical damage or interference with such exchanges not related to market conditions), (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States (whether or not mandatory), (iii) a commencement of a war, armed hostilities or other international or national calamity directly or indirectly involving the United States, (iv) any limitation (whether or not mandatory) by any United States governmental authority on the extension of credit generally by banks or other financial institutions, (v) a change in general financial, bank or capital market conditions which materially and adversely affects the ability of financial institutions in the United States to extend credit or syndicate loans, or (vi) in the case of any of the foregoing existing at the time of the execution of the Merger Agreement, a material acceleration or worsening thereof; or (d) the representations and warranties of the Company contained in the Merger Agreement shall not be true and correct on and as of the Expiration Date, with the same force and effect as if made on and 25 28 as of the Expiration Date, in all respects, except for such breaches which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect (as hereinafter defined) on the Company; or (e) the Company shall have failed to perform in all material respects any obligations or to comply with any material agreement or covenant to be performed or complied with by it under the Merger Agreement, which failure to perform has had or would reasonably be expected to have a Material Adverse Effect on the Company; or (f) the Company shall have failed to obtain any consent from any third-party required to be obtained by it in order to permit consummation of the Offer, other than those consents the failure of which to obtain would not have and would not reasonably be expected to have, a Material Adverse Effect on the Company; or (g) the Merger Agreement shall have been terminated by the Company or Parent in accordance with its terms; or (h) the Offer shall not have been consummated by December 14, 1998. "Material Adverse Effect" means, in respect of any party, a material adverse effect on (i) the business, financial condition or results of operations of such party and its subsidiaries, taken as a whole, except effects that are (x) generally applicable in the United States economy and/or the economy in any other region of the world which do not have a disproportionate effect on such party and its subsidiaries (as the case may be), or (y) relate to the securities market in general, or (z) relate to such party's industry in general or (ii) the ability of such party to consummate the transactions contemplated by the Merger Agreement without unreasonable delay; provided, however, that (I) the institution of a lawsuit by a shareholder of Parent or the Company challenging the Merger Agreement or the transactions contemplated thereby (or any threat to do so) will not be deemed to be a Material Adverse Effect, and (II) with respect to the Company, the commencement, public proposal, public disclosure or communication to the Company of any Takeover Proposal will not be deemed to be a Material Adverse Effect. The foregoing conditions are for the sole benefit of Parent and Purchaser and may be waived by Parent or Purchaser, in whole or in part at any time and from time to time in the sole discretion of Parent or Purchaser. The failure by Parent or Purchaser at any time to exercise any of the foregoing rights will not be deemed a waiver of any such right and each such right will be deemed an ongoing right which may be asserted at any time and from time to time. 15. REGULATORY APPROVALS; STATE TAKEOVER LAWS. General. Except as otherwise disclosed herein, based on a review of publicly available information filed by the Company with the Commission, neither Purchaser nor Parent is aware of (i) any license or regulatory permit that appears to be material to the business of the Company and its subsidiaries, taken as a whole, that might be adversely affected by the acquisition of Shares by Purchaser pursuant to the Offer or the Merger or (ii) any approval or other action by any governmental, administrative or regulatory agency or authority, domestic or foreign, that would be required for the acquisition or ownership of Shares by Purchaser as contemplated herein. Should any such approval or other action be required, Purchaser currently contemplates that such approval or action would be sought. While Purchaser does not currently intend to delay the acceptance for payment of Shares tendered pursuant to the Offer pending the outcome of any such matter, there can be no assurance that any such approval or action, if needed, would be obtained or 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 in the event that such approvals were not obtained or any other actions were not taken. Purchaser's obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions. See "Section 14 -- Conditions of the Offer." Antitrust. Under the HSR Act and the rules that have been promulgated thereunder by the Federal Trade Commission ("FTC"), certain acquisition transactions may not be consummated unless certain 26 29 information has been furnished to the Antitrust Division of the Department of Justice (the "Antitrust Division") and the FTC and certain waiting period requirements have been satisfied. The acquisition of Shares by Purchaser pursuant to the Offer is subject to the HSR Act requirements. Under the provisions of the HSR Act applicable to the purchase of Shares pursuant to the Offer, unless early termination of the waiting period is granted or LVI receives a request for additional information of documentary material prior thereto, such purchase may not be made until the expiration of a 15-calendar day waiting period following the required filing under the HSR Act by LVI. LVI made its required filing on September 17, 1998. Accordingly, the waiting period under the HSR Act will expire at 11:59 P.M., New York City time, on October 2, 1998. Pursuant to the HSR Act, LVI has requested early termination of the waiting period applicable to the Offer. There can be no assurances, however, that the 15-day HSR Act waiting period will be terminated before such period is set to expire. If the FTC or the Antitrust Division issues a request for additional information or documentary material pursuant to the HSR Act, the waiting period under the HSR Act will be extended for an additional period of ten days after the request is substantially complied with, unless sooner terminated by the FTC or the Antitrust Division, and no Shares will be acquired until such waiting period has expired. See "Section 2 -- Acceptance for Payment and Payment for Shares." Only one extension of such waiting period pursuant to a request for additional information is authorized by the rules promulgated under the HSR Act, except by court order. Although the Company is required to file certain information and documentary material with the Antitrust Division and the FTC in connection with the Offer, neither the Company's failure to make such filings nor a request to the Company from the Antitrust Division or the FTC for additional information or documentary material will extend the waiting period. The Antitrust Division and the FTC 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 Purchaser's purchase of Shares, either the Antitrust Division or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the acquisition of Shares pursuant to the Offer or seeking divestiture of Shares acquired by Purchaser or divestiture of substantial assets of Parent, the Company or any of their respective subsidiaries. Private parties may also bring legal action under the antitrust laws under certain circumstances. Based upon an examination of publicly available information relating to the businesses in which Parent and its subsidiaries and the Company and its subsidiaries are involved, 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 a challenge is made, what the result will be. Exon-Florio Amendment. The acquisition of Shares pursuant to the Offer by Purchaser and Parent is also subject to the requirements of Section 721 of Title VII of the Defense Production Act of 1950, as amended by Section 5021 of the Omnibus Trade and Competitiveness Act of 1988, and commonly referred to as the "Exon-Florio Amendment." The Exon-Florio Amendment may apply to any merger, acquisition or takeover that is by or with foreign persons and that could result in foreign control (or a change in foreign control to a different foreign person) of an entity engaged in interstate commerce in the United States. Pursuant to the Exon-Florio Amendment, Purchaser and Parent will provide notice of the transaction to the Committee on Foreign Investment in the United States ("CFIUS"). Upon the filing of such notice, CFIUS has a 30-day period in which to review the notice and consider whether the proposed transaction is subject to the Exon-Florio Amendment and to determine whether the acquisition will impair the national security of the United States. During such 30-day period, CFIUS must decide whether to undertake a formal investigation. If no further investigation is undertaken, the waiting period will terminate at the end of the 30-day review period. If an investigation is undertaken, CFIUS will have up to 45 days to complete its formal investigation and submit a report to the President of the United States, who will then have an additional 15 days to take action or to determine that no action is necessary. Parent made the notice filing under the Exon-Florio Amendment on September 18, 1998. Accordingly, the waiting period under the Exon-Florio Amendment will expire at 11:59 p.m., New York City time, on October 19, 1998, unless CFIUS undertakes a further investigation. 27 30 State Takeover Laws. A number of states throughout the United States have enacted takeover statutes that purport, in varying degrees, to be applicable to attempts to acquire securities of corporations that are incorporated or have assets, stockholders, executive offices or places of business in such states. In Edgar v. Mite Corp., the Supreme Court of the United States held that the Illinois Business Takeover Act, which involved state securities laws that made the takeover of certain corporations more difficult, imposed a substantial burden on interstate commerce and therefore was unconstitutional. In CTS Corp. v. Dynamics Corp. of America, however, the Supreme Court of the United States held that a state may, as a matter of corporate law and, in particular, those laws concerning corporate governance, constitutionally disqualify a potential acquiror from voting on the affairs of a target corporation without prior approval of the remaining stockholders, provided that such laws were applicable only under certain conditions. The Pennsylvania Takeover Disclosure Law ("PTDL") purports to regulate certain attempts to acquire a corporation which (1) is organized under the laws of Pennsylvania or (2) has its principal place of business and substantial assets located in Pennsylvania. In Crane Co. v. Lam, 509 F. Supp. 782 (E.D. Pa. 1981), the United States District Court for the Eastern District of Pennsylvania preliminarily enjoined, on grounds arising under the United States Constitution, enforcement of at least the portion of the PTDL involving the pre-offer waiting period thereunder. Section 8(a) of the PTDL provides an exemption for any offer to purchase securities as to which the board of directors of the target company recommends acceptance to its shareholders, if at the time such recommendation is first communicated to shareholders the offeror files with the Pennsylvania Securities Commission ("PSC") a copy of the Schedule 14D-1 and certain other information and materials, including an undertaking to notify security holders of the target company that a notice has been filed with the PSC which contains substantial additional information about the offer and which is available for inspection at the PSC's principal office during business hours. The Board has unanimously approved the transactions contemplated by the Merger Agreement and recommended acceptance of the Offer and the Merger to the Company's shareholders. While reserving and not waiving its right to challenge the validity of the PTDL or its applicability to the Offer, Purchaser is making a Section 8(a) filing with the PSC in order to qualify for the exemption from the PTDL. Pursuant to Section 10 of the PTDL, Purchaser will submit the appropriate $100 notice filing fee along with the Section 8(a) filing. Additional information about the Offer has been filed with the Pennsylvania Securities Commission pursuant to the Pennsylvania Takeover Disclosure Law and is available for inspection at the Pennsylvania Securities Commission's office at Eastgate Office Building, 1010 North 7th Street, Harrisburg, PA 17102-1410, during business hours. Chapter 25 of Pennsylvania Law contains other provisions relating generally to takeovers and acquisitions of certain publicly owned Pennsylvania corporations such as the Company that have a class or series of shares entitled to vote generally in the election of directors registered under the Exchange Act (a "registered corporation"). The following discussion is a general and highly abbreviated summary of certain features of such chapter, is not intended to be complete or to completely address potentially applicable exceptions or exemptions, and is qualified in its entirety by reference to the full text of Chapter 25 of Pennsylvania Law. In addition to other provisions not applicable to the Offer or the Merger, Subchapter 25D of Pennsylvania Law includes provisions requiring approval of a merger of a registered corporation with an "interested shareholder" in which the "interested shareholder" is treated differently from other shareholders, by the affirmative vote of the shareholders entitled to cast at least a majority of the votes that all shareholders other than the interested shareholder are entitled to cast with respect to the transaction without counting the votes of the interested shareholders. This disinterested shareholder approval requirement is not applicable to a transaction (i) approved by a majority of disinterested directors, (ii) in which the consideration to be received by shareholders is not less than the highest amount paid by the interested shareholder in acquiring his shares, or (iii) effected without submitting the Merger to a vote of shareholders as permitted in Section 1924(b)(1)(ii) of the Pennsylvania Law. Purchaser currently believes that the disinterested shareholder approval requirement of Subchapter 25D will not be applicable to the contemplated Merger because of prior disinterested Board approval. Subchapter 25E of Pennsylvania Law, which addresses "control transactions," requires under certain circumstances any person who acquires at least 20% of the voting power of a registered corporation to offer to 28 31 purchase up to the balance of the voting shares of the corporation at the price determined under the statute, which may not be less than the highest price per share paid by the controlling person or group at any time during the 90-day period ending on and including the date of the control transaction, plus an increment representing any value, including without limitation, any proportion of value payable for acquisition of control of the corporation, that may not be reflected in such price. A "control transaction" will occur if Purchaser acquires voting power over 20% or more of the Shares of the Company by purchasing Shares pursuant to the Offer. See "Section 11 -- Purpose of the Offer; Plans for the Company; Merger Agreement; and Other Agreements." Subchapter 25F of Pennsylvania Law prohibits under certain circumstances certain "business combinations," including mergers and sales or pledges of significant assets, of a registered corporation with an "interested shareholder" for a period of five years. Subchapter 25F exempts business combinations approved by the board of directors prior to a shareholder becoming an interested shareholder and transactions with interested shareholders who beneficially owned shares with at least 15% of the total voting power of a corporation on March 23, 1988 and remain so. The Company has represented to the Purchaser that Subchapter 25F is not applicable to the contemplated Merger. Subchapter 25G of Pennsylvania Law, relating to "control-share acquisitions," prevents under certain circumstances the owner of a control-share block of shares of a registered corporation from voting such shares unless a majority of the "disinterested" shares approve such voting rights. Failure to obtain such approval may result in a forced sale by the control-share owner of the control-share block to the corporation at a possible loss. The purchase by Purchaser of Shares may be deemed to constitute a control-share acquisition, with the result that Purchaser would not have voting rights with respect to such control-shares unless the voting rights are restored by a disinterested shareholder vote. The Company has represented to the Purchaser that Subchapter 25G is not applicable to the transactions contemplated by the Merger Agreement. Subchapter 25H of Pennsylvania Law, relating to disgorgement by certain controlling shareholders of a registered corporation, provides that under certain circumstances any profit realized by a controlling person from the disposition of shares of the corporation to any person (including to the corporation under Subchapter 25G or otherwise) will be recoverable by the corporation. The Company has represented to the Purchaser that Subchapter 25H is not applicable to the transactions contemplated by the Merger Agreement. Subchapter 25I of Pennsylvania Law entitles "eligible employees" of a registered corporation to a lump sum payment of severance compensation under certain circumstances if the employee is terminated, other than for willful misconduct, within 90 days before voting rights lost as a result of a control-share acquisition are restored by a vote of disinterested shareholders. Subchapter 25J of Pennsylvania Law provides protection against termination or impairment under certain circumstances of "covered labor contracts" of a registered corporation as a result of a "business combination" transaction if the business operation to which the covered labor contract relates was owned by the registered corporation at the time voting rights are restored by shareholder vote after a control-share acquisition. The Company has represented to Purchaser that Subchapters 25I and 25J are not applicable to the transactions contemplated by the Merger Agreement. Section 2504 of Pennsylvania Law provides that the applicability of Chapter 25 of Pennsylvania Law to a registered corporation having a class or series of shares entitled to vote generally in the election of directors registered under the Exchange Act or otherwise satisfying the definition of a registered corporation under Section 2502(1) of Pennsylvania Law shall terminate immediately upon the termination of the status of the corporation as a registered corporation. Purchaser 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 the registration of the Shares are met. Except for the filing pursuant to Section 8(a) of the PTDL described above, neither Purchaser nor Parent has currently complied with any state takeover statute or regulation; however Purchaser intends to comply with Subchapter 25E to the extent it is applicable upon consummation of the Offer. Purchaser reserves the right to challenge the applicability or validity of any state law purportedly applicable to the Offer or the Merger and nothing in this Offer to Purchase or any action taken in connection with the Offer or the Merger is intended as a waiver of such right. If it is asserted that any state takeover statute is applicable to the Offer or 29 32 the Merger and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer or the Merger, Purchaser might be required to file certain information with, or to receive approvals from, the relevant state authorities, and Purchaser might be unable to accept for payment or pay for Shares tendered pursuant to the Offer, or be delayed in consummating the Offer or the Merger. In such case, Purchaser may not be obliged to accept for payment or pay for any Shares tendered pursuant to the Offer. 16. FEES AND EXPENSES. Except as set forth below, neither Parent nor Purchaser will pay any fees or commissions to any broker, dealer or other person for soliciting tenders of Shares pursuant to the Offer. ING Barings is acting as Dealer Manager in connection with the Offer and has provided certain financial advisory services to Parent and Purchaser in connection with the Offer and the Merger. As compensation for ING Barings' services as financial advisor, Parent or its affiliate will pay ING Barings a transaction fee upon the consummation of the Offer. In addition, Parent has agreed to reimburse ING Barings for all out-of-pocket expenses, including reasonable attorneys' fees, incurred by ING Barings in connection with its role as financial advisor and Dealer Manager, and Parent has agreed to indemnify ING Barings and certain related persons against certain losses, claims, damages, liabilities, costs and expenses in connection with its role as financial advisor and Dealer Manager. In addition, Parent has agreed to pay directly, or reimburse ING Barings for, (i) all expenses incurred by ING Barings relating to the preparation, printing, filing, mailing and publishing of all Offer material, (ii) all fees and expenses of the Depositary and the Information Agent referred to in this Offer to Purchase, (iii) all advertising charges in connection with the Offer, (iv) all fees, if any, payable to dealers (including ING Barings), banks and trust companies as reimbursement for their customary mailing and handling expenses incurred in forwarding the Offer material to their customers and (v) all other fees and expenses incurred by ING Barings in connection with the Offer. All payments to be made by Parent pursuant to the Dealer Manager Agreement will be made promptly against delivery to Parent of statements therefor. Parent will be liable for the foregoing payments whether or not the Offer is made or the Purchaser purchases any Shares pursuant to the Offer. Purchaser has retained Morrow & Co., Inc. to act as the Information Agent in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, facsimile, telegraph and personal interviews and may request brokers, dealers and other nominee shareholders to forward materials relating to the Offer to beneficial owners of Shares. The Information Agent will receive reasonable and customary compensation for its services, will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities and expenses in connection therewith, including certain liabilities under the Federal securities laws. In addition, Continental Stock Transfer & Trust Company has been retained as the Depositary. The Depositary has not been retained to make solicitations or recommendations in its role as Depositary. The Depositary will receive reasonable and customary compensation for its services, will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities and expenses in connection therewith, including certain liabilities under the Federal securities laws. Brokers, dealers, commercial banks and trust companies will be reimbursed by Purchaser for customary mailing and handling expenses incurred by them in forwarding offering material to their customers. 17. MISCELLANEOUS. 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 the Shares pursuant thereto, Purchaser will make a good faith effort to comply with 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 will be deemed to be made on behalf of Purchaser by one or more registered brokers or dealers which are licensed under the laws of such jurisdiction. 30 33 NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF PARENT OR 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. Parent and Purchaser have filed with the Commission the Schedule 14D-1, together with Exhibits, pursuant to Rule 14d-3 of the General Rules and Regulations under the Exchange Act, furnishing certain additional information with respect to the Offer, and may file amendments thereto. The Schedule 14D-1 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 -- Certain Information Concerning the Company" (except that they will not be available at the regional offices of the Commission). DLC Acquisition Corp. September 21, 1998 31 34 SCHEDULE I INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF PARENT, PURCHASER AND LVI 1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. Set forth below is the name, current business address, citizenship and the present principal occupation or employment and material occupations, positions, offices or employments for the past five years of each director and executive officer of Parent. Unless otherwise indicated, each person identified below is employed by Parent or its affiliates, and has been employed by Parent or its affiliates, in positions of increasing responsibility, for the past five years. The principal address of Parent and, unless otherwise indicated below, the current business address for each individual listed below is 390 E. Joe Orr Road, Chicago Heights, Illinois 60411. Except as otherwise noted below, each such person is a citizen of the United States. Directors are identified by an asterisk.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS ---- -------------------------------------------------- Yves R. Collinet*............................ Vice President of Parent and Purchaser; Vice Parc Scientifique Athena President -- Technical of The Carmeuse Group Boulevard de Lauzelle 65 1348 Louvain-la-Neuve Nord Belgium citizen of Belgium Jacques A. Germay*........................... Chairman of Parent and Purchaser; Chief Executive 47 Rue de L'Abbaye Officer of Alpha, S.A. 4432 Alleur, Belgium citizen of Belgium Yves Willems*................................ Vice President of Parent and Purchaser; Managing Parc Scientifique Athena Director of Carmeuse Coordination Center, S.A.; Chief Boulevard de Lauzelle 65 Financial Officer of The Carmeuse Group; Director of 1348 Louvain-la-Neuve Nord Coil, S.A. Belgium citizen of Belgium Alfredo Riefkohl Henrichsen*................. Chief Executive Officer of Grupo Calidra, S.A. de Vasco de Quiroga No. 1800 C.V. 01210 Mexico, D.F. citizen of Mexico Richard C. Kraus............................. President and Chief Executive Officer of Parent and Purchaser; President and Chief Executive Officer of Echo Bay Mines from 1981 to April, 1997; Director of St. Mary Land and Exploration Company William S. Brown III......................... Director of Strategic Development of Parent; Vice President of Carmeuse North American Group and Chairman of Marblehead Lime Company since July, 1998; President and Chief Executive Officer of Carmeuse North American Group from November, 1994 to July, 1998; President and Chief Executive Officer of Brown Group from July, 1991 to November, 1994
I-1 35
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS ---- -------------------------------------------------- Scott A. Deininger........................... Executive Vice President of Parent; Treasurer of Purchaser; Chief Financial Officer of Carmeuse North American Group since April, 1998; Group Controller of the Carmeuse North American Group from March, 1997 to April, 1998; Region Controller of Tarmac Minerals, Inc. from March, 1996 to March, 1997; Corporate Controller of Wimpey Minerals USA, Inc. from January, 1993 to March, 1996 Suzanne E. Ritzler........................... Executive Vice President and Secretary of Parent; Secretary of Purchaser; Executive Vice President -- Legal and General Counsel of Carmeuse North American Group since March, 1997; attorney with law firm of Seyfarth, Shaw, Fairweather & Geraldson from March, 1992 to March, 1997
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. Set forth below is the name, current business address, citizenship and the present principal occupation or employment and material occupations, positions, offices or employments for the past five years of each director and executive officer of Purchaser. The principal address of Purchaser and the current business address for each individual listed below, unless otherwise indicated, is 390 E. Joe Orr Road, Chicago Heights, Illinois 60411. Except as otherwise noted below, each such person is a citizen of the United States. Directors are identified by an asterisk.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS ---- -------------------------------------------------- Jacques A. Germay*........................... Chairman of Parent and Purchaser; Chief Executive 47 Rue de L'Abbaye Officer of Alpha, S.A. 4432 Alleur, Belgium citizen of Belgium Yves Willems*................................ Vice President of Parent and Purchaser; Managing Parc Scientifique Athena Director of Carmeuse Coordination Center, S.A.; Chief Boulevard de Lauzelle 65 Financial Officer of The Carmeuse Group; Director of 1348 Louvain-la-Neuve Nord Coil, S.A. Belgium citizen of Belgium Richard C. Kraus*............................ President and Chief Executive Officer of Parent and Purchaser; President and Chief Executive Officer of Echo Bay Mines from 1981 to April, 1997; Director of St. Mary Land and Exploration Company William S. Brown III*........................ Director of Strategic Development of Parent; Vice President of Carmeuse North America Group and Chairman of Marblehead Lime Company since July, 1998; President and Chief Executive Officer of Carmeuse North American Group from November, 1994 to July, 1998; President and Chief Executive Officer of Brown Group from July, 1991 to November, 1994 Scott A. Deininger........................... Executive Vice President of Parent; Treasurer of Purchaser; Chief Financial Officer of Carmeuse North American Group since April, 1998; Group Controller of the Carmeuse North American Group from March, 1997 to April, 1998; Region Controller of Tarmac Minerals, Inc. from March, 1996 to March, 1997; Corporate Controller of Wimpey Minerals USA, Inc. from January, 1993 to March, 1996
I-2 36
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS ---- -------------------------------------------------- Suzanne E. Ritzler........................... Executive Vice President and Secretary of Parent; Secretary of Purchaser; Executive Vice President -- Legal and General Counsel of Carmeuse North American Group since March, 1997; attorney with law firm of Seyfarth, Shaw, Fairweather & Geraldson from March, 1992 to March, 1997
3. DIRECTORS AND EXECUTIVE OFFICERS OF LVI. Set forth below is the name, current business address, citizenship and the present principal occupation or employment and material occupations, positions, offices or employments for the past five years of each director and executive officer of LVI. Unless otherwise indicated, each person identified below is employed by LVI or its subsidiaries, and has held positions of increasing responsibility at LVI or its subsidiaries, for the past five years. The principal address of LVI and, unless otherwise indicated below, the current business address for each individual listed below is Nijverheids-straat 34, P.O. Box 648, 2800 AP Gouda, The Netherlands. Directors are identified by an asterisk.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS ---- -------------------------------------------------- Dominique Collinet*.................. Chairman of LVI and The Carmeuse Group; Director of Parc Scientifique Athena Compagnie Generale Mosane, S.A., Spadel, S.A. and Banque Boulevard de Lauzelle 65 Brussels Lambert, S.A. 1348 Louvain-la-Neuve Nord Belgium citizen of Belgium J.J. de Niet......................... Managing Director of LVI and Carmeuse NA Nijverheidsstraat 34 P. O. Box 648 2800 AP Gouda The Netherlands citizen of The Netherlands
I-3 37 ANNEX A PENNSYLVANIA BUSINESS CORPORATION LAW OF 1988 CHAPTER 25 SUBCHAPTER E. CONTROL TRANSACTIONS 2541 Application and Effect of Subchapter. -- (a) General rule. -- Except as otherwise provided in this section, this subchapter shall apply to a registered corporation unless: (1) the registered corporation is one described in section 2502(1)(ii) or (2) (relating to registered corporation status): (2) the bylaws, by amendment adopted either: (i) by March 23, 1984; or (ii) on or after March 23, 1988, and on or before June 21, 1988; and, in either event, not subsequently rescinded by an article amendment, explicitly provide that this subchapter shall not be applicable to the corporation in the case of a corporation which on June 21, 1988, did not have outstanding one or more classes or series of preference shares entitled, upon the occurrence of a default in the payment of dividends or another similar contingency, to elect a majority of the members of the board of directors (a bylaw adopted on or before June 21, 1988, by a corporation excluded from the scope of this paragraph by the restriction of this paragraph relating to certain outstanding preference shares shall be ineffective unless ratified under paragraph (3)); (3) the bylaws of which explicitly provide that this subchapter shall not be applicable to the corporation by amendment ratified by the board of directors on or after December 19, 1990, and on or before March 19, 1991, in the case of a corporation: (i) which on June 21, 1988, had outstanding one or more classes or series of preference shares entitled, upon the occurrence of a default in the payment of dividends or another similar contingency, to elect a majority of the members of the board of directors; and (ii) the bylaws of which on that date contained a provision described in paragraph (2); or (4) the articles explicitly provide that this subchapter shall not be applicable to the corporation by a provision included in the original articles, by an article amendment adopted prior to the date of the control transaction and prior to or on March 23, 1988, pursuant to the procedures then applicable to the corporation, or by an article amendment adopted prior to the date of the control transaction and subsequent to March 23, 1988, pursuant to both: (i) the procedures then applicable to the corporation; and (ii) unless such proposed amendment has been approved by the board of directors of the corporation, in which event this subparagraph shall not be applicable, the affirmative vote of the shareholders entitled to cast at least 80% of the votes which all shareholders are entitled to cast thereon. A reference in the articles or bylaws to former section 910 (relating to right of shareholders to receive payment for shares following a control transaction) of the act of May 5, 1933 (P.L. 364, No. 106), known as the Business Corporation Law of 1933, shall be a reference to this subchapter for the purposes of this section. See section 101(c) (relating to references to prior statutes). (b) Inadvertent transactions. -- This subchapter shall not apply to any person or group that inadvertently becomes a controlling person or group if that controlling person or group, as soon as practicable, divests itself of a sufficient amount of its voting shares so that it is no longer a controlling person or group. (c) Certain subsidiaries. -- This subchapter shall not apply to any corporation that on December 23, 1983, was a subsidiary of any other corporation. 2542 Definitions. -- The following words and phrases when used in this subchapter shall have the meanings given to them in this section unless the context clearly indicates otherwise: "Control transaction." The acquisition by a person or group of the status of a controlling person or group. "Controlling person or group." A controlling person or group as defined in section 2543 (relating to controlling person or group). "Fair value." A value not less than the highest price paid per share by the controlling person or group at any time during the 90-day period ending on and including the date of the control transaction plus an increment representing any value, including, without limitation, any proportion of any value payable for acquisition of control of the corporation, that may not be reflected in such price. "Partial payment amount." The amount per share specified in section 2545 (c) (2) (relating to contents of notice). A-1 38 "Subsidiary." Any corporation as to which any other corporation has or has the right to acquire, directly or indirectly, through the exercise of all warrants, options and rights and the conversion of all convertible securities, whether issued or granted by the subsidiary or otherwise, voting power over voting shares of the subsidiary that would entitle the holders thereof to cast in excess of 50% of the votes that all shareholders would be entitled to cast in the election of directors of such subsidiary, except that a subsidiary will not be deemed to cease being a subsidiary as long as such corporation remains a controlling person or group within the meaning of this subchapter. "Voting shares." The term shall have the meaning specified in section 2552 (relating to definitions). 2543 Controlling Person or Group. -- (a) General rule. -- For the purpose of this subchapter, a "controlling person or group" means a person who has, or a group of persons acting in concert that has, voting power over voting shares of the registered corporation that would entitle the holders thereof to cast at least 20% of the votes that all shareholders would be entitled to cast in an election of directors of the corporation. (b) Exceptions generally. -- Notwithstanding subsection (a): (1) A person or group which would otherwise be a controlling person or group within the meaning of this section shall not be deemed a controlling person or group unless, subsequent to the later of March 23, 1988, or the date this subchapter becomes applicable to a corporation by bylaw or article amendment or otherwise, that person or group increases the percentage of outstanding voting shares of the corporation over which it has voting power to in excess of the percentage of outstanding voting shares of the corporation over which that person or group had voting power on such later date, and to at least the amount specified in subsection (a), as the result of forming or enlarging a group or acquiring, by purchase, voting power over voting shares of the corporation. (2) No person or group shall be deemed to be a controlling person or group at any particular time if voting power over any of the following voting shares is required to be counted at such time in order to meet the 20% minimum: (i) Shares which have been held continuously by a natural person since January 1, 1983, and which are held by such natural person at such time. (ii) Shares which are held at such time by any natural person or trust, estate, foundation or other similar entity to the extent the shares were acquired solely by gift, inheritance, bequest, devise or other testamentary distribution or series of these transactions, directly or indirectly, from a natural person who had acquired the shares prior to January 1, 1983. (iii) Shares which were acquired pursuant to a stock split, stock dividend, reclassification or similar recapitalization with respect to shares described under this paragraph that have been held continuously since their issuance by the corporation by the natural person or entity that acquired them from the corporation or that were acquired, directly or indirectly, from such natural person or entity, solely pursuant to a transaction or series of transactions described in subparagraph (ii), and that are held at such time by a natural person or entity described in subparagraph (ii). (iv) Control shares as defined in section 2562 (relating to definitions) which have not yet been accorded voting rights pursuant to section 2564(a) (relating to voting rights of shares acquired in a control-share acquisition). (v) Shares, the voting rights of which are attributable to a person under subsection (d) if: (A) the person acquired the option or conversion right directly from or made the contract, arrangement or understanding or has the relationship directly with the corporation; and (B) the person does not at the particular time own or otherwise effectively possess the voting rights of the shares. (vi) Shares acquired directly from the corporation or an affiliate or associate, as defined in section 2552 (relating to definitions), of the corporation by a person engaged in business as an underwriter of securities who acquires the shares through his participation in good faith in a firm commitment underwriting registered under the Securities Act of 1933. (3) In determining whether a person or group is or would be a controlling person or group at any particular time, there shall be disregarded voting power arising from a contingent right of the holders of one or more classes or series of preference shares to elect one or more members of the board of directors upon or during the continuation of a default in the payment of dividends on such shares or another similar contingency. (c) Certain record holders. -- A person shall not be a controlling person under subsection (a) if the person holds voting power, in good faith and not for the purpose of circumventing this subchapter, as an agent, bank, broker, nominee or trustee for one or more beneficial owners who do not individually or, if they are a group acting in concert, as a group have the voting power specified in subsection (a), or who are not deemed a controlling person or group under subsection (b). A-2 39 (d) Existence of voting power. -- For the purposes of this subchapter, a person has voting power over a voting share if the person has or shares, directly or indirectly, through any option, contract, arrangement, understanding, conversion right or relationship, or by acting jointly or in concert or otherwise, the power to vote, or to direct the voting of, the voting share. 2544 Right of Shareholders to Receive Payment for Shares. -- Any holder of voting shares of a registered corporation that becomes the subject of a control transaction who shall object to the transaction shall be entitled to the rights and remedies provided in this subchapter. 2545 Notice to Shareholders. -- (a) General rule. -- Prompt notice that a control transaction has occurred shall be given by the controlling person or group to: (1) Each shareholder of record of the registered corporation holding voting shares. (2) To the court, accompanied by a petition to the court praying that the fair value of the voting shares of the corporation be determined pursuant to section 2547 (relating to valuation procedures) if the court should receive pursuant to section 2547 certificates from shareholders of the corporation or an equivalent request for transfer of uncertificated securities. (b) Obligations of the corporation. -- If the controlling person or group so requests, the corporation shall, at the option of the corporation and at the expense of the person or group, either furnish a list of all such shareholders to the person or group or mail the notice to all such shareholders. (c) Contents of notice. -- The notice shall state that: (1) All shareholders are entitled to demand that they be paid the fair value of their shares. (2) The minimum value the shareholder can receive under this subchapter is the highest price paid per share by the controlling person or group within the 90-day period ending on and including the date of the control transaction, and stating that value. (3) If the shareholder believes the fair value of his shares is higher, that this subchapter provides an appraisal procedure for determining the fair value of such shares, specifying the name of the court and its address and the caption of the petition referenced in subsection (a) (2), and stating that the information is provided for the possible use by the shareholder in electing to proceed with a court-appointed appraiser under section 2547. There shall be included in, or enclosed with, the notice a copy of this subchapter. (d) Optional procedure. -- The controlling person or group may, at its option, supply with the notice referenced in subsection (c) a form for the shareholder to demand payment of the partial payment amount directly from the controlling person or group without utilizing the court-appointed appraiser procedure of section 2547, requiring the shareholder to state the number and class or series, if any, of the shares owned by him, and stating where the payment demand must be sent and the procedures to be followed. 2546 Shareholder Demand for Fair Value. -- (a) General rule. -- after the occurrence of the control transaction, any holder of voting shares of the registered corporation may, prior to or within a reasonable time after the notice required by section 2545 (relating to notice to shareholders) is given, which time period may be specified in the notice, make written demand on the controlling person or group for payment of the amount provided in subsection (c) with respect to the voting shares of the corporation held by the shareholder, and the controlling person or group shall be required to pay that amount to the shareholder pursuant to the procedures specified in section 2547 (relating to valuation procedures). (b) Contents of demand. -- The demand of the shareholder shall state the number and class or series, if any, of the shares owned by him with respect to which the demand is made. (c) Measure of value. -- A shareholder making written demand under this section shall be entitled to receive cash for each of his shares in an amount equal to the fair value of each voting share as of the date on which the control transaction occurs, taking into account all relevant factors, including an increment representing a proportion of any value payable for acquisition of control of the corporation. (d) Purchases independent of subchapter. -- The provisions of this subchapter shall not preclude a controlling person or group subject to this subchapter from offering, whether in the notice required by section 2545 or otherwise, to purchase voting shares of the corporation at a price other than that provided in subsection (c), and the provisions of this subchapter shall not preclude any shareholder from agreeing to sell his voting shares at that or any other price to any person. A-3 40 2547 Valuation Procedures. -- (a) General rule. -- If, within 45 days (or such other time period, if any, as required by applicable law) after the date of the notice required by section 2545 (relating to notice to shareholders), or, if such notice was not provided prior to the date of the written demand by the shareholder under section 2546 (relating to shareholder demand for fair value), then within 45 days (or such other time period, if any, required by applicable law) of the date of such written demand, the controlling person or group and the shareholder are unable to agree on the fair value of the shares or on a binding procedure to determine the fair value of the shares, then each shareholder who is unable to agree on both the fair value and on such a procedure with the controlling person or group and who so desires to obtain the rights and remedies provided in this subchapter shall, no later than 30 days after the expiration of the applicable 45-day or other period, surrender to the court certificates representing any of the shares that are certificated shares, duly endorsed for transfer to the controlling person or group, or cause any uncertificated shares to be transferred to the court as escrow agent under subsection (c) with a notice stating that the certificates or uncertificated shares are being surrendered or transferred, as the case may be, in connection with the petition referenced in section 2545 or, if no petition has theretofore been filed, the shareholder may file a petition within the 30-day period in the court praying that the fair value (as defined in this subchapter) of the shares be determined. (b) Effect of failure to give notice and surrender certificates. -- Any shareholder who does not so give notice and surrender any certificates or cause uncertificated shares to be transferred within such time period shall have no further right to receive, with respect to shares the certificates of which were not so surrendered or the uncertificated shares which were not so transferred under this section, payment under this subchapter from the controlling person or group with respect to the control transaction giving rise to the rights of the shareholder under this subchapter. (c) Escrow and notice. -- The court shall hold the certificates surrendered and the uncertificated shares transferred to it in escrow for, and shall promptly, following the expiration of the time period during which the certificates may be surrendered and the uncertificated shares transferred, provide a notice to the controlling person or group of the number of shares so surrendered or transferred. (d) Partial payment for shares. -- The controlling person or group shall then make a partial payment for the shares so surrendered or transferred to the court, within ten business days of receipt of the notice from the court, at a per-share price equal to the partial payment amount. The court shall then make payment as soon as practicable, but in any event within ten business days, to the shareholders who so surrender or transfer their shares to the court of the appropriate per-share amount received from the controlling person or group. (e) Appointment of appraiser. -- Upon receipt of any share certificate surrendered or uncertificated share transferred under this section, the court shall, as soon as practicable but in any event within 30 days, appoint an appraiser with experience in appraising share values of companies of like nature to the registered corporation to determine the fair value of the shares. (f) Appraisal procedure. -- The appraiser so appointed by the court shall, as soon as reasonably practicable, determine the fair value of the shares subject to its appraisal and the appropriate market rate of interest on the amount then owed by the controlling person or group to the holders of the shares. The determination of any appraiser so appointed by the court shall be final and binding on both the controlling person or group and all shareholders who so surrendered their share certificates or transferred their shares to the court, except that the determination of the appraiser shall be subject to review to the extent and within the time provided or prescribed by law in the case of other appointed judicial officers. See 42 Pa.C.S. Section 5105(a)(3) (relating to right to appellate review) and 5571(b) (relating to appeals generally). (g) Supplemental payment. -- Any amount owed, together with interest, as determined pursuant to the appraisal procedures of this section shall be payable by the controlling person or group after it is so determined and upon and concurrently with the delivery or transfer to the controlling person or group by the court (which shall make delivery of the certificate or certificates surrendered or the uncertificated shares transferred to it to the controlling person or group as soon as practicable but in any event within ten business days after the final determination of the amount owed) of the certificate or certificates representing shares surrendered or the uncertificated shares transferred to the court, and the court shall then make payment, as soon as practicable but in any event within ten business days after receipt of payment from the controlling person or group, to the A-4 41 shareholders who so surrendered or transferred their shares to the court of the appropriate per-share amount received from the controlling person or group. (h) Voting and dividend rights during appraisal proceedings. -- Shareholders who surrender their shares to the court pursuant to this section shall retain the right to vote their shares and receive dividends or other distributions thereon until the court receives payment in full for each of the shares so surrendered or transferred of the partial payment amount (and, thereafter, the controlling person or group shall be entitled to vote such shares and receive dividends or other distributions thereon). The fair value (as determined by the appraiser) of any dividends or other distributions so received by the shareholders shall be subtracted from any amount owing to such shareholders under this section. (i) Powers of the court. -- The court may appoint such agents, including the transfer agent of the corporation, or any other institution, to hold the share certificates so surrendered and the shares surrendered or transferred under this section, to effect any necessary change in record ownership of the shares after the payment by the controlling person or group to the court of the amount specified in subsection (h), to receive and disburse dividends or other distributions, to provide notices to shareholders and to take such other actions as the court determines are appropriate to effect the purposes of this subchapter. (j) Costs and expenses. -- The costs and expenses of any appraiser or other agents appointed by the court shall be assessed against the controlling person or group. The costs and expenses of any other procedure to determine fair value shall be paid as agreed to by the parties agreeing to the procedure. (k) Jurisdiction exclusive. -- The jurisdiction of the court under this subchapter is plenary and exclusive and the controlling person or group and all shareholders who so surrendered or transferred their shares to the court shall be made a party to the proceeding as in an action against their shares. (l) Duty of corporation. -- The corporation shall comply with requests for information, which may be submitted pursuant to procedures maintaining the confidentiality of the information, made by the court or the appraiser selected by the court. If any of the shares of the corporation are not represented by certificates, the transfer, escrow or retransfer of those shares contemplated by this section shall be registered by the corporation, which shall give the written notice required by section 1528(f) (relating to uncertificated shares) to the transferring shareholder, the court and the controlling shareholder or group, as appropriate in the circumstances. (m) Payment under optional procedure. -- Any amount agreed upon between the parties or determined pursuant to the procedure agreed upon between the parties shall be payable by the controlling person or group after it is agreed upon or determined and upon and concurrently with the delivery of any certificate or certificates representing such shares or the transfer of any uncertificated shares to the controlling person or group by the shareholder. (n) Title to shares. -- Upon full payment by the controlling person or group of the amount owed to the shareholder or to the court, as appropriate, the shareholder shall cease to have any interest in the shares. 2548 Coordination with Control Transaction. -- (a) General rule. -- A person or group that proposes to engage in a control transaction may comply with the requirements of this subchapter in connection with the control transaction, and the effectiveness of the rights afforded in this subchapter to shareholders may be conditioned upon the consummation of the control transaction. (b) Notice. -- The person or group shall give prompt written notice of the satisfaction of any such condition to each shareholder who has made demand as provided in this subchapter. A-5 42 Facsimile copies of the Letter of Transmittal, properly completed and duly signed, will be accepted. The Letter of Transmittal, certificates for the Shares and any other required documents should be sent by each shareholder of the Company or his broker, dealer, commercial bank, trust company or other nominee to the Depositary as follows: The Depositary for the Offer is: CONTINENTAL STOCK TRANSFER & TRUST COMPANY 2 Broadway 19th Floor New York, New York 10004 Facsimile (212) 509-5150 Questions or to confirm fax (212) 509-4000, extension 535 (Reorganization Department) Any questions or requests for assistance or additional copies of the Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery or other tender offer materials may be directed to the Dealer Manager or the Information Agent at their respective telephone numbers and addresses listed below. You may also contact your broker, dealer, commercial bank or trust company or other nominee for assistance concerning the Offer. The Information Agent for the Offer is: MORROW & CO., INC. 445 Park Avenue Fifth Floor New York, New York 10022 Banks & Brokers Call Toll-Free (800) 662-5200 All Others Call Toll-Free (800) 566-9061 The Dealer Manager for the Offer is: ING BARING FURMAN SELZ LLC 230 Park Avenue New York, New York 10169 Call Collect (212) 309-6469 A-6 EX-99.(A)(2) 3 LETTER OF TRANSMITTAL 1 EXHIBIT (A)(2) LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK OF DRAVO CORPORATION PURSUANT TO THE OFFER TO PURCHASE DATED SEPTEMBER 21, 1998 BY DLC ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF CARMEUSE LIME, INC. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, OCTOBER 19, 1998 UNLESS THE OFFER IS EXTENDED. The Depositary for the Offer is: CONTINENTAL STOCK TRANSFER & TRUST COMPANY 2 Broadway, 19th Floor New York, New York 10004 Facsimile (212) 509-5150 Questions or to confirm fax (212) 509-4000, extension 535 (Reorganization Department) DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be completed by shareholders either if certificates evidencing Shares (as defined below) are to be forwarded herewith or if delivery of Shares is to be made by book-entry transfer to the Depositary's account at Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the book-entry transfer procedure described in Section 3 of the Offer to Purchase (as defined below). Delivery of documents to the Book-Entry Transfer Facility does not constitute delivery to the Depositary. Shareholders whose certificates evidencing Shares ("Share Certificates") are not immediately available or who cannot deliver their Share Certificates and all other documents required hereby to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase) or who cannot complete the procedure for delivery by book-entry transfer on a timely basis and who wish to tender their Shares must do so pursuant to the guaranteed delivery procedure described in Section 3 of the Offer to Purchase. See Instruction 2. 2 [ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution ----------------------------------------------- Account Number -------------------------------------------------------------- Transaction Code Number ----------------------------------------------------- [ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Holder(s): -------------------------------------------- Window Ticket No. (if any): ------------------------------------------------- Date of Execution of Notice of Guaranteed Delivery: ------------------------- Name of Institution which Guaranteed Delivery: ------------------------------ If Delivered by Book-Entry Transfer, Check Box: [ ] Account Number -------------------------------------------------------------- Transaction Code Number -----------------------------------------------------
- -------------------------------------------------------------------------------- DESCRIPTION OF SHARES TENDERED - ---------------------------------------------------------------------------------------------------------------- NAME AND ADDRESS OF REGISTERED HOLDER(S) TOTAL NUMBER (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) OF SHARES NUMBER APPEAR(S) ON SHARE CERTIFICATE(S)) SHARE CERTIFICATE EVIDENCED BY OF SHARES (ATTACH ADDITIONAL LIST, IF NECESSARY) NUMBER(S)* SHARE CERTIFICATE(S)* TENDERED** - ---------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- --------------------------------------------------------------- - ---------------------------------------------------------------------------------------------------------------- * Need not be completed by shareholders delivering Shares by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share Certificate delivered to the Depositary are being tendered hereby. See Instruction 4. - ----------------------------------------------------------------------------------------------------------------
3 NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY. Ladies and Gentlemen: The undersigned hereby tenders to DLC Acquisition Corp. ("Purchaser"), a Pennsylvania corporation and wholly owned subsidiary of Carmeuse Lime, Inc. ("Parent"), a Delaware corporation and indirect subsidiary of LVI Holding N.V., the above-described shares of common stock, $1.00 par value (the "Shares"), of Dravo Corporation, a Pennsylvania corporation (the "Company"), pursuant to Purchaser's offer to purchase all outstanding Shares, at $13.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated September 21, 1998 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"). The undersigned understands that Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more direct or indirect subsidiaries of Parent, the right to purchase all or any portion of the Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve Parent or Purchaser of its obligations under this Agreement or prejudice the rights of tendering shareholders of Shares to receive payment for Shares properly tendered and accepted for payment. Subject to, and effective upon, acceptance for payment of the Shares tendered herewith, in accordance with the terms of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), the undersigned hereby sells, assigns and transfers to, or upon the order of, Purchaser all right, title and interest in and to all the Shares that are being tendered hereby and all dividends, distributions (including, without limitation, distributions of additional Shares) and rights declared, paid or distributed in respect of such Shares on or after September 15, 1998 (collectively, "Distributions"), and irrevocably appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares and all Distributions, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (i) deliver Share Certificates evidencing such Shares and all Distributions, or transfer ownership of such Shares and all Distributions on the account books maintained by the Book-Entry Transfer Facility, together, in either case, with all accompanying evidences of transfer and authenticity, to or upon the order of Purchaser, (ii) present such Shares and all Distributions for transfer on the books of the Company and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares and all Distributions, all in accordance with the terms of the Offer. The undersigned hereby irrevocably appoints Richard C. Kraus and Suzanne E. Ritzler, and each of them, as the attorneys and proxies of the undersigned, each with full power of substitution, to vote in such manner as each such attorney and proxy or his substitute shall, in his sole discretion, deem proper and otherwise act (by written consent or otherwise) with respect to all the Shares tendered hereby which have been accepted for payment by Purchaser prior to the time of such vote or other action and all Shares and other securities issued in Distributions in respect of such Shares, which the undersigned is entitled to vote at any meeting of shareholders of the Company (whether annual or special and whether or not an adjourned or postponed meeting) or consent in lieu of any such meeting or otherwise and Purchaser reserves the right to require that, in order for Shares or other securities to be deemed validly tendered, immediately upon Purchaser's acceptance for payment of such Shares Purchaser must be able to exercise full voting rights with respect to such Shares, except as otherwise limited by applicable Pennsylvania Law. This proxy and power of attorney is coupled with an interest in the Shares tendered hereby, is irrevocable and is granted in consideration of, and is effective upon, the acceptance for payment of such Shares by Purchaser in accordance with the terms of the Offer. Such acceptance for payment shall revoke all other proxies and powers of attorney granted by the undersigned at any time with respect to such Shares (and all Shares and other securities issued in Distributions in respect of such Shares), and no subsequent proxy or power of attorney shall be given or written consent executed (and if given or executed, shall not be effective) by the undersigned with respect thereto. The undersigned understands that, in order for Shares to be deemed validly tendered, immediately upon Purchaser's acceptance of such Shares for payment, Purchaser must be able to exercise full voting and 4 other rights with respect to such Shares, including, without limitation, voting at any meeting of the Company's shareholders then scheduled. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby and all Distributions, and that when such Shares are accepted for payment by Purchaser, Purchaser will acquire good, marketable and unencumbered title thereto and to all Distributions, free and clear of all liens, restrictions, charges and encumbrances, and that none of such Shares and Distributions will be subject to any adverse claim. The undersigned, upon request, shall execute and deliver all additional documents deemed by the Depositary or Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby and all Distributions. In addition, the undersigned shall remit and transfer promptly to the Depositary for the account of Purchaser all Distributions in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer, and, pending such remittance and transfer or appropriate assurance thereof, Purchaser shall be entitled to all rights and privileges as owner of each such Distribution and may withhold the entire purchase price of the Shares tendered hereby or deduct from such purchase price the amount or value of such Distribution, as determined by Purchaser in its sole discretion. No authority herein conferred or agreed to be conferred shall be affected by, and all such authority shall survive, the death or incapacity of the undersigned. All obligations of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable. The undersigned understands that tenders of Shares pursuant to any one of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute the undersigned's acceptance of the terms and conditions of the Offer. Purchaser's acceptance of such Shares for payment will constitute a binding agreement between the undersigned and Purchaser upon the terms and subject to the conditions of the Offer. Unless otherwise indicated herein in the box entitled "Special Payment Instructions," please issue the check for the purchase price of all Shares purchased, and return all Share Certificates evidencing Shares not purchased or not tendered, in the name(s) of the registered holder(s) appearing above under "Description of Shares Tendered." Similarly, unless otherwise indicated in the box entitled "Special Delivery Instructions," please mail the check for the purchase price of all Shares purchased and all Share Certificates evidencing Shares not tendered or not purchased (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing above under "Description of Shares Tendered." In the event that the boxes entitled "Special Payment Instructions" and "Special Delivery Instructions" are both completed, please issue the check for the purchase price of all Shares purchased and return all Share Certificates evidencing Shares not purchased or not tendered in the name(s) of, and mail such check and Share Certificates to, the person(s) so indicated. Unless otherwise indicated herein in the box entitled "Special Payment Instructions," please credit any Shares tendered hereby and delivered by book-entry transfer, but which are not purchased, by crediting the account at the Book-Entry Transfer Facility. The undersigned recognizes that Purchaser has no obligation, pursuant to the Special Payment Instructions, to transfer any Shares from the name of the registered holder(s) thereof if Purchaser does not purchase any of the Shares tendered hereby. 5 SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if the check for the purchase price of Shares purchased or Share Certificates evidencing Shares not tendered or not purchased are to be issued in the name of someone other than the undersigned. Issue: [ ] check [ ] Share Certificate(s) to: Name ---------------------------------------------------------------------------- (Please Print) Address ------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Include Zip Code) - -------------------------------------------------------------------------------- Taxpayer Identification or Social Security Number (See Substitute Form W-9 On Reverse Side) - -------------------------------------------------------------------------------- SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if the check for the purchase price of Shares purchased or Share Certificates evidencing Shares not tendered or not purchased are to be mailed to someone other than the undersigned, or to the undersigned at an address other than that shown under "Description of Shares Tendered." Mail: [ ] check [ ] Share Certificate(s) to: Name ---------------------------------------------------------------------------- (Please Print) Address ------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Include Zip Code) - -------------------------------------------------------------------------------- Taxpayer Identification or Social Security Number (See Substitute Form W-9 on Reverse Side) 6 IMPORTANT SHAREHOLDERS: SIGN HERE (PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Signature(s) of Holder(s) Dated: , 199 ------------------------------------------------------------------ -- (MUST BE SIGNED BY REGISTERED HOLDER(S) EXACTLY AS NAME(S) APPEAR(S) ON SHARE CERTIFICATES OR ON A SECURITY POSITION LISTING OR BY A PERSON(S) AUTHORIZED TO BECOME REGISTERED HOLDER(S) BY CERTIFICATES AND DOCUMENTS TRANSMITTED HEREWITH. IF SIGNATURE IS BY A TRUSTEE, EXECUTOR, ADMINISTRATOR, GUARDIAN, ATTORNEY-IN-FACT, OFFICER OF A CORPORATION OR OTHER PERSON ACTING IN A FIDUCIARY OR REPRESENTATIVE CAPACITY, PLEASE PROVIDE THE FOLLOWING INFORMATION. SEE INSTRUCTION 5.) NAME(S): ----------------------------------------------------------------------- - -------------------------------------------------------------------------------- (PLEASE PRINT) CAPACITY (FULL TITLE): --------------------------------------------------------- ADDRESS: ----------------------------------------------------------------------- - -------------------------------------------------------------------------------- (INCLUDE ZIP CODE) AREA CODE AND TELEPHONE NO.: ---------------------------------------------- TAX IDENTIFICATION OR SOCIAL SECURITY NO.: ---------------------------------- - -------------------------------------------------------------------------------- (SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE) GUARANTEE OF SIGNATURE(S) (IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5) FOR USE BY FINANCIAL INSTITUTIONS ONLY. PLACE MEDALLION GUARANTEE IN SPACE BELOW. Name: -------------------------------------------------------------------------- (Please Print) Name of Firm: ------------------------------------------------------------------ Address: ----------------------------------------------------------------------- (Include Zip Code) Area Code and Telephone No.: --------------------------------------------------- Dated: ------------------------------------------------------------------------- 7 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by a financial institution (including most banks, savings and loans associations and brokerage houses) that is a participant in the Securities Transfer Association Medallion Program or the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (each an "Eligible Institution"). No signature guarantee is required on this Letter of Transmittal (a) if this Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this document, shall include any participant in the Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Shares) of Shares tendered herewith, unless such holder(s) has completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" on the reverse hereof, or (b) if such Shares are tendered for the account of an Eligible Institution. See Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter of Transmittal is to be used either if Share Certificates are to be forwarded herewith or if Shares are to be delivered by book-entry transfer pursuant to the procedure set forth in Section 3 of the Offer to Purchase. Share Certificates evidencing all physically tendered Shares, or a confirmation of a book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility of all Shares delivered by book-entry transfer as well as a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the reverse hereof prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase). If Share Certificates are forwarded to the Depositary in multiple deliveries, a properly completed and duly executed Letter of Transmittal must accompany each such delivery. Shareholders whose Share Certificates are not immediately available, who cannot deliver their Share Certificates and all other required documents to the Depositary prior to the Expiration Date or who cannot complete the procedure for delivery by book-entry transfer on a timely basis may tender their Shares pursuant to the guaranteed delivery procedure described in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by Purchaser, must be received by the Depositary prior to the Expiration Date; and (iii) the Share Certificates evidencing all physically delivered Shares in proper form for transfer by delivery, or a confirmation of a book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility of all Shares delivered by book-entry transfer, in each case together with a Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, and any other documents required by this Letter of Transmittal, must be received by the Depositary within three New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery, all as described in Section 3 of the Offer to Purchase. THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER, 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. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. By execution of this Letter of Transmittal (or a facsimile hereof), all tendering shareholders waive any right to receive any notice of the acceptance of their Shares for payment. 3. INADEQUATE SPACE. If the space provided herein under "Description of Shares Tendered" is inadequate, the Share Certificate numbers, the number of Shares evidenced by such Share Certificates and the number of Shares tendered should be listed on a separate schedule and attached hereto. 8 4. PARTIAL TENDERS (NOT APPLICABLE TO SHAREHOLDERS WHO TENDER BY BOOK-ENTRY TRANSFER). If fewer than all the Shares evidenced by any Share Certificate delivered to the Depositary herewith are to be tendered hereby, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered." In such cases, new Share Certificate(s) evidencing the remainder of the Shares that were evidenced by the Share Certificates delivered to the Depositary herewith will be sent to the person(s) signing this Letter of Transmittal, unless otherwise provided in the box entitled "Special Delivery Instructions" on the reverse hereof, as soon as practicable after the expiration or termination of the Offer. All Shares evidenced by Share Certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the Share Certificates evidencing such Shares without alteration, enlargement or any other change whatsoever. If any Share tendered hereby is owned of record by two or more persons, all such persons must sign this Letter of Transmittal. If any of the Shares tendered hereby are registered in the names of different holders, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of such Shares. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, no endorsements of Share Certificates or separate stock powers are required, unless payment is to be made to, or Share Certificates evidencing Shares not tendered or not purchased are to be issued in the name of, a person other than the registered holder(s), in which case, the Share Certificate(s) evidencing the Shares tendered hereby must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on such Share Certificate(s). Signatures on such Share Certificate(s) and stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares tendered hereby, the Share Certificate(s) evidencing the Shares tendered hereby must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on such Share Certificate(s). Signatures on such Share Certificate(s) and stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal or any Share Certificate or stock power is signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to Purchaser of such person's authority so to act must be submitted. 6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction 6, Purchaser will pay all stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price of any Shares purchased is to be made to, or Share Certificate(s) evidencing Shares not tendered or not purchased are to be issued in the name of, a person other than the registered holder(s), the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person or otherwise) payable on account of the transfer to such other person will be deducted from the purchase price of such Shares purchased, unless evidence satisfactory to Purchaser of the payment of such taxes, or exemption therefrom, is submitted. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Share Certificates evidencing the Shares tendered hereby. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase price of any Shares tendered hereby is to be issued, or Share Certificate(s) evidencing Shares not tendered or not purchased are to be issued, in the name of a person other than the person(s) signing this Letter of Transmittal or if such check or any such Share Certificate is to be sent to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal but at an address other than that shown in the box 9 entitled "Description of Shares Tendered" on the reverse hereof, the appropriate boxes on the reverse of this Letter of Transmittal must be completed. 8. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for assistance may be directed to the Information Agent at its address or telephone number set forth below. Additional copies of the Offer to Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may be obtained from the Information Agent or from brokers, dealers, commercial banks or trust companies. 9. TAX IDENTIFICATION NUMBER. Federal income tax law generally requires that a holder tendering Shares pursuant to the Offer must provide the Depositary with his correct Taxpayer Identification Number ("TIN"), which, in the case of a holder who is an individual, is his social security number. If the Depositary is not provided with the correct TIN or an adequate basis for an exemption, such holder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, backup withholding at the rate of 31% may be imposed upon the gross proceeds resulting from the Offer. If such withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. To prevent backup withholding, each tendering holder must provide his correct TIN by completing the "Substitute Form W-9" set forth herein, which requires a holder to certify that the TIN provided is correct (or that such holder is awaiting a TIN) and that (i) the holder has not been notified by the Internal Revenue Service that he is subject to backup withholding as a result of a failure to report all interest or dividends or (ii) the Internal Revenue Service has notified the holder that he is no longer subject to backup withholding. Exempt holders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. To prevent possible erroneous backup withholding, an exempt holder should enter its correct TIN in Part 1 of Substitute Form W-9, write "Exempt" on the face of the form, and sign and date the form. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for additional instructions. In order for a nonresident alien or foreign entity to qualify as exempt, such person must submit a completed Form W-8, "Certificate of Foreign Status." Such forms may be obtained from the Depositary. If the Shares are held in more than one name or are not in the same name of the actual owner, consult the W-9 Guidelines for information on which TIN to report. If you do not have a TIN, consult the W-9 Guidelines for instructions on applying for a TIN, write "Applied For" in the space for the TIN in Part 1 of the Substitute Form W-9, and sign and date the Substitute Form W-9 and the Certificate of Awaiting Taxpayer Identification Number set forth herein. If you do not provide your TIN to the Depositary within 60 days, backup withholding will begin and continue until you furnish your TIN to the Depositary. NOTE: WRITING "APPLIED FOR" ON THE FORM MEANS THAT YOU HAVE ALREADY APPLIED FOR A TIN OR THAT YOU INTEND TO APPLY FOR ONE IN THE NEAR FUTURE. 10. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate(s) representing Shares has been lost, destroyed or stolen, the Shareholder should promptly notify the Depositary. The Shareholder will then be instructed as to the steps that must be taken in order to replace the certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed certificates have been followed. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE). 10 TO BE COMPLETED BY ALL TENDERING REGISTERED HOLDERS OF SECURITIES SUBSTITUTE FORM W-9 PAYOR'S NAME: CONTINENTAL STOCK TRANSFER & TRUST COMPANY - ----------------------------------------------------------------------------------------------------------------------- SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT -------------------------------------- FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW: Social Security Number DEPARTMENT OF THE OR TREASURY ---------------------------------- INTERNAL REVENUE Employer Identification Number SERVICE ---------------------------------------------------------------------------------------------- Payor's Request for PART 2--FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING (See Instructions) Taxpayer Identification Number (TIN) - ----------------------------------------------------------------------------------------------------------------------- PART 3-CERTIFICATION--Under penalties of perjury, I certify that (1) The number shown on this form is my correct TIN (or I am waiting for a number to be issued to me), and (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends or (c) the IRS has notified me that I am no longer subject to backup withholding. - ----------------------------------------------------------------------------------------------------------------------- SIGNATURE __________________________________________________ DATE ________________________________ You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest or dividends on your tax return. - -----------------------------------------------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN PART 1 OF SUBSTITUTE FORM W-9 CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and that I mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office (or I intend to mail or deliver an application in the near future). I understand that if I do not provide a taxpayer identification number to the Payor within 60 days, the Payor is required to withhold 31 percent of all cash payments made to me thereafter until I provide a number. SIGNATURE _____________________________________ DATE ________________________ NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31 PERCENT OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE OFFER TO PURCHASE. 11 Please review the enclosed guidelines for certification of Taxpayer Identification Number on substitute Form W-9 for additional details. The Information Agent for the Offer is: MORROW & CO., INC. 445 Park Avenue, 5th Floor New York, New York 10022 Banks & Brokers Call Toll-Free 800-662-5200 All Others Call Toll Free 800-223-2064 The Dealer Manager for the Offer is: ING BARING FURMAN SELZ LLC 230 Park Avenue New York, New York 10169 Call Collect (212) 309-6469 September 21, 1998 EX-99.(A)(3) 4 NOTICE OF GUARANTEED 1 EXHIBIT (A)(3) NOTICE OF GUARANTEED DELIVERY FOR TENDER SHARES OF COMMON STOCK OF DRAVO CORPORATION BY DLC ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF CARMEUSE LIME, INC. (NOT TO BE USED FOR SIGNATURE GUARANTEES) This Notice of Guaranteed Delivery, or one substantially in the form hereof, must be used to accept the Offer (as defined below) (i) if certificates ("Share Certificates") evidencing shares of common stock, $1.00 par value (the "Shares"), of Dravo Corporation, a Pennsylvania corporation (the "Company"), are not immediately available, (ii) if Share Certificates and all other required documents cannot be delivered to Continental Stock Transfer & Trust Company, as Depositary (the "Depositary"), prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase (as defined below)) or (iii) if the procedure for delivery by book-entry transfer cannot be completed on a timely basis. This Notice of Guaranteed Delivery may be delivered by hand or mail or transmitted by telegram or facsimile transmission to the Depositary. See Section 3 of the Offer to Purchase. The Depositary for the Offer is: CONTINENTAL STOCK TRANSFER & TRUST COMPANY 2 Broadway 19th Floor New York, New York 10004 Facsimile (212) 509-5150 Questions or to confirm fax (212) 509-4000, extension 535 (Reorganization Department) DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL. The Guarantee on the reverse side must be completed. 2 Ladies and Gentlemen: The undersigned hereby tenders to DLC Acquisition Corp., a Pennsylvania corporation and wholly owned subsidiary of Carmeuse Lime, Inc., a Delaware corporation and indirect subsidiary of LVI Holding N.V., a Dutch corporation, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated September 21, 1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"), receipt of each of which is hereby acknowledged, the number of Shares specified below pursuant to the guaranteed delivery procedures described in Section 3 of the Offer to Purchase. Number of Shares: --------------------------------------------------------------- Certificate Nos. (if available): - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (Check box if Shares will be tendered by book-entry transfer) [ ] Account Number: ----------------------------------------------------------------- Dated: -------------------------------------------------------------------------- Name(s) of Record Holder(s): - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Please Print Address(es): -------------------------------------------------------------------- - -------------------------------------------------------------------------------- Zip Code Company Area Code and Tel. No.: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Area Code and Tel. No.: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Signature(s) - -------------------------------------------------------------------------------- GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a participant in the Securities Transfer Association Medallion Program or the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program, hereby guarantees to deliver to the Depositary either the certificates representing the Shares tendered hereby, in proper form for transfer, or a Book-Entry Confirmation (as defined in Section 2 of the Offer to Purchase) of a transfer of such Shares, in any such case together with a properly completed and duly executed Letter of Transmittal, or a manually signed facsimile thereof, with any required signature guarantees, and any other documents required by the Letter of Transmittal within three New York Stock Exchange trading days after the date hereof. The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal and certificates for Shares to the Depositary within the time period shown herein. Failure to do so could result in financial loss to such Eligible Institution. Name of Firm: ------------------------------------- ----------------------------------------------------- Authorized Signature Address: -------------------------------------------- Title: ----------------------------------------------- - ----------------------------------------------------- Zip Code Area Code and Tel. No.: -------------------------- Date: -----------------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.(A)(4) 5 BROKER/DEALER LETTER 1 EXHIBIT (A)(4) [LOGO] ING BARING FURMAN SELZ LLC 230 PARK AVENUE NEW YORK, NEW YORK 10169 CALL COLLECT (212) 309-6469 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF DRAVO CORPORATION AT $13.00 NET PER SHARE BY DLC ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF CARMEUSE LIME, INC. - -------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, OCTOBER 19, 1998, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- To Brokers, Dealers, Commercial Banks, September 21, 1998 Trust Companies and Other Nominees: We have been appointed by DLC Acquisition Corp. ("Purchaser"), a Pennsylvania corporation and wholly owned subsidiary of Carmeuse Lime, Inc., a Delaware corporation and indirect subsidiary of LVI Holding N.V., a Dutch corporation, to act as Dealer Manager in connection with Purchaser's offer to purchase all outstanding shares of common stock, $1.00 par value (the "Shares"), of Dravo Corporation, a Pennsylvania corporation (the "Company"), at a price of $13.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in Purchaser's Offer to Purchase, dated September 21, 1998 (the "Offer to Purchase"), and the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer") enclosed herewith. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares registered in your name or in the name of your nominee. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the Offer a number of Shares which constitutes a majority of the Shares outstanding on a fully diluted basis. The Offer is also subject to other terms and conditions. See Section 14 of the Offer to Purchase. Enclosed for your information and use are copies of the following documents: 1. Offer to Purchase, dated September 21, 1998; 2. Letter of Transmittal to be used by holders of Shares in accepting the Offer and tendering Shares; 3. Notice of Guaranteed Delivery to be used to accept the Offer if the Shares and all other required documents are not immediately available or cannot be delivered to Continental Stock Transfer & Trust Company as depositary (the "Depositary"), by the Expiration Date (as defined in the Offer to Purchase) or if the procedure for book-entry transfer cannot be completed by the Expiration Date; 2 4. A letter to shareholders of the Company from Arthur E. Byrnes, Chairman of the Board of the Company, and Carl A. Gilbert, President and Chief Executive Officer of the Company, together with a Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Securities and Exchange Commission by the Company; 5. A letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; 6. Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9; and 7. Return envelope addressed to the Depositary. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, OCTOBER 19, 1998, UNLESS THE OFFER IS EXTENDED. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of certificates evidencing such Shares (or a confirmation of a book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility (as defined in the Offer to Purchase)), a Letter of Transmittal (or facsimile thereof) properly completed and duly executed and any other required documents in accordance with the instructions contained in the Letter of Transmittal. If a holder of Shares wishes to tender Shares, but cannot deliver such holder's certificates or other required documents, or cannot comply with the procedure for book-entry transfer, prior to the expiration of the Offer, a tender of Shares may be effected by following the guaranteed delivery procedure described in Section 3 of the Offer to Purchase. Purchaser will not pay any fees or commissions to any broker, dealer or other person (other than the Dealer Manager, the Depositary and the Information Agent as described in the Offer) in connection with the solicitation of tenders of Shares pursuant to the Offer. However, Purchaser will reimburse you for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to your clients. Purchaser will pay or cause to be paid any stock transfer taxes payable with respect to the transfer of Shares to it, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Any inquiries you may have with respect to the Offer should be addressed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers as set forth on the back cover page of the Offer to Purchase. Requests for copies of the enclosed materials may be directed to the Information Agent. Very truly yours, ING Baring Furman Selz LLC NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF PARENT, PURCHASER, THE COMPANY, THE INFORMATION AGENT, THE DEALER MANAGER OR THE DEPOSITARY, OR OF ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. EX-99.(A)(5) 6 CLIENT LETTER 1 EXHIBIT (A)(5) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF DRAVO CORPORATION AT $13.00 NET PER SHARE BY DLC ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF CARMEUSE LIME, INC. - -------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, OCTOBER 19, 1998, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- September 21, 1998 To Our Clients: Enclosed for your consideration is an Offer to Purchase, dated September 21, 1998 (the "Offer to Purchase"), and a related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer") in connection with the Offer by DLC Acquisition Corp. ("Purchaser"), a Pennsylvania corporation and wholly owned subsidiary of Carmeuse Lime, Inc. ("Parent"), a Delaware corporation and indirect subsidiary of LVI Holding N.V., a Dutch corporation, to purchase all outstanding shares of common stock, $1.00 par value (the "Shares"), of Dravo Corporation, a Pennsylvania corporation (the "Company"), at a price of $13.00 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer. We are the holder of record of Shares held by us for your account. A tender of such shares can be made only by us as the holder of record and pursuant to your instructions. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Shares held by us for your account. We request instructions as to whether you wish to have us tender on your behalf any or all of the Shares held by us for your account, upon the terms and subject to the conditions set forth in the Offer. Your attention is invited to the following: 1. The tender price is $13.00 per Share, net to the seller in cash. 2. The Offer is being made for all outstanding Shares. 3. The Board of Directors of the Company unanimously has determined that each of the Offer and the Merger (as defined in the Offer to Purchase) is fair to, and in the best interests of, the shareholders of the Company, and recommends that shareholders accept the Offer and tender their Shares pursuant to the Offer. 4. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City Time, on Monday, October 19, 1998, unless the Offer is extended. 5. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the expiration of the Offer such number of Shares which constitutes at least a majority of the 2 Shares outstanding on a fully diluted basis and of the voting power of the Company's outstanding voting securities entitled to vote on the Merger (the "Minimum Condition"). Although under the terms of the Merger Agreement (as defined in the Offer to Purchase) Parent and Purchaser may waive the Minimum Condition, they do not currently intend to do so, and Parent and Purchaser may terminate the Merger Agreement if the Minimum Condition is not satisfied. The Offer is also subject to other terms and conditions. See Section 14 of the Offer to Purchase. 6. Tendering shareholders 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, federal income tax backup withholding at the rate of 31% may be imposed on the gross proceeds resulting from the Offer, unless an exemption is provided or unless the required taxpayer identification information is provided. See Instruction 9 to the Letter of Transmittal. 7. Notwithstanding any other provision of the Offer, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by Continental Stock Transfer & Trust Company, as Depositary (the "Depositary"), of (a) certificates for Shares pursuant to the procedures set forth in Section 3 of the Offer to Purchase or timely Book-Entry Confirmation (as defined in the Offer to Purchase) with respect to such Shares; (b) the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, with any required signature guarantees; and (c) any other documents required by the Letter of Transmittal. Accordingly, payment may not be made to all tendering shareholders at the same time depending upon when certificates representing Shares or confirmations for book-entry transfer of such Shares into the Depositary's account are actually received by the Depositary. If you wish to have us tender any or all of your Shares, please so instruct us by completing, executing and returning to us the instruction form contained in this letter. An envelope in which to return your instructions to us is enclosed. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified in your instructions. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER. The Offer is made solely by the Offer to Purchase and the related Letter of Transmittal and is being made to all holders of Shares. Purchaser is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If 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 such state statute. If, after such good faith effort, Purchaser cannot comply with such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by ING Baring Furman Selz LLC or by one or more registered brokers or dealers licensed under the laws of such jurisdiction. 3 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF DRAVO CORPORATION The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated September 21, 1998, and the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"), in connection with the offer by DLC Acquisition Corp., a Pennsylvania corporation and wholly owned subsidiary of Carmeuse Lime, Inc., a Delaware corporation and indirect subsidiary of LVI Holding N.V., a Dutch corporation, to purchase all outstanding shares of common stock, $1.00 par value (the "Shares"), of Dravo Corporation, a Pennsylvania corporation. This will instruct you to instruct your nominee to tender the number of Shares indicated below (or, if no number is indicated below, all Shares) that are held for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. - -------------------------------------------------------------------------------- NUMBER OF SHARES TO BE TENDERED: Dated: ________________, 199_ - -------------------------------------------------------------------------------- SIGN HERE: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SIGNATURE(S) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- PLEASE TYPE OR PRINT NAME(S) PLEASE TYPE OR PRINT ADDRESS ------------------------------------------------- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- AREA CODE AND TELEPHONE NUMBER ----------------------------------------------- - -------------------------------------------------------------------------------- TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER - -------------------------------------------------------------------------------- - --------------- * Unless otherwise indicated, it will be assumed that all Shares held by us for your account are to be tendered. EX-99.(A)(6) 7 FORM W-9 1 EXHIBIT (A)(6) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYOR.--Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payor. - ------------------------------------------------------------ GIVE THE SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - ------------------------------------------------------------ 1. An individual's account The individual 2. Two or more individuals (joint The actual owner of account) the account or, if combined funds, the first individual on the account (1) 3. Custodian account of a minor The minor (2) (Uniform Gift to Minors Act) 4a. The usual revocable savings trust The grantor-trustee account (grantor is also trustee) (1) b. So-called trust account that is The actual owner not a legal or valid trust under (1) State Law 5. Sole proprietorship account The owner (3) - ------------------------------------------------------------ - ------------------------------------------------------------ GIVE THE EMPLOYER IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - ------------------------------------------------------------ 6. Sole Proprietorship Account The owner (3) 7. A valid trust, estate, or pension The legal entity trust (Do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title) (4) 8. Corporate account The corporation 9. Association, club, religious, The organization charitable, educational or other tax-exempt organization 10. Partnership account The partnership 11. A broker or registered nominee The broker or nominee 12. Account with the Department of The public entity Agriculture in the name of a public entity (such as a State or local government, school district or prison) that receives agricultural program payments - ------------------------------------------------------------ (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Show your individual name, but you may also enter your business or "doing business as" name. You may use either your social security number or employer identification number (if you have one). (4) List first and circle the name of the valid trust, estate, or pension trust. NOTE: If no name is circled when there is more than one name listed, the number will be considered to be that of the first name listed. 2 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER (TIN) ON SUBSTITUTE FORM W-9 (SECTION REFERENCES ARE TO THE INTERNAL REVENUE CODE) PAGE 2 NAME If you are an individual, generally provide the name shown on your social security card. However, if you have changed your last name, for instance, due to marriage, without informing the Social Security Administration of the name change, please enter your first name and both the last name shown on your social security card and your new last name. OBTAINING A NUMBER If you don't have a taxpayer identification number ("TIN"), apply for one immediately. To apply, obtain Form SS-5, Application for a Social Security Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service (the "IRS"). PAYEES AND PAYMENTS EXEMPT FROM BACKUP WITHHOLDING The following is a list of payees exempt from backup withholding and for which no information reporting is required. For interest and dividends, all listed payees are exempt except item (9). For broker transactions, payees listed in (1) through (13), and a person registered under the Investment Advisors Act of 1940 who regularly acts as a broker are exempt. Payments subject to reporting under sections 6041 and 6041A are generally exempt from backup withholding only if made to payees described in items (1) through (7), except that a corporation that provides medical and health care services or bills and collects payments for such services is not exempt from backup withholding or information reporting. (1) A corporation. (2) An organization exempt from tax under section 501(a), or an individual retirement plan ("IRA"), or a custodial account under section 403(b)(7) if the account satisfies the requirements of section 401(f)(2). (3) The United States or any of its agencies or instrumentalities. (4) A state, the District of Columbia, a possession of the United States, or any of their political subdivisions or instrumentalities. (5) A foreign government or any of its political subdivisions, agencies or instrumentalities. (6) An international organization or any of its agencies or instrumentalities. (7) A foreign central bank of issue. (8) A dealer in securities or commodities required to register in the U.S., the District of Columbia, or a possession of the U.S. (9) A futures commission merchant registered with the Commodity Futures Trading Commission. (10) A real estate investment trust. (11) An entity registered at all times during the tax year under the Investment Company Act of 1940. (12) A common trust fund operated by a bank under section 584(a). (13) A financial institution. (14) A middleman known in the investment community as a nominee or listed in the most recent publication of the American Society of Corporate Secretaries, Inc. Nominee List. (15) A trust exempt from tax under Section 664 or described in section 4947. Payments of dividends that generally are exempt from backup withholding also include the following: - - Payments to nonresident aliens subject to withholding under section 1441. - - Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident alien partner. - - Payments made by certain foreign organizations. Payments of interest that generally are exempt from backup withholding include the following: - - Payments of interest on obligations issued by individuals. NOTE: YOU MAY BE SUBJECT TO BACKUP WITHHOLDING IF THIS INTEREST IS $600 OR MORE AND IS PAID IN THE COURSE OF THE PAYOR'S TRADE OR BUSINESS AND YOU HAVE NOT PROVIDED YOUR CORRECT TIN TO THE PAYOR. - - Payments of tax-exempt interest (including exempt-interest dividends under section 852). - - Payments described in section 6049(b)(5) to nonresident aliens. - - Payments on tax-free covenant bonds under section 1451. - - Payments made by certain foreign organizations. - - Mortgage interest paid to you. Payments that are not subject to information reporting are also not subject to backup withholding. For details, see sections 6041, 6041A(a), 6042, 6044, 6045, 6049, 6050A, and 6050N, and the regulations under those sections. PRIVACY ACT NOTICE.--Section 6109 requires you to furnish your correct TIN to persons who must file information returns with the IRS to report interest, dividends, and certain other income paid to you, mortgage interest you paid, the acquisition or abandonment of secured property, cancellation of debt or contributions you made to an IRA. The IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. You must provide your TIN whether or not you are required to file a tax return. Payors must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a TIN to a payor. Certain penalties may also apply. PENALTIES (1) FAILURE TO FURNISH TIN--If you fail to furnish your correct TIN to a payor, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you make a false statement with no reasonable basis that results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Willfully falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE IRS EX-99.(A)(7) 8 TENDER OFFER INSTRUCTIONS 1 EXHIBIT (A)(7) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF DRAVO CORPORATION AT $13.00 NET PER SHARE BY DLC ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF CARMEUSE LIME, INC. - -------------------------------------------------------------------------------- THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, OCTOBER 19, 1998, UNLESS THE OFFER IS EXTENDED. - -------------------------------------------------------------------------------- RE: TENDER OFFER INSTRUCTIONS FOR PARTICIPANTS OF DRAVO CORPORATION DIVIDEND REINVESTMENT PLAN Dear Dividend Reinvestment Plan Participant: As a participant in the Plan, we are requesting instructions on the shares of common stock of Dravo Corporation allocated to your account. In order for you to direct the tender of these shares you must give your tender instructions to Continental Stock Transfer & Trust Company, which is acting as Depositary for the Offer to Purchase Dravo Corporation common stock by DLC Acquisition Corp. ("Purchaser"), a wholly owned subsidiary of Carmeuse Lime, Inc. ("Parent"). Dravo Corporation, Purchaser and Parent have entered into a Merger Agreement. Under the terms of the agreement, Purchaser is offering to purchase for cash all of the shares of Dravo Corporation common stock at $13.00 per share. To tender shares held in the Plan, please complete the enclosed Instruction Card and mail it in the return envelope provided or fax it to Continental Stock Transfer & Trust Company at (212) 509-5150. If you have any questions, or require additional assistance, please call Morrow & Co., Inc., the Information Agent, at (800) 223-2064. INSTRUCTION CARD RE: DRAVO CORPORATION DIVIDEND REINVESTMENT PLAN To Continental Stock Transfer & Trust Company as Depositary for the Offer to Purchase all of the Shares of Dravo Corporation Common Stock: I am a participant in the above-stated Plan and, as such, I received a copy of the Offer to Purchase, dated September 21, 1998, made by DLC Acquisition Corp., a wholly owned subsidiary of Carmeuse Lime, Inc., and the related Letter of Transmittal, under which all of the shares of common stock of Dravo Corporation are to be purchased at $13.00 per share for cash. I wish to direct you to instruct Continental Stock Transfer & Trust Company, the Dividend Reinvestment Agent for Dravo Corporation, to tender all common shares held by the Dividend Reinvestment Agent for my account. -------------------------------------- (SIGNATURE OF PARTICIPANT) -------------------------------------- PLEASE TYPE OR PRINT NAME(S) -------------------------------------- (SIGNATURE OF PARTICIPANT) -------------------------------------- PLEASE TYPE OR PRINT NAME(S) PLEASE TYPE OR PRINT ADDRESS -------------------------------------- -------------------------------------- AREA CODE AND TELEPHONE NUMBER -------------------------------------- -------------------------------------- (DATE) IF SHARES ARE HELD IN JOINT NAMES, EACH CO-OWNER MUST SIGN. PLEASE COMPLETE THE SUBSTITUTE W-9 2 TO BE COMPLETED BY ALL TENDERING REGISTERED HOLDERS OF SECURITIES SUBSTITUTE FORM W-9 PAYOR'S NAME: CONTINENTAL STOCK TRANSFER & TRUST COMPANY - ----------------------------------------------------------------------------------------------------------------------- SUBSTITUTE PART 1--PLEASE PROVIDE YOUR TIN IN THE BOX AT -------------------------------------- FORM W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW: Social Security Number DEPARTMENT OF THE OR TREASURY -------------------------------------- INTERNAL REVENUE Employer Identification Number SERVICE ---------------------------------------------------------------------------------------------- Payor's Request for PART 2--FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING (See Instructions) Taxpayer Identification Number (TIN) - ----------------------------------------------------------------------------------------------------------------------- PART 3-CERTIFICATION--Under penalties of perjury, I certify that (1) The number shown on this form is my correct TIN (or I am waiting for a number to be issued to me), and (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends or (c) the IRS has notified me that I am no longer subject to backup withholding. - ----------------------------------------------------------------------------------------------------------------------- SIGNATURE ______________________________________________________ DATE ____________________________ You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because you have failed to report all interest or dividends on your tax return. - -----------------------------------------------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN PART 1 OF SUBSTITUTE FORM W-9 CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and that I mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office (or I intend to mail or deliver an application in the near future). I understand that if I do not provide a taxpayer identification number to the Payor within 60 days, the Payor is required to withhold 31 percent of all cash payments made to me thereafter until I provide a number. SIGNATURE ______________________________________ DATE ________________________ NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31 PERCENT OF ANY CASH PAYMENTS MADE TO YOU PURSUANT TO THE OFFER TO PURCHASE. EX-99.(A)(8) 9 JOINT PRESS RELEASE 1 EXHIBIT (A)(8) JOINT PRESS RELEASE Pittsburgh, PA and Chicago, IL, September 15 -- Dravo Corporation (NYSE:DRV), Carmeuse Lime, Inc., and Lafarge S.A. today jointly announced agreement on a merger between Dravo Corporation and Carmeuse Lime, Inc. Under the merger agreement, the acquiring company, DLC Acquisition Corp., a wholly- owned subsidiary of Carmeuse Lime, Inc., will make a cash tender offer for all of the outstanding common stock of Dravo at a price of $13.00 per share. The Boards of Directors of Carmeuse and Dravo have unanimously approved the transaction, and Dravo's Board has recommended that their shareholders tender to the offer. Under the terms of the agreement, DLC Acquisition Corp. will commence its tender offer for Dravo's common stock within the next five business days. Consummation of the offer is subject to a number of conditions, including the condition that at least a majority of Dravo's outstanding common shares, on a fully-diluted basis, be tendered into the offer, and the condition that Hart-Scott-Rodino and other regulatory approvals be obtained. The agreement provides for the payment of a $9.5 million topping fee in the event Dravo consummates a transaction with a third party. Upon consummation of the recently announced North American lime joint venture between the Carmeuse North American group and Lafarge Lime, a division of Lafarge S.A., which is anticipated during the fourth quarter of 1998, the Dravo business would become part of the joint venture. Consummation of the offer for Dravo is not subject to the timing or the consummation of the joint venture between Carmeuse and Lafarge. Commenting on the agreement, Arthur E. Byrnes, chairman of Dravo, said, "After comprehensive review, we have concluded that this transaction provides our shareholders with a liquidity opportunity at a substantial premium to the current market price." Carl A. Gilbert, president and chief executive officer of Dravo, added "From a business standpoint, combining with Carmeuse Lime will make us part of a larger, growth-oriented company. To that extent we will have achieved the central objective of our strategic plan -- that of bringing about a significant increase in the critical mass of our business. Such an outcome would represent a win-win for our shareholders, our customers and our employees." Jacques Germay, chairman of the Carmeuse North American group, and Alain Crouy, chief executive officer of Lafarge Aluminates, Lime and Admixtures, jointly stated that, "The transaction between Carmeuse Lime and Dravo, together with the anticipated joint venture between Carmeuse and Lafarge, will create a strong company by combining the resources of Carmeuse, Lafarge and Dravo to better serve the needs of the marketplace." Based in Pittsburgh, Dravo is the largest publicly owned company in the U.S. lime industry, operating 3.4 million tons of annual capacity. Based in Chicago, Illinois, Carmeuse Lime, Inc. is a privately held North American company and part of the Carmeuse North American group. The Carmeuse North American group, which includes eight lime plants in the U.S. and Canada, has approximately 3 million tons of annual production capacity. Lafarge Lime has approximately 800,000 tons of annual lime production capacity in the North American market. Carmeuse, a Belgian group, was founded in 1860. It posts annual revenues of more than US $500 million in lime, dolomite and limestone; employs 3,000 people at more than 50 plants in Europe, North America, and Mexico; and is committed to a strategy of strong international development in its markets. World leader in construction materials, Lafarge S.A. holds a top-ranking position in all five of its core businesses: cement, concrete and aggregates, roofing, gypsum, and specialty products. Active in 60 countries, Lafarge employs nearly 65,000 people, generating sales of US $10 billion. For further information, contact Earl J. Bellisario, senior vice president and chief financial officer of Dravo Corporation, at 412-995-5585; Jacques Germay, chairman of Carmeuse North America, at 011-32-10-48-16-00; Richard Kraus, president of Carmeuse North America, at 708-757-1258, or Yves Romesoan, director of external relations for Lafarge Group at 011-33-1-44-34-11-02. EX-99.(A)(9) 10 FORM OF SUMMARY ADVERTISEMENT 1 EXHIBIT (a)(9) This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares. The Offer is made solely by the Offer to Purchase dated September 21, 1998 and the related Letter of Transmittal, and is being made to all holders of Shares. Purchaser is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If 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 such state statute. If, after such good faith effort, Purchaser cannot comply with such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by ING Baring Furman Selz LLC ("Dealer-Manager") or one or more registered brokers or dealers licensed under the laws of such jurisdiction. NOTICE OF OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF DRAVO CORPORATION AT $13.00 NET PER SHARE BY DLC ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF CARMEUSE LIME, INC. DLC Acquisition Corp., a Pennsylvania corporation ("Purchaser"), and a wholly owned subsidiary of Carmeuse Lime, Inc., a Delaware corporation ("Parent"), is offering to purchase all outstanding shares of common stock, par value $1.00 per share (the "Shares"), of Dravo Corporation, a Pennsylvania corporation (the "Company"), at a price of $13.00 net per Share, in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated September 21, 1998 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, as amended from time to time, together constitute the "Offer"). Following the Offer, Purchaser intends to effect the Merger as described below. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, OCTOBER 19, 1998, UNLESS THE OFFER IS EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER SUCH NUMBER OF SHARES WHICH CONSTITUTES AT LEAST A MAJORITY OF THE ACTUAL SHARES OUTSTANDING ON A FULLY DILUTED BASIS AND THE VOTING POWER OF THE COMPANY'S OUTSTANDING VOTING SECURITIES ENTITLED TO VOTE ON THE MERGER (AS HEREINAFTER DEFINED) (THE "MINIMUM CONDITION"). ALTHOUGH UNDER THE TERMS OF THE MERGER AGREEMENT PARENT AND PURCHASER MAY WAIVE THE MINIMUM CONDITION, THEY DO NOT CURRENTLY INTEND TO DO SO; AND UNDER THE TERMS OF THE MERGER AGREEMENT, PARENT AND PURCHASER MAY TERMINATE THE MERGER AGREEMENT IF THE MINIMUM CONDITION IS NOT SATISFIED. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS, INCLUDING THE EXPIRATION OR TERMINATION OF ANY APPLICABLE WAITING PERIODS IMPOSED BY THE HART-SCOTT-RODINO ANTI-TRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND OTHER GOVERNMENTAL APPROVALS. SEE SECTIONS 1 AND 14 OF THE OFFER TO PURCHASE. The Offer is being made pursuant to an Agreement and Plan of Merger dated as of September 15, 1998 (the "Merger Agreement"), among Parent, Purchaser and the Company. The Merger Agreement provides that, among other things, as soon as practicable following the satisfaction or waiver of the conditions set forth in the Merger Agreement, Purchaser will be merged with and into the Company (the "Merger"). Following consummation of the Merger, the separate existence of Purchaser shall cease and the Company will continue as the surviving corporation and will be a 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 held by the Company or any subsidiary of the Company, and any Shares issued and outstanding immediately prior to the Effective Time owned by Parent, Purchaser or any other subsidiary of Parent, shall be canceled. Each remaining Share issued and outstanding immediately prior to the Effective Time (other than Shares with respect to dissenting shareholders of the Company) shall automatically be canceled and converted and become solely a right to receive $13.00 in cash, without interest. Each share of common stock of Purchaser issued and outstanding immediately prior to the Effective Time shall be converted and exchanged into one validly issued, fully paid and nonassessable Share. Each share of issued and outstanding preferred stock of the Company shall remain outstanding and unaffected by the Merger unless redeemed or converted pursuant to the terms and conditions of the Company's Articles of Incorporation and the applicable statement of designation of preferences and rights for any such preferred stock. THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT EACH OF THE OFFER AND THE MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY AND THE SHAREHOLDERS OF THE COMPANY, AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares validly tendered and not withdrawn if, as and when Purchaser gives oral or written notice to Continental Stock Transfer & Trust Company (the "Depositary") of Purchaser's acceptance of such Shares for payment pursuant to the Offer. Upon the terms and 2 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 shareholders for the purpose of receiving payment from Purchaser and transmitting such payments to tendering shareholders 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. 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 timely confirmation of book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility (as defined in Section 3 of the Offer to Purchase) pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees and (iii) any other documents required under the Letter of Transmittal. Purchaser expressly reserves the right, in its sole discretion (but subject to the terms and conditions of the Merger Agreement), at any time and from time to time, to extend for any reason the period of time during which the Offer is open, including the occurrence of any of the events specified in Section 14 of the Offer to Purchase, by giving oral or written notice of such extension to the Depositary; provided, however, that pursuant to the Merger Agreement, Purchaser has agreed to extend the Offer for ten business days, until Monday, November 2, 1998, if the Minimum Condition has not been satisfied as of the initial scheduled expiration date. Any such extension will be followed as promptly as practicable by public announcement thereof. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the rights of tendering shareholders to withdraw their Shares. Tenders of the Shares made pursuant to the Offer are irrevocable except that such Shares may be withdrawn at any time prior to 12:00 Midnight, New York City time, on Monday, October 19, 1998 (or the latest time and date at which the Offer, if extended by Purchaser, shall expire) and, unless theretofore accepted for payment by Purchaser pursuant to the Offer, may also be withdrawn at any time after Friday, November 20, 1998. For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one its addresses set forth on the back cover of the 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. 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 (as defined in Section 3 of the Offer to Purchase), 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 of the Offer to Purchase, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn shares. 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. The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. The Company has provided Purchaser with the Company's shareholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares whose names appear on the Company's shareholder list and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the shareholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Questions and requests for assistance or for additional copies of the Offer to Purchase and the related Letter of Transmittal and other tender offer materials may be directed to the Information Agent or the Dealer Manager as set forth below, and copies will be furnished promptly at Purchaser's expense. No fees or commissions will be paid to brokers, dealers or other persons for soliciting tenders of Shares pursuant to the Offer. The Information Agent for the Offer is: MORROW & CO., INC. 445 Park Avenue, 5th Floor New York, New York 10022 Toll Free (800) 566-9061 Call Collect (212) 754-8000 Banks and Brokerage Firms Please Call: (800) 662-5200 The Depositary for the Offer is: CONTINENTAL STOCK TRANSFER & TRUST COMPANY 2 Broadway, 19th Floor New York, New York 10004 (212) 509-4000 Ext. 535 The Dealer Manager for the Offer is: ING BARING FURMAN SELZ LLC 230 Park Avenue New York, New York 10169 Call Collect (212) 309-6469 September 21, 1998 EX-99.(A)(10) 11 TEXT OF SUBCHAPTER 1 EXHIBIT (A)(10) PENNSYLVANIA BUSINESS CORPORATION LAW OF 1988 CHAPTER 25 SUBCHAPTER E. CONTROL TRANSACTIONS 2541 Application and Effect of Subchapter. -- (a) General rule. -- Except as otherwise provided in this section, this subchapter shall apply to a registered corporation unless: (1) the registered corporation is one described in section 2502(1)(ii) or (2) (relating to registered corporation status): (2) the bylaws, by amendment adopted either: (i) by March 23, 1984; or (ii) on or after March 23, 1988, and on or before June 21, 1988; and, in either event, not subsequently rescinded by an article amendment, explicitly provide that this subchapter shall not be applicable to the corporation in the case of a corporation which on June 21, 1988, did not have outstanding one or more classes or series of preference shares entitled, upon the occurrence of a default in the payment of dividends or another similar contingency, to elect a majority of the members of the board of directors (a bylaw adopted on or before June 21, 1988, by a corporation excluded from the scope of this paragraph by the restriction of this paragraph relating to certain outstanding preference shares shall be ineffective unless ratified under paragraph (3)); (3) the bylaws of which explicitly provide that this subchapter shall not be applicable to the corporation by amendment ratified by the board of directors on or after December 19, 1990, and on or before March 19, 1991, in the case of a corporation: (i) which on June 21, 1988, had outstanding one or more classes or series of preference shares entitled, upon the occurrence of a default in the payment of dividends or another similar contingency, to elect a majority of the members of the board of directors; and (ii) the bylaws of which on that date contained a provision described in paragraph (2); or (4) the articles explicitly provide that this subchapter shall not be applicable to the corporation by a provision included in the original articles, by an article amendment adopted prior to the date of the control transaction and prior to or on March 23, 1988, pursuant to the procedures then applicable to the corporation, or by an article amendment adopted prior to the date of the control transaction and subsequent to March 23, 1988, pursuant to both: (i) the procedures then applicable to the corporation; and (ii) unless such proposed amendment has been approved by the board of directors of the corporation, in which event this subparagraph shall not be applicable, the affirmative vote of the shareholders entitled to cast at least 80% of the votes which all shareholders are entitled to cast thereon. A reference in the articles or bylaws to former section 910 (relating to right of shareholders to receive payment for shares following a control transaction) of the act of May 5, 1933 (P.L. 364, No. 106), known as the Business Corporation Law of 1933, shall be a reference to this subchapter for the purposes of this section. See section 101(c) (relating to references to prior statutes). (b) Inadvertent transactions. -- This subchapter shall not apply to any person or group that inadvertently becomes a controlling person or group if that controlling person or group, as soon as practicable, divests itself of a sufficient amount of its voting shares so that it is no longer a controlling person or group. (c) Certain subsidiaries. -- This subchapter shall not apply to any corporation that on December 23, 1983, was a subsidiary of any other corporation. 2542 Definitions. -- The following words and phrases when used in this subchapter shall have the meanings given to them in this section unless the context clearly indicates otherwise: "Control transaction." The acquisition by a person or group of the status of a controlling person or group. "Controlling person or group." A controlling person or group as defined in section 2543 (relating to controlling person or group). "Fair value." A value not less than the highest price paid per share by the controlling person or group at any time during the 90-day period ending on and including the date of the control transaction plus an increment representing any value, including, without limitation, any proportion of any value payable for acquisition of control of the corporation, that may not be reflected in such price. "Partial payment amount." The amount per share specified in section 2545(c)(2) (relating to contents of notice). 2 "Subsidiary." Any corporation as to which any other corporation has or has the right to acquire, directly or indirectly, through the exercise of all warrants, options and rights and the conversion of all convertible securities, whether issued or granted by the subsidiary or otherwise, voting power over voting shares of the subsidiary that would entitle the holders thereof to cast in excess of 50% of the votes that all shareholders would be entitled to cast in the election of directors of such subsidiary, except that a subsidiary will not be deemed to cease being a subsidiary as long as such corporation remains a controlling person or group within the meaning of this subchapter. "Voting shares." The term shall have the meaning specified in section 2552 (relating to definitions). 2543 Controlling Person or Group. -- (a) General rule. -- For the purpose of this subchapter, a "controlling person or group" means a person who has, or a group of persons acting in concert that has, voting power over voting shares of the registered corporation that would entitle the holders thereof to cast at least 20% of the votes that all shareholders would be entitled to cast in an election of directors of the corporation. (b) Exceptions generally. -- Notwithstanding subsection (a): (1) A person or group which would otherwise be a controlling person or group within the meaning of this section shall not be deemed a controlling person or group unless, subsequent to the later of March 23, 1988, or the date this subchapter becomes applicable to a corporation by bylaw or article amendment or otherwise, that person or group increases the percentage of outstanding voting shares of the corporation over which it has voting power to in excess of the percentage of outstanding voting shares of the corporation over which that person or group had voting power on such later date, and to at least the amount specified in subsection (a), as the result of forming or enlarging a group or acquiring, by purchase, voting power over voting shares of the corporation. (2) No person or group shall be deemed to be a controlling person or group at any particular time if voting power over any of the following voting shares is required to be counted at such time in order to meet the 20% minimum: (i) Shares which have been held continuously by a natural person since January 1, 1983, and which are held by such natural person at such time. (ii) Shares which are held at such time by any natural person or trust, estate, foundation or other similar entity to the extent the shares were acquired solely by gift, inheritance, bequest, devise or other testamentary distribution or series of these transactions, directly or indirectly, from a natural person who had acquired the shares prior to January 1, 1983. (iii) Shares which were acquired pursuant to a stock split, stock dividend, reclassification or similar recapitalization with respect to shares described under this paragraph that have been held continuously since their issuance by the corporation by the natural person or entity that acquired them from the corporation or that were acquired, directly or indirectly, from such natural person or entity, solely pursuant to a transaction or series of transactions described in subparagraph (ii), and that are held at such time by a natural person or entity described in subparagraph (ii). (iv) Control shares as defined in section 2562 (relating to definitions) which have not yet been accorded voting rights pursuant to section 2564(a) (relating to voting rights of shares acquired in a control-share acquisition). (v) Shares, the voting rights of which are attributable to a person under subsection (d) if: (A) the person acquired the option or conversion right directly from or made the contract, arrangement or understanding or has the relationship directly with the corporation; and (B) the person does not at the particular time own or otherwise effectively possess the voting rights of the shares. (vi) Shares acquired directly from the corporation or an affiliate or associate, as defined in section 2552 (relating to definitions), of the corporation by a person engaged in business as an underwriter of securities who acquires the shares through his participation in good faith in a firm commitment underwriting registered under the Securities Act of 1933. (3) In determining whether a person or group is or would be a controlling person or group at any particular time, there shall be disregarded voting power arising from a contingent right of the holders of one or more classes or series of preference shares to elect one or more members of the board of directors upon or during the continuation of a default in the payment of dividends on such shares or another similar contingency. (c) Certain record holders. -- A person shall not be a controlling person under subsection (a) if the person holds voting power, in good faith and not for the purpose of circumventing this subchapter, as an agent, bank, broker, nominee or trustee for one or more beneficial owners who do not individually or, if they are a group acting in concert, as a group have the voting power specified in subsection (a), or who are not deemed a controlling person or group under subsection (b). 2 3 (d) Existence of voting power. -- For the purposes of this subchapter, a person has voting power over a voting share if the person has or shares, directly or indirectly, through any option, contract, arrangement, understanding, conversion right or relationship, or by acting jointly or in concert or otherwise, the power to vote, or to direct the voting of, the voting share. 2544 Right of Shareholders to Receive Payment for Shares. -- Any holder of voting shares of a registered corporation that becomes the subject of a control transaction who shall object to the transaction shall be entitled to the rights and remedies provided in this subchapter. 2545 Notice to Shareholders. -- (a) General rule. -- Prompt notice that a control transaction has occurred shall be given by the controlling person or group to: (1) Each shareholder of record of the registered corporation holding voting shares. (2) To the court, accompanied by a petition to the court praying that the fair value of the voting shares of the corporation be determined pursuant to section 2547 (relating to valuation procedures) if the court should receive pursuant to section 2547 certificates from shareholders of the corporation or an equivalent request for transfer of uncertificated securities. (b) Obligations of the corporation. -- If the controlling person or group so requests, the corporation shall, at the option of the corporation and at the expense of the person or group, either furnish a list of all such shareholders to the person or group or mail the notice to all such shareholders. (c) Contents of notice. -- The notice shall state that: (1) All shareholders are entitled to demand that they be paid the fair value of their shares. (2) The minimum value the shareholder can receive under this subchapter is the highest price paid per share by the controlling person or group within the 90-day period ending on and including the date of the control transaction, and stating that value. (3) If the shareholder believes the fair value of his shares is higher, that this subchapter provides an appraisal procedure for determining the fair value of such shares, specifying the name of the court and its address and the caption of the petition referenced in subsection (a)(2), and stating that the information is provided for the possible use by the shareholder in electing to proceed with a court-appointed appraiser under section 2547. There shall be included in, or enclosed with, the notice a copy of this subchapter. (d) Optional procedure. -- The controlling person or group may, at its option, supply with the notice referenced in subsection (c) a form for the shareholder to demand payment of the partial payment amount directly from the controlling person or group without utilizing the court-appointed appraiser procedure of section 2547, requiring the shareholder to state the number and class or series, if any, of the shares owned by him, and stating where the payment demand must be sent and the procedures to be followed. 2546 Shareholder Demand for Fair Value. -- (a) General rule. -- after the occurrence of the control transaction, any holder of voting shares of the registered corporation may, prior to or within a reasonable time after the notice required by section 2545 (relating to notice to shareholders) is given, which time period may be specified in the notice, make written demand on the controlling person or group for payment of the amount provided in subsection (c) with respect to the voting shares of the corporation held by the shareholder, and the controlling person or group shall be required to pay that amount to the shareholder pursuant to the procedures specified in section 2547 (relating to valuation procedures). (b) Contents of demand. -- The demand of the shareholder shall state the number and class or series, if any, of the shares owned by him with respect to which the demand is made. (c) Measure of value. -- A shareholder making written demand under this section shall be entitled to receive cash for each of his shares in an amount equal to the fair value of each voting share as of the date on which the control transaction occurs, taking into account all relevant factors, including an increment representing a proportion of any value payable for acquisition of control of the corporation. (d) Purchases independent of subchapter. -- The provisions of this subchapter shall not preclude a controlling person or group subject to this subchapter from offering, whether in the notice required by section 2545 or otherwise, to purchase voting shares of the corporation at a price other than that provided in subsection (c), and the provisions of this subchapter shall not preclude any shareholder from agreeing to sell his voting shares at that or any other price to any person. 3 4 2547 Valuation Procedures. -- (a) General rule. -- If, within 45 days (or such other time period, if any, as required by applicable law) after the date of the notice required by section 2545 (relating to notice to shareholders), or, if such notice was not provided prior to the date of the written demand by the shareholder under section 2546 (relating to shareholder demand for fair value), then within 45 days (or such other time period, if any, required by applicable law) of the date of such written demand, the controlling person or group and the shareholder are unable to agree on the fair value of the shares or on a binding procedure to determine the fair value of the shares, then each shareholder who is unable to agree on both the fair value and on such a procedure with the controlling person or group and who so desires to obtain the rights and remedies provided in this subchapter shall, no later than 30 days after the expiration of the applicable 45-day or other period, surrender to the court certificates representing any of the shares that are certificated shares, duly endorsed for transfer to the controlling person or group, or cause any uncertificated shares to be transferred to the court as escrow agent under subsection (c) with a notice stating that the certificates or uncertificated shares are being surrendered or transferred, as the case may be, in connection with the petition referenced in section 2545 or, if no petition has theretofore been filed, the shareholder may file a petition within the 30-day period in the court praying that the fair value (as defined in this subchapter) of the shares be determined. (b) Effect of failure to give notice and surrender certificates. -- Any shareholder who does not so give notice and surrender any certificates or cause uncertificated shares to be transferred within such time period shall have no further right to receive, with respect to shares the certificates of which were not so surrendered or the uncertificated shares which were not so transferred under this section, payment under this subchapter from the controlling person or group with respect to the control transaction giving rise to the rights of the shareholder under this subchapter. (c) Escrow and notice. -- The court shall hold the certificates surrendered and the uncertificated shares transferred to it in escrow for, and shall promptly, following the expiration of the time period during which the certificates may be surrendered and the uncertificated shares transferred, provide a notice to the controlling person or group of the number of shares so surrendered or transferred. (d) Partial payment for shares. -- The controlling person or group shall then make a partial payment for the shares so surrendered or transferred to the court, within ten business days of receipt of the notice from the court, at a per-share price equal to the partial payment amount. The court shall then make payment as soon as practicable, but in any event within ten business days, to the shareholders who so surrender or transfer their shares to the court of the appropriate per-share amount received from the controlling person or group. (e) Appointment of appraiser. -- Upon receipt of any share certificate surrendered or uncertificated share transferred under this section, the court shall, as soon as practicable but in any event within 30 days, appoint an appraiser with experience in appraising share values of companies of like nature to the registered corporation to determine the fair value of the shares. (f) Appraisal procedure. -- The appraiser so appointed by the court shall, as soon as reasonably practicable, determine the fair value of the shares subject to its appraisal and the appropriate market rate of interest on the amount then owed by the controlling person or group to the holders of the shares. The determination of any appraiser so appointed by the court shall be final and binding on both the controlling person or group and all shareholders who so surrendered their share certificates or transferred their shares to the court, except that the determination of the appraiser shall be subject to review to the extent and within the time provided or prescribed by law in the case of other appointed judicial officers. See 42 Pa.C.S. Section 5105(a)(3) (relating to right to appellate review) and 5571(b) (relating to appeals generally). (g) Supplemental payment. -- Any amount owed, together with interest, as determined pursuant to the appraisal procedures of this section shall be payable by the controlling person or group after it is so determined and upon and concurrently with the delivery or transfer to the controlling person or group by the court (which shall make delivery of the certificate or certificates surrendered or the uncertificated shares transferred to it to the controlling person or group as soon as practicable but in any event within ten business days after the final determination of the amount owed) of the certificate or certificates representing shares surrendered or the uncertificated shares transferred to the court, and the court shall then make payment, as soon as practicable but in any event within ten business days after receipt of payment from the controlling person or group, to the 4 5 shareholders who so surrendered or transferred their shares to the court of the appropriate per-share amount received from the controlling person or group. (h) Voting and dividend rights during appraisal proceedings. -- Shareholders who surrender their shares to the court pursuant to this section shall retain the right to vote their shares and receive dividends or other distributions thereon until the court receives payment in full for each of the shares so surrendered or transferred of the partial payment amount (and, thereafter, the controlling person or group shall be entitled to vote such shares and receive dividends or other distributions thereon). The fair value (as determined by the appraiser) of any dividends or other distributions so received by the shareholders shall be subtracted from any amount owing to such shareholders under this section. (i) Powers of the court. -- The court may appoint such agents, including the transfer agent of the corporation, or any other institution, to hold the share certificates so surrendered and the shares surrendered or transferred under this section, to effect any necessary change in record ownership of the shares after the payment by the controlling person or group to the court of the amount specified in subsection (h), to receive and disburse dividends or other distributions, to provide notices to shareholders and to take such other actions as the court determines are appropriate to effect the purposes of this subchapter. (j) Costs and expenses. -- The costs and expenses of any appraiser or other agents appointed by the court shall be assessed against the controlling person or group. The costs and expenses of any other procedure to determine fair value shall be paid as agreed to by the parties agreeing to the procedure. (k) Jurisdiction exclusive. -- The jurisdiction of the court under this subchapter is plenary and exclusive and the controlling person or group and all shareholders who so surrendered or transferred their shares to the court shall be made a party to the proceeding as in an action against their shares. (l) Duty of corporation. -- The corporation shall comply with requests for information, which may be submitted pursuant to procedures maintaining the confidentiality of the information, made by the court or the appraiser selected by the court. If any of the shares of the corporation are not represented by certificates, the transfer, escrow or retransfer of those shares contemplated by this section shall be registered by the corporation, which shall give the written notice required by section 1528(f) (relating to uncertificated shares) to the transferring shareholder, the court and the controlling shareholder or group, as appropriate in the circumstances. (m) Payment under optional procedure. -- Any amount agreed upon between the parties or determined pursuant to the procedure agreed upon between the parties shall be payable by the controlling person or group after it is agreed upon or determined and upon and concurrently with the delivery of any certificate or certificates representing such shares or the transfer of any uncertificated shares to the controlling person or group by the shareholder. (n) Title to shares. -- Upon full payment by the controlling person or group of the amount owed to the shareholder or to the court, as appropriate, the shareholder shall cease to have any interest in the shares. 2548 Coordination with Control Transaction. -- (a) General rule. -- A person or group that proposes to engage in a control transaction may comply with the requirements of this subchapter in connection with the control transaction, and the effectiveness of the rights afforded in this subchapter to shareholders may be conditioned upon the consummation of the control transaction. (b) Notice. -- The person or group shall give prompt written notice of the satisfaction of any such condition to each shareholder who has made demand as provided in this subchapter. 5 EX-99.(A)(11) 12 SHAREHOLDER LETTER 1 DRAVO CORPORATION LOGO September 21, 1998 Dear Shareholder: We are pleased to advise you that on September 15, 1998, Dravo Corporation ("Dravo") entered into an Agreement and Plan of Merger with Carmeuse Lime, Inc. ("Carmeuse") and one of its subsidiaries, DLC Acquisition Corp., which provides for the acquisition of all of the outstanding Common Stock of Dravo at a price of $13.00 per share in cash. Under the terms of the proposed transaction, DLC Acquisition Corp. has today commenced a tender offer for all of the outstanding shares of Dravo Common Stock at $13.00 per share. Following the completion of the tender offer, and any approvals required by law, DLC Acquisition Corp. will be merged with Dravo and all shares of Common Stock not purchased in the tender offer (other than those owned by Carmeuse or by shareholders who have perfected appraisal rights) will be converted into the right to receive $13.00 per share in cash in the merger. YOUR BOARD OF DIRECTORS (I) HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE TENDER OFFER AT THE OFFER PRICE AND THE MERGER, (II) HAS DETERMINED THAT THE TERMS OF THE TENDER OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF THE COMPANY AND ITS SHAREHOLDERS, AND (III) RECOMMENDS THAT SHAREHOLDERS ACCEPT THE TENDER OFFER, TENDER THEIR SHARES TO DLC ACQUISITION CORP. AND APPROVE AND ADOPT THE MERGER AGREEMENT AND MERGER, IF REQUIRED. In arriving at its recommendation, the Board of Directors gave careful consideration to a number of factors more fully described in the accompanying materials. The Board of Directors has received the written opinion dated September 15, 1998 of Salomon Smith Barney Inc., financial advisor to Dravo, to the effect that, as of such date and based upon and subject to certain matters stated therein, the $13.00 per share cash consideration to be received in the Offer and the Merger by the holders of Common Stock (other than Carmeuse and its affiliates) was fair, from a financial point of view, to such holders. Accompanying this letter is a copy of the Company's Solicitation/Recommendation Statement on Schedule 14D-9. Also enclosed is Carmeuse's Offer to Purchase and related materials, including a Letter of Transmittal for use in tendering shares. We urge you to read the enclosed materials carefully. The management and directors of Dravo thank you for the support you have given the Company. On behalf of the Board of Directors, Arthur E. Byrnes Arthur E. Byrnes Chairman of the Board Carl A. Gilbert Carl A. Gilbert President and Chief Executive Officer EX-99.(B)(1) 13 BANK BRUSSELS LETTER 1 EXHIBIT (B)(1) 14 September 1998 CERTIFICATE OF NOTORIETY FOR CARMEUSE SA Dear Sirs, Our client Carmeuse SA has informed us of their intention to proceed, either directly or through one of their subsidiaries, to a public offering on all shares of Dravo Corporation. Our client needs among other conditions (to be allowed to execute this project) to dispose of US$230 millions. To this end we, Bank Brussels Lambert SA, certify by the present letter that Carmeuse SA can on this day draw on US$230 millions at an indicative margin of 0,25% over Libor and these US$230 millions will stay at its disposal for a period of 3 months, from the date of signature of the present letter; period which could be renewed for another term of maximum 3 months, with full repayment at the end of the period. Bank Brussels Lambert SA /s/ PHILIPPE HUSTINX /s/ T. BREUER senior manager senior manager EX-99.(B)(2) 14 LAFARGE, S.A. LETTER 1 EXHIBIT (B)(2) September 14, 1998 Mr. D. Collinet Administrateur Delegue Carmeuse S.A. Parc Scientifique Athene Boulevard de Lauzelle, 65 1348 Louvain-la-Neuve Belgique Dear Mr. Collinet: We refer to the Memorandum of Understanding as to North America agreed upon by our two corporations on the 3rd of June last, as well as to the numerous conversations we have recently had with respect to the acquisition plan of the U.S. corporation Dravo. You have made clear to us and we have understood the necessity of launching a tender offer on Dravo even as the incorporation of our American Joint Venture cannot be finalized before the launching of this offer. You have concurrently expressed your wish not to launch this operation without having received from us, confirmation of our agreement on this offer and of our intention to follow you on this operation subsequent to our role as future partner in the Joint Venture. In answer to your request, we confirm, if need be, our firm intention of realizing our Joint Venture following the terms set forth in our agreements, as soon as the North American antitrust authorities' approval has been delivered. We equally confirm our financial commitment, to the extent of our interest in the Joint Venture that is to say 40% and up to the sum of 13 USD per share, in the cost of acquisition of a part-necessarily between 50.1% and 100% of Dravo's capital. This commitment is subject to the terms we have discussed, and most particularly those set forth in the Agreement and Plan of Merger of its latest version of the 11th of September (and of its Annex I and Company Disclosure Schedules) to be executed by Carmeuse and Dravo, and therefore represents a maximum cost incumbent on Lafarge, of 40% of Dravo's capital stock and 40% of Dravo's indebtedness, for an aggregate of 124 million USD. As to the practical terms of funding, we shall place at your disposal, the portion of cash funding incumbent on us as soon as the Dravo share's payment must occur. Should there be any difficulties in the incorporation of the Joint Venture, it is understood that both corporations shall make their best efforts so as to resolve those difficulties all the while respecting the spirit of the Memorandum of Understanding as to North America. If, however, for reasons totally outside of our control which we do not imagine today, the incorporation of the Joint Venture should turn out to be totally impossible, you will consent to, as a guaranty for the funds lent by our corporation, pledging to us or giving us any other equivalent security on the Dravo shares, or any other guaranty acceptable to Lafarge in the assumption that the deliverance of a security on Dravo shares should prove not to be possible under U.S. law, equivalent to the value of our credit. This will intervene at the latest at the time at which this impossibility is ascertained and in any case before the 31st of December next. Should this be the case, the advance in funds which will have been made shall be remunerated at 0.25% over the Libor at 3 months, and we will have the faculty of asking for its reimbursement at any time at 6 months notice. However, should this notice not be sufficient for you to complete the reimbursement, you may ask for it to be extended, provided that on no account shall the reimbursement take place after the 31st of December, 1999. 2 We would be thankful for your confirming your agreement as to the above by returning a signed copy of this letter, which will then be subject to French law and any dispute over which shall be settled pursuant to the provisions of point 17.2 of the Memorandum of Understanding as to North America. We hope we have hereby met your expectations. Yours sincerely, Olivier Legrain EX-99.(B)(3) 15 AGREEMENT BETWEEN PARENT AND CARMEUSE 1 EXHIBIT (b)(3) Sept. 18th, 1998 CREDIT AGREEMENT BETWEEN: CARMEUSE S.A., having registered offices at Parc Scientifique Athena, Boulevard de Lauzelle, 65-1348 Louvain-la-Neuve (Belgium) represented by Mr Yves WILLEMS, Director and Mr Jacques-Bernard DE JONGH, Director. hereinafter referred to as : "THE LENDER" AND: CARMEUSE LIME INC., having registered offices at 390, East Joe Orr Road, Chicago Heights, Illinois 60411 (United States). represented by Mr Jacques GERMAY, Chairman and Mrs Suzanne RITZLER, General Counsel. hereinafter referred at as : "THE BORROWER" Hereinafter collectively referred to as : "THE PARTIES". ACCORDINGLY, THE PARTIES HAVE AGREED AS FOLLOWS ART. 1 The Lender agrees to grant to the Borrower, upon the terms and conditions hereof, a Revolving Credit Facility for an aggregate amount of USD 350 mios (three hundred and fifty millions US dollars). The Borrower can drawdown advances within the credit line for period of 1, 3 or 6 months. ART. 2 The Borrower shall use the proceeds of any advance for the acquisition, directly or indirectly, of Dravo Corporation shares or any funding needs requested by the Tender Offer launched by Carmeuse Group on Dravo Corporation. ART. 3 Any drawdown or advance related to this agreement will be minimum of USD 10,000,000 with a maximum up to the total amount of the credit line. At any time, the aggregate outstanding advances granted by the Lender to the Borrower will never exceed the aggregate amount of the Credit line. ART. 4 The Borrower will advise the Lender of any request of advance at least three business days prior to date of drawdown. ART. 5 In any case, this Credit Agreement will be valid for a 6 months period with full repayment of advances and interests at the end of such period. 2 Sept. 18th, 1998 ART. 6 The rate of interests applied on any drawdown or advances made under the present agreement will be the Libor of the concerned period of drawdown plus a margin of 75 basis points. The calculation of interests will be achieved on 360 days a year basis, taking into account the actual number of days elapsed during the drawdown period. ART. 7 The Borrower will pay the interests in net amount, after application of withholding taxes if any. ART. 8 This agreement shall be construed and governed in accordance with the laws of the Kingdom of Belgium. The jurisdiction will be the Court of Nivelles. Signed on September 18th, 1998 in two original copies, each party acknowledging having received a duly executed copy. FOR CARMEUSE S.A., /s/ JACQUES-BERNARD DE JONGH /s/ YVES WILLEMS -------------------------------- ------------------------------- Jacques-Bernard DE JONGH Yves WILLEMS Director Director FOR CARMEUSE LIME INC., /s/ SUZANNE RITZLER /s/ JACQUES GERMAY ------------------------ ------------------------------- Suzanne RITZLER Jacques GERMAY General Counsel Chairman EX-99.(C)(1) 16 AGREEMENT AND PLAN MERGER 1 EXHIBIT (C)(1) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- AGREEMENT AND PLAN OF MERGER DATED AS OF SEPTEMBER 15, 1998 BY AND AMONG CARMEUSE LIME, INC. DLC ACQUISITION CORP. AND DRAVO CORPORATION - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS ARTICLE I THE OFFER......................................... 1 Section 1.1. The Offer.................................... 1 Section 1.2. Company Action............................... 3 Section 1.3. Directors.................................... 4 ARTICLE II THE MERGER....................................... 4 Section 2.1. The Merger................................... 4 Section 2.2. Closing...................................... 5 Section 2.3. Effective Time of the Merger................. 5 Section 2.4. Articles of Incorporation.................... 5 Section 2.5. By-Laws...................................... 5 Section 2.6. Board of Directors; Officers................. 5 Section 2.7. Effects of Merger............................ 5 ARTICLE III CONVERSION OF COMMON STOCK...................... 5 Section 3.1. Conversion of Common Stock................... 5 Section 3.2. Preference Stock Unaffected.................. 6 Section 3.3. Stock Options................................ 6 Section 3.4. Closing of Company Transfer Books............ 6 Section 3.5. Exchange of Certificates..................... 6 Section 3.6. Funding of Paying Agent...................... 7 Section 3.7. Action of Shareholders....................... 7 Section 3.8. Merger Without Meeting of Shareholders....... 8 Section 3.9. No Further Ownership Rights in Common Stock.................................................. 8 Section 3.10. Dissenting Shareholders -- Common Stock..... 8 Section 3.11. Dissenting Shareholders -- Preference Stock.................................................. 8 Section 3.12. Assistance in Consummation of the Merger.... 9 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.... 9 Section 4.1. Organization and Qualification............... 9 Section 4.2. Capitalization of the Company and its Subsidiaries........................................... 10 Section 4.3. Authority Relative to this Agreement......... 11 Section 4.4. SEC Reports; Financial Statements; Title to Assets; Liens.......................................... 11 Section 4.5. Information Supplied......................... 12 Section 4.6. Consents and Approvals; No Violations........ 12 Section 4.7. No Default................................... 13 Section 4.8. No Undisclosed Liabilities................... 13 Section 4.9. Litigation................................... 13 Section 4.10. Compliance with Applicable Law.............. 14 Section 4.11. Employee Plans.............................. 14 Section 4.12. Environmental Matters....................... 16 Section 4.13. Tax Matters................................. 18 Section 4.14. Intangible Property......................... 19 Section 4.15. Opinion of Financial Advisor................ 19 Section 4.16. Brokers..................................... 20 Section 4.17. Labor Matters............................... 20 Section 4.18. Absence of Certain Changes.................. 20 Section 4.19. Millennium.................................. 21 Section 4.20. Full Disclosure............................. 21 Section 4.21. Real Property............................... 22 Section 4.22. Contracts................................... 23 -i- 3 ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT.......... 23 Section 5.1. Organization and Qualification............... 23 Section 5.2. Authority Relative to this Agreement......... 23 Section 5.3. No Conflict or Violation; Consents........... 23 Section 5.4. Adequate Financing........................... 24 Section 5.5. Ownership of Common Stock.................... 24 Section 5.6. Full Disclosure.............................. 24 Section 5.7. Information Supplied......................... 24 ARTICLE VI REPRESENTATIONS AND WARRANTIES REGARDING PURCHASER................................................. 24 Section 6.1. Organization................................. 24 Section 6.2. Capitalization............................... 24 Section 6.3. Authority Relative to this Agreement......... 24 ARTICLE VII CONDUCT OF BUSINESS PENDING THE MERGER.......... 25 Section 7.1. Conduct of Business by the Company Pending the Merger............................................. 25 Section 7.2. No Solicitation.............................. 26 ARTICLE VIII ADDITIONAL AGREEMENTS.......................... 28 Section 8.1. Access and Information....................... 28 Section 8.2. Indemnification.............................. 28 Section 8.3. HSR Act...................................... 29 Section 8.4. Additional Agreements Regarding Consents and Approvals.............................................. 29 Section 8.5. Takeover Statutes............................ 30 Section 8.6. Benefits..................................... 30 Section 8.7. Effect of Knowledge of Breach................ 30 Section 8.8. Certain Deliveries........................... 31 ARTICLE IX CONDITIONS PRECEDENT............................. 31 Section 9.1. Conditions to Each Party's Obligation to Effect the Merger...................................... 31 ARTICLE X TERMINATION AND FEES.............................. 32 Section 10.1. Termination................................. 32 Section 10.2. Effect of Termination....................... 32 Section 10.3. Fees and Expenses........................... 32 ARTICLE XI GENERAL PROVISIONS............................... 33 Section 11.1. Non-Survival of Representations, Warranties and Agreements......................................... 33 Section 11.2. Amendment................................... 33 Section 11.3. Notices..................................... 33 Section 11.4. Specific Performance........................ 34 Section 11.5. Publicity................................... 34 Section 11.6. Interpretation.............................. 34 Section 11.7. Counterparts................................ 34 Section 11.8. Entire Agreement; No Third Party Beneficiaries.......................................... 35 Section 11.9. Severability................................ 35 Section 11.10. Governing Law.............................. 35 Section 11.11. Assignment................................. 35 Section 11.12. Descriptive Headings....................... 35 ANNEX I Conditions to the Offer COMPANY DISCLOSURE SCHEDULE -ii- 4
DEFINED TERMS LOCATION - ------------- -------- Agreement.................................... Agreement and Plan of Merger Business Day................................. Section 1.1(a) Closing...................................... Section 2.2 Closing Date................................. Section 2.2 Commission................................... Section 1.1(c) Common Stock................................. Agreement and Plan of Merger Company...................................... Agreement and Plan of Merger Company Disclosure Schedule.................. Article IV--Representations and Warranties of the Company Company Representatives...................... Section 7.2(a) Company SEC Reports.......................... Section 4.4(a) Effective Time............................... Section 2.3 Environmental Laws........................... Section 4.12 Event........................................ Annex I--Conditions to the Offer Exchange Act................................. Section 1.1(a) Expiration Date.............................. Section 1.1(c) Governmental Entity.......................... Section 4.6 HSR Act...................................... Section 4.6 Indemnified Parties.......................... Section 8.2(a) Independent Directors........................ Section 1.3 Interested Stockholder....................... Section 4.3 Knowledge.................................... Section 11.6 Leased Property.............................. Section 4.21 Leases....................................... Section 21 Liens........................................ Section 4.21 Material Adverse Effect...................... Section 4.1(c) Material Legal Requirements.................. Section 5.3(b) Merger....................................... Agreement and Plan of Merger Minimum Condition............................ Section 1.1(a) Offer........................................ Agreement and Plan of Merger Option....................................... Section 3.3(a) Owned Real Property.......................... Section 4.21 Parent....................................... Agreement and Plan of Merger Paying Agent................................. Section 3.5 PBCL......................................... Agreement and Plan of Merger Per Share Amount............................. Agreement and Plan of Merger Permitted Liens.............................. Section 4.21 Preference Stock............................. Section 3.2 Prohibited Result............................ Annex I(a) Proxy Statement.............................. Section 3.7(c) Purchaser.................................... Agreement and Plan of Merger Release...................................... Section 4.12 Remedies..................................... Section 10.2 Schedule 14D-1............................... Section 1.1(c) Schedule 14D-9............................... Section 1.2(c) Securities Act............................... Section 4.3(a) Series B Preference Stock.................... Section 3.2 Series D Preferred Stock..................... Section 3.2 Shareholders................................. Section 1.1(c) Superior Proposal............................ Section 7.2(e) Takeover Proposal............................ Section 7.2(d); Section 10.3(b)(ii) Tender Offer Documents....................... Section 1.1(c) Termination Date............................. Section 10.1(b)
-iii- 5 AGREEMENT AND PLAN OF MERGER THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of September 15, 1998, by and among Carmeuse Lime, Inc., a Delaware corporation ("Parent"), DLC Acquisition Corp., a Pennsylvania corporation and a wholly owned subsidiary of Parent ("Purchaser"), and Dravo Corporation, a Pennsylvania corporation (the "Company"): W I T N E S S E T H: WHEREAS, the Boards of Directors of each of the Parent and the Purchaser have determined that it is in the best interests of their respective shareholders and the Board of Directors of the Company has determined that it is in the best interest of the Company for the Parent to acquire the Company upon the terms and subject to the conditions set forth herein; WHEREAS, in furtherance thereof, it is proposed that Purchaser will make a cash tender offer to acquire all issued and outstanding shares of common stock, $1.00 par value, of the Company (the "Common Stock"), at a cash purchase price of $13.00 per share (the "Per Share Amount"), without interest thereon, in accordance with the terms and subject to the conditions of this Agreement (the "Offer"); WHEREAS, also in furtherance of such acquisition, the Boards of Directors of the Company, Parent and Purchaser have each approved the merger (the "Merger") of Purchaser with and into the Company following consummation of the Offer in accordance with the Pennsylvania Business Corporation Law (the "PBCL") upon the terms and subject to the conditions set forth herein and as a result of which the holders of Common Stock will receive the Per Share Amount for each share of Common Stock held by them at the effective time of the Merger and the Company will thereafter become a wholly owned subsidiary of Parent; WHEREAS, the Board of Directors of the Company has resolved to recommend acceptance of the Offer and the Merger to the holders of the Common Stock, has determined that the Per Share Amount to be paid for each share of Common Stock in the Offer and the Merger is fair to the holders of such Common Stock, and has resolved to recommend that the holders of such Common Stock accept the Offer and approve this Agreement and the Merger, if required by the PBCL, and each of the transactions contemplated hereby, each upon the respective terms and subject to the applicable conditions set forth herein; and NOW, THEREFORE, in consideration of the foregoing premises and the mutual representations, warranties, covenants and agreements set forth herein, Parent, Purchaser and the Company, intending to be legally bound hereby, agree as follows: ARTICLE I THE OFFER SECTION 1.1. THE OFFER (a) Purchaser shall, and Parent shall cause Purchaser to, commence, within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended, including the rules and regulations promulgated thereunder (the "Exchange Act"), the Offer, as promptly as practical but in no event later than five (5) business days (as such term is defined in Rule 14e-1 under the Exchange Act (a "Business Day")) after the date of this Agreement. The Offer will be subject only to a number of shares of Common Stock being validly tendered prior to the expiration of the Offer and not properly withdrawn which would result in Purchaser's ownership of such number of shares of Common Stock that represents at least a majority of (i) the actual outstanding shares of Common Stock on a fully diluted basis including shares issuable upon exercise of outstanding options (whether or not exercisable) and other securities convertible into Common Stock and (ii) the voting power of the Company's outstanding voting securities entitled to vote on the Merger (the "Minimum Condition") and satisfaction or waiver of the further conditions set forth in Annex I hereto, any of which conditions may be waived in the sole discretion of Purchaser, subject in the case of the Minimum Condition to the limitation set forth in (d) below. Assuming all of the conditions to consummation of the 6 Offer that have not otherwise been waived are satisfied, Parent and Purchaser shall consummate the Offer as promptly as possible. (b) Upon the terms and subject to the conditions of the Offer, Purchaser shall, and Parent shall cause Purchaser to, purchase all shares of Common Stock which are validly tendered on or prior to the expiration of the Offer and not timely withdrawn as promptly as practicable. Purchaser may, at any time, transfer or assign to one or more corporations, which are direct or indirect subsidiaries of Parent, the right to purchase all or any portion of the Common Stock tendered pursuant to the Offer, but any such transfer or assignment shall not relieve Parent or Purchaser of its obligations under this Agreement or prejudice the rights of tendering holders of Common Stock to receive payment for shares of Common Stock properly tendered and accepted for payment. (c) The Offer shall remain open (unless the Purchaser elects to terminate the Offer upon the occurrence of an Event (as defined in Annex I)) for a period of twenty (20) Business Days from the commencement of the Offer (the "Expiration Date"), unless Purchaser shall have extended the period of time for which the Offer is open as may be permitted or required by this Agreement, or applicable law, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by Purchaser, shall expire. On or prior to the date the Offer is commenced, Purchaser shall file, and Parent shall cause Purchaser to prepare and file, with the Securities and Exchange Commission (the "Commission") a Tender Offer Statement on Schedule 14D-1 (together with all exhibits, amendments and supplements thereto, the "Schedule 14D-1") with respect to the Offer that shall contain (as an exhibit) or incorporate by reference the Offer (or portions thereof) and forms of the related letter of transmittal and summary advertisement (the "Tender Offer Documents"). The Schedule 14D-1 shall comply in all material respects with the provisions of all applicable federal securities laws and, on the date filed with the Commission and on the date first published, sent or given to the holders of Common Stock (the "Shareholders"), shall not contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except with respect to information furnished by the Company for inclusion in the Schedule 14D-1. Parent and Purchaser agree to promptly correct, by preparing an amendment or supplement, any information provided by them for use in the Tender Offer Documents if and to the extent that such information shall have become false or misleading in any material respect, and Parent and Purchaser further agree to cause the Tender Offer Documents, as so amended or supplemented, to be filed with the Commission and disseminated to the Shareholders, in each case, as and to the extent required by applicable federal securities laws. Parent and Purchaser agree to provide the Company and its counsel with any comments Parent, Purchaser or their counsel may receive from the Commission or its staff with respect to the Tender Offer Documents and any amendments or supplements thereto, promptly after receipt of such comments. (d) Purchaser shall not, without the prior written consent of the Company, (i) decrease or change the form of the Per Share Amount, (ii) reduce the number of shares of Common Stock sought pursuant to the Offer, (iii) amend the conditions or impose additional conditions to the Offer, (iv) amend any term of the Offer, (v) amend the Minimum Condition, or (vi) amend any other term of the Offer in a manner adverse to the holders of the Common Stock. Subject to the last sentence of paragraph (a), Purchaser may at any time, in its sole discretion, extend the Offer. (e) Parent shall provide or cause to be provided to Purchaser (or its transferee or assignee pursuant to the last sentence of (b) above) on a timely basis the funds necessary to purchase any shares of Common Stock that Purchaser becomes obligated to purchase under this Agreement. (f) Notwithstanding the first sentence of Section 1.1(c), Purchaser shall extend the Offer (i) for ten Business Days beyond the initial Expiration Date if the Minimum Condition has not then been satisfied; and (ii) on one or more occasions, in each instance for up to ten Business Days, beyond the then scheduled Expiration Date, but not beyond the Termination Date, if the Company, Parent or Purchaser receives a request for additional information from a Government Agency with respect to the Company's and Parent's filing under the HSR Act, in which case the Offer shall be extended until the waiting period under the HSR Act is terminated or until this Agreement is terminated in accordance with Section 10.1. -2- 7 SECTION 1.2. COMPANY ACTION (a) The Company hereby approves of and consents to the Offer and represents and warrants that its Board of Directors, at a meeting duly called and held on September 14, 1998, at which a majority of the Directors were present either in person or by telephone: (i) duly approved and adopted this Agreement and the transactions contemplated hereby, including the Offer and the Merger, (ii) determined that this Agreement and the transactions contemplated hereby, including the Offer and the Merger, are fair to and in the best interests of the Shareholders, (iii) recommended that the Shareholders accept the Offer and tender their shares of Common Stock pursuant to the Offer and (iv) if a meeting of the Company's shareholders is required to be called and held in accordance with applicable law, recommended that the shareholders approve this Agreement and the transactions contemplated hereby, including the Merger. (b) The Company further represents that Salomon Smith Barney Inc. has opined to the Board of Directors of the Company to the effect that, as of the date of this Agreement, the Per Share Amount to be received by holders of Common Stock (other than Parent and its affiliates) pursuant to the Offer and the Merger is fair to such holders from a financial point of view. (c) The Company shall file with the Commission, concurrent with the filing by Purchaser of the Schedule 14D-1, a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 (together with any and all amendments or supplements thereto, and including the exhibits thereto, the "Schedule 14D-9") with respect to the Offer. The Schedule 14D-9 shall comply in all material respects with the provisions of all applicable federal securities law and, on the date filed with the Commission and on the date first published, sent or given to the Shareholders, shall not contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except with respect to information furnished by Parent or Purchaser for inclusion in the Schedule 14D-9. The Company further agrees to take all steps necessary to cause the Schedule 14D-9 to be filed with the Commission and to be disseminated to the Shareholders, in each case as and to the extent required by applicable federal securities laws. The Company shall mail, or cause to be mailed, such Schedule 14D-9 to the Shareholders at the same time and together with the Tender Offer Documents. The Schedule 14D-9 and the Tender Offer Documents shall contain the recommendations of the Board of Directors described in Section 1.2(a) hereof. The Company agrees promptly to correct the Schedule 14D-9 if and to the extent that it shall have become false or misleading in any material respect (and each of Parent and Purchaser, with respect to written information supplied by it specifically for use in the Schedule 14D-9, shall promptly notify the Company of any required corrections of such information and cooperate with the Company with respect to correcting such information) and to amend or supplement the information contained in the Schedule 14D-9 to include any information that shall become necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company further agrees to take all steps necessary to cause the Schedule 14D-9, as so corrected, to be filed with the Commission and disseminated to the Shareholders, in each case, as and to the extent required by applicable federal securities laws. Purchaser and its counsel shall be given a reasonable opportunity to review and comment on the Schedule 14D-9 before it is filed with the Commission. In addition, the Company agrees to provide Purchaser and its counsel with any comments, whether written or oral, that the Company or its counsel may receive from time to time from the Commission or its staff with respect to the Schedule 14D-9, and any amendments or supplements thereto, promptly after the receipt of such comments or communications. (d) In connection with the Offer, the Company, promptly upon execution of this Agreement, shall furnish or cause to be furnished to Purchaser mailing labels containing the names and addresses of all record holders of the Common Stock and security position listings of shares of Common Stock held in stock depositories, each as of a recent date, and shall promptly furnish Purchaser with such additional information (including, but not limited to, updated lists of Shareholders and their addresses, mailing labels and security position listings) and such other information and assistance as Purchaser or its agents may reasonably request for the purpose of communicating the Offer to the record and beneficial holders of shares of Common Stock. -3- 8 SECTION 1.3. DIRECTORS Promptly upon the purchase by Purchaser, pursuant to the Offer, and in accordance with this Agreement of such number of shares of Common Stock as represents at least a majority of the outstanding shares of Common Stock (on a fully diluted basis) and from time to time thereafter, Purchaser shall be entitled to designate such number of directors, rounded up to the next whole number, on the Board of Directors of the Company as will give Purchaser, subject to compliance with Section 14(f) of the Exchange Act, representation on the Board of Directors of the Company equal to the product of (a) the number of directors on the Board of Directors of the Company (after giving effect to the appointment of such directors) and (b) the percentage that such number of shares of Common Stock so purchased bears to the number of shares of Common Stock outstanding; provided, that in no event shall such number of directors be less than a majority of the total number of directors of the Company. In connection with the foregoing, the Company shall, upon written request by Purchaser, promptly (i) increase the size of the Board of Directors of the Company to the extent permitted by its Articles of Incorporation and By-Laws (and amend the Articles of Incorporation and By-Laws, if so required, to increase the size of the Board of Directors, to allow for such additional directors); and/or (ii) take all steps necessary and appropriate to secure the resignations of such number of directors as is necessary to enable Purchaser's designees to be elected to the Board of Directors of the Company (and shall hold a Board meeting for such purpose); and (iii) cause Purchaser's designees to be so elected; provided, however, that, in the event that Parent's designees are appointed or elected to the Board of Directors, until the Effective Time the Board of Directors shall have at least two directors who are directors on the date hereof and who are neither an officer of the Company or its subsidiaries nor a designee, stockholder, affiliate or associate (within the meaning of the federal securities laws) of Parent (the "Independent Directors"); provided further, that if the number of Independent Directors shall be reduced below two for any reason, any remaining Independent Directors (or Independent Director if there is only one) shall be entitled to fill such vacancy(ies) and if no Independent Directors remain, the other directors shall designate one person who shall not be either an officer of the Company or its subsidiaries or a designee, shareholder, affiliate or associate of Parent to fill one of the vacancies which person shall be deemed to be an Independent Director for purposes of this Agreement and who shall be entitled to fill any remaining vacancy in the number of Independent Directors as provided herein. At any time after the execution hereof, at the request of Purchaser, the Company shall promptly take, at its expense, all action necessary to effect any such election, including mailing to all holders of record of its outstanding securities the information required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in form and substance reasonably satisfactory to Purchaser and its counsel and filing the same with the Commission. Parent or Purchaser shall supply the Company and be responsible for any information included in the filings with the Commission with respect to Purchaser and its nominees, officers, directors and affiliates required by said Section 14(f) and Rule 14f-1 of the Exchange Act. Notwithstanding anything in this Agreement to the contrary, upon consummation of the Offer and prior to the Effective Time, in addition to any other approval of the directors required by applicable law or the Articles of Incorporation or By-Laws of the Company, the affirmative vote of a majority of the Independent Directors shall be required (i) to amend or terminate this Agreement by the Company, (ii) to waive any of the Company's rights or to exercise any of its remedies hereunder, (iii) to extend the time for performance of Purchaser's obligations hereunder or (iv) to take any other action by the Company in connection with this Agreement required to be taken by the Board of Directors of the Company, whether or not such Independent Directors constitute a quorum. ARTICLE II THE MERGER SECTION 2.1. THE MERGER Upon the terms and subject to the conditions hereof, at the Effective Time, Purchaser shall be merged into the Company and the separate existence of Purchaser shall thereupon cease, and the Company, as the surviving corporation in the Merger, shall by virtue of the Merger continue its corporate existence under the -4- 9 laws of the Commonwealth of Pennsylvania with all of its rights, privileges, immunities, powers and franchises unaffected thereby. SECTION 2.2. CLOSING The closing (the "Closing") of the Merger shall take place at the offices of Buchanan Ingersoll Professional Corporation in Pittsburgh, Pennsylvania at 10:00 a.m. on the second Business Day after the conditions set forth in Article IX have been satisfied (or, to the extent permitted by applicable law, waived by the parties entitled to the benefits thereof), or at such other place, time and date as shall be agreed between the Parent and the Company (the "Closing Date"). SECTION 2.3. EFFECTIVE TIME OF THE MERGER The Merger shall become effective at the date and time (the "Effective Time") when properly executed Articles of Merger are duly filed with the Department of State of the Commonwealth of Pennsylvania, which filing shall be made as soon as practicable following fulfillment of the conditions set forth in Article IX hereof, or at such time thereafter as is provided in such Articles of Merger. SECTION 2.4. ARTICLES OF INCORPORATION The Articles of Incorporation of the Company shall, after the Effective Time, be the Articles of Incorporation of the Company and thereafter may be amended in accordance with their terms and as provided by applicable law. SECTION 2.5. BY-LAWS The By-laws of Purchaser as in effect at the Effective Time shall, after the Effective Time, be the By-laws of the Company. SECTION 2.6. BOARD OF DIRECTORS; OFFICERS The directors of Purchaser immediately prior to the Effective Time shall, after the Effective Time, be the directors of the Company and the officers of the Company immediately prior to the Effective Time shall, after the Effective Time, be the officers of the Company, in each case until their respective successors are duly elected and qualified. SECTION 2.7. EFFECTS OF MERGER The Merger shall have the effects set forth in Section 1929 of the PBCL. ARTICLE III CONVERSION OF COMMON STOCK SECTION 3.1. CONVERSION OF COMMON STOCK At the Effective Time, by virtue of the Merger and without any action on the part of any Shareholder: (a) All shares of Common Stock issued and outstanding immediately prior to the Effective Time which are held by the Company or any subsidiary of the Company, and any shares of Common Stock issued and outstanding immediately prior to the Effective Time owned by Parent, Purchaser or any other subsidiary of Parent, shall be canceled. (b) Each remaining share of Common Stock issued and outstanding immediately prior to the Effective Time (other than shares of Common Stock with respect to which the provisions of Section 3.10 are applicable) shall automatically be canceled and extinguished and be converted into and become solely a right to receive the Per Share Amount in cash, without interest. -5- 10 (c) Each share of capital stock of Purchaser issued and outstanding immediately prior to the Effective Time shall be converted and exchanged into one validly issued, fully paid and nonassessable share of Common Stock of the Company. SECTION 3.2. PREFERENCE STOCK UNAFFECTED Each issued and outstanding share of the Company's $2.475 Cumulative Convertible Series B Preference Stock, par value $1.00 per share ("Series B Preference Stock"), and Series D Cumulative Convertible Changeable Preference Stock, par value $1.00 per share ("Series D Preferred Stock"), (together, the "Preference Stock") shall remain outstanding and unaffected by the Merger unless redeemed or converted pursuant to the terms and conditions of the Company's Articles of Incorporation and the applicable statement of designation preferences and rights for such Preference Stock. SECTION 3.3. STOCK OPTIONS (a) Subject to paragraph (b) below, each option (an "Option") to purchase Common Stock issued by the Company which is outstanding at the Effective Time shall be canceled by virtue of the Merger, without consideration except as provided in this Section 3.3(a), and shall cease to exist. Each holder of an Option, whether or not such Option is immediately exercisable, shall be entitled to receive at the Effective Time, for each share of Common Stock issuable on exercise of such Option, an amount in cash equal to the excess of (x) the Per Share Amount over (y) the per share exercise price of the Option as in effect immediately prior to the Effective Time. No consideration shall be payable with respect to any Option if the exercise price of such Option exceeds the Per Share Amount. (b) The consideration due under this Section 3.3 shall be payable without interest after (x) verification by the Paying Agent of the ownership and terms of the particular Option by reference to the Company's records and (y) delivery in the manner provided in Section 3.5 of a written instrument duly executed by the owner of the Option, in a form to be provided by the Paying Agent promptly after the Effective Time, setting forth (i) the aggregate number of shares of Common Stock acquirable by such Option holder upon exercise of all Options held by such holder, whether or not such Options are immediately exercisable, the respective issue dates of each Option and the exercise price of each Option; (ii) a representation by the person that he or she is the owner of all Options described pursuant to clause (i), and that none of those Options has expired or ceased to be exercisable; and (iii) a consent to the treatment of such Options pursuant to this Section 3.3 in full satisfaction of all rights relating to such Options. SECTION 3.4. CLOSING OF COMPANY TRANSFER BOOKS At the Effective Time, the stock transfer books of the Company shall be closed with respect to Common Stock issued and outstanding immediately prior to the Effective Time and no further transfer of such Common Stock shall thereafter be made on such stock transfer books. If, after the Effective Time, valid certificates previously representing such Common Stock are presented to the Company or the Paying Agent, they shall be exchanged as provided in Section 3.5. SECTION 3.5. EXCHANGE OF CERTIFICATES Prior to the Effective Time, Purchaser shall, and Parent shall cause Purchaser to, designate a bank or trust company to act as agent (the "Paying Agent") for the Shareholders to receive the funds necessary to effect the exchange for cash of certificates which, immediately prior to the Effective Time, represented Common Stock entitled to payment pursuant to Section 3.1(b). As soon as practicable after the Effective Time, the Paying Agent shall mail a transmittal form to each holder of record of certificates theretofore representing such Common Stock advising such holder of the procedure for surrendering to the Paying Agent such certificates. If a check for the Per Share Amount is to be issued in the name of a person other than the person in whose name the certificates for Common Stock surrendered for exchange are registered on the books of the Company, it shall be a condition of the exchange that the person requesting such exchange shall pay to the Paying Agent all transfer or other taxes required by reason of the issuance of such check in the name of a -6- 11 person other than the registered owner of the certificates surrendered, or shall establish to the satisfaction of the Paying Agent that such taxes have been paid or are not applicable. Upon the surrender and exchange of a certificate theretofore representing Common Stock, the holder shall be paid by check, without interest thereon, the Per Share Amount for each share of Common Stock theretofore represented by such certificate and to which he or she is entitled hereunder, less only such amount required to be withheld under applicable backup withholding federal income tax regulations, and such certificate shall forthwith be canceled. Until so surrendered and exchanged, each such certificate shall represent solely the right to receive the Per Share Amount into which the Common Stock it theretofore represented shall have been converted pursuant to Section 3.1, without interest, and the Company shall not be required to pay the holder thereof the Per Share Amount to which such holder otherwise would be entitled. Notwithstanding the foregoing, neither the Paying Agent nor any party hereto shall be liable to a holder of certificates theretofore representing Common Stock for any amount paid to a public official pursuant to any applicable abandoned property, escheat or similar laws. If any certificates representing any Common Stock shall not have been surrendered immediately prior to such date on which any payment in respect thereof would otherwise escheat to or become the property of any governmental authority of applicable jurisdiction, the payment in respect of such certificates shall, to the extent permitted by applicable law, become the property of the Company, free and clear of all claims or interest of any person previously entitled thereto. Parent shall use reasonable and customary efforts to locate holders of record of Common Stock who are entitled to receive the Per Share Amount for their shares but who have not surrendered their certificates for exchange in accordance with this Section 3.5 within six (6) months after the Effective Time. In the case of any lost, mislaid, stolen or destroyed certificate, the holder of such certificate may be required, as a condition precedent to delivery to such holder of the Per Share Amount, to deliver to Purchaser a bond in such reasonable sum as security for or a reasonable indemnity agreement as indemnity against any claim that may be made against Parent, Purchaser or the Company with respect to the certificate alleged to have been lost, mislaid, stolen or destroyed. SECTION 3.6. FUNDING OF PAYING AGENT Parent shall transmit by wire, or other acceptable means to the Paying Agent, at or prior to the Effective Time funds required for the exchange of all Common Stock and cancellation of all Options in accordance with this Agreement. The Paying Agent shall agree to hold such funds in trust and deliver such funds (in the form of checks of the Paying Agent) in accordance with this Section and Sections 3.3 and 3.5. Any portion of such funds which has not been paid to Shareholders or holders of outstanding Options pursuant to Section 3.3 or 3.5 within six months after the Effective Time shall promptly be paid to the party which provided such funds, and thereafter holders of certificates representing the right to receive the cash into which Common Stock or Options formerly represented by such certificates shall have been converted pursuant to Section 3.1(b) or 3.3 who have not theretofore complied with Section 3.3 or 3.5 shall look solely to the Parent for payment of the amount of cash to which they are entitled pursuant to this Agreement. SECTION 3.7. ACTION OF SHAREHOLDERS (a) If required by applicable law to approve the Merger, the Company shall take all action necessary in accordance with the PBCL and its Articles of Incorporation and By-Laws to convene a meeting of its shareholders promptly after the consummation of the Offer to consider and vote upon this Agreement and the Merger. If a meeting of the Company's shareholders is to be called, the Company shall, if and to the extent requested by Purchaser but subject to the fiduciary duties of the Independent Directors, use all reasonable efforts to solicit from such shareholders proxies in favor of the adoption of this Agreement and shall take all other action reasonably necessary, or which otherwise may be reasonably requested by Purchaser, to secure a vote of such shareholders in favor of adoption of this Agreement. (b) At any such meeting, Purchaser shall vote or cause to be voted all of the Common Stock then owned by it or its subsidiaries in favor of adoption of this Agreement and the Company shall vote or cause to be voted all securities entitled to vote at such meeting with respect to which proxies in the form distributed by the Company have been given, and not voted against the adoption of this Agreement, in favor of adoption of this Agreement. -7- 12 (c) If necessary, the Company shall file with the Commission, and shall use all reasonable efforts to have processed to completion by the Commission, in each case at the earliest practicable date, a proxy statement or information statement, as Purchaser shall designate (the "Proxy Statement"), with respect to the adoption by the Company's shareholders of this Agreement in form and substance reasonably satisfactory to Purchaser and its counsel. The information provided by Purchaser and the Company, respectively, for use in the Proxy Statement shall be true and correct in all material respects and shall not omit to state any material fact necessary in order to make such information and the Proxy Statement not misleading as of the date of the Proxy Statement. The Proxy Statement shall contain the determination and recommendation of the Board of Directors of the Company referred to in Section 1.2. SECTION 3.8. MERGER WITHOUT MEETING OF SHAREHOLDERS Notwithstanding Section 3.7, in the event that Purchaser shall acquire at least 80% or more of the outstanding shares of each class of the Company, the parties hereto agree to take all necessary and appropriate action, to cause the Merger to become effective as soon as practicable after the expiration of the Offer without a meeting of shareholders of the Company in accordance with Section 1924(b)(ii) of the PBCL. SECTION 3.9. NO FURTHER OWNERSHIP RIGHTS IN COMMON STOCK From and after the Effective Time, the holders of Common Stock which was outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Common Stock except as otherwise provided in this Agreement or by law. All cash paid upon the surrender of certificates in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to Common Stock of the Company. SECTION 3.10. DISSENTING SHAREHOLDERS -- COMMON STOCK Notwithstanding anything in this Agreement to the contrary, shares of Common Stock that are issued and outstanding immediately prior to the Effective Time and that are held by Shareholders who (i) have not voted such shares in favor of the Merger and (ii) have delivered timely a written demand for appraisal of such shares in the manner provided in Chapter 15 of the PBCL shall not be canceled and converted into the right to receive the Per Share Amount described in Section 3.1(b), unless and until such Shareholder shall have failed to perfect, or effectively shall have withdrawn or lost, such Shareholder's right to appraisal and payment under the PBCL, but rather, such Shareholders shall be entitled to payment of the fair value of their shares determined and payable in accordance with the provisions of Chapter 15, Subchapter D of the PBCL. If such Shareholder shall have so failed to perfect, or effectively shall have withdrawn or lost such right, the Common Stock owned by such Shareholder shall thereupon be deemed to have been canceled and converted as described in Section 3.1(b) at the Effective Time, and each share of Common Stock owned by such Shareholder shall represent solely the right to receive the Per Share Amount, without interest. From and after the Effective Time, no Shareholder who has demanded appraisal rights as provided in Subchapter D of the PBCL shall be entitled to vote his or her shares of Common Stock for any purpose or to receive payment of dividends or other distributions with respect to such shares (except dividends and other distributions payable to Shareholders of record at a date which is prior to the Effective Time). The Company shall give Purchaser prompt notice of all written demands received by it for appraisal of Common Stock and shall not settle or compromise any such demand without the prior written consent of Purchaser. SECTION 3.11. DISSENTING SHAREHOLDERS -- PREFERENCE STOCK Notwithstanding anything in this Agreement to the contrary, shares of Preference Stock that are issued and outstanding immediately prior to the Effective Time and that are held by holders of shares of Preference Stock who (i) have not voted such shares in favor of the Merger and (ii) have delivered timely a written demand for appraisal of such shares in the manner provided in Chapter 15 of the PBCL, unless and until such shareholder shall have failed to perfect, or effectively shall have withdrawn or lost, such shareholder's right to appraisal and payment under the PBCL, shall be entitled to payment of the fair value of their shares determined and payable in accordance with the provisions of Chapter 15, Subchapter D of the PBCL. If such -8- 13 shareholder shall have so failed to perfect, or effectively shall have withdrawn or lost such right, the Preference Stock owned by such shareholder shall remain outstanding and unaffected by the Merger. From and after the Effective Time, no shareholder who has demanded appraisal rights as provided in Subchapter D of the PBCL shall be entitled to vote his or her shares of Preference Stock for any purpose or to receive payment of dividends or other distributions with respect to such shares (except dividends and other distributions payable to shareholders of record at a date which is prior to the Effective Time). The Company shall give Purchaser prompt notice of all written demands received by it for appraisal of Preference Stock and shall not settle or compromise any such demand without the prior written consent of Purchaser. SECTION 3.12. ASSISTANCE IN CONSUMMATION OF THE MERGER Each of Parent, Purchaser and the Company shall provide all reasonable assistance to, and shall cooperate with, each other to bring about the consummation of the Offer, the Merger, and the other transactions contemplated by this Agreement as soon as possible in accordance with the terms and conditions of this Agreement. Parent shall cause Purchaser to perform all of its obligations in connection with this Agreement. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company represents and warrants to Parent and Purchaser as follows (which representations and warranties are qualified by the disclosure schedule delivered by the Company to Parent prior to the date of this Agreement, a copy of which is attached hereto (the "Company Disclosure Schedule"), and by the Company SEC Reports (as defined in Section 4.4(a)): SECTION 4.1. ORGANIZATION AND QUALIFICATION (a) The Company and each of its subsidiaries is a corporation duly organized, validly existing and subsisting under the laws of the jurisdiction of its incorporation or organization and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its businesses as now being conducted. (b) Except as set forth in Section 4.1(b) of the Company Disclosure Schedule, the Company has no subsidiaries and does not own, directly or indirectly, beneficially or of record, any shares of capital stock or other security of any other entity or any other investment in any other entity. (c) The Company has heretofore made available to Parent accurate and complete copies of its Articles of Incorporation and Bylaws (or similar governing documents), as currently in effect, of the Company and each of its subsidiaries. Each of the Company and its subsidiaries is duly qualified or licensed and in good standing to do business in each jurisdiction in which the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except in such jurisdictions where the failure to be so duly qualified or licensed and in good standing has not had and would not reasonably be expected to have a Material Adverse Effect (as defined below) on the Company. When used in connection with any party to this Agreement, the term "Material Adverse Effect" means a material adverse effect on (i) the business, financial condition or results of operations of such party and its subsidiaries, taken as whole, except effects that are (x) generally applicable in the United States economy and/or the economy in any other region of the world which do not have a disproportionate effect on such party and its subsidiaries (as the case may be) or, (y) relate to the securities market in general, or (z) relate to such party's industry in general or (ii) the ability of such party to consummate the transactions contemplated hereby without unreasonable delay; provided, however, that (I) the institution of a lawsuit by a shareholder of Parent or the Company challenging this Agreement or the transactions contemplated hereby (or any threat to do so) shall not be deemed to be a Material Adverse Effect, and (II) with respect to the Company, the commencement, public proposal, public disclosure or communication to the Company of any Takeover Proposal shall not be deemed to be a Material Adverse Effect. -9- 14 SECTION 4.2. CAPITALIZATION OF THE COMPANY AND ITS SUBSIDIARIES (a) The authorized capital stock of the Company consists of: (i) 35,000,000 shares of Common Stock, par value $1.00 per share, of which, as of August 5, 1998, 14,718,508 shares were issued and outstanding, and (ii) (x) 1,878,870 shares of Series B Preference Stock, of which 16,000 shares are issued and outstanding; (y) 200,000 shares, of Series C Preferred Stock, par value $ 1.00 per share, of which no shares are issued and outstanding; and (z) 200,000 shares of Series D Preferred Stock, of which 200,000 shares are issued and outstanding. All of the issued and outstanding shares of Common Stock and Preference Stock have been duly authorized, validly issued, and are fully paid, nonassessable and free of preemptive rights. As of August 5, 1998, 1,373,300 shares of Common Stock were reserved for issuance and issuable upon or otherwise deliverable in connection with the exercise of outstanding options granted by the Company to purchase shares of Common Stock issued pursuant to the Company stock incentive plans listed on Section 4.2(a) of the Company Disclosure Schedule (the "Company Stock Incentive Plans") and 1,651,456 shares of Common Stock were reserved for issuance and issuable upon conversion of the Preference Stock in accordance with its terms. Since August 5, 1998, except as set forth on Section 4.2(a) of the Company Disclosure Schedule, no shares of the Company's capital stock have been issued otherwise than pursuant to the exercise of options granted by the Company to purchase shares of Common Stock already in existence on such date, and, since July 23, 1998, no options to purchase shares of the Company Common Stock have been granted. Except as set forth above in this Section 4.2(a), there are outstanding (i) no shares of capital stock or other voting securities of the Company, (ii) no securities of the Company or its subsidiaries convertible into or exchangeable for shares of capital stock or voting securities of the Company, (iii) no options or other rights to acquire from the Company or its subsidiaries, and no other contract, understanding, arrangement or obligation (whether or not contingent) of the Company or its subsidiaries to issue or sell, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company and (iv) no equity equivalents, or interests in the ownership or earnings, of the Company or its subsidiaries (including stock appreciation rights) (collectively, the "Company Securities"). There are no contracts, understandings, arrangements or obligations (whether or not contingent) of the Company or its subsidiaries to repurchase, redeem or otherwise acquire any Company Securities. Except as set forth in Section 4.2(a) of the Company Disclosure Schedule, there are no stockholder agreements, voting trusts or other agreements or understandings to which the Company is a party or to which it is bound relating to the voting of any shares of capital stock of the Company. (b) Except as set forth in Section 4.2(b) of the Company Disclosure Schedule, (i) all of the outstanding capital stock of the Company's subsidiaries is validly issued, fully paid and nonassessable and is owned beneficially and of record by the Company, directly or indirectly, free and clear of any Lien and (ii) there are no securities of the Company or its subsidiaries convertible into or exchangeable for, no options or other rights to acquire from the Company or its subsidiaries, and no other contract, understanding, arrangement or obligation (whether or not contingent) of the Company or its subsidiaries to issue or sell any capital stock or other ownership interests in, or any other securities of, any subsidiary of the Company. There are no contracts, understandings, arrangements or obligations (whether or not contingent) of the Company or its subsidiaries to repurchase, redeem or otherwise acquire any outstanding shares of capital stock or other ownership interests in any subsidiary of the Company. There are no stockholder agreements, voting trusts or other agreements or understandings to which the Company or its subsidiaries is a party or to which it is bound relating to the voting of any shares of capital stock of any subsidiary of the Company. (c) The Company has no bonds, debentures, notes or other instruments or evidence of indebtedness having the right to vote (or convertible into, or exercisable or exchangeable for, securities having the right to vote) on any matters on which holders of the Company's outstanding securities may vote issued or outstanding. (d) The Company is not subject to a "rights agreement," poison pill, or similar obligation. That certain Shareholders Rights Agreement, dated April 14, 1986, by and between the Company and PNC Bank, N.A., as Rights Agent, has expired in accordance with its terms, no longer has any force or effect whatsoever and the rights issued thereunder have expired. The Company has not declared a dividend on its Common Stock since May 1987. -10- 15 SECTION 4.3. AUTHORITY RELATIVE TO THIS AGREEMENT (a) The Company has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Board of Directors of the Company (the "Company Board") and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated hereby (other than, with respect to the Merger, the approval and adoption of the Merger by the affirmative vote of the holders of a majority of the votes cast by the then outstanding shares of Common Stock and Preference Stock, voting together as a single class, voting at the meeting of the Company stockholders referred to in Section 3.7 hereof). Such approval and adoption is the only vote of the holders of any class or series of the Company's capital stock necessary (under Pennsylvania law, the Company's charter or otherwise) to approve the Merger and this Agreement and the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company and constitutes a valid, legal and binding agreement of the Company, enforceable against the Company in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally and except that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding therefore may be brought. (b) The Company Board has, by a majority vote of its directors, duly and validly approved, and taken all corporate actions required to be taken by the Company Board for the consummation of the transactions contemplated hereby (including, without limitation, the Merger) and resolved to recommend that the stockholders of the Company approve and adopt the Merger. The execution and delivery of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been (i) duly authorized by the Board of Directors of the Company prior to Parent or Purchaser becoming an "Interested Stockholder" as defined in Section 2553 of the Pennsylvania Law and, (ii) approved in such a manner as to avoid the application of Subchapter F of Chapter 25 of the Pennsylvania Law. The Company has taken all necessary corporate action so that no "business combination," "fair price," "control share acquisition" or "moratorium" statute or other similar statute or regulation of any state "blue sky" or securities law statute (including, without limitation, the provisions of Section 2538 and Subchapters F, G, H, I and J of Chapter 25 of the Pennsylvania Law) (each, a "Takeover Statute") or any applicable anti-takeover provision in the Company's Articles of Incorporation or By-Laws is applicable to the Company or the transactions contemplated hereby. (c) The Company Common Stock is listed on the New York Stock Exchange (the "NYSE"). None of the Preference Stock is currently registered under the Securities Act (as defined below) nor listed on any national securities exchange and, with the exception of the Common Stock into which the Series D Preference Stock is convertible, the Preference Stock has no registration rights. The Common Stock underlying the Series D Preference Stock is subject to a Registration Rights Agreement dated September 21, 1988. SECTION 4.4. SEC REPORTS; FINANCIAL STATEMENTS; TITLE TO ASSETS; LIENS (a) The Company has filed all required forms, reports and documents with the Commission since January 1, 1995, each of which has complied in all material respects with all applicable requirements of the Securities Act of 1933, as amended (the "Securities Act") and the Securities Exchange Act of 1934, as amended (the "Exchange Act"), each as in effect on the dates such forms, reports and documents were filed. The Company has heretofore delivered to Parent, in the form filed with the Commission (including any amendments thereto), (i) its Annual Reports on Form 10-K for each of the fiscal years ended December 31, 1995, 1996 and 1997, (ii) all definitive proxy statements relating to the Company's meetings of stockholders (whether annual or special) held since January 1, 1995 and (iii) all other reports or registration statements filed by the Company with the Commission since January 1, 1995 (the "Company SEC Reports"). None of such forms, reports or documents, including, without limitation, any financial statements or schedules included or incorporated by reference therein, contained, when filed, any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The -11- 16 consolidated financial statements of the Company included in the Company SEC Reports complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission with respect thereto, have been prepared in conformity with generally accepted accounting principles, consistently applied ("GAAP") (except, in the case of unaudited consolidated quarterly statements, which have been prepared in accordance with the instructions to Form 10-Q of the Commission and Article 10 of Regulation S-X) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto), and fairly present the consolidated financial position of the Company and its consolidated subsidiaries as of the dates thereof and their consolidated results of operations and cash flows for the periods then ended (subject, in the case of the unaudited interim financial statements, to normal, recurring year-end adjustments). Since December 31, 1997, except as set forth in the Company SEC Reports, there has not been any change, or any application or request for any change, by the Company or any of its subsidiaries in accounting principles, methods or policies for financial accounting or tax purposes. The financial statements of the Company have been prepared from, and are in accordance with, the books and records of the Company and its subsidiaries in all material respects. (b) The Company and its subsidiaries have good and marketable title to their assets, except where failure to have such good and marketable title to such assets would not have a Material Adverse Effect on the Company. Section 4.4(b) of the Company Disclosure Schedule sets forth a list of all Liens on the assets of the Company and its subsidiaries except Permitted Liens and Liens that do not have a Material Adverse Effect on the Company. SECTION 4.5. INFORMATION SUPPLIED None of the information supplied or to be supplied by the Company for inclusion or incorporation by reference in (i) Schedule 14D-1 to be filed with the Commission by Parent and/or Purchaser in connection with the Offer will, at the time the Schedule 14D-1 is filed with the Commission contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and (ii) the Proxy Statement will, at the date mailed to stockholders of the Company and at the times of the meetings of stockholders of the Company to be held in connection with the Merger, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. If at any time prior to the Effective Time, any event with respect to the Company, its officers and directors or any of its subsidiaries should occur which is required to be described in an amendment of, or a supplement to, the Schedule 14D-1 or the Proxy Statement, the Company shall promptly so advise Parent and such event shall be so described, and such amendment or supplement (which Purchaser and Parent shall have a reasonable opportunity to review) shall be promptly filed with the Commission and, as and to the extent required by law, disseminated to the stockholders of the Company. The Proxy Statement, insofar as it relates to the meeting of the Company's stockholders to vote on the Merger, will comply as to form in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder, except that no representation or warranty is made with respect to statements made or incorporated by reference therein based on information supplied by Parent specifically for inclusion or incorporation by reference in such document. SECTION 4.6. CONSENTS AND APPROVALS; NO VIOLATIONS Except for filings, permits, authorizations, consents and approvals as may be required under, and other applicable requirements of, the Securities Act, the Exchange Act, state securities or blue sky laws, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the filing and recordation of the Articles of Merger as required by the PBCL and as otherwise set forth in Section 4.6 to the Company Disclosure Schedule, no filing with or notice to, and no permit, authorization, consent or approval of, any court or tribunal or administrative, governmental or regulatory body, agency or authority (a "Governmental Entity") is necessary for the execution and delivery by the Company of this Agreement or the consummation by the Company of the transactions contemplated hereby, except where the failure to obtain such permits, authorizations, consents or approvals or to make such filings or give such notice would not, individually or in -12- 17 the aggregate, reasonably be expected to have a Material Adverse Effect on the Company. Except as set forth in Section 4.6 to the Company Disclosure Schedule, and assuming all filings, notifications, permits, authorizations, consents and approvals referred to in the immediately preceding sentence are duly and timely obtained or made, neither the execution, delivery and performance of this Agreement by the Company nor the consummation by the Company of the transactions contemplated hereby will (i) conflict with or result in any breach of any provision of the respective certificate or articles of incorporation or bylaws (or similar governing documents) of the Company or any of its subsidiaries, (ii) result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of indemnification, termination, amendment, cancellation or acceleration or Lien) under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which the Company or any of its subsidiaries is a party or by which any of them or any of their respective properties or assets may be bound, or (iii) violate any order, writ, injunction, decree, law, statute, rule or regulation applicable to the Company or any of its subsidiaries or any of their respective properties or assets, except in the case of (ii) and (iii) for violations, breaches or defaults which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on the Company. SECTION 4.7. NO DEFAULT Neither the Company nor any of its subsidiaries is in default or violation (and no event has occurred which with or without due notice or the lapse of time or both would constitute a default or violation) of any term, condition or provision of (i) its articles of incorporation or bylaws (or similar governing documents), (ii) any note, bond, mortgage, indenture, lease, license, contract, agreement or other instrument or obligation to which the Company or any of its subsidiaries is now a party or by which any of them or any of their respective properties or assets may be bound or (iii) any order, writ, injunction, decree, law, statute, rule or regulation applicable to the Company, its subsidiaries or any of their respective properties or assets, except in the case of (ii) and (iii) for violations, breaches or defaults which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on the Company. SECTION 4.8. NO UNDISCLOSED LIABILITIES Except as and to the extent disclosed by the Company in the Company SEC Reports and for any liabilities or obligations arising out of matters disclosed in Section 4.8 of the Company Disclosure Schedule, none of the Company or its subsidiaries had any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, and whether due or to become due or asserted or unasserted, which would be required by GAAP to be reflected in, reserved against or otherwise described in the consolidated financial statements of the Company (including the notes thereto) as of the date of such Company SEC Reports, other than any such liabilities or obligations which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on the Company. SECTION 4.9. LITIGATION Except as publicly disclosed by the Company in the Company SEC Reports, or disclosed in Section 4.9 of the Company Disclosure Schedule, there is no suit, claim, action, proceeding or investigation pending or, to the Knowledge of the Company, threatened against the Company or any of its subsidiaries or any of their respective properties or assets which (a) individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on the Company or (b) questions the validity of this Agreement or any action to be taken by the Company in connection with the consummation of the transactions contemplated hereby. Except as publicly disclosed by the Company in the Company SEC Reports, none of the Company or its subsidiaries is subject to any outstanding order, writ, injunction or decree which, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on the Company. -13- 18 SECTION 4.10. COMPLIANCE WITH APPLICABLE LAW Except as publicly disclosed by the Company in the Company SEC Reports or disclosed in Section 4.10 of the Company Disclosure Schedule, the Company and its subsidiaries hold all permits, licenses, variances, exemptions, orders and approvals of all Governmental Entities necessary for the lawful conduct of their respective businesses (the "Company Permits"), except for failures to hold such permits, licenses, variances, exemptions, orders and approvals which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on the Company. Except as publicly disclosed by the Company in the Company SEC Reports, the Company and its subsidiaries are in compliance with the terms of the Company Permits, except where the failure so to comply, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect on the Company. Except as publicly disclosed by the Company in the Company SEC Reports, the businesses of the Company and its subsidiaries are not being conducted in violation of any law, ordinance or regulation of any Governmental Entity, except for violations or possible violations which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on the Company. Except as publicly disclosed by the Company in the Company SEC Reports, no investigation or review by any Governmental Entity with respect to the Company or its subsidiaries is pending or, to the Knowledge of the Company, threatened, nor, to the Knowledge of the Company, has any Governmental Entity indicated an intention to conduct the same, other than, in each case, those the outcome of which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on the Company. No representation or warranty is made in this Section 4.10 with respect to Environmental Laws (as defined and addressed in Section 4.12(a)). SECTION 4.11. EMPLOYEE PLANS (a) Section 4.1l(a) of the Company Disclosure Schedule lists, with respect to the Company or any of its subsidiaries (or their respective predecessors) or any trade or business (whether or not incorporated) (y) currently or formerly under common control (within the meaning of Section 4001(b) of ERISA) with the Company or (z) which together with the Company is or was treated as a single employer under Section 414(t) of the Internal Revenue Code of 1986, as amended (the "Code") (the "Controlled Group"), all (i) "employee benefit plans," as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), (ii) all other severance pay, salary continuation, annual or long-term incentive, stock, phantom stock, stock appreciation right or stock option, retirement, pension, profit sharing or deferred compensation plans, contracts, programs, funds, or arrangements of any kind, (iii) all other employee compensation or benefit plans, contracts, programs, funds, arrangements (whether written or oral, qualified or nonqualified, funded or unfunded, foreign or domestic, currently effective or terminated) which the Company or any of the Controlled Group maintains, is a party to, contributes to or has any obligation to or liability for or which cover its or their employees or former employees, (iv) all trust, escrow or similar agreements or other funding arrangements (the "Funding Arrangements") related to the plans, contracts, programs, funds or arrangements described in clauses (i) through (iii) (the "Employee Benefit Plans") whether or not funded to which the Company or any of the Controlled Group has or is required to make payments, transfers or contributions except Employee Benefit Plans mandated by law ("Statutory Plans"). Neither the Company, nor any of the Controlled Group has any liability with respect to any plan, contract, program, fund, arrangement or practice of the type described in this Section 4.11(a) other than the Employee Benefit Plans and the Funding Arrangements. (b) Copies of the following materials have been delivered or made available to Parent: (i) all current and prior plan documents for each Employee Benefit Plan or Funding Arrangement, or in the case of an unwritten Employee Benefit Plan or Funding Arrangement, a written description thereof, (ii) all determination letters from the Internal Revenue Service with respect to any of the Employee Benefit Plans or Funding Arrangements, (iii) all current and prior summary plan descriptions, summaries of material modifications, annual reports, and summary annual reports, (iv) all current and prior trust agreements, insurance contracts, and other documents relating to the funding or payment of benefits under any Employee Benefit Plan or Funding Arrangement, and (v) any other documents, forms or other instruments relating to any Employee -14- 19 Benefit Plan or Funding Arrangement reasonably requested by Parent. All financial information furnished with respect to any Employee Benefit Plan or Funding Arrangement is true and accurate in all material respects. (c) As of the date hereof, except for exceptions which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on the Company, (i) all payments required to be made by or under any Employee Benefit Plan, any Funding Arrangement, or any collective bargaining agreement have been made; (ii) the Company and its subsidiaries have performed all obligations required to be performed by them under any Employee Benefit Plan or Funding Arrangement; (iii) the Employee Benefit Plans and Funding Arrangements have been administered in compliance with their terms and, if applicable, the requirements of ERISA, the Code and other applicable laws; (iv) there are no actions, suits, arbitrations or claims (other than routine claims for benefit) pending or, to the Knowledge of the Company, threatened with respect to any Employee Benefit Plan or Funding Arrangement; (v) the Company and its subsidiaries have no liability as a result of any "prohibited transaction" (as defined in Section 406 of ERISA and Section 4975 of the Code) for any excise tax or civil penalty; and (vi) except as set forth in the Company SEC Reports, or in Section 4.11(c) of the Company Disclosure Schedule, the assets of each Funding Arrangement for each Employee Benefit Plan required to be funded equal or exceed the vested and unvested projected benefit liabilities under such Employee Benefit Plan. (d) If and to the extent applicable, no Employee Benefit Plan has or has incurred an accumulated funding deficiency within the meaning of Section 302 of ERISA or Section 412 of the Code, nor has any waiver of the minimum funding standards of Section 302 of ERISA and Section 412 of the Code been requested of or granted by the Internal Revenue Service with respect to any Employee Benefit Plan or Funding Arrangement, nor has any lien in favor of any such plan arisen under Section 412(n) of the Code or Section 302(f) of ERISA. (e) Except for exceptions which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on the Company, the Company and its subsidiaries have not incurred any unsatisfied withdrawal liability with respect to any Multiemployer Plan, as defined in ERISA ("Multiemployer Plan"). Except as set forth in Section 4.11(e) of the Company Disclosure Schedule, no withdrawal liability would be assessed upon partial or complete withdrawal from any Multiemployer Plan to which the Company or any of the Controlled Group is obligated to contribute or guarantees contributions other than any such withdrawal liability which has not had and would not reasonably be expected to have a Material Adverse Effect on the Company. (f) Except for exceptions which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on the Company, each of the Employee Benefit Plans which is intended to be "qualified" within the meaning of Section 401(a) of the Code is so qualified, and each trust created thereunder is exempt from tax under the provisions of Section 501(a) of the Code. (g) Except as set forth on Section 4.11(g) of the Company Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby either alone or together with the occurrence or nonoccurrence of any other event or condition will (i) result in any payment becoming due, or increase the amount of compensation or benefit due, to any current or former employee of the Company or any of the Controlled Group; (ii) increase any compensation or benefits otherwise payable under any Employee Benefit Plan or Funding Arrangement; or (iii) result in the acceleration of the time of payment or vesting of any such compensation or benefits. (h) Except as disclosed on Section 4.11(h) of the Company Disclosure Schedule and for exceptions which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on the Company, with respect to any insurance policy providing funding for benefits under any Employee Benefit Plan, there is no liability of the Company in the nature of a retroactive rate adjustment, loss sharing arrangement, or other actual or contingent liability, there will be no such liability arising wholly or partially out of events occurring prior to the execution of this Agreement, nor would there be any such liability if the Company canceled such policy as of the date hereof. -15- 20 SECTION 4.12. ENVIRONMENTAL MATTERS (a) As used in this Agreement: (i) "Environmental Law" means any applicable federal, state or local law, statute, code, ordinance, rule, regulation or other governmental requirement from any U.S. or foreign jurisdiction concerning the Release (as defined herein), handling, storage, processing, transportation, manufacture, distribution, treatment, disposal, permitting, remediation or other use of any solid waste, industrial waste or Hazardous Substance (as defined herein), or concerning the protection of the health or safety of employees or the public, including, by way of example but not limitation, the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. sec. 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. sec. 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. sec. 6901 et seq.), the Clean Water Act (33 U.S.C. sec. 1251), the Clean Air Act (42 U.S.C. sec. 7401), the Toxic Substances Control Act (15 U.S.C. sec. 2601 et seq.), and the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. sec. 136 et seq.), the Mine Safety and Health Act (30 U.S.C. sec. 801 et seq.) and the Occupational Safety and Health Act (29 U.S.C. sec. 651 et seq.), and the regulations promulgated pursuant to each of them. (ii) "Environmental Claim" means any written notice of violation, action, claim, lien, demand, order, injunction, judgment, decree, ruling, assessment or arbitration award or directive (conditional or otherwise) by any Governmental Entity or any person for personal injury (including sickness, disease or death), tangible or intangible property damage, diminution in value, damage to the environment or natural resources, nuisance, pollution, contamination or other adverse effects on the environment, or for fines, penalties or restrictions resulting from or based upon (a) the existence, or the continuation of the existence, of a Release (including, without limitation, sudden or non-sudden accidental or non-accidental Release) of, or exposure to, any Hazardous Substance, odor, audible noise, or any solid or industrial waste; (b) the transportation, storage, treatment or disposal of solid waste, industrial waste or Hazardous Substances, in connection with the past or present operations of any person, any of its subsidiaries or, to the Knowledge of such person, any of their respective predecessors or assigns; or (c) the violation, or alleged violation, of any Environmental Laws, orders, injunctions, judgments, decrees, rulings, assessments, arbitration awards, Environmental Permits or ruling, order or decision of any court, arbitrator or Governmental Entity relating to such person and its environmental matters. (iii) "Environmental Permit" means any permit, approval, authorization, license, variance, registration, permit application, notification, program development and implementation, or permission required under any applicable Environmental Law. (iv) "Hazardous Substance" means any substance, material or waste which is regulated (A) under any Environmental Law or (B) by any applicable Governmental Entity in the jurisdictions in which a person or any subsidiary or any of their respective predecessors or assigns conducts or has conducted business, or (C) by the United States, including, without limitation, any material or substance which is defined as a "hazardous waste," "hazardous material," "hazardous substance," "extremely hazardous waste" or "restricted hazardous waste," "subject waste," "pollutant," "contaminant," "toxic waste," "toxic substance" or "residual waste" under any Environmental Law, including, but not limited to, radioactive materials, petroleum products, asbestos and polychlorinated biphenyls. (v) "Property" means, with respect to any person, any land, facility or operations currently or previously owned or otherwise used by such person, any of its subsidiaries or any of their respective predecessors. (vi) "Release" means, with respect to any person, any intentional or unintentional, continuous or intermittent release, spill, emission, seepage, leaking, pumping, uncontrolled loss, injection, deposit, disposal, discharge, dispersal, leaching or migration into the environment, or any building surface, or onto or from any Property of such person, of any Hazardous Substance, including the movement of any Hazardous Substance through or in the air, soil, surface water, ground water or otherwise. -16- 21 (vii) "Remedial Action" means, with respect to any person, all actions, including, without limitation, any capital expenditures, required or voluntarily undertaken by such person to (i) clean up, remove, treat, or in any other way address any Hazardous Substance or any other material required pursuant to applicable Environmental Law or Environmental Permit; (ii) prevent the Release or threat of Release, or minimize the further Release of any Hazardous Substance or any other material required pursuant to applicable Environmental Law or Environmental Permit; (iii) perform pre-remedial studies and investigations or post-remedial monitoring and care including the conduct of risk assessments and negotiation with applicable Governmental Entities regarding any Hazardous Substance or any other material required pursuant to applicable Environmental Law or Environmental Permit; or (iv) bring the Properties of such person into compliance with all applicable Environmental Laws and Environmental Permits. (b) Except as disclosed in any Company SEC Report or as disclosed in Section 4.12 of the Company Disclosure Schedule, the Company and each of its subsidiaries and, to the Knowledge of the Company, each other permitted user of a Property and its use of and operations at each Property is in compliance with all applicable Environmental Laws and Environmental Permits, except where the failure to so be in compliance, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect on the Company. (c) Except as disclosed in any Company SEC Report or as disclosed in Section 4.12 of the Company Disclosure Schedule, neither the Company nor any of its subsidiaries or, to the Knowledge of the Company, any of their respective predecessors or any other user of a Property, has received any written communication from a court, Governmental Entity or any other person that alleges that the Company or any such subsidiary or predecessor or other person is not in compliance, with any Environmental Law or Environmental Permit or has liability thereunder, and, to the Knowledge of the Company, there is no basis for any such allegation except with respect to failures to so be in compliance which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on the Company. (d) Except as disclosed in any Company SEC Report or as disclosed in Section 4.12 of the Company Disclosure Schedule, (i) none of the Properties or operations of the Company or any of its subsidiaries or, to the Knowledge of the Company, any of their respective predecessors, is the subject of any investigation by any Governmental Entity, whether federal, state, local or foreign, with respect to (A) any Environmental Law or Environmental Permit, (B) any Remedial Action or (C) any Environmental Claim, which in each case, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on the Company and (ii) the Company and each of its subsidiaries have filed all notices, obtained all Environmental Permits and conducted all Remedial Actions required under all Environmental Laws and Environmental Permits, except where the failure to file such notices, obtain such Environmental Permits or take such Remedial Actions, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect on the Company. The Company and each of its subsidiaries are in compliance with the terms and conditions of each of their Environmental Permits, except for any such noncompliance which, individually and in the aggregate, has not had and would not reasonably be expected to have, a Material Adverse Effect on the Company, and, except as disclosed in Section 4.12 of the Company Disclosure Schedule, to the Knowledge of the Company, no change in the facts or circumstances reported or assumed in the application for or granting of any such Environmental Permit exists. (e) Except as disclosed in any Company SEC Report or as disclosed in Section 4.12 of the Company Disclosure Schedule, the Company and each of its subsidiaries and, to the Knowledge of the Company, each of their respective predecessors, have filed all notices required to be filed by them under all Environmental Laws and Environmental Permits reporting any Release, except where failure to file such notices, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect on the Company. (f) Except as disclosed in any Company SEC Report or as disclosed in Section 4.12 of the Company Disclosure Schedule, neither the Company nor any of its subsidiaries has any contingent liabilities with respect to its business or, to the Knowledge of the Company, that of its predecessors, in connection with any -17- 22 Hazardous Substance or Environmental Law or Environmental Permit which, individually or in the aggregate, have had or would reasonably be expected to have a Material Adverse Effect on the Company. (g) Except as disclosed in any Company SEC Report or as disclosed in Section 4.12 of the Company Disclosure Schedule, underground storage tanks are not located on or under any Property for which the Company or any of its subsidiaries would be responsible or potentially responsible under any Environmental Law or Environmental Permit and there have been no Releases of Hazardous Substances on, in or under any Property for which the Company or any of its subsidiaries would be responsible or potentially responsible under any Environmental Law or Environmental Permit that in either case, individually or in the aggregate, have had or would reasonably be expected to have a Material Adverse Effect on the Company. (h) Except as disclosed in any Company SEC Report or as disclosed in Section 4.12 of the Company Disclosure Schedule, none of the Company, any of its subsidiaries or, to the Knowledge of the Company, any of their respective predecessors or any other user of a Property, is subject to any judicial, administrative or arbitral actions, suits, proceedings (public or private), written claims or governmental proceedings alleging the violation of any Environmental Law or Environmental Permit, and, to the Knowledge of the Company, there is no basis for any such claim or proceeding that, individually or in the aggregate, have had or would reasonably be expected to have a Material Adverse Effect on the Company. (i) Except as disclosed in any Company SEC Report or as disclosed in Section 4.12 of the Company Disclosure Schedule, none of the Company, any of its subsidiaries or, to the Knowledge of the Company, any of their respective predecessors or any other permitted user of a Property of the Company or any of its subsidiaries, as a result of their respective past and current operations, has caused or permitted any Hazardous Substances to remain or be disposed of, either on or under any Property of the Company or any of its subsidiaries or on any real property, otherwise than in compliance with all applicable Environmental Laws and Environmental Permits, in a manner that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on the Company. SECTION 4.13. TAX MATTERS Except as disclosed in Section 4.13 of the Company Disclosure Schedule or as disclosed in any Company SEC Report: (a) Subject to such exceptions which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on the Company, (i) the Company and each of its subsidiaries, and each affiliated group (within the meaning of Section 1504 of the Code) of which the Company or any of its subsidiaries is or has been a member, has timely filed all federal income tax returns and all other Tax (as defined below) returns and reports required to be filed by it, (ii) all such Tax returns are complete and correct in all respects and (iii) the Company, and each of its subsidiaries paid (or the Company has paid on its subsidiaries behalf) all Taxes due in respect of the taxable periods covered by such Tax returns. The Company has previously delivered to Parent copies of all U.S. federal income Tax returns filed by the Company and each of its subsidiaries for their taxable years ended in 1995 and 1996. The liability for Taxes reflected on the balance sheet dated July 31, 1998, of the Company is sufficient for the payment of all unpaid Taxes that are accrued or applicable for any period ended on or before July 31, 1998, except for any deficiency which has not had and would not reasonably be expected to have a Material Adverse Effect on the Company. For purposes of this Agreement, (1) "Tax" or "Taxes" shall mean all taxes, charges, fees, imposts, levies, gaming or other assessments, including, without limitation, all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever, together with any interest and any penalties, fines, additions to tax or additional amounts imposed by any taxing authority (domestic or foreign) and shall include any transferee liability in respect of taxes and any liability in respect of taxes imposed by contract, tax sharing agreement, tax indemnity agreement or any similar agreement and (2) "Tax returns" shall mean any report, return, document, declaration or any other information or filing required to be supplied to any taxing authority or jurisdiction (foreign or domestic) with respect to Taxes, including without -18- 23 limitation, information returns, any document with respect to or accompanying payments of Taxes or estimated Taxes, or with respect to or accompanying requests for the extension of time in which to file any such report, return document, declaration or other information. (b) Subject to such exceptions which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on the Company, no deficiencies for any Taxes have been proposed, asserted or assessed against the Company or any of its subsidiaries that have not been fully paid or adequately provided for in the appropriate financial statements of the Company and its subsidiaries. (c) Subject to such exceptions which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on the Company, no issues relating to Taxes have been raised in writing by the relevant taxing authority (whether federal, state, local or other) during any pending audit or examination. The federal income Tax returns of the Company and each of its subsidiaries consolidated in such Tax returns have been reviewed by the Internal Revenue Service for all years through its fiscal year ended December 31, 1984. (d) None of the Company or any of its subsidiaries has taken or agreed to take any action that would prevent the Merger from constituting a reorganization qualifying under the provisions of Section 368(a) of the Code. (e) None of the Company or any of its subsidiaries is a party to or is bound by any Tax sharing agreement, Tax indemnity obligation or similar agreement, arrangement or practice with respect to Taxes (including any advance pricing agreement, closing agreement or other agreement relating to Taxes with any taxing authority). (f) The Company and each of its subsidiaries are not currently, have not been within the last five years, and do not anticipate becoming a "United States real property holding company" within the meaning of Section 897(c) of the Code. SECTION 4.14. INTANGIBLE PROPERTY Subject to such exceptions which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on Company, the Company and its subsidiaries own or possess adequate licenses or other valid rights to use all patents, patent rights, trademarks, trademark rights, trade names, trade name rights, copyrights, service marks, trade secrets, applications for trademarks and for service marks, know-how and other proprietary rights and information used or held for use in connection with the business of the Company and its subsidiaries as currently conducted or as contemplated to be conducted, and, except as set forth in the Company SEC Reports, or Section 4.14 of the Company Disclosure Schedule, the Company has no Knowledge of any assertion or claim challenging the validity or enforceability of any of the foregoing which, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect on the Company. Except as disclosed in Section 4.14 of the Company Disclosure Schedule or in any Company SEC Report and subject to such exceptions which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on the Company, there have been no claims made or notices that the manufacture and sale of any of the Company's products infringes the patents of any third party. To the Knowledge of the Company, each of the federal, state and international registrations pertaining to the proprietary rights and information owned by the Company and its subsidiaries is valid and in full force and effect and all required filings in association with such registrations have been properly made and all required fees have been paid, except where the failure to be in full force and effect, to have made the required filings or to have paid the required fees has not had and would reasonably not be expected to have a Material Adverse Effect on the Company. SECTION 4.15. OPINION OF FINANCIAL ADVISOR Salomon Smith Barney Inc. (the "Company Financial Advisor") has delivered to the Company's Board its opinion, dated the date of this Agreement, to the effect that, as of such date, the Per Share Amount is fair -19- 24 to the holders of the Common Stock from a financial point of view, and such opinion has not been withdrawn or adversely modified. SECTION 4.16. BROKERS No broker, finder or investment banker (other than the Company Financial Advisor) is entitled to any brokerage, finder's or other fee or commission or expense reimbursement in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company or any of its affiliates. The fees and commissions payable to the Company Financial Advisor, as contemplated by this Section, shall not exceed the aggregate amount set forth in that certain letter dated December 1, 1997 from the Company Financial Advisor to the Company, a true and current copy of which has been provided for Parent. SECTION 4.17. LABOR MATTERS Except as set forth in Section 4.17 of the Company Disclosure Schedule, neither the Company nor any of its subsidiaries is a party to any employment, severance compensation, labor or collective bargaining agreement and there are no employment, severance compensation, labor or collective bargaining agreements which pertain to employees of the Company or any of its subsidiaries. No labor organization or group of employees of the Company or any of its subsidiaries has made a pending written demand for recognition or certification. There is no labor strike, slowdown or stoppage pending or, to the Knowledge of the Company, threatened against or involving the Company or any of its subsidiaries which would have or would reasonably be expected to have a Material Adverse Effect on the Company. SECTION 4.18. ABSENCE OF CERTAIN CHANGES Since December 31, 1997 and except as set forth in the Company SEC Reports and Section 4.18 of the Company Disclosure Schedule, the Company and its subsidiaries have conducted their business in the ordinary course consistent with past practice and there has not been: (a) any event, occurrence or development of a state of circumstances or facts which has had or is reasonably likely to have, individually or in the aggregate, a Material Adverse Effect on the Company; (b) any declaration, setting aside or payment of any dividend or other distribution with respect to any shares of Company Common Stock, or any repurchase, redemption or other acquisition by the Company or any of its subsidiaries of any amount of outstanding shares of capital stock or other securities of, or other ownership interests in, the Company or any of its subsidiaries; (c) any amendment of any material term of any outstanding security of the Company or any of its subsidiaries; (d) any incurrence, assumption or guarantee by the Company or any of its subsidiaries of any indebtedness from any third party for borrowed money other than guarantees by the Company for the benefit of any of its subsidiaries and other than in the ordinary course of business and in amounts and on terms consistent with past practices; (e) any creation or assumption by the Company or any of its subsidiaries of any Lien on any material asset other than in the ordinary course of business consistent with past practices; (f) any making of any loan, advance or capital contribution to or investment in any person other than loans, advances or capital contributions to or investments in wholly-owned subsidiaries or to employees of the Company made in the ordinary course of business consistent with past practices; (g) any damage, destruction or other casualty loss (whether or not covered by insurance) affecting the business or assets of the Company or any of its subsidiaries which, individually or in the aggregate, has had or is reasonably likely to have a Material Adverse Effect on the Company; -20- 25 (h) any transaction or commitment made, or any contract or agreement entered into, by the Company or any of its subsidiaries relating to its assets or business (including, without limitation, the acquisition or disposition of any assets) (other than transactions and commitments contemplated by this Agreement) inconsistent with the Company's 1998 Strategic and Annual Operating Plan dated February 18, 1998 (the "1998 Plan"), which was disclosed to Parent and Purchaser prior to the date of this Agreement, or any relinquishment by the Company or any of its subsidiaries of any material contract, license or right; (i) any change in any method of accounting or accounting principle or practice by the Company or any of its subsidiaries, except for any such change required by GAAP or Regulation S-X promulgated under the Exchange Act ("Regulation S-X"); or (j) any (i) grant by the Company or any of its subsidiaries of any severance or termination pay to, or entry into any employment, termination or severance arrangement with, any director, officer or employee of the Company or any subsidiaries other than any such grant or arrangement to or with any employee of any subsidiary of the Company in the ordinary course in an amount not exceeding an amount equal to the annual compensation plus expenses relating to "COBRA" and out-placement benefits of such employee; (ii) entering into of any employment, deferred compensation or other similar agreement (or any amendment to any such existing agreement) with any director, officer or employee of the Company or any of its subsidiaries, (iii) increase in benefits payable under any existing severance or termination pay policies or employment agreements or (iv) increase in compensation, bonus or other benefits payable to directors, officers or employees of the Company or any of its subsidiaries, other than in the ordinary course of business. SECTION 4.19. MILLENNIUM (a) The Company is in the process of conducting an inventory and assessment of all software, computers, network equipment, technical infrastructure, production equipment and other equipment and systems that are material to the operation of its business and the businesses of its subsidiaries and that rely on, utilize or perform date or time processing ("Systems"). (b) Any failure of any of the Company's Systems to be Year 2000 Complaint has not had and is not reasonably expected to have a Material Adverse Effect on the Company. (c) "Year 2000 Compliant" means a System will at all times: (i) consistently and accurately handle and process date and time information and data values before, during and after January 1, 2000, including but not limited to accepting date input, providing date output, and performing calculations on or utilizing dates or portions of dates; (ii) function accurately and in accordance with its specifications without interruption, abnormal endings, degradation, change in operation or other impact, or disruption of other Systems, resulting from processing date or time data with values, before, during and after January 1, 2000; (iii) respond to and process two-digit date input in a way that resolves any ambiguity as to century; and (iv) store and provide output of date information in ways that are unambiguous as to century. SECTION 4.20. FULL DISCLOSURE None of the representations or warranties of the Company contained in this Article 4 nor any of the disclosures contained in the Company Disclosure Schedule contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements contained herein or therein, in light of the circumstances under which they are to be made, not misleading, subject to such exceptions which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on the Company. The documents furnished by the Company pursuant to this Agreement are in all material respects true and correct copies of such documents. -21- 26 SECTION 4.21. REAL PROPERTY (a) Section 4.21(a) of the Company Disclosure Schedule lists all material real property owned by the Company or any of its subsidiaries (the "Owned Real Property"). The Company has good and marketable title in fee simple to the Owned Real Property and, except as indicated in Section 4.21(a) of the Company Disclosure Schedule, the Owned Real Property and all mineral reserves located thereon are owned free and clear of any charge, claim, community property interest, equitable interest, lien, option, pledge, security interest, mortgage, lease, license, easement, right of first refusal or other encumbrance ("Liens") other than for Permitted Liens. (b) Section 4.21(b) of the Company Disclosure Schedule contains a list of all leases and subleases (the "Leases"), with respect to all material real property leased by the Company or any of its subsidiaries (the "Leased Property"). (c) The Company and its Subsidiaries have the mineral reserves disclosed in pages 1-7 of the 1997 Form 10-K. There are no material zoning or land use restrictions or covenants which would materially inhibit the surface or subsurface mining or quarrying process where such mineral reserves are located. (d) The Liens affecting the Owned Real Property or Leased Property do not and will not, with respect to each Owned Real Property or Leased Property, individually or in the aggregate, materially impair the Company's or its subsidiary's ability to use the Owned Real Property or Leased Property in the operation of the Company's or its subsidiary's business as presently conducted. To the Knowledge of the Company, the Company or its subsidiary has access to public roads, streets or the like or valid easements over private streets, roads or other private property for such ingress to and egress from the Owned Real Property and the Leased Property, except as would not materially impair the Company's or its subsidiary's ability to use any such Owned Real Property or Leased Property in the operation of the Company's or its subsidiary's business as presently conducted or for the purposes for which such Owned Real Property or Leased Property is held by the Company or its subsidiary. (e) Neither the Company nor any of its subsidiaries has received any notice of any violation of any applicable building, zoning, land use or other similar statutes, laws, ordinances, regulations, permits or other requirements in respect of the Owned Real Property and the Leased Property, and to the Knowledge of the Company, there does not exist any such violations which adversely affect the ability of the Company and its subsidiaries to use the Owned Real Property or Leased Property in the manner and scope in which it is now being used except for violations which have not had and would not reasonably be expected to have a Material Adverse Effect on the Company. Neither the Company nor any of its subsidiaries has received any notice that any, and to the Knowledge of the Company, no operations on or uses of the Owned Real Property and the Leased Property constitute non-conforming uses under any applicable building, zoning, land use or other similar statutes, laws, ordinances, regulations, permits or other requirements other than (i) non-conforming uses that are legal non-conforming uses, (ii) non-conforming uses that have been conducted with sufficient continuity so as to preserve the right to continue the existing operations and uses and any similar operations and uses for such property in the future, and (iii) non-conforming uses which, individually and in the aggregate, have not had and would not reasonably be expected to have, a Material Adverse Effect on the Company. Neither the Company nor any of its subsidiaries has Knowledge of or has received notice of any pending or contemplated condemnation, eminent domain or rezoning proceeding affecting the Owned Real Property or the Leased Property. (f) Neither the Company nor any of its subsidiaries has received any notice from any insurance carrier regarding defects or inadequacies in the Owned Real Property or Leased Property which, if not corrected, would result in termination of the Company's or its subsidiaries' insurance coverage or any material increase in the cost thereof, and the Company has no Knowledge of any such defects or inadequacies. (g) "Permitted Liens" means, with respect to any asset, (i) covenants, conditions, restrictions, encroachments, encumbrances, easements, rights of way, licenses, grants, building or use restrictions, exceptions, reservations, limitations or other imperfections of title (other than a Lien securing any indebtedness) with respect to such asset which, individually or in the aggregate, do not materially detract from the -22- 27 value of, or materially interfere with the present occupancy or use of, such asset and the continuation of the present occupancy or use of such asset or the use or occupancy for which such asset is held by a person; (ii) unfiled mechanic's, materialmen's and similar Liens with respect to amounts not yet due and payable or which are being contested in good faith through appropriate proceedings; (iii) Liens for taxes not yet delinquent or which are being contested in good faith through appropriate proceedings; and (iv) Liens securing rental payments under capital lease arrangements. SECTION 4.22. CONTRACTS Section 4.22 of the Company Disclosure Schedule sets forth a list of all material sales contracts and agreements to which the Company or any subsidiary is a party (the "Material Contracts"). All such contracts and agreements are in full force and effect and are binding on the parties thereto. No default by the Company or any of its subsidiaries has occurred thereunder, and to the Knowledge of the Company, no default by the other contracting parties has occurred thereunder, other than defaults which, individually and in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on the Company. ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT Parent represents and warrants to the Company as follows: SECTION 5.1. ORGANIZATION AND QUALIFICATION Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the corporate power to carry on its business as it is now being conducted or currently proposed to be conducted. SECTION 5.2. AUTHORITY RELATIVE TO THIS AGREEMENT Parent has the corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. The submission of the Offer, the negotiation, execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by Parent's Board of Directors. This Agreement constitutes a valid and binding obligation of Parent enforceable in accordance with its terms except as enforcement may be limited by bankruptcy, insolvency or other similar laws affecting the enforcement of creditors' rights generally and except that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding therefor may be brought. No other corporate proceedings on the part of Parent are necessary to authorize this Agreement and the transactions contemplated hereby. SECTION 5.3. NO CONFLICT OR VIOLATION; CONSENTS (a) Neither the execution and delivery of this Agreement nor the consummation or performance of any of the transactions contemplated hereby by Parent will, directly or indirectly (with or without notice or lapse of time) (i) contravene, conflict with, or result in a violation of (A) any provision of the Certificate of Incorporation or By-Laws of Parent, or (B) any resolution adopted by the board of directors or the shareholders of Parent; or (ii) contravene, conflict with, or result in a violation of, or give any Governmental Entity or other person the right to challenge any of the transactions contemplated hereby or to exercise any remedy or obtain any relief under, any material order, permit, regulation, statute or rules ("Material Legal Requirements") to which Parent, its subsidiaries, or any of the assets owned or used by Parent or its subsidiaries, may be subject; (b) Except as referred to herein or in connection, or in compliance, with the provisions of the HSR Act, the Securities Act, the Exchange Act, the Exon-Florio Act, filing of the Articles of Merger and the environmental, corporation, securities or blue sky laws or regulations of the various states, no consent, approval, or authorization of, or registration or filing with, any Governmental Entity or any other person is -23- 28 required for the execution and delivery of this Agreement by the Parent and the Purchaser or the consummation of the Offer and the Merger. SECTION 5.4. ADEQUATE FINANCING Parent has adequate funds to consummate the Offer and the Merger and perform its other obligations under this Agreement, to refinance the existing indebtedness of the Company and its subsidiaries and to satisfy the reasonably anticipated working capital requirements of the Company and its subsidiaries after the Closing. SECTION 5.5. OWNERSHIP OF COMMON STOCK Neither Parent nor Purchaser beneficially owns or otherwise has an interest in any Common Stock or Preference Stock. SECTION 5.6. FULL DISCLOSURE None of the representations or warranties of Parent or Purchaser contained in this Article 5 or Article 6 contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements contained herein or therein, in light of the circumstances under which they are to be made, not misleading, subject to such exceptions which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on Parent. SECTION 5.7. INFORMATION SUPPLIED None of the information supplied or to be supplied by Parent for inclusion or incorporation by reference into (i) the Company's Schedule 14D-9 or, if necessary (ii) the Proxy Statement will at the time they are filed with the Commission contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements, therein not misleading. If at any time prior to the Effective Time, any event with respect to Parent, its officers and directors or any of its subsidiaries should occur which is required to be described in an amendment to the Schedule 14D-1, 14D-9 or Proxy Statement, Parent shall promptly so advise the Company and such event shall be so described, and such amendment or supplement (which if not prepared by the Company shall be reviewed by the Company) shall be promptly filed with the Commission and, as and to the extent required by law, disseminated to the shareholders of the Company. ARTICLE VI REPRESENTATIONS AND WARRANTIES REGARDING PURCHASER Parent and Purchaser jointly and severally represent and warrant to the Company as follows: SECTION 6.1. ORGANIZATION Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania. Purchaser has not engaged in any business (other than certain organizational matters) since it was incorporated. SECTION 6.2. CAPITALIZATION The authorized capital stock of Purchaser consists of 20,000,000 shares of Common Stock, par value $0.01 per share, of which 14,718,508 shares are validly issued and outstanding, fully paid and nonassessable and are owned by Parent free and clear of all liens, charges, claims, security interests or encumbrances. SECTION 6.3. AUTHORITY RELATIVE TO THIS AGREEMENT Purchaser has the corporate power to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby -24- 29 have been duly authorized by its Board of Directors and sole shareholder, and no other corporate proceedings on the part of Purchaser are necessary to authorize this Agreement and the transactions contemplated hereby. Except as referred to herein or in connection, or in compliance, with the provisions of the HSR Act, the Securities Act, the Exchange Act, the Exon-Florio Act, filing of the Articles of Merger, and the environmental, corporation, securities or blue sky laws or regulations of the various states, no filing or registration with, or authorization, consent or approval of, any Governmental Entity is necessary for the consummation by Purchaser of the Offer, the Merger or the transactions contemplated by this Agreement, other than filings, registrations, authorizations, consents or approvals as will be timely made or obtained or the failure to make or obtain would not prevent the consummation of the transactions contemplated hereby. ARTICLE VII CONDUCT OF BUSINESS PENDING THE MERGER SECTION 7.1. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER Prior to the Effective Time, unless Parent shall otherwise agree in writing: (a) the business of the Company and its subsidiaries shall be conducted only in the ordinary and usual course and in compliance with all applicable Material Legal Requirements and, to the extent consistent therewith, each of the Company and its subsidiaries shall use its commercially reasonable efforts to preserve its business organization intact and to maintain its existing relations with customers, suppliers, employees, creditors and business partners; (b) the Company shall not, directly or indirectly, amend its or any of its subsidiaries', articles or certificate of incorporation or bylaws or similar organizational documents; (c) the Company shall not, and it shall not permit any of its subsidiaries to: (i) (A) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to the Company's capital stock or that of any of its subsidiaries (other than regularly scheduled dividends on the Preference Stock in accordance with the terms of the Preference Stock) or (B) redeem, purchase or otherwise acquire directly or indirectly any of the Company's capital stock (or options, warrants, calls, commitments or rights of any kind to acquire any shares of capital stock) or that of any of its subsidiaries, other than redemptions of Preference Stock required by the Company's Articles of Incorporation; (ii) issue, sell, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or any of its subsidiaries, other than Common Stock issuable upon the exercise of the Options, or upon the conversion of the Series B Preferred or Series D Preferred outstanding on the date hereof; or (iii) split, combine or reclassify the outstanding capital stock of the Company or of any of its subsidiaries; (d) the Company shall not, and it shall not permit any of its subsidiaries to, acquire or agree to acquire, or dispose of or agree to dispose of, any material assets other than in the ordinary course of business, either by purchase, merger, consolidation, sale of shares in any of its subsidiaries or otherwise; (e) the Company shall not, and it shall not permit any of its subsidiaries to, transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any of the Owned Real Property or Leased Property (except for mortgages on such real property existing on the date hereof) or, other than in the ordinary course of business, intellectual properties; (f) neither the Company nor any of its subsidiaries shall: (i) grant any increase in the compensation payable or to become payable by the Company or any of its subsidiaries to any of its officers, directors or key employees, except for (A) increases in the ordinary course of business consistent with past practices or to the extent required by any contract, and (B) payment immediately prior to consummation of the Offer, of a pro rata portion of the 1998 target award under the Company's Annual Incentive Plan for which amounts have been accrued on the Company's financial statements, or (ii) (A) adopt any new, (B) grant any award under any, or (C) amend or otherwise increase, or accelerate the payment or vesting -25- 30 of the amounts payable or to become payable under, any existing employee benefit or compensation plan other than as contemplated by this Agreement or in accordance with the provisions of such benefit plan; or (iii) increase the number of directors of the Company, enter into or modify or amend any existing employment or severance agreement with or, grant any severance or termination rights to any officer, director or employee of the Company or any of its subsidiaries or terminate any of the employees of the Company other than in the ordinary course of business; or (iv) enter into or modify in any material respect any collective bargaining agreement; (g) neither the Company nor any of its subsidiaries shall modify, amend or terminate in any material respect any of its Material Contracts or waive, release or assign any material rights or claims; (h) neither the Company nor any of its subsidiaries shall: (i) incur or assume any indebtedness other than indebtedness with respect to working capital in amounts consistent with past practice; (ii) materially modify any existing indebtedness or obligation; (iii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person (other than a subsidiary), other than immaterial amounts in the ordinary course of business consistent with past practice; (iv) make any loans, advances or capital contributions to, or investments in, any other person (other than to wholly owned subsidiaries of the Company or customary advances to employees in accordance with past practice); or (v) enter into any material commitment or transaction other than in the ordinary course of business; (i) neither the Company nor any of its subsidiaries shall change any of the accounting methods, practices or policies used by it, unless required by generally accepted accounting principles or SEC rules and regulations; (j) the Company shall not, and it shall not permit any of its subsidiaries to, make or agree to make any capital expenditures, except for capital expenditures that are not materially inconsistent with the 1998 Plan; (k) the Company shall not, and it shall not permit any of its subsidiaries to, make any material tax election (unless required by law) or settle or compromise any material income tax liability; (l) the Company shall not, and it shall not permit any of its subsidiaries to, (i) waive the benefits of, or agree to modify in any material manner, any confidentiality, standstill or similar agreement to which the Company or any of its subsidiaries is a party, or (ii) pay, discharge or satisfy any legal proceeding, other than a payment, discharge or satisfaction, (A) involving payments by the Company or its subsidiaries of less than $100,000 in the aggregate, or (B) for which liabilities are fully reflected on or are fully reserved against in the Company's most recent consolidated financial statements (or the notes thereto) included in the Company SEC Reports, in each case in complete satisfaction, and with a complete release, of such matter with respect to all parties to such matter; (m) the Company shall not, and it shall not permit any of its subsidiaries to, make any payment or incur any liability or obligation for the purpose of obtaining any consent from any third party to the transactions contemplated hereby; and (n) neither the Company nor any of its subsidiaries shall enter into an agreement, contract, commitment or arrangement to do any of the foregoing, or to authorize, recommend, propose or announce an intention to do any of the foregoing. SECTION 7.2. NO SOLICITATION (a) The Company shall, and shall cause its subsidiaries, officers, directors, employees, counsel, investment bankers, financial advisers, accountants, other representatives and agents (collectively, the "Company Representatives") to immediately as of the date hereof cease any discussions or negotiations with any parties that may be ongoing with respect to a Takeover Proposal (as defined below). The Company shall not, and shall not authorize or permit any Company Representative to, (i) solicit, initiate or encourage (including by way of furnishing information), or take any other action to facilitate, any inquiries or the making -26- 31 of any proposal which constitutes, or may reasonably be expected to lead to, any Takeover Proposal; (ii) participate in any discussions or negotiations regarding any Takeover Proposal; or (iii) enter into any agreement with respect to any Takeover Proposal; provided, however, that, if at any time prior to the Effective Time, the Board of Directors of the Company determines in good faith, in consultation with its legal counsel, that it is necessary to do so in order to comply with its fiduciary duties, the Company may, in response to an unsolicited Takeover Proposal, and subject to compliance with Section 7.2(c), (x) furnish information with respect to the Company to any person pursuant to a confidentiality agreement and (y) participate in negotiations regarding such Takeover Proposal. Without limiting the foregoing, it is understood that any violation of the restrictions set forth in the preceding sentence by any Company Representative shall be deemed to be a breach of this Section 7.2(a) by the Company. (b) Neither the Board of Directors of the Company nor any committee thereof shall: (i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to Parent, the approval or recommendation by such Board of Directors or such committee of this Agreement or the Offer or the Merger; (ii) approve or recommend, or propose to approve or recommend, any Takeover Proposal; or (iii) cause the Company to enter into any agreement with respect to any Takeover Proposal. Notwithstanding the foregoing, in the event that prior to the Effective Time the Board of Directors of the Company determines in good faith, in consultation with its legal counsel as to legal matters, that it is necessary to do so in order to comply with its fiduciary duties, the Board of Directors of the Company may withdraw or modify its approval or recommendation of this Agreement, the Offer and the Merger, approve or recommend a Superior Proposal (as defined below) or cause the Company to enter into an agreement with respect to a Superior Proposal, but in each case only at a time that is after the fifth Business Day following Parent's receipt of written notice advising Parent that the Board of Directors of the Company has received a Superior Proposal. (c) In addition to the obligations of the Company set forth in paragraphs (a) and (b) of this Section 7.2, the Company shall promptly advise Parent orally of any request for information or of any Takeover Proposal (including the terms of such Takeover Proposal). (d) "Takeover Proposal" means any inquiry, proposal or offer from any person relating to any: (A) merger, consolidation or similar transaction involving the Company, (B) sale, lease or other disposition directly or indirectly by merger, consolidation, share exchange or otherwise of assets of the Company or its subsidiaries outside the ordinary course of business representing 10% or more of the consolidated assets of the Company and its subsidiaries, (C) issue, sale, or other disposition of (including by way of merger, consolidation, share exchange or any similar transaction) securities (or options, rights or warrants to purchase, or securities convertible into, such securities) representing 20% or more of the voting power of the Company or (D) transaction in which any person shall acquire beneficial ownership (as such term is defined in Rule 13d-3 under the Exchange Act), or the right to acquire beneficial ownership or any "group" (as such term is defined under the Exchange Act) shall have been formed which beneficially owns or has the right to acquire beneficial ownership of more than 20% of the outstanding Common Stock, in each case, other than the transactions with Parent contemplated by this Agreement. (e) "Superior Proposal" means any bona fide written offer for a Takeover Proposal to acquire, directly or indirectly, for consideration consisting of cash and/or securities, more than 20% of the outstanding Common Stock on a fully diluted basis or all or substantially all the assets of the Company and otherwise on terms which the Board of Directors of the Company determines in its good faith judgment in consultation with a financial advisor of nationally recognized reputation that the consideration offered pursuant to such Takeover Proposal is more favorable to the Shareholders than the Offer and the Merger from a financial point of view. -27- 32 ARTICLE VIII ADDITIONAL AGREEMENTS SECTION 8.1. ACCESS AND INFORMATION The Company and its subsidiaries shall (a) afford to Parent and its accountants, counsel and other representatives full access during normal business hours (and at such other times as the parties may mutually agree) throughout the period prior to the Effective Time to all of their properties, books, contracts, commitments, records and personnel, and (b) during such period, furnish promptly to Parent (i) a copy of each report, schedule and other document filed or received by it pursuant to the requirements of federal or state securities laws, and (ii) all other information concerning its business, properties and personnel as Parent may reasonably request. Parent shall hold, and shall cause its employees and agents to hold, in confidence all such information in accordance with the terms of the Confidentiality Agreement dated April 28, 1998 between Parent and the Company. SECTION 8.2. INDEMNIFICATION (a) Until, and after, the Effective Time, the Purchaser's Bylaws shall contain indemnification and limitation of liability provisions which are substantially identical to the indemnification and limitation of liability provisions of Article XVII of the By-laws of the Company, and such provisions shall not be amended, repealed or otherwise modified in any manner that would make any of such provisions less favorable to the directors, officers and employees of the Company than pertain to such persons on the date hereof. Without limiting the foregoing, from the Effective Time and for a period of six years after the Effective Time, Parent shall, (i) indemnify, defend and hold harmless the present and former officers, directors, employees and agents of the Company and its subsidiaries and of Purchaser (collectively, the "Indemnified Parties"), from and against, and pay or reimburse the Indemnified Parties for, all losses, obligations, expenses, claims, damages or liabilities resulting from third-party claims (and involving claims by or in the right of the Company) and including interest, penalties, out-of-pocket expenses and attorneys' fees incurred in the investigation or defense of any of the same or in asserting any of their rights hereunder resulting from or arising out of actions or omissions of such Indemnified Parties occurring on or prior to the Effective Time (including, without limitation, the transactions contemplated by this Agreement) to the fullest extent permitted or required under (A) applicable law, (B) the articles of incorporation or by-laws of the Company or Purchaser in effect on the date of this Agreement, including, without limitation, provisions relating to advances of expenses incurred in the defense of any action or suit, or (C) any indemnification agreement between the Indemnified Party and the Company; and (ii) advance to any Indemnified Parties expenses incurred in defending any action or suit with respect to such matters, in each case to the extent such Indemnified Parties are entitled to indemnification or advancement of expenses under the Company's or Purchaser's articles of incorporation and by-laws in effect on the date hereof and subject to the terms of such articles of incorporation and by-laws; provided, however, that in the event any claim or claims are asserted or made within such six-year period, all rights to indemnification in respect of each such claim shall continue until final disposition of such claim. (b) Any Indemnified Party wishing to claim indemnification under Section 8.2(a) shall provide notice to the Parent promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and the Indemnified Party shall permit the Parent (at its expense) to assume the defense of any claim or any litigation resulting therefrom; provided, however, that (i) counsel for the Parent who shall conduct the defense of such claim or litigation shall be reasonably satisfactory to the Indemnified Party and the Indemnified Party may participate in such defense at such Indemnified Party's expense, and (ii) the omission by any Indemnified Party to give notice as provided herein shall not relieve the Parent of its indemnification obligation under this Agreement, except to the extent that such omission results in a failure of actual notice to the Parent, and the Parent is actually prejudiced as a result of such failure to give notice. In the event that the Parent does not accept the defense of any matter as above provided, or counsel for the Indemnified Parties advises the Indemnified Parties in writing that there are issues that raise conflicts of interest between the Parent and the Indemnified Parties, the Indemnified Parties may retain counsel satisfactory to them, and the Parent shall pay all reasonable fees and expenses of such counsel for the -28- 33 Indemnified Parties promptly as statements therefor are received; provided, however, that the Parent shall not be liable for any settlement effected without its prior written consent (which consent shall not be unreasonably withheld); provided, further, however, that the Parent shall not be responsible for the fees and expenses of more than one counsel for all of the Indemnified Parties. In any event, the Parent and the Indemnified Parties shall cooperate in the defense of any action or claim. The Parent shall not, in the defense of any such claim or litigation, except with the consent of the Indemnified Party, consent to entry of any judgment or enter into any settlement that provides for injunctive or other nonmonetary relief affecting the Indemnified Party or that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability with respect to such claim or litigation. (c) This Section 8.2 is intended for the benefit of, and to grant third party rights to, persons entitled to indemnification under this Section 8.2 and the benefits of Article XVII of the By-laws of the Company, whether or not parties to this Agreement, and each of such persons shall be entitled to enforce the covenants contained in this Section 8.2. (d) If Parent or the Company, as the case may be, or any of their respective successors or assigns (i) reorganizes or consolidates with or merges into any other person and is not the resulting, continuing or surviving corporation or entity of such reorganization, consolidation or merger, or (ii) liquidates, dissolves or transfers all or substantially all of its properties and assets to any person or persons, then, and in such case, proper provision will be made so that the successors and assigns of Parent or the Company assume all of the obligations of Parent or the Company, as the case may be, as set forth in this Section 8.2. (e) Parent shall use commercially reasonable efforts for a period of six years after the Effective Time to provide officers' and directors' liability insurance in respect of acts or omissions occurring prior to the Effective Time, including but not limited to the transactions contemplated by this Agreement, covering each person currently covered by the Company's existing officers' and directors' liability insurance policy, or who becomes covered by such policy prior to the Effective Time, on terms with respect to coverage and amount no less favorable than those of such policy in effect on the date hereof, provided that in satisfying its obligation under this paragraph (e), Parent shall not be obligated to pay premiums in excess of 150% of the amount per annum the Company paid in 1997, and provided further that Parent shall nevertheless be obligated to provide such coverage as may be obtained for such amount. SECTION 8.3. HSR ACT The Company and Parent shall use their best efforts to file as soon as practicable notifications under the HSR Act in connection with the Offer, the Merger and the transactions contemplated by this Agreement and to respond as promptly as practicable to any inquiries received from the Federal Trade Commission and the Antitrust Division of the Department of Justice for additional information or documentation and to respond as promptly as practicable to all inquiries and requests received from any State Attorney General or other Governmental Entity in connection with antitrust matters. The Company and Parent agree to coordinate and, to the extent not inconsistent with their respective legal obligations, cooperate with each other in making all such filings and responses. SECTION 8.4. ADDITIONAL AGREEMENTS REGARDING CONSENTS AND APPROVALS (a) Subject to the terms and conditions herein provided, each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable law to consummate and make effective the transactions contemplated by this Agreement, including using all reasonable efforts to obtain all necessary waivers, consents and approvals, to effect all necessary registrations and filings (including, but not limited to, filings under the HSR Act and with all applicable Governmental Agencies) and to lift any injunction or other legal bar to the Offer and the Merger (and, in such case, to proceed with the Offer and the Merger as expeditiously as possible) subject, however, in the case of this Agreement, to the appropriate vote (if required) of the Company's shareholders. Notwithstanding the foregoing, without Parent's prior written consent, the Company shall not obtain any consent that will affect Parent or the Company to either of their economic detriment, including any -29- 34 modification of any Material Contract or Company license or permit. Each party shall promptly inform the other of any communication with, and any proposed understanding, undertaking, or agreement with, any Governmental Entity regarding any such filing or any such transaction. Neither party shall participate in any meeting with any Governmental Entity in respect of any such filing, investigation, or other inquiry without giving the other party notice of the meeting and, to the extent permitted by such Governmental Entity, the opportunity to attend and participate. (b) Parent and the Company shall cooperate in the preparation, execution and filing of all returns, applications or other documents regarding any real property transfer, stamp, recording, documentary or other taxes and any other fees and similar taxes which may become payable in connection with the Offer or the Merger. (c) In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and/or directors of Parent or the Company shall take all such necessary action. SECTION 8.5. TAKEOVER STATUTES If any "business combination," "fair price," "control share acquisition" or "moratorium" statute or other similar statute or regulation or any state "blue sky" or securities law statute shall become applicable to the transactions contemplated hereby, the Company and the Board of Directors of the Company shall, to the extent consistent with applicable law, grant such approvals and take such actions as are reasonably necessary so that the transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated hereby and otherwise act to minimize the effects of such statute or regulations on the transactions contemplated hereby; provided, that this Section 8.5 shall not require the Company to seek to amend its Articles of Incorporation to opt out of Subchapter E of Chapter 25 of the PBCL. SECTION 8.6. BENEFITS (a) Until at least December 31, 1999, Parent will cause the Company (and its successors or assigns) to maintain, at its option, either (i) the employee benefit plans of the Company and its subsidiaries in effect on the date of this Agreement or (ii) other benefits to employees of the Company and its subsidiaries that are not materially less favorable in the aggregate to such employees than those in effect on the date of this Agreement; provided, however, that the Company will not maintain any plan or arrangement that provides for issuance of securities of the Company. (b) Notwithstanding anything in this Agreement to the contrary, prior to consummation of the Merger, the Company may pay eligible participants a pro rata portion (from January 1, 1998 through the Effective Time) of the 1998 target award under the Company's Annual Incentive Plan, for which amounts have been accrued on the Company's financial statements through such date. (c) Parent acknowledges the existence of those certain agreements between the Company and various employees and former employees of the Company set forth in Section 8.6(c) of the Company Disclosure Schedule, and Parent agrees that after the Effective Time such agreements shall continue to be an obligation of the Company and shall remain in full force and effect. (d) Until at least March 31, 2000, Parent or its affiliates shall maintain the Company's Pittsburgh, Pennsylvania office. SECTION 8.7. EFFECT OF KNOWLEDGE OF BREACH (a) Notwithstanding anything to the contrary contained in this Agreement, including, without limitation, the Company's failure to disclose any matter required to be disclosed on the Company Disclosure Schedule, Parent and Purchaser agree that no representation or warranty made by the Company in this Agreement shall be deemed to be inaccurate or incorrect, and the Company shall not be deemed to be in breach of this Agreement, if the Parent, Purchaser or its representatives had actual knowledge on the date hereof of any such undisclosed matter or that any such representation or warranty was inaccurate or incorrect. -30- 35 (b) The Company shall give prompt notice to Parent and Parent shall give prompt notice to the Company of (i) the occurrence or nonoccurrence of any event the occurrence or nonoccurrence of which would be likely to cause any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect at or prior to the Effective Time, (ii) any material failure of the Company, or the Parent as the case may be, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder, (iii) any notice of, or other communication relating to, a default or event which, with notice or lapse of time or both, would become a default, received by it or any of its subsidiaries subsequent to the date of this Agreement and prior to the Effective Time, under any contract or agreement material to the business, financial condition, or results of operations of it and its subsidiaries taken as a whole to which it or any of its subsidiaries is a party or is subject, (iv) any notice or other communication from any third party alleging that the consent of such third party is or may be required in connection with the transactions contemplated by this Agreement, or (v) any material adverse change in business, financial condition or results of operations of it and its subsidiaries taken as a whole, other than changes resulting from general economic conditions; provided, however, that the delivery of any notice pursuant to this Section 8.7(b) shall not cure such breach or non-compliance or limit or otherwise affect the remedies available hereunder to the party receiving such notice. SECTION 8.8. CERTAIN DELIVERIES After consummation of the Offer and prior to the Merger, the Company shall deliver or cause to be delivered to Parent and Purchaser (i) a certificate of the Company, signed by the Company's President and Chief Executive Officer and by the Company's Senior Vice President and Chief Financial Officer, to the effect that (a) all of the representations and warranties of the Company contained in this Agreement are true and correct on the Closing Date in all respects, expect for such breaches which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect, and (b) the Company has performed in all material respects all obligations and complied with all material agreements and covenants to be performed or complied with by it under the Agreement, other than failures to perform or comply which have not had and would not reasonably be expected to have, a Material Adverse Effect; and (ii) an opinion of counsel as to such matters regarding this Agreement, the Company and the Merger as Parent and Purchaser may reasonably request. ARTICLE IX CONDITIONS PRECEDENT SECTION 9.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER The respective obligations of each party to effect the Merger shall be subject to the fulfillment at or prior to the Effective Time of the following conditions: (a) The Offer shall have been consummated in accordance with its terms. (b) The waiting period applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated. (c) This Agreement shall have been adopted by the requisite vote of the Company's shareholders or, if permitted by Section 1924(b)(1)(ii) of the PBCL, by the Board of Directors of the Company. (d) No preliminary or permanent injunction or other order by any federal or state court in the United States which prevents the consummation of the Merger shall have been issued and remain in effect (each party agreeing to use its best efforts to have any such injunction lifted). -31- 36 ARTICLE X TERMINATION AND FEES SECTION 10.1. TERMINATION This Agreement may be terminated at any time prior to the Effective Time, whether before or after approval by the Company's shareholders: (a) by mutual consent of the Board of Directors of Parent and the Board of Directors of the Company; (b) by either Parent or the Company if the Offer shall not have been consummated on or before 90 days from date of Agreement (the "Termination Date") (provided the terminating party is not otherwise in material breach of its representations, warranties or obligations under this Agreement); (c) by the Company if any of the conditions specified in Section 9.1 have not been satisfied or waived by the Company at such time as such condition is no longer capable of satisfaction; (d) by Parent if any of the conditions specified in Section 9.1 have not been satisfied or waived by Parent at such time as such condition is no longer capable of satisfaction; (e) by the Company, if Parent or Purchaser shall have breached or failed to perform in any material respect any of its representations, warranties or covenants contained in this Agreement, which breach or failure to perform (i) would give rise to a failure of condition set forth in Section 9.1 or Annex I, and (ii) cannot be or has not been cured within thirty (30) days after the giving of notice to Parent of such breach; (f) by the Company, in connection with entering into an agreement for a Superior Proposal as expressly permitted by Section 7.2, provided the Company has complied with all provisions thereof, including the notice provisions therein. SECTION 10.2. EFFECT OF TERMINATION In the event of termination of this Agreement by either Parent or the Company, as provided in Section 10.1, this Agreement shall forthwith become void and of no further force and effect; provided, however, that each of the parties shall be entitled to pursue, exercise and enforce any and all remedies, rights, powers and privileges available to it at law or in equity for any breach of this Agreement ("Remedies") which occurred prior to such termination unless Parent is entitled to payment of the fee provided for in Section 10.3(b), in which case this Agreement shall be of no further force or effect, the Company shall have no other or further obligation to Parent or Purchaser (except payment of such fee) and neither Purchaser nor Parent shall have any Remedies against Company or any subsidiary under this Agreement. SECTION 10.3. FEES AND EXPENSES. (a) Except as provided in subsection (b) below, whether or not the Merger is consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated by this Agreement shall be paid by the party incurring such expenses. (b) (i) If either (A)(i) the Company receives a bona fide Takeover Proposal at any time after the date of this Agreement and prior to the termination of this Agreement, (ii) this Agreement terminates prior to the consummation of the Offer for any reason (other than a breach of this Agreement by Parent or Purchaser), and (iii) by the date which is six months after the date of termination of this Agreement, either (1) a Takeover Proposal with a third party is consummated, or (2) the Company enters into an agreement for a Takeover Proposal with a third party which is thereafter consummated, or (B) the Company terminates this Agreement pursuant to Section 10.1(f), then, in either event, the Company shall pay to Parent, by wire transfer of immediately available funds, within two days after the consummation of the Takeover Proposal or Superior Proposal, as the case may be, a fee of $9,500,000 (the "Topping Fee"). -32- 37 (ii) For the purposes of subparagraph (b)(i)(A)(iii) of this Section 10.3 only, the term "Takeover Proposal" shall mean any proposal or offer from any person relating to any: (A) merger, consolidation or similar transaction involving the Company, (B) sale, lease or other disposition directly or indirectly by merger, consolidation, share exchange or otherwise of assets of the Company or its subsidiaries outside the ordinary course of business representing 10% or more of the consolidated assets of the Company and its subsidiaries, (C) issue, sale, or other disposition of (including by way of merger, consolidation, share exchange or any similar transaction) securities (or options, rights or warrants to purchase, or securities convertible into, such securities) representing 20% or more of the voting power of the Company or (D) transaction in which any person shall acquire beneficial ownership (as such term is defined in Rule 13d-3 under the Exchange Act), or the right to acquire beneficial ownership or any "group" (as such term is defined under the Exchange Act) shall have been formed which beneficially owns or has the right to acquire beneficial ownership of more than 50% of the outstanding Common Stock, in each case, other than the transactions with Parent and Purchaser contemplated by this Agreement. ARTICLE XI GENERAL PROVISIONS SECTION 11.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS All representations and warranties set forth in this Agreement shall terminate at the Effective Time. All covenants and agreements set forth in this Agreement shall survive in accordance with their terms. SECTION 11.2. AMENDMENT This Agreement may be amended by the parties hereto, by or pursuant to action taken by their respective Boards of Directors, at any time before or after approval hereof by the shareholders of the Company, but, after such approval, no amendment shall be made which changes the Per Share Amount or which in any way materially adversely affects the rights of such shareholders, without the further approval of such shareholders. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties hereto. SECTION 11.3. NOTICES All notices, demands or other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given (a) when delivered personally to the recipient, (b) when sent to the recipient by telecopy (receipt electronically confirmed by sender's telecopy machine) if during normal business hours of the recipient, otherwise on the next Business Day, or (c) one Business Day after the date when sent to the recipient by reputable same day or next day courier service (charges prepaid). Such notices, demands and other communications shall be sent to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): If to the Company: Dravo Corporation 11 Stanwix Street 11th Floor Pittsburgh, PA 15222 Attention: Carl E. Gilbert, President and Chief Executive Officer With a copy to: Buchanan Ingersoll Professional Corporation 301 Grant Street Pittsburgh, Pennsylvania 15219 Attention: Michael J. Flinn Telecopy No.: (412) 562-1041 -33- 38 If to Parent or Purchaser: Carmeuse Lime, Inc. 390 E. Joe Orr Road Chicago Heights, IL 60411 Attention: President Telecopy: (708) 757-1300 with a copy to: Carmeuse Lime, Inc. 390 E. Joe Orr Road Chicago Heights, IL 60411 Attention: General Counsel Telecopy: (708) 757-1300 SECTION 11.4. SPECIFIC PERFORMANCE The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. SECTION 11.5. PUBLICITY Each party's initial press release with respect to the execution of this Agreement has been previously approved by the other parties. Following such initial press releases, so long as this Agreement is in effect, neither the Company, Parent nor any of their respective affiliates shall issue or cause the publication of any press release or other public announcement with respect to the Offer, the Merger, this Agreement or the other transactions between the parties contemplated hereby without the prior consultation of the other parties, except as may be required by law or by any listing agreement with a national securities exchange or trading market. SECTION 11.6. INTERPRETATION The language used in this Agreement shall be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party. Any references to any federal, state, local or foreign statute or law shall also refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. Unless the context otherwise requires: (a) a term has the meaning assigned to it by this Agreement; (b) including means "including but not limited to"; (c) "or" is disjunctive but not exclusive; (d) words in the singular include the plural, and in the plural include the singular; (e) "$" means the currency of the United States of America; (f) "person" means any individual or entity; and (g) "Knowledge" of any person that is an entity (or similar language) means the actual knowledge of its executive officers after reasonable investigation. When a reference is made in this Agreement to Sections or paragraphs, such reference shall be to a Section or paragraphs of this Agreement unless otherwise indicated. SECTION 11.7. COUNTERPARTS This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties. -34- 39 SECTION 11.8. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES This Agreement and the Confidentiality Agreement between the parties dated April 28, 1998: (a) constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, and (b) other than the provisions of Section 8.2, nothing expressed or implied in this Agreement is intended or will be construed to confer upon or give to any person other than the parties hereto any rights or remedies under or by reason of this Agreement or any transaction contemplated hereby. SECTION 11.9. SEVERABILITY In the event that any one or more of the provisions contained in this Agreement or in any other instrument referred to herein, shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, then to the maximum extent permitted by law, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or any other such instrument. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable. SECTION 11.10. GOVERNING LAW This Agreement and the legal relations between the parties hereto will be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to the choice of law principles thereof. SECTION 11.11. ASSIGNMENT Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties, except Purchaser may assign, in its sole discretion, any or all of its rights, interests and obligations hereunder to any direct or indirect wholly owned subsidiary of Parent. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns. SECTION 11.12. DESCRIPTIVE HEADINGS The descriptive headings of the several sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. -35- 40 IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this Agreement to be signed by their respective officers thereunder duly authorized all as of the date first written above. ATTEST: CARMEUSE LIME, INC. - -------------------------------------------- -------------------------------------------- By: By: Title: Title: ATTEST DLC ACQUISITION CORP. - -------------------------------------------- -------------------------------------------- By: By: Title: Title: ATTEST: DRAVO CORPORATION - -------------------------------------------- -------------------------------------------- By: By: Title: Title:
Carmeuse S.A. hereby unconditionally and jointly and severally guarantees the obligations of Parent and Purchaser under this Agreement. ATTEST CARMEUSE S.A. - -------------------------------------------- -------------------------------------------- By: By: Title: Title:
-36- 41 ANNEX I CONDITIONS TO THE OFFER Notwithstanding any other provision of the Offer, Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the Commission, including Rule 14e-l(c) promulgated under the Exchange Act (relating to Purchaser's obligation to pay for or return tendered shares of Common Stock promptly after termination or withdrawal of the Offer), pay for, and (subject to any such rules or regulations) may delay the acceptance for payment of any tendered shares of Common Stock and (except as provided in this Agreement) amend or terminate the Offer as to any shares of Common Stock not then paid for if (i) the Minimum Condition is not satisfied, (ii) any applicable waiting period under the HSR Act or the Exon-Florio Act shall not have expired or been terminated prior to the expiration of the Offer or (iii) at any time after the date of this Agreement and before the time of acceptance of payment for any such shares (whether or not any shares have theretofore been accepted for payment or paid for pursuant to the Offer) of Common Stock any of the following events (each, an "Event") shall have occurred (each of paragraphs (a) through (h) providing a separate and independent condition to Purchaser's obligations pursuant to the Offer): (a) there shall be pending or in effect an injunction or other order, decree, judgment or ruling by a court of competent jurisdiction or by a governmental, regulatory or administrative agency or commission of competent jurisdiction or a statute, rule, regulation, executive order or other action shall have been promulgated, enacted, or taken by a governmental authority or a governmental, regulatory or administrative agency or commission of competent jurisdiction which in any such case (i) restrains or prohibits the making or consummation of the Offer or the consummation of the Merger, (ii) prohibits or restricts the ownership or operation by Parent (or any of its affiliates or subsidiaries) of any portion of its or the Company's business or assets which is material in light of the size and scope of the business of the Company and its subsidiaries taken as a whole, or compels Parent (or any of its affiliates or subsidiaries) to dispose of or hold separate any portion of its or the Company's business or assets which is material to the business of the Company and its subsidiaries taken as a whole, (iii) imposes material limitations on the ability of Parent effectively to acquire or to hold or to exercise full rights of ownership of the Common Stock, including, without limitation, the right to vote the Common Stock purchased by Purchaser on all matters properly presented to the shareholders of the Company, or (iv) imposes any material limitations on the ability of Parent or any of its affiliates or subsidiaries effectively to control in any material respect the business and operations of the Company and its subsidiaries (each of clauses (i) through (iv) being referred to as a "Prohibited Result"); or (b) an action or a proceeding shall have been commenced by a Governmental Entity under federal or state antitrust laws or any other applicable law before any court or any governmental or other administrative or regulatory authority or agency, domestic or foreign, which would reasonably be expected to have a Prohibited Result; or (c) there shall have occurred (i) any general suspension of, or limitation on prices for, trading in securities on any national securities exchange or the over-the-counter market for a period in excess of 24 hours (excluding suspensions or limitations resulting solely from physical damage or interference with such exchanges not related to market conditions), (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States (whether or not mandatory), (iii) a commencement of a war, armed hostilities or other international or national calamity directly or indirectly involving the United States, (iv) any limitation (whether or not mandatory) by any United States governmental authority on the extension of credit generally by banks or other financial institutions, (v) a change in general financial, bank or capital market conditions which materially and adversely affects the ability of financial institutions in the United States to extend credit or syndicate loans, or (vi) in the case of any of the foregoing existing at the time of the execution of this Agreement, a material acceleration or worsening thereof; or 42 (d) the representations and warranties of the Company contained in the Agreement shall not be true and correct on and as of the Expiration Date, with the same force and effect as if made on and as of the Expiration Date, in all respects, except for such breaches which, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on the Company; or (e) the Company shall have failed to perform in all material respects any obligation or to comply with any material agreement or covenant to be performed or complied with by it under the Agreement, which failure to perform has had or would reasonably be expected to have a Material Adverse Effect on the Company; or (f) the Company shall have failed to obtain any consent from any third-party required to be obtained by it in order to permit consummation of the Offer, other than those consents the failure of which to obtain would not have and would not reasonably be expected to have, a Material Adverse Effect on the Company; (g) the Agreement shall have been terminated by the Company or Parent in accordance with its terms; or (h) the Offer shall not have been consummated by the Termination Date. The foregoing conditions are for the sole benefit of Parent and Purchaser and may be asserted by Parent and Purchaser regardless of the circumstances giving rise to such Event (not including any action or inaction by Parent) or may be waived by Parent or Purchaser in whole at any time or in part from time to time in its reasonable discretion. 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 and each such right shall be deemed an ongoing right and may be asserted at any time and from time to time. COMPANY DISCLOSURE SCHEDULE The following is a list of the omitted Company Disclosure Schedules to the Agreement and Plan of Merger filed herewith as Exhibit (c)(1): Section 4.1(b) -- Subsidiaries Section 4.2(a) -- Capitalization Section 4.2(b) -- Lien on Securities Section 4.4(b) -- Lien on Assets Section 4.6 -- Consents and Approvals Section 4.8 -- Undisclosed Liabilities Section 4.9 -- Litigation Section 4.10 -- Compliance with Applicable Law Section 4.11 -- List of Employee Plans Section 4.12 -- Environmental Matters Section 4.13 -- Tax Matters Section 4.14 -- Intangible Property Section 4.17 -- Labor Matters Section 4.18 -- Absence of Certain Changes Section 4.21(a) -- Owned Real Property Section 4.21(b) -- Leased Property Section 4.22 -- Contracts Section 8.6(c) -- Severance Agreements
Copies of the above-referenced schedules will be provided to the Commission upon request. -2- EX-99.(C)(2) 17 CONFIDENTIALITY AGREEMENT 1 EXHIBIT (c)(2) DRAVO CORPORATION 11 Stanwix Street Pittsburgh, PA 15222 412-995-5500 - FAX: 412-995-5594 April 29, 1998 Carmeuse Lime, Inc. 390 East Joe Orr Road Chicago Heights, IL 60411 Attention: W.S. Brown III President Gentlemen: In connection with Carmeuse Lime, Inc.'s consideration of a possible business transaction, Dravo is prepared to make available to Carmeuse Lime, Inc. certain information concerning its business, financial condition, operations, assets and liabilities. As a condition to such information being furnished by Dravo, Carmeuse Lime, Inc. and its directors, officers, employees, agents or advisors (including, without limitation, attorneys, accountants, consultants, bankers and financial advisors) (collectively, "Representatives") agree to treat any such information (whether prepared by Dravo, its advisors or otherwise and irrespective of the form of communication) which has been or will be furnished to Carmeuse Lime, Inc. or to its Representatives (herein collectively referred to as the "Evaluation Material") in accordance with the provisions of this letter agreement, and to take or abstain from taking certain other actions hereinafter set forth. The term "Evaluation Material" shall be deemed to include all notes, analyses, compilations, studies, interpretations or other documents prepared by Carmeuse Lime, Inc. or its Representatives which contain, reflect or are based upon, in whole or in part, the information furnished pursuant hereto. The term "Evaluation Material" does not include information which (i) is or becomes generally available to the public other than as a result of a disclosure by Carmeuse Lime, Inc. or its Representatives, (ii) was within the possession of Carmeuse Lime, Inc. prior to its being furnished pursuant hereto, provided that the source of such information was not known by Carmeuse Lime, Inc. to be bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to Dravo or any other party with respect to such information or (iii) becomes available to Carmeuse Lime, Inc. on a non-confidential basis from a source other than Dravo or any of its Representatives, provided that such source is not bound by a confidentiality agreement with, or other contractual, legal or fiduciary obligation of confidentiality to, Dravo or any other party with respect to such information. Carmeuse Lime, Inc. and its Representatives shall use the Evaluation Material solely for the purpose of evaluating a possible transaction between the companies, the Evaluation Material will be kept confidential and neither Carmeuse Lime, Inc. nor its Representatives will disclose any of the Evaluation Material in any manner whatsoever; provided, however, that (i) Carmeuse Lime, Inc. may make any disclosure of such Evaluation Material to which Dravo gives its prior written consent and (ii) Evaluation Material may be disclosed only to such of Carmeuse Lime, Inc.'s Representatives who need to know such information for the sole purpose of evaluating a possible transaction between the companies, who agree to keep such information confidential. In any event, Carmeuse Lime, Inc. shall be responsible for any breach of this letter agreement by any of its Representatives and agrees, at its sole expense, to take all reasonable measures (including but not limited to court proceedings) to restrain its Representatives from prohibited or unauthorized disclosure or use of the Evaluation Material. Carmeuse Lime, Inc. agrees that neither it nor any of its Representatives will use any Evaluation Material in any manner that is detrimental to Dravo, including without limitation, by using any Evaluation Material in connection with the solicitation of any of the customers of Dravo, or otherwise for the purpose of obtaining a competitive advantage. In addition, Carmeuse Lime, Inc. agrees that, without the prior written 2 consent of Dravo, neither it nor its Representatives will disclose to any other person the fact that the Evaluation Material has been made available, that discussions or negotiations are taking place concerning a possible transaction involving the companies or any of the terms, conditions or other facts with respect thereto (including the status thereof), unless in the written opinion of counsel to a party that such disclosure is required by law and then only with as much prior written notice to Dravo as is practical under the circumstances. Without limiting the generality of the foregoing, we further agree that, without the prior written consent of Dravo, Carmeuse Lime, Inc. will not, directly or indirectly, enter into any agreement, arrangement or understanding, with any other person regarding a possible transaction involving Dravo. The term "person" as used in this letter agreement shall be broadly interpreted to include the media and any corporation, partnership, group, individual or other entity. In the event that Carmeuse Lime, Inc. or any of its Representatives is required (by deposition, interrogatories, requests for information or documents in legal proceedings, subpoena, civil investigative demand or other similar process) to disclose any of the Evaluation Material, Dravo shall be provided with prompt written notice of any such request or requirement so that Dravo may seek a protective order or other appropriate remedy and/or waive compliance with the provisions of this letter agreement. If, in the absence of a protective order or other remedy or the receipt of a waiver by Dravo, Carmeuse Lime, Inc. or any of its Representatives are nonetheless, in the written opinion of its counsel, legally compelled to disclose Evaluation Material to any tribunal or else stand liable for contempt or suffer other censure or penalty, Carmeuse Lime, Inc. or its Representative may, without liability hereunder, disclose to such tribunal only that portion of the Evaluation Material which such counsel advises is legally required to be disclosed, provided that Carmeuse Lime, Inc. exercise its best efforts to preserve the confidentiality of the Evaluation Material, including, without limitation, by cooperating with Dravo to obtain an appropriate protective order or other reliable assurance that confidential treatment will be accorded the Evaluation Material by such tribunal. If either of us decides not to proceed with a transaction contemplated by this letter agreement, it will promptly inform the other of that decision. In that case, or any time upon the request of Dravo for any reason, Carmeuse Lime, Inc. will promptly deliver to Dravo all documents (and all copies thereof) furnished pursuant hereto. In the event of such a decision or request, all other Evaluation Material prepared by Carmeuse Lime, Inc. or its Representatives shall be destroyed and no copy thereof shall be retained. Notwithstanding the return or destruction of the Evaluation Material, both Carmeuse Lime, Inc. and its Representatives will continue to be bound by the obligations of confidentiality and other obligations hereunder. Carmeuse Lime, Inc. understands and acknowledges that Dravo makes no representation or warranty, express or implied, as to the accuracy or completeness of the Evaluation Material. Neither Dravo nor any of its Representatives shall have any liability to Carmeuse Lime, Inc. relating to or resulting from the use of the Evaluation Material. Only those representations or warranties which are made in a final definitive agreement regarding the transactions contemplated hereby, when, as and if executed, and subject to such limitations and restrictions as may be specified therein, will have any legal effect. In consideration of the Evaluation Material being furnished hereunder, Carmeuse Lime, Inc. hereby further agrees that, without the prior written consent of the Board of Directors of Dravo, for a period of eighteen months from the date hereof, neither it nor its affiliates (as such term is defined in Rule 12b-2 of the Securities Exchange act of 1934, as amended), acting alone or as part of a group, will acquire or offer or agree to acquire, directly or indirectly, by purchase or otherwise, any voting securities (or direct or indirect rights or options to acquire any voting securities) of Dravo, or otherwise seek to influence or control, in any manner whatsoever, the management or policies of Dravo; provided that nothing in this paragraph shall limit Carmeuse Lime, Inc. or any affiliates from making an offer to acquire the voting securities of Dravo if (a) the Board of Directors of Dravo has authorized an "auction" of such securities, or (b) Carmeuse Lime, Inc. is making a counteroffer to a proposed transaction for such securities. Each of us agrees that unless and until a final definitive agreement regarding a transaction has been executed and delivered, neither of us will be under any legal obligation of any kind whatsoever with respect to such a transaction by virtue of this letter agreement except for the matters specifically agreed to herein. 3 It is understood and agreed that no failure or delay by a party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. It is further understood and agreed that money damages would not be a sufficient remedy for any breach of this letter agreement and that a party shall be entitled to equitable relief, including injunction and specific performance, as a remedy for any such breach. Such remedies shall not be deemed to be the exclusive remedies for a breach of this letter agreement but shall be in addition to all other remedies available at law or equity. In the event of litigation relating to this letter agreement, if a court of competent jurisdiction determines that a party or its Representatives have breached this letter agreement, then such party shall be liable and pay the reasonable legal fees incurred by the aggrieved party in connection with such litigation, including any appeal therefrom. This letter contains the entire understanding of the parties hereto with respect to the matter covered hereby and may be amended only by a written document executed by the party and you. Please confirm your agreement with the foregoing by signing and returning one copy of this letter to the undersigned, whereupon this letter agreement shall become a binding agreement between us. Very truly yours, /s/ CARL A. GILBERT CAG/pb Accepted and agreed as of the date first written above: By: /s/ W.S. BROWN ---------------------------------- Name: W.S. Brown Title: President/CEO 4 [DRAVO CORPORATION LETTERHEAD] August 11, 1998 Lafarge Aluminates, Lime & Admixtures 17 Ter, Rue De La Vanne B.P. 560 92542 Montrouge Cedex France Attention: Mr. Alain Crouy President & CEO Gentlemen: In connection with your consideration of a possible business transaction with Dravo, you agree to be bound by the terms of that certain letter agreement by and between Carmeuse Lime Inc. and Dravo dated April 29, 1998, a copy of which is attached hereto and made a part hereof. You also agree that your affiliated companies will be similarly bound and that you will be responsible for any breach of the said letter agreement by an affiliate. Very truly yours, /s/ CARL A. GILBERT CAG/pb Accepted and agreed as of the date first written above: Lafarge Aluminates, Lime & Admixtures Subject to DRAVO's written approval of LAFARGE LIME's involvement with By: /s/ ALAIN B. CROUY CARMEUSE in this possible business -------------------------------- transaction. Name: Alain B. Crouy Title: President and CEO EX-99.(G) 18 FINANCIAL STATEMENTS EXHIBIT 1 FINANCIAL STATEMENT EXHIBIT 2 ARTHUR ANDERSEN LLP CARMEUSE LIME INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS as of December 31, 1997 and 1996 Together With Auditors' Report F-1 3 ARTHUR ANDERSEN LLP REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Carfin, S.A.: We have audited the accompanying consolidated balance sheets of CARMEUSE LIME INC. AND SUBSIDIARIES (see Note 1) as of December 31, 1997 and 1996, and the related consolidated statements of operations, shareholder's equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Carmeuse Lime Inc. and Subsidiaries as of December 31, 1997 and 1996, and the results of their operations and their cash flows for the years then ended, in conformity with generally accepted accounting principles. As explained in Note 1 to the financial statements, effective January 1, 1997, the Company changed its method of depreciation and the estimated useful lives of certain property, plant and equipment. ARTHUR ANDERSEN LLP Chicago, Illinois March 3, 1998 F-2 4 CARMEUSE LIME INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1997 AND 1996 (IN THOUSANDS)
1997 1996 -------- -------- ASSETS CURRENT ASSETS: Cash and cash equivalents................................. $ 2,996 $ 2,806 Marketable securities..................................... 133 98 Accounts and other receivables, less allowance for doubtful accounts of $1,914 and $1,720 in 1997 and 1996, respectively............................................ 21,485 22,301 Inventories............................................... 20,060 16,173 Prepaid expenses.......................................... 1,354 1,531 Income taxes receivable................................... 165 1,267 Current deferred tax asset................................ 152 1,615 -------- -------- Total current assets.................................... 46,345 45,791 -------- -------- PROPERTY, PLANT AND EQUIPMENT, at cost: Land and improvements and mineral reserves................ 8,566 8,349 Building and improvements................................. 4,383 4,333 Machinery and equipment................................... 58,052 48,838 Construction in progress.................................. 2,463 349 -------- -------- 73,464 61,869 Less- Accumulated depreciation, depletion and amortization............................................ (7,192) (5,429) -------- -------- Property, plant and equipment, net........................ 66,272 56,440 -------- -------- OTHER NONCURRENT ASSETS..................................... 138 816 -------- -------- $112,755 $103,047 ======== ======== LIABILITIES AND SHAREHOLDER'S EQUITY CURRENT LIABILITIES: Current maturities of long-term debt...................... $ 1,000 $ 500 Accounts payable.......................................... 13,125 11,968 Accrued expenses.......................................... 5,418 6,420 Property, state and franchise taxes....................... 1,354 2,080 Accrued salaries, wages and payroll-related expenses...... 2,946 2,333 -------- -------- Total current liabilities............................... 23,843 23,301 POSTRETIREMENT BENEFIT OBLIGATION........................... 757 832 LONG-TERM DEBT, less current maturities..................... 70,000 64,500 DEFERRED INCOME TAXES....................................... 1,925 1,731 -------- -------- Total liabilities....................................... 96,525 90,364 -------- -------- SHAREHOLDER'S EQUITY: Common stock, authorized 1,000 shares; no par value; issued and outstanding 1,000 shares..................... 12,000 12,000 Additional paid-in capital................................ 1,000 1,000 Unrealized gain on marketable securities.................. 96 60 Retained earnings (deficit)............................... 3,134 (377) -------- -------- Total shareholder's equity.............................. 16,230 12,683 -------- -------- $112,755 $103,047 ======== ========
The accompanying notes are an integral part of these balance sheets. F-3 5 CARMEUSE LIME INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 (IN THOUSANDS)
1997 1996 -------- ------- NET SALES................................................... $124,550 $80,695 COST OF SALES............................................... 107,885 74,028 -------- ------- Gross profit.............................................. 16,665 6,667 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES................ 8,153 6,359 -------- ------- Operating profit.......................................... 8,512 308 -------- ------- OTHER INCOME (EXPENSE): Interest income........................................... 249 296 Interest expense.......................................... (5,084) (1,111) Other income (expense), net............................... (10) 499 -------- ------- Total other expense....................................... (4,845) (316) -------- ------- Profit (loss) before income taxes and cumulative effect... 3,667 (8) INCOME TAX EXPENSE.......................................... 1,966 122 -------- ------- Net income (loss) before cumulative effect................ 1,701 (130) CUMULATIVE EFFECT of change in depreciation method (Note 1)................. 1,810 -- -------- ------- Net income (loss)...................................... $ 3,511 $ (130) ======== =======
The accompanying notes are an integral part of these statements. F-4 6 CARMEUSE LIME INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 (IN THOUSANDS)
UNREALIZED ADDITIONAL GAIN ON RETAINED COMMON PAID-IN MARKETABLE EARNINGS STOCK CAPITAL SECURITIES (DEFICIT) ------- ---------- ---------- --------- BALANCE, December 31, 1995...................... $12,000 $1,000 $37 $ (247) Net loss...................................... -- -- -- (130) Unrealized gain on marketable securities...... -- -- 23 -- ------- ------ --- ------ BALANCE, December 31, 1996...................... 12,000 1,000 60 (377) ------- ------ --- ------ Net income.................................... -- -- -- 3,511 Unrealized gain on marketable securities...... -- -- 36 -- ------- ------ --- ------ BALANCE, December 31, 1997...................... $12,000 $1,000 $96 $3,134 ======= ====== === ======
The accompanying notes are an integral part of these statements. F-5 7 CARMEUSE LIME INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 (IN THOUSANDS)
1997 1996 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)......................................... $ 3,511 $ (130) Adjustments to reconcile net income (loss) to net cash provided by operating activities-- Cumulative effect of change in accounting principle, net.................................................... (1,810) -- Deferred tax provision.................................... 1,037 787 Depreciation, depletion and amortization.................. 4,496 2,036 Gain on sale of property dispositions..................... (2) -- Changes in assets and liabilities-- Accounts and other receivables, net.................... 816 (6,577) Inventories............................................ (3,887) (2,044) Prepaid expenses....................................... 177 58 Income tax receivable.................................. 1,102 (594) Other long-term assets................................. 678 -- Accounts payable....................................... 1,157 1,600 Accrued expenses....................................... (1,002) 3,045 Property, state and franchisee taxes................... (726) (45) Accrued salaries, wages and payroll-related expenses... 613 127 Post retirement benefit obligation..................... (75) -- -------- -------- Net cash provided by (used in) operating activities.......................................... 6,085 (1,737) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Payments for businesses acquired.......................... -- (736) Expenditures for property, plant and equipment............ (11,908) (49,604) Proceeds on sale of property dispositions................. 13 22 -------- -------- Net cash used in investing activities.................. (11,895) (50,318) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayment of intercompany loan............................ (53,000) -- Proceeds from intercompany loan........................... 56,000 53,000 Proceeds from issuance of debt............................ 3,000 -- Principal payment on long-term debt....................... -- (500) -------- -------- Net cash provided by financing activities.............. 6,000 52,500 -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS................... 190 445 CASH AND CASH EQUIVALENTS, beginning of year................ 2,806 2,361 -------- -------- CASH AND CASH EQUIVALENTS, end of year...................... $ 2,996 $ 2,806 ======== ======== SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest.................................... $ 2,996 $ 1,043 Cash paid for income taxes................................ 193 508 ======== ========
The accompanying notes are an integral part of these statements. F-6 8 CARMEUSE LIME INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1997 AND 1996 (IN THOUSANDS) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION Carmeuse Lime Inc. (a U.S. corporation) is a wholly owned subsidiary of Carfin, S.A. (a Belgian corporation). The consolidated financial statements include the accounts of Carmeuse Lime Inc. (the "Company") and its wholly owned subsidiaries, Marblehead Lime Company Inc., Utah Marblehead Lime Company, Carmeuse Pennsylvania Inc. and Carmeuse Ohio, Inc. All significant intercompany transactions have been eliminated in consolidation. In December 1997, the Company purchased certain assets of a company in Ohio for $5,500. The acquisition has been accounted for using the purchase method of accounting. The acquired fixed assets have been classified as machinery and equipment in the accompanying consolidated balance sheets, and will be allocated to the appropriate fixed asset accounts upon completion of an independent valuation during fiscal year 1998. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with a maturity of three months or less from the time of purchase to be cash equivalents. INVENTORIES In 1997, the Company accounted for inventories using the lower of weighted average cost or market value. Previously, certain inventories were valued using the first-in, first-out ("FIFO) cost method, and other inventories were valued using the last-in, first-out ("LIFO") cost method. The new method of accounting for inventories was adopted to better recognize the effect of commingled inventories on cost of sales. The 1996 financial statements have been restated to apply the new method retroactively. The effect of the accounting change on net income is to decrease net income by approximately $28 in 1997 and to decrease the net loss by approximately $396 in 1996. The company has not adjusted the 1996 beginning retained earnings for the cumulative effect of the accounting change because of the immaterial affect on the consolidated financial statements. FAIR VALUE OF FINANCIAL INSTRUMENTS Statement of Financial Accounting Standards No. 107, "Disclosures about Fair Value of Financial Instruments," (SFAS No. 107), requires that certain companies disclose the estimated fair values for certain of its financial instruments. Financial instruments include cash, accounts receivable, accounts payable, and long term debt. The carrying amounts reported in the accompanying consolidated balance sheets for these financial instruments approximate their fair values. F-7 9 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are carried at cost. Depreciation is provided over the estimated useful lives of the assets. The estimated useful lives are as follows: Buildings and land improvements............................. 33 years Plant and Equipment......................................... 3 to 17 years
Effective January 1, 1997, depreciation of all buildings and plant and equipment has been computed using the straight-line method. In prior years, depreciation of principally all assets was computed using accelerated methods. In conjunction with the change in depreciation method, the estimated useful lives were extended. The change in method of depreciation and the extension of the lives were done to conform with actual experience of the depreciation of long-lived assets. The effect of the change in 1997 was to decrease net income by approximately $212. The cumulative affect of retroactively applying the new method and new lives was an increase to income of $1,810 (after the reduction for income taxes of $620). Depletion of capitalized quarry acquisition costs is provided using the units-of-production method based on proven quarry reserves. Costs incurred to develop new mineable stone reserves are capitalized and charged to income using the units-of-production method. Upon sale or retirement, the cost and related accumulated depreciation is eliminated from the respective accounts, and the resulting gain or loss is included in income. Repairs and maintenance are charged to operations as incurred. INCOME TAXES The Company follows Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." As of December 31, 1997 and 1996, the Company has recorded long-term deferred tax liabilities of $1,925 and $1,731, respectively, and current deferred tax assets of $352 and $1,815, respectively. A valuation allowance of $200 established upon the acquisition of Marblehead Lime Co. was recorded against the current deferred tax assets as of December 31, 1997 and 1996. The deferred tax liabilities and assets consist mainly of temporary differences caused by depreciation of fixed assets and provisions for estimated expenses. The income tax expense in the accompanying statements of operations is composed of the following:
1997 1996 ------ ----- Current provision (benefit)................................. $ 929 $(668) Deferred provision.......................................... 1,037 790 ------ ----- $1,966 $ 122 ====== =====
Differences between the Company's effective tax rate and the federal statutory tax rate reflect permanent differences attributable primarily to additional state income taxes. RECLASSIFICATIONS Certain 1996 financial statement captions have been reclassified to reflect the allocation of the purchase price of certain assets of Tarmac America, which occurred on December 30, 1996. F-8 10 2. INVENTORIES Inventories, stated at lower of weighted average cost or market, consisted of the following at December 31, 1997 and 1996:
1997 1996 ------- ------- Raw materials............................................... $11,816 $ 9,415 Parts and supplies.......................................... 3,440 3,899 Finished goods.............................................. 4,804 2,859 ------- ------- $20,060 $16,173 ======= =======
3. MARKETABLE SECURITIES The Company follows the provisions of SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." The Company holds equity securities that are classified as available-for-sale securities. At December 31, 1997, these securities were carried at their fair market value of $133 with a gross unrealized holding gain of $96 reported as part of shareholder's equity. 4. DEBT Debt consisted of the following at December 31, 1997 and 1996:
1997 1996 ------- ------- Credit Agreement with Bank Brussels Lambert (BBL), New York Branch, interest rate adjusted quarterly to the three-month LIBOR......................................... $12,000 $12,000 Intercompany loan from Carmeuse S.A., interest rate of LIBOR plus 2%................................................... -- 53,000 Note payable to sellers of certain assets in Ohio bearing interest at the corporate base rate as published by Bank Brussels Lambert, New York Branch on the last day of each month; principal and interest are due annually on December 30........................................................ 3,000 -- Intercompany loan from Carfin, S.A. bearing interest at the one month LIBOR plus 1%; principal due February, 1998; interest payable monthly.................................. 56,000 -- ------- ------- Total debt.................................................. 71,000 65,000 Less: current maturities.................................... (1,000) (500) ------- ------- Long-term debt.............................................. $70,000 $64,500 ======= =======
On February 6, 1998, the Company, along with three of its sister corporations, signed a new credit facility in the amount of $95,000. The Company has been allocated $73,000 of the facility with the remainder being allocated to its sister corporations. The facility, which contains a term loan of $51,000, and a revolving credit facility of $22,000, will be used to repay certain of the debt outstanding as of December 31, 1997. In accordance with generally accepted accounting principles, the debt existing at December 31, 1997 has been classified according to the repayment terms of the new credit facility. The new credit facility contains certain restrictive covenants, which among other things, restrict dividend payments, require performance to meet certain levels of working capital, tangible net worth, interest and debt coverage, debt to equity, and funded debt. There are also restrictions on capital expenditures and dispositions of various assets. F-9 11 Maturities of the debt, as classified under the new credit facility, are as follows:
DECEMBER 31 AMOUNT - ----------- ------- 1998........................................................ $ 1,000 1999........................................................ 3,550 2000........................................................ 6,829 2001........................................................ 7,286 2002........................................................ 25,743 Thereafter.................................................. 26,592 ------- $71,000 =======
5. LETTERS OF CREDIT The Company has an agreement with Bank Brussels Lambert, New York Branch until February, 1998 to provide for working capital and letter of credit requirements of up to $2,000. As of December 31, 1997, the Company had outstanding letters of credit of approximately $889, representing conditional commitments whereby the Company guarantees performance to a third party. In addition, the Company has also issued another letter of credit of $1,000 representing conditional commitments whereby the company guarantees performance to a third party. 6. EMPLOYEE BENEFIT PLANS The Company has a defined benefit retirement plan that covers any employee on a salaried basis, except those covered under a collective bargaining agreement, and certain hourly paid employees. Retirement benefits for this plan are based on years of service and compensation levels during the latter years of employment. All other hourly employees are covered by union-administered plans. Retirement benefits for these plans are based on years of service. Under the union plans, the Company is charged for pension costs by the unions based on a weekly rate per employee. It is the Company's policy to fund retirement plans to the maximum extent deductible under existing federal income tax regulations. Such contributions are intended to provide not only for benefits attributed to service to date but also for those expected to be earned in the future. The Company also maintains a qualified savings and thrift plan under Section 401(k) of the Internal Revenue Code. Company contributions to the Plan, which cover substantially all eligible salaried and certain non-union hourly employees, are based on a fifty percent matching contribution made by the participants up to a specified limit. Net periodic pension costs for the defined benefit plan for 1997 and 1996 includes the following components:
1997 1996 ----- ----- Service cost................................................ $ 442 $ 377 Interest cost on projected benefit obligation............... 640 614 Expected return on assets................................... (995) (886) ----- ----- Net periodic pension cost................................... $ 87 $ 105 ===== =====
F-10 12 The following table sets forth the plan's funded status at December 31, 1997 and 1996:
1997 1996 ------- ------- Actuarial present value of benefit obligations-- Vested benefits........................................... $ 8,502 $ 6,708 Nonvested benefits........................................ 538 824 ------- ------- Accumulated benefit obligations........................ 9,040 7,532 Effect of projected future salary increases................. 1,012 1,538 ------- ------- Projected benefit obligations............................... 10,052 9,070 Plan assets, at fair value.................................. 13,541 11,654 ------- ------- Plan assets in excess of projected benefit obligation............................................ 3,489 2,584 Unrecognized net gain....................................... (2,257) (1,265) ------- ------- Prepaid pension cost, included in prepaid expenses in the accompanying consolidated balance sheets.................. $ 1,232 $ 1,319 ======= =======
The unrecognized prior service cost is being amortized over the expected future service of plan participants. Assumptions used in the above computations as of the measurement date were as follows:
1997 1996 ---- ---- Weighted average discount................................... 7.0% 7.5% Weighted average salary scale............................... 4.5 4.5 Expected long-term rates of return on assets................ 8.5 8.5 === ===
The Company provides life insurance benefits to certain employees after retirement who were age 50 or older and whose age plus service exceeded 70 on July 1, 1993. The Company follows Statement of Financial Accounting Standards No. 106, "Employers Accounting for Postretirement Benefits Other Than Pensions," which requires the recognition of postretirement benefits over the period in which active employees become eligible for such benefits. The Company recognized its accrued postretirement benefit obligation at the time of Marblehead Lime Company's purchase as part of the purchase price allocation. The net periodic postretirement benefit expense for 1997 and 1996 includes the following components:
1997 1996 ---- ---- Service cost for benefits earned during year................ $-- $12 Interest cost on accumulated benefit obligation............. 45 63 --- --- Total expense.......................................... $45 $75 === ===
A summary of the actuarial and recorded liabilities for postretirement benefits is as follows:
1997 1996 ---- ---- Actives not fully eligible.................................. $ -- $269 Actives fully eligible...................................... 94 325 Retirees.................................................... 516 257 Unrecognized net gain (loss)................................ 147 (19) ---- ---- Total accrued accumulated benefit obligation.............. $757 $832 ==== ====
An 8.0% annual rate increase in the per capita costs of covered health care benefits was assumed for 1997 and 1996. Increasing the assumed health care cost trend rates by one percentage point in each year would increase the actuarial present value of benefit obligations as of December 31, 1997 and 1996, by $34 and $48, F-11 13 respectively, and increase the service and interest cost components of net periodic postretirement benefit cost by $3 and $5 for 1997 and 1996, respectively. A discount rate of 7.5% was used to determine the APBO. 7. RENTAL EXPENSE AND LEASE COMMITMENTS The Company leases certain plant and equipment under operating leases expiring in various years through 2005. Minimum rental payments under noncancelable operating leases for the next five years are as follows:
DECEMBER 31 AMOUNT ----------- ------ 1998........................................................ $855 1999........................................................ 855 2000........................................................ 855 2001........................................................ 493 2002........................................................ 493 ====
Lease expense relating to cancelable and noncancelable operating leases charged to income for the years ended December 31, 1997 and 1996, totaled approximately $1,154 and $254, respectively. 8. TRANSACTIONS WITH AFFILIATED COMPANIES During 1997 and 1996, the Company purchased lime from Beachvilime, Northern Lime and Guelph Dolime, subsidiaries of the Company's Parent. Purchases amounted to $1,922 and $2,196 in 1997 and 1996, respectively, with $78 and $209 due these subsidiaries at December 31, 1997 and 1996, respectively. The Company also sold $102 and $200 of lime to these subsidiaries with $20 and $35 owed to the Company at December 31, 1997 and 1996, respectively. At December 31, 1997 and 1996, the Company had a loan receivable from Beachvilime of $2,000 and $1,000 respectively, which is included in accounts and other receivables. The Company performs management services on behalf of the Company's parent and its subsidiaries. For the years ended December 31, 1997 and 1996, the Company billed $248 and $266 respectively. These amounts are included in other income in the accompanying consolidated statements of income. Included in accounts and other receivables are $248 and $266 at December 31, 1997 and 1996, respectively, due the Company for these services. The Company also incurs management fees from Carmeuse S.A. and Beachvilime Limited. These fees amounted to $1,123 and $1,410 for the years ended December 31, 1997 and 1996, respectively and are included in selling, general and administrative expenses. The Company owes $975 and $1,410 at December 31, 1997 and 1996, respectively for these services and are included in accounts payable in the accompanying consolidated balance sheets. During 1996, the Company incurred $1,102 in expenses for company expansion which was reimbursed by Carmeuse S.A. This amount was included in accounts and other receivables at December 31, 1996. F-12 14 ARTHUR ANDERSEN LLP CARMEUSE LIME INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 1996 AND 1995 TOGETHER WITH AUDITORS' REPORT F-13 15 ARTHUR ANDERSEN LLP REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To Carfin, S.A.: We have audited the accompanying consolidated balance sheets of CARMEUSE LIME INC. AND SUBSIDIARIES (see Note 1) as of December 31, 1996 and 1995, and the related consolidated statements of income, shareholder's equity and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Carmeuse Lime Inc. and Subsidiaries as of December 31, 1996 and 1995, and the results of their operations and their cash flows for the years then ended, in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Chicago, Illinois February 21, 1997 F-14 16 CARMEUSE LIME INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF DECEMBER 31, 1996 AND 1995 (IN THOUSANDS)
1996 1995 -------- ------- ASSETS CURRENT ASSETS: Cash and cash equivalents................................. $ 2,806 $ 2,361 -------- ------- Marketable securities..................................... 98 76 -------- ------- Accounts and other receivables, less allowance for doubtful accounts of $1,720 and $1,000 in 1996 and 1995, respectively..................................... 22,357 15,724 -------- ------- Inventories-- Finished goods......................................... 218 383 Raw materials.......................................... 11,663 11,512 Parts and supplies..................................... 3,803 2,234 -------- ------- Total inventories.................................... 15,684 14,129 -------- ------- PREPAID EXPENSES.......................................... 1,531 1,588 -------- ------- INCOME TAXES RECEIVABLE................................... 1,267 673 -------- ------- CURRENT DEFERRED TAX ASSET................................ 1,819 1,376 -------- ------- Total current assets................................. 45,562 35,927 -------- ------- PROPERTY, PLANT AND EQUIPMENT, AT COST: Land and improvements..................................... 3,323 3,012 Building and improvements................................. 2,057 1,640 Machinery and equipment................................... 56,140 7,834 Construction in progress.................................. 349 130 -------- ------- 61,869 12,616 Less--Accumulated depreciation, depletion and amortization........................................... (5,429) (3,741) -------- ------- Property, plant and equipment, net..................... 56,440 8,875 -------- ------- OTHER NONCURRENT ASSETS..................................... 816 100 -------- ------- $102,818 $44,902 ======== ======= LIABILITIES AND SHAREHOLDER'S EQUITY CURRENT LIABILITIES: Accounts payable.......................................... $ 11,932 $10,368 Accrued expenses.......................................... 6,420 3,365 Property, state and franchise taxes....................... 2,080 2,125 Accrued salaries, wages and payroll-related expenses...... 2,536 2,206 Current portion, long-term debt........................... 500 500 Deferred income taxes..................................... -- 705 -------- ------- Total current liabilities.............................. 23,468 19,269
F-15 17
1996 1995 -------- ------- POSTRETIREMENT BENEFIT OBLIGATION........................... 832 843 LONG-TERM DEBT.............................................. 64,500 12,000 DEFERRED INCOME TAXES....................................... 1,731 -- -------- ------- Total liabilities...................................... 90,531 32,112 -------- ------- SHAREHOLDER'S EQUITY: Common stock.............................................. 12,000 12,000 Additional paid-in capital................................ 1,000 1,000 -------- ------- 13,000 13,000 -------- ------- Unrealized gain on marketable securities.................. 60 37 -------- ------- Retained earnings-- Beginning of year...................................... (247) 1,573 Net loss for the year.................................. (526) (1,820) -------- ------- End of year............................................ (773) (247) -------- ------- Total shareholder's equity........................... 12,287 12,790 -------- ------- $102,818 $44,902 ======== =======
The accompanying notes are an integral part of these balance sheets. F-16 18 CARMEUSE LIME INC. AND SUBSIDIARIES STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 (IN THOUSANDS)
1996 1995 ------- ------- NET SALES................................................... $80,695 $91,727 COST OF SALES............................................... 74,628 85,745 ------- ------- Gross profit........................................... 6,067 5,982 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES................ 6,359 8,109 ------- ------- Operating loss......................................... (292) (2,127) ------- ------- OTHER (INCOME) EXPENSE: Interest income........................................... (296) (265) Interest expense.......................................... 1,111 1,097 Other income.............................................. (499) 9 ------- ------- Total other expense.................................... 316 841 ------- ------- Loss before benefit for income taxes................... (608) (2,968) BENEFIT FOR INCOME TAXES.................................... (82) (1,148) ------- ------- Net loss............................................... $ (526) $(1,820) ======= =======
The accompanying notes are an integral part of these statements. F-17 19 CARMEUSE LIME INC. AND SUBSIDIARIES STATEMENTS OF SHAREHOLDER'S EQUITY FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 (IN THOUSANDS)
UNREALIZED ADDITIONAL GAIN ON RETAINED COMMON PAID-IN MARKETABLE EARNINGS STOCK CAPITAL SECURITIES (DEFICIT) ------- ---------- ---------- --------- BALANCE, December 31, 1994...................... $12,000 $1,000 $-- $ 1,573 Net loss...................................... -- -- -- (1,820) Unrealized gain on marketable securities...... -- -- 37 -- ------- ------ --- ------- BALANCE, December 31, 1995...................... 12,000 1,000 37 (247) Net loss...................................... -- -- -- (526) Unrealized gain on marketable securities...... -- -- 23 -- ------- ------ --- ------- BALANCE, December 31, 1996...................... $12,000 $1,000 $60 $ (773) ======= ====== === =======
The accompanying notes are an integral part of these statements. F-18 20 CARMEUSE LIME INC. AND SUBSIDIARIES STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 (IN THOUSANDS)
1996 1995 ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss.................................................. $ (526) $(1,820) Adjustments to reconcile net loss to net cash provided by operating activities-- Depreciation, depletion and amortization............... 2,016 2,303 Changes in assets and liabilities-- Accounts and other receivables, net.................. (6,633) (1,736) Inventories.......................................... (1,555) 3,468 Prepaid expenses..................................... 58 170 Income tax receivable................................ (594) (674) Deferred tax asset................................... (443) (994) Accounts payable..................................... 1,564 3,354 Accrued expenses..................................... 3,045 641 Property, state and franchisee taxes................. (45) (171) Accrued salaries, wages and payroll-related expenses............................................ 330 180 Deferred income taxes................................ 1,026 380 Loss (gain) on sale of property dispositions........... -- (7) ------- ------- Net cash provided by operating activities............ (1,757) 5,094 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Sale of marketable securities............................. -- 445 Payments for businesses acquired.......................... (736) -- Expenditures for property, plant and equipment............ (49,604) (3,081) Proceeds on sale of property dispositions................. 22 22 ------- ------- Net cash used in investing activities.................. (50,318) (2,614) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Loan fee amortization..................................... 20 20 Proceeds from intercompany loan........................... 53,000 -- Principal payment on long-term debt....................... (500) (500) ------- ------- Net cash used in financing activities.................. 52,520 (480) ------- ------- NET INCREASE IN CASH AND CASH EQUIVALENTS................... 445 2,000 CASH AND CASH EQUIVALENTS, beginning of year................ 2,361 361 ------- ------- CASH AND CASH EQUIVALENTS, end of year...................... $ 2,806 $ 2,361 ======= ======= SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest.................................... $ 1,043 $ 1,073 Cash paid for income taxes................................ 508 785 ======= =======
The accompanying notes are an integral part of these statements. F-19 21 CARMEUSE LIME INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1996 AND 1995 (IN THOUSANDS) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Principles of Consolidation Carmeuse Lime Inc. (a U.S. corporation) is a wholly owned subsidiary of Carfin, S.A. (a Belgian Corporation). The consolidated financial statements include the accounts of Carmeuse Lime Inc. (the "Company") and its wholly owned subsidiaries, Marblehead Lime Company, Utah Marblehead Lime Company and Carmeuse Pennsylvania. All significant intercompany transactions have been eliminated in consolidation. On December 30, 1996, the Company purchased certain assets and liabilities of Tarmac America for approximately $51,000. The final purchase price is subject to an audit of the working capital accounts which will be completed during fiscal year 1997. The acquisition has been accounted for using the purchase method of accounting. The purchase price has been allocated to the assets purchased and the liabilities assumed based upon preliminary estimates made by the management of fair value at the date of acquisition. All fixed assets from the acquisition have been classified as machinery and equipment in the balance sheet and will be allocated to the appropriate fixed asset accounts upon completion of independent valuation during fiscal year 1997. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less from the time of purchase to be cash equivalents. Inventories Of the Company's inventories, $8,702 and $11,737 at December 31, 1996 and 1995, respectively, were valued using the last-in, first-out ("LIFO") cost method of inventory pricing, which is not in excess of market. If these same inventories were valued using the first-in, first-out ("FIFO") method, they would have been valued $508 and $331 higher, respectively. All other inventories are stated at the lower of FIFO cost or market. Fair Market Value of Financial Instruments During 1995, the Company adopted Statement of Financial Accounting Standards No. 107, "Disclosure About Fair Value of Financial Instruments," which requires the disclosure of the fair market value of financial instruments. The Company believes that the carrying amounts of all financial instruments approximate fair market value. F-20 22 Property, Plant and Equipment The Company uses the straight-line method for financial reporting purposes and accelerated methods for income tax purposes in determination of depreciation for certain equipment and in the kilns at the Buffington plant; the remainder is depreciated under accelerated methods for both financial and income tax purposes. Income Taxes The Company follows Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." As of December 31, 1996 and 1995, the Company has recorded current deferred tax liabilities of $0 and $705, respectively, current deferred tax assets of $2,019 and $1,576, respectively, and a valuation allowance of $200. The valuation allowance was established upon the acquisition of Marblehead Lime Co. The deferred tax liabilities and assets consist mainly of temporary differences caused by depreciation of fixed assets and provisions for estimated expenses. Income tax benefits consist of a current benefit of $668 in 1996 and $482 in 1995 and a deferred provision of $586 in 1996 versus a deferred benefit of $666 in 1995. Differences between the Company's effective tax rate and the federal statutory tax rate reflect permanent differences attributable primarily to additional state income taxes. Employee Benefit Plans The Company has a retirement plan that covers substantially all employees. Retirement benefits for this plan are based on years of service and compensation levels during the latter years of employment. All other hourly employees are covered by either the Company or union-administered plans. Retirement benefits for these plans are based on years of service. Under the union plans, the Company is charged for pension costs by the unions based on a weekly rate per employee. It is the Company's policy to fund retirement plans to the maximum extent deductible under existing federal income tax regulations. Such contributions are intended to provide not only for benefits attributed to service to date but also for those expected to be earned in the future. Net periodic pension costs for 1996 and 1995 included the following components:
1996 1995 ----- ----- Service cost................................................ $ 377 $ 323 Interest cost on projected benefit obligation............... 614 586 Expected return on assets................................... (886) (704) ----- ----- $ 105 $ 205 ===== =====
F-21 23 The following table sets forth the plan's funded status at December 31, 1996 and 1995:
1996 1995 ------ ------ Actuarial present value of benefit obligations-- Vested benefits........................................... $6,708 $7,049 Nonvested benefits........................................ 824 107 ------ ------ Accumulated benefit obligations............................. 7,532 7,156 Effect of projected future salary increases................. 1,538 2,251 ------ ------ Projected benefit obligations............................... 9,070 9,407 Plan assets, at fair value.................................. 11,654 10,615 ------ ------ Plan assets in excess of projected benefit obligation....... 2,584 1,208 Unrecognized net (gain) or loss............................. (1,265) 308 ------ ------ Prepaid pension cost........................................ $1,319 $1,516 ====== ======
The unrecognized prior service cost is being amortized over the expected future service of plan participants. Assumptions used in the above computations as of the measurement date were as follows:
1996 1995 ---- ---- Weighted average discount................................... 7.5% 7.0% Weighted average salary scale............................... 4.5 4.5 Expected long-term rates of return on assets................ 8.5 8.5 === ===
The Company follows the Statement of Financial Accounting Standards No. 106, "Employers Accounting for Postretirement Benefits Other Than Pensions," which requires the recognition of postretirement benefits over the period in which active employees become eligible for such benefits. The Company recognized its accrued postretirement benefit obligation at the time of Marblehead Lime Company's purchase as part of the purchase price allocation. The periodic expense for postretirement benefits was $75 for both December 31, 1996 and 1995, and included the following components:
1996 1995 ---- ---- Service cost for benefits earned during year................ $12 $10 Interest cost on accumulated benefit obligation............. 63 65 --- --- Total expense............................................. $75 $75 === ===
A summary of the actuarial and recorded liabilities for postretirement benefits is as follows:
1996 1995 ---- ---- Actives not fully eligible.................................. $269 $281 Actives fully eligible...................................... 325 340 Retirees.................................................... 257 268 Unrecognized loss........................................... (19) (46) ---- ---- Total accrued accumulated benefit obligation.............. $832 $843 ==== ====
An 8.0% annual rate increase in the per capita costs of covered health care benefits was assumed for 1996 and 1995. Increasing the assumed health care cost trend rates by one percentage point in each year would increase the actuarial present value of benefit obligations as of December 31, 1996 and 1995, by $48 and $50, F-22 24 respectively, and increase the service and interest cost components of net periodic postretirement benefit cost for 1996 and 1995 by $5. A discount rate of 7.5% was used to determine the APBO. 2. TRANSACTIONS WITH AFFILIATED COMPANIES: During 1996 and 1995, the Company purchased lime from Beachvilime, Northern Lime and Guelph Dolime, subsidiaries of the Company's Parent. Purchases amounted to $2,196 and $3,244 with $209 and $1,257 due these subsidiaries at December 31, 1996 and 1995, respectively. The Company also sold $200 and $35 of lime to these subsidiaries with $35 and $101 owed to the Company at December 31, 1996 and 1995, respectively. At December 31, 1996, the Company had a loan receivable from Beachvilime of $1,000, which is included in accounts and other receivables. The Company performs management services on behalf of the Company's Parent and its subsidiaries. These services resulted in an intercompany receivable of $266 and $147 due to the Company at December 31, 1996 and 1995, respectively. The Company also incurred management fees from Carmeuse S.A. and Beachvilime resulting in an intercompany payable of $1,410 and $529 at December 31, 1996 and 1995, respectively. During 1996 and 1995, the Company incurred $1,102 and $208 in expenses for company expansion which will be reimbursed by Carmeuse S.A. This amount is included in accounts and other receivables. During 1995, the Company's Parent incurred legal fees of $255 on the Company's behalf. This amount is included in accounts payable at December 31, 1995. 3. RENTAL EXPENSES AND LEASE COMMITMENTS: Minimum rental commitments under existing noncancelable operating leases at December 31, 1996, are as follows:
YEAR AMOUNT ---- ------ 1997........................................................ $25 1998........................................................ 25 1999........................................................ 25 2000........................................................ 25 2001........................................................ 25 ===
Minimum rental commitments under existing noncancelable operating leases after 2001 are $25 a year through the year 2005. 4. LONG-TERM DEBT: Long-term debt at December 31, 1996 and 1995, is as follows:
1996 1995 ------- ------- Credit Agreement with Bank Brussels Lambert (BBL), New York Branch, interest rate adjusted quarterly to the three-month LIBOR......................................... $12,000 $12,500 Intercompany loan from Carmeuse S.A., interest rate of LIBOR plus 2%................................................... 53,000 -- Less- Current portion....................................... (500) (500) ------- ------- $64,500 $12,000 ======= =======
The agreement contains restrictive covenants which, among other things, restrict dividend payments, require performance to maintain certain levels for working capital, current ratio, interest rate coverage and debt to equity. There are also restrictions on capital expenditures and dispositions of various assets. At December 31, 1996, the Company was not in compliance with certain of these covenants. F-23 25 The Company is currently in the process of negotiating a new credit facility with BBL to replace the existing credit agreement. Management expects the new credit facility to cover all of the North American operations of Carfin, S.A. and will be finalized during 1997. On December 27, 1996, Carmeuse, S.A. financed the purchase of certain assets of Tarmac America through an intercompany loan of $53,000. The intercompany loan is expected to be repaid from the proceeds of the refinancing discussed above. 5. LETTERS OF CREDIT: The Company has an agreement with Bank Brussels Lambert, New York Branch until May 30, 1997, to provide for working capital and letter of credit requirements of up to $2,000. As of December 31, 1996, the Company had outstanding letters of credit of approximately $483, representing conditional commitments whereby the Company guarantees performance to a third party. The Company has an interest rate swap agreement with Banque Indosuez Belgique, S.A. The Company has entered into this interest rate swap in order to hedge the interest expense on the credit agreement with Bank Brussels Lambert, New York Branch. The notional amount of the interest rate swap agreement is $12,000. The term of the interest rate swap agreement coincides with the term of the credit agreement that the Company has with Bank Brussels Lambert, New York Branch. The loan is to be repaid in full by June, 2001. The swap agreement is predicated on a fixed interest rate of 6.85% which is compared on a quarterly basis to the three-month LIBOR rate (relevant rate). If the relevant rate is less than the fixed rate, interest is paid by the Company whereas if the relevant rate exceeds the fixed rate, interest is received by the Company. At December 31, 1996 and 1995, the Company owed $14 and $10, respectively, to Banque Indosuez Belgique, S.A. as a result of this interest rate swap. 6. MARKETABLE SECURITIES: Effective January 1, 1995, the Company adopted the provisions of SFAS No. 115, "Accounting for Certain Investments in Debt and Equity Securities." The Company holds equity securities that are classified as available-for-sale securities. At December 31. 1996, these securities were carried at their fair market value of $98 with a gross unrealized holding gain of $60 reported as part of shareholder's equity. 7. SIGNIFICANT TRANSACTIONS: During fiscal year 1995, the Company provided approximately $1,900 primarily for the shutdown of its Thornton and Brennan facilities. The special charge includes projected costs related to severance, the write-down to net realizable value of fixed assets at the facilities and other related costs. The remaining reserve is classified as a current liability in the balance sheet and the charge was recorded as a selling, general and administrative expense in the statement of income. F-24 -----END PRIVACY-ENHANCED MESSAGE-----