-----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, N4s5bIuhvnp6zSiXmFlHZTWTCBEEtF6vThrU5+HjPH7DTrbPiGeDoHzYkiKeYvuw lFJzOmxNPMMftMponCLKgw== 0000912057-95-011586.txt : 19951228 0000912057-95-011586.hdr.sgml : 19951228 ACCESSION NUMBER: 0000912057-95-011586 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 13 FILED AS OF DATE: 19951227 SROS: CSX SROS: NASD SROS: NYSE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CIMCO INC /DE/ CENTRAL INDEX KEY: 0000791243 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 330251163 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-38255 FILM NUMBER: 95604580 BUSINESS ADDRESS: STREET 1: 265 BRIGGS AVE CITY: COSTA MESA STATE: CA ZIP: 92626 BUSINESS PHONE: 7145464460 MAIL ADDRESS: STREET 2: 265 BRIGGS AVENUE CITY: COSTA MESA STATE: CA ZIP: 92626 FORMER COMPANY: FORMER CONFORMED NAME: CIMCO DATE OF NAME CHANGE: 19900926 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CIMCO INC /DE/ CENTRAL INDEX KEY: 0000791243 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 330251163 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: 1934 Act SEC FILE NUMBER: 005-38255 FILM NUMBER: 95604581 BUSINESS ADDRESS: STREET 1: 265 BRIGGS AVE CITY: COSTA MESA STATE: CA ZIP: 92626 BUSINESS PHONE: 7145464460 MAIL ADDRESS: STREET 2: 265 BRIGGS AVENUE CITY: COSTA MESA STATE: CA ZIP: 92626 FORMER COMPANY: FORMER CONFORMED NAME: CIMCO DATE OF NAME CHANGE: 19900926 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HANNA M A CO/DE CENTRAL INDEX KEY: 0000045370 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED RUBBER PRODUCTS, NEC [3060] IRS NUMBER: 340232435 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: SUITE 36 5000 STREET 2: 200 PUBLIC SQUARE CITY: CLEVELAND STATE: OH ZIP: 44114-2304 BUSINESS PHONE: 2165894000 FORMER COMPANY: FORMER CONFORMED NAME: HANNA MINING CO DATE OF NAME CHANGE: 19850523 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HANNA M A CO/DE CENTRAL INDEX KEY: 0000045370 STANDARD INDUSTRIAL CLASSIFICATION: FABRICATED RUBBER PRODUCTS, NEC [3060] IRS NUMBER: 340232435 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: SUITE 36 5000 STREET 2: 200 PUBLIC SQUARE CITY: CLEVELAND STATE: OH ZIP: 44114-2304 BUSINESS PHONE: 2165894000 FORMER COMPANY: FORMER CONFORMED NAME: HANNA MINING CO DATE OF NAME CHANGE: 19850523 SC 14D1 1 SC 14D1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 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 AND SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ CIMCO, INC. (Name of Subject Company) HANWEST, INC. AND M.A. HANNA COMPANY (Bidders) COMMON STOCK, $0.01 PAR VALUE (Title of Class of Securities) 171842107 (CUSIP Number of Class of Securities) ------------------------ JOHN S. PYKE, JR. VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY M.A. HANNA COMPANY SUITE 36-5000 200 PUBLIC SQUARE CLEVELAND, OHIO 44114 (216) 589-4000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidders)
COPIES TO: LYLE G. GANSKE, ESQ. NICK E. YOCCA, ESQ. JONES, DAY, REAVIS & POGUE STRADLING, YOCCA, CARLSON & RAUTH, P.C. NORTH POINT 660 NEWPORT CENTER DRIVE, SUITE 1600 901 LAKESIDE AVENUE NEWPORT BEACH, CALIFORNIA 92660 CLEVELAND, OHIO 44114 (714) 752-4000 (216) 586-3939
DECEMBER 19, 1995 (Date of event which requires filing of this Statement on Schedule 13D) CALCULATION OF FILING FEE
TRANSACTION AMOUNT OF VALUATION FILING FEE $34,042,376(*) $6,908.48(**)
(*) Determined in accordance with Rule 0-11(d) under the Securities Exchange Act of 1934. This Transaction Valuation assumes, solely for purposes of calculating the Filing Fee for this Schedule 14D-1, the purchase of 3,242,131 shares of common stock, par value $0.01 per share, and any associated Rights (collectively, the "Shares"), of the Subject Company at $10.50 per Share net to the seller in cash. Such number of Shares represents all of the Shares outstanding as of December 18, 1995, and assumes the exercise or conversion of all existing options, rights and securities which were then exercisable or convertible into Shares. (**) Includes a Schedule 13D filing fee of $100. / / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. Amount Previously Paid: None Filling Party: Not Applicable Form or Registration No.: Not Applicable Date Filed: Not Applicable - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- CUSIP No. 171842107 14D-1 Page __ of __ Pages
- -------------------------------------------------------------------------------- 1. Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person HANWEST, INC. 34-1233868 - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a member of a Group* (a) / / (b) / /
- -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Sources of Funds* AF - -------------------------------------------------------------------------------- 5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f) / / - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization DELAWARE - -------------------------------------------------------------------------------- 7. Aggregate Amount Beneficially Owned by Each Reporting Person 539,734** - -------------------------------------------------------------------------------- 8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares* / / - -------------------------------------------------------------------------------- 9. Percent of Class Represented by Amount in Row (7) 16.6% as of December 18, 1995** - -------------------------------------------------------------------------------- 10. Type of Reporting Person* CO - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT! **On December 19, 1995, Hanwest, Inc., a Delaware corporation (the "Purchaser"), entered into a Stockholder Tender Agreement (the "Stockholder Tender Agreement") with Russell T. Gilbert (the "Seller Stockholder"), the President and Chief Executive Officer of CIMCO, Inc., a Delaware corporation (the "Company"), pursuant to which the Seller Stockholder agreed to sell and tender (and not withdraw) all Shares owned by the Seller Stockholder pursuant to and in accordance with the terms of the Purchaser's Offer to Purchase dated December 27, 1995 (the "Offer to Purchase"). The Seller Stockholder owns 539,734 Shares, which represents approximately 16.6% of the Shares outstanding on December 18, 1995 on a fully diluted basis. The number of Shares subject to the Stockholder Tender Agreement is reflected in rows 7 and 9 of the table above. The Stockholder Tender Agreement remains in effect until the earlier of the following: (i) the Seller Stockholder's Shares are purchased in accordance with the terms of the Offer to Purchase, (ii) the date the Agreement and Plan of Merger, dated as of December 19, 1995, among the Purchaser, the Company and M.A. Hanna Company is terminated and (iii) March 31, 1996. The Stockholder Tender Agreement is described more fully in Section 10, "Background of the Offer; the Merger Agreement; the Stockholder Tender Agreement; the Confidentiality Agreement; Appraisal Rights; the Rights Agreement," of the Offer to Purchase. During the term of the Stockholder Tender Agreement, Purchaser and M.A. Hanna Company have the power to vote the Seller Stockholder's Shares in connection with the transactions contemplated by the Offer to Purchase and with respect to certain other extraordinary transactions involving the Company. Neither Purchaser nor M.A. Hanna Company have dispositive power with respect to the Shares until acceptance and payment for the Shares pursuant to the Offer to Purchase. 2 CUSIP No. 171842107 14D-1 Page __ of __ Pages
- -------------------------------------------------------------------------------- 1. Name of Reporting Person S.S. or I.R.S. Identification No. of Above Person M.A. HANNA COMPANY 34-0232435 - -------------------------------------------------------------------------------- 2. Check the Appropriate Box if a member of a Group* (a) / / (b) / /
- -------------------------------------------------------------------------------- 3. SEC Use Only - -------------------------------------------------------------------------------- 4. Sources of Funds* WC - -------------------------------------------------------------------------------- 5. Check Box if Disclosure of Legal Proceedings is Required Pursuant to Items 2(e) or 2(f) / / - -------------------------------------------------------------------------------- 6. Citizenship or Place of Organization DELAWARE - -------------------------------------------------------------------------------- 7. Aggregate Amount Beneficially Owned by Each Reporting Person 539,734** - -------------------------------------------------------------------------------- 8. Check Box if the Aggregate Amount in Row (7) Excludes Certain Shares* / / - -------------------------------------------------------------------------------- 9. Percent of Class Represented by Amount in Row (7) 16.6% as of December 18, 1995** - -------------------------------------------------------------------------------- 10. Type of Reporting Person* CO, HC - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT! ** See description for Hanwest, Inc. on immediately preceding page. 3 INTRODUCTION This Schedule 14D-1 relates to a tender offer by Hanwest, Inc., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of M.A. Hanna Company, a Delaware corporation (the "Parent"), to purchase all the outstanding shares of common stock, par value $0.01 per share, including any associated Rights (as defined in the Offer to Purchase) (collectively, the "Shares"), of CIMCO, Inc., a Delaware corporation (the "Company"), at $10.50 per Share net to the seller in cash, upon the terms and subject to the conditions set forth in its Offer to Purchase dated December 27, 1995 (the "Offer to Purchase"), a copy of which is attached hereto as Exhibit (a)1, and in the related Letter of Transmittal, a copy of which is attached hereto as Exhibit (a)2, which together constitute the "Offer." The Offer is made pursuant to an Agreement and Plan of Merger, dated as of December 19, 1995, among the Parent, the Purchaser and the Company (the "Merger Agreement"), a copy of which is attached hereto as Exhibit (c)1. This Statement shall also constitute a Schedule 13D with respect to the Stockholder Tender Agreement, dated as of December 19, 1995 (the "Stockholder Tender Agreement"), entered into by Russell T. Gilbert, the President and Chief Executive Officer of the Company (the "Seller Stockholder"), and the Purchaser. Pursuant to the Stockholder Tender Agreement, the Seller Stockholder has agreed to tender and sell (and not withdraw) all Shares owned by the Seller Stockholder pursuant to and in accordance with the Offer. A copy of the Seller Stockholder Agreement is filed as Exhibit (c)2 hereto. ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is CIMCO, Inc., a Delaware corporation. The address of its principal executive offices is 265 Briggs Avenue, Costa Mesa, California 92626. (b) The information set forth in the Introduction of the Offer to Purchase is incorporated herein by reference. (c) The information set forth in Section 6 ("Price Range of Shares; Dividends") of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d), (g) The Purchaser is a Delaware corporation. All of the outstanding capital stock of the Purchaser is owned by the Parent. The information set forth in Section 8 ("Certain Information Concerning the Purchaser and the Parent") and Schedule I of the Offer to Purchase is incorporated herein by reference. (e)-(f) None of the Purchaser, the Parent or, to the best knowledge of the Purchaser, any of the persons listed in Schedule I to the Offer to Purchase has during the last five years been (i) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding 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 in (i) Section 7 ("Certain Information Concerning the Company"), Section 8 ("Certain Information Concerning the Purchaser and the Parent"), and Section 10 ("Background of the Offer; the Merger Agreement; the Stockholder Tender Agreement; the Confidentiality Agreement; Appraisal Rights; the Rights Agreement") of the Offer to Purchase, (ii) the Merger Agreement, and (iii) the Stockholder Tender Agreement is incorporated herein by reference. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a) The information set forth in the Introduction and Section 9 ("Source and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. (b) Not applicable. (c) Not applicable. 4 ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. (a)-(e) The information set forth in (i) the Introduction, Section 10 ("Background of the Offer; the Merger Agreement; the Stockholder Tender Agreement; the Confidentiality Agreement; Appraisal Rights; the Rights Agreement") and Section 11 ("Purpose of the Offer; Plans for the Company") of the Offer to Purchase, (ii) the Merger Agreement, and (iii) the Stockholder Tender Agreement is incorporated herein by reference. (f)-(g) The information set forth in Section 12 ("Effect of the Offer on the Market for the Shares; NASDAQ Quotations; Registration Under the Exchange Act") of the Offer to Purchase is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a)-(b) The information set forth in (i) the Introduction and Section 8 ("Certain Information Concerning the Purchaser and the Parent") of the Offer to Purchase, (ii) the Merger Agreement, and (iii) the Stockholder Tender Agreement is incorporated herein by reference. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in (i) the Introduction, Section 8 ("Certain Information Concerning the Purchaser and the Parent"), and Section 10 ("Background of the Offer; the Merger Agreement; the Stockholder Tender Agreement; the Confidentiality Agreement; Appraisal Rights; the Rights Agreement") of the Offer to Purchase (ii) the Merger Agreement, and (iii) the Stockholder Tender Agreement is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in the Introduction and Section 17 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth in Section 8 ("Certain Information Concerning the Purchaser and the Parent") of the Offer to Purchase is incorporated herein by reference. ITEM 10. ADDITIONAL INFORMATION. (a) None. (b)-(c) The information set forth in Section 16 ("Certain Legal Matters; Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Section 12 ("Effect of the Offer on the Market for the Shares; NASDAQ Quotations; Registration under the Exchange Act") of the Offer to Purchase is incorporated herein by reference. (e) None. (f) The information set forth in the Offer to Purchase and the Letter of Transmittal is incorporated herein by reference in its entirety. 5 ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a)1............................................ Offer to Purchase, dated December 27, 1995 (a)2............................................ Letter of Transmittal (a)3............................................ Form of Letter from Dealer Manager to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees (a)4............................................ Form of Letter from Brokers, Dealers, Commercial Banks, Trust Companies and Nominees to their Clients (a)5............................................ Form of Notice of Guaranteed Delivery (a)6............................................ Form of Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (a)7............................................ Form of Press Release issued on December 20, 1995 by the Parent and the Company (a)8............................................ Form of Summary Advertisement, dated December 27, 1995 (b) ............................................ None (c)1............................................ Agreement and Plan of Merger, dated as of December 19, 1995, among the Parent, the Purchaser and the Company (c)2............................................ Stockholder Tender Agreement, dated as of December 19, 1995, between the Seller Stockholder and the Purchaser (c)3............................................ Confidentiality Agreement, dated September 2, 1994, as amended, between the Parent and the Company (c)4............................................ Letter of Intent, dated November 2, 1995, as amended, between the Parent and the Company (d) ............................................ None (e) ............................................ Not Applicable (f) ............................................ None
6 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: December 27, 1995 HANWEST, INC. By: /s/ J.S. PYKE, JR. -------------------------------------- Name: J.S. Pyke, Jr. Title: Vice President and Secretary 7 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: December 27, 1995 M.A. HANNA COMPANY By: /s/ J.S. PYKE, JR. -------------------------------------- Name: J.S. Pyke, Jr. Title: Vice President, General Counsel and Secretary 8 EXHIBIT INDEX EXHIBIT DESCRIPTION - ------- ----------------------------------------------------------------------- (a)1 Offer to Purchase, dated December 27, 1995 (a)2 Letter of Transmittal (a)3 Form of Letter from Dealer Manager to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees (a)4 Form of Letter from Brokers, Dealers, Commercial Banks, Trust Companies and Nominees to their Clients (a)5 Form of Notice of Guaranteed Delivery (a)6 Form of Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 (a)7 Form of Press Release issued on December 20, 1995 by the Parent and the Company (a)8 Form of Summary Advertisement, dated December 27, 1995 (c)1 Agreement and Plan of Merger, dated as of December 19, 1995, among the Parent, the Purchaser and the Company (c)2 Stockholder Tender Agreement, dated as of December 19, 1995, between the Seller Stockholder and the Purchaser (c)3 Confidentiality Agreement, dated September 2, 1994, as amended, between the Parent and the Company (c)4 Letter of Intent, dated November 2, 1995, as amended, between the Parent and the Company 9 EX-99.A-1 2 EXHIBIT 99.A.1 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS) OF CIMCO, INC. BY HANWEST, INC. A WHOLLY OWNED SUBSIDIARY OF M.A. HANNA COMPANY AT $10.50 PER SHARE THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JANUARY 25, 1996, UNLESS THE OFFER IS EXTENDED. THE BOARD OF DIRECTORS OF CIMCO, INC. (THE "COMPANY") UNANIMOUSLY HAS DETERMINED THAT THE OFFER AND THE MERGER DESCRIBED HEREIN ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, HAS APPROVED THE OFFER AND THE MERGER AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. ------------------------ THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN IMMEDIATELY PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) THAT NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $0.01 PER SHARE (INCLUDING THE ASSOCIATED RIGHTS) (COLLECTIVELY, THE "SHARES"), OF THE COMPANY REPRESENTING AT LEAST A MAJORITY OF THE TOTAL NUMBER OF SHARES THEN OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"). ------------------------ IMPORTANT Any stockholder desiring to tender Shares, should either (1) complete and sign the Letter of Transmittal (or facsimile thereof) in accordance with the instructions in the Letter of Transmittal and deliver it to the Depositary with the certificate(s) representing tendered Shares and all other required documents or tender such Shares pursuant to the procedures for book-entry transfer set forth in Section 3 or (2) request his or her broker, dealer, commercial bank, trust company or other nominee to effect the transaction for him or her. A stockholder having Shares registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such person if he or she desires to tender such Shares. Any stockholder who desires to tender Shares and whose certificates representing such Shares are not immediately available or who cannot comply with the procedures for book-entry transfer on a timely basis may tender such Shares pursuant to the guaranteed delivery procedure set forth in Section 3. Questions and requests for assistance or additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to the Information Agent or to the Dealer Manager at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained from brokers, dealers, commercial banks or trust companies. ------------------------ THE DEALER MANAGER FOR THE OFFER IS: SALOMON BROTHERS INC December 27, 1995 TABLE OF CONTENTS
SECTION PAGE - -------------------------------------------------------------------------- ---- Introduction.............................................................. 1 1. Terms of the Offer; Expiration Date.................................. 2 2. Acceptance for Payment and Payment................................... 3 3. Procedure for Tendering Shares....................................... 3 4. Withdrawal Rights.................................................... 5 5. Certain Tax Considerations........................................... 6 6. Price Range of Shares; Dividends..................................... 6 7. Certain Information Concerning the Company........................... 7 8. Certain Information Concerning the Purchaser and the Parent.......... 9 9. Source and Amount of Funds........................................... 11 10. Background of the Offer; the Merger Agreement; the Stockholder Tender Agreement; the Confidentiality Agreement; Appraisal Rights; the Rights Agreement.................................................... 12 11. Purpose of the Offer; Plans for the Company.......................... 28 12. Effect of the Offer on the Market for the Shares; NASDAQ Quotations; Registration under the Exchange Act................................. 29 13. Dividends and Distributions.......................................... 29 14. Extension of Tender Period; Amendment; Termination................... 30 15. Certain Conditions to the Offer...................................... 31 16. Certain Legal Matters; Regulatory Approvals.......................... 33 17. Fees and Expenses.................................................... 37 18. Miscellaneous........................................................ 37 Schedule I -- Directors and Executive Officers of the Parent and the Purchaser Exhibit A -- Agreement and Plan of Merger
To the Holders of Common Stock of CIMCO Inc.: INTRODUCTION Hanwest, Inc., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of M.A. Hanna Company, a Delaware corporation (the "Parent"), hereby offers to purchase all outstanding shares of common stock, par value $0.01 per share (the "Common Stock"), of CIMCO, Inc., a Delaware corporation (the "Company"), and the associated preferred stock purchase rights (the "Rights," and together with the Common Stock, the "Shares") issued pursuant to the Rights Agreement, dated as of December 5, 1992, between the Company and First Interstate Bank of California, as Rights Agent (as the same may be amended, the "Rights Agreement"), at $10.50 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which together constitute the "Offer"). Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser pursuant to the Offer. The Purchaser will pay all charges and expenses of Salomon Brothers Inc ("Salomon"), which is acting as Dealer Manager for the Offer (the "Dealer Manager"), National City Bank (the "Depositary") and Georgeson & Company Inc. (the "Information Agent") incurred in connection with the Offer. See Section 17. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN IMMEDIATELY PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) THAT NUMBER OF SHARES REPRESENTING AT LEAST A MAJORITY OF THE TOTAL NUMBER OF SHARES THEN OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"). THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD OF DIRECTORS" OR THE "BOARD") UNANIMOUSLY HAS DETERMINED THAT THE OFFER AND THE MERGER DESCRIBED HEREIN ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, HAS APPROVED THE OFFER AND THE MERGER AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of December 19, 1995 (the "Merger Agreement"), among the Parent, the Purchaser and the Company. The Merger Agreement provides, among other things, that the Purchaser will make the Offer and that, following the purchase of the Shares pursuant to the Offer and the satisfaction of the other conditions set forth in the Merger Agreement and in accordance with relevant provisions of Delaware General Corporation Law ("DGCL"), the Purchaser will be merged with and into the Company (the "Merger"). Following the consummation of the Merger, the Company will continue as the surviving corporation (the "Surviving Corporation") and will be a wholly owned subsidiary of the Parent. At the effective time of the Merger (the "Effective Time"), each Share issued and outstanding immediately prior to the Effective Time (other than Shares held in the treasury of the Company or owned by the Parent or any wholly owned subsidiary of the Parent and other than Shares held by stockholders exercising appraisal rights pursuant to Section 262 of the DGCL) will be cancelled and automatically converted into the right to receive $10.50 in cash or any higher price per Share that may be paid pursuant to the Offer, without interest. See Section 10. Pursuant to the Company's Certificate of Incorporation and the DGCL, the affirmative vote of the holders of a majority of the outstanding Shares is required to approve and adopt the Merger Agreement and the Merger. Concurrently with the execution of the Merger Agreement, the Purchaser entered into an agreement (the "Stockholder Tender Agreement") with Russell T. Gilbert, the President and Chief Executive Officer of the Company (the "Seller Stockholder"), who owns 539,734 Shares (representing approximately 16.6% of the Shares outstanding on December 18, 1995 on a fully-diluted basis). Pursuant to the Stockholder Tender Agreement, the Seller Stockholder has agreed to tender and sell (and not withdraw) all Shares owned by him pursuant to and in accordance with the Offer. The Stockholder Tender Agreement also provides that the Purchaser is entitled to receive a fee from the Seller Stockholder, under certain circumstances, in connection with certain subsequent transactions involving the Shares. See Section 10. According to the Company, as of December 18, 1995, there were 2,970,481 Shares outstanding and not more than 271,650 Shares subject to issuance pursuant to stock options under the Company's stock option plans. As a result, the Purchaser believes that the Minimum Condition would be satisfied if at least 1,621,066 Shares are validly tendered and not withdrawn immediately prior to the Expiration Date. Pursuant to the Stockholder Tender Agreement, the Seller Stockholder has agreed to tender 539,734 Shares to the Purchaser pursuant to the Offer. Therefore, the Purchaser will need to have only 1,081,332 Shares validly tendered and not withdrawn pursuant to the Offer, in addition to the Shares subject to the Stockholder Tender Agreement, in order to satisfy the Minimum Condition. PaineWebber Incorporated ("PaineWebber"), financial advisor to the Company, has delivered to the Board of Directors its written opinion to the effect that, as of the date of the Merger Agreement, the $10.50 in cash to be received by the holders of Shares in the Offer and the Merger is fair to such holders from a financial point of view. A copy of such opinion is included with the Company's Solicitation/Recommendation Statement on Schedule 14D-9, which is being mailed to stockholders concurrently herewith, and stockholders are urged to read the opinion in its entirety for a description of the assumptions made, factors considered and procedures followed by PaineWebber. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the conditions of the Offer, the Purchaser will accept for payment and pay for all Shares that have been validly tendered prior to the Expiration Date and not withdrawn as permitted by Section 4. The term "Expiration Date" means 12:00 Midnight, New York City time, on Thursday, January 25, 1996, unless the Purchaser shall have extended, in its sole discretion, the period of time for which the Offer is open, in which event the term "Expiration Date" means the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. The Offer is subject to certain conditions set forth in Section 15, including satisfaction of the Minimum Condition and the expiration or termination of the waiting period applicable to the Purchaser's acquisition of Shares pursuant to the Offer under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"). If any such condition is not satisfied, the Purchaser may (i) terminate the Offer and return all tendered Shares to tendering stockholders, (ii) extend the Offer and, subject to withdrawal rights as set forth in Section 4, retain all such Shares until the expiration of the Offer as so extended, (iii) waive such condition and, subject to any requirement to extend the period of time during which the Offer is open, purchase all Shares validly tendered by the Expiration Date and not withdrawn or (iv) delay acceptance for payment of or payment for Shares, subject to applicable law, until satisfaction or waiver of the conditions to the Offer; provided, however, that, unless previously approved by the Company in writing, no change may be made which decreases the price per Share payable in the Offer, which changes the form of consideration to be paid in the Offer, which reduces the maximum number of Shares to be purchased in the Offer, which imposes conditions to the Offer in addition to those set forth in Section 15, which broaden the scope of such conditions, which increases the minimum number of Shares that must be tendered as a condition to the acceptance for payment and payment for the Shares, which waives the Minimum Condition if such waiver would result in less than a majority of the Shares being accepted for payment or paid for pursuant to the Offer or which, except as provided in the Merger Agreement, extends the period of the Offer beyond 45 days after the date of commencement of the Offer, or which otherwise amends the terms of the Offer (including any of the conditions set forth in Section 15) in a manner that is materially adverse to the holders of Shares. For a description of the Purchaser's right to extend the period of time during which the Offer is open, and to amend, delay or terminate the Offer, see Section 14. The Company has provided or will provide the Purchaser with the Company's stockholder list and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares and will be 2 furnished to brokers, banks and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT. Upon the terms and subject to the conditions of the Offer, the Purchaser will accept for payment and pay for all Shares validly tendered by the Expiration Date and not properly withdrawn at the earliest time following expiration of the Offer that all conditions to the Offer shall have been satisfied or waived by the Purchaser. For a description of the Purchaser's right to terminate the Offer and not accept for payment of or pay for Shares or to delay acceptance for payment of or payment for Shares, see Section 14. For purposes of the Offer, the Purchaser shall be deemed to have accepted for payment tendered Shares when, as and if the Purchaser gives oral or written notice to the Depositary of its acceptance of the tenders of such Shares. Payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price with the Depositary, which will act as agent for the tendering stockholders for the purpose of receiving payments from the Purchaser and transmitting such payments to tendering stockholders. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of certificates for such Shares (or of a confirmation of a book-entry transfer of such Shares into the Depositary's account at a Book-Entry Transfer Facility (as defined in Section 3)), a properly completed and duly executed Letter of Transmittal (or facsimile thereof) (unless, in the case of book-entry transfer, an Agent's Message (as defined in Section 3) is utilized) and any other required documents. For a description of the procedure for tendering Shares pursuant to the Offer, see Section 3. Accordingly, payment may be made to tendering stockholders at different times if delivery of the Shares and other required documents occur at different times. Under no circumstances will interest be paid by the Purchaser on the consideration paid for Shares pursuant to the Offer, regardless of any delay in making such payment. If the Purchaser increases the consideration to be paid for Shares pursuant to the Offer, the Purchaser will pay such increased consideration for all Shares purchased pursuant to the Offer. The Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its affiliates the right to purchase Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer or prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment. If any tendered Shares are not purchased pursuant to the Offer for any reason, or if certificates are submitted for more Shares than are tendered, certificates for such unpurchased or untendered Shares will be returned (or, in the case of Shares tendered by book-entry transfer, such Shares will be credited to an account maintained at the appropriate Book-Entry Transfer Facility), without expense to the tendering stockholder, as promptly as practicable following the expiration or termination of the Offer. 3. PROCEDURE FOR TENDERING SHARES. To tender Shares pursuant to the Offer, either (i) a properly completed and duly executed Letter of Transmittal (or facsimile thereof) and any other documents required by the Letter of Transmittal or an Agent's Message must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase and either (a) certificates for the Shares to be tendered must be received by the Depositary at one of such addresses or (b) such Shares must be delivered pursuant to the procedures for book-entry transfer described below (and a confirmation of such delivery received by the Depositary, including an Agent's Message if the tendering stockholder has not delivered a Letter of Transmittal), in each case prior to the Expiration Date, or (ii) the guaranteed delivery procedure described below must be complied with. The term "Agent's Message" means a message transmitted by a Book-Entry Transfer Facility to and received by the Depositary and forming a part of a book-entry confirmation, which states that such Book-Entry Transfer Facility has received an express acknowledgement from a participant in the system established by such Book-Entry Transfer Facility tendering the Shares which are the subject of such book-entry confirmation that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Purchaser may enforce such agreement against such participant. 3 BOOK-ENTRY TRANSFERS. The Depositary will cause a book-entry account in respect of the Shares to be established at The Depository Trust Company, the Midwest Securities Trust Company and the Philadelphia Depository Trust Company (individually, a "Book-Entry Transfer Facility" and collectively, the "Book-Entry Transfer Facilities") in connection with the Offer within two business days after the date of this Offer to Purchase, and any financial institution that is a participant in the system of any Book-Entry Transfer Facility may make book-entry delivery of Shares by causing such Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with the procedures of such Book-Entry Transfer Facility. However, although delivery of Shares may be effected through book-entry transfer, the Letter of Transmittal (or facsimile thereof) properly completed and duly executed, together with any required signature guarantees and any other required documents or an Agent's Message must, in any case, be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date, or the guaranteed delivery procedure described below must be complied with. Delivery of the Letter of Transmittal and any other required documents to a Book-Entry Transfer Facility does not constitute delivery to the Depositary. SIGNATURE GUARANTEES. Except as otherwise provided below, all signatures on a Letter of Transmittal must be guaranteed by a bank, broker or other institution that is a member of the Medallion Signature Guaranty Program (each, an "Eligible Institution"). Signatures on a Letter of Transmittal need not be guaranteed (i) if the Letter of Transmittal is signed by the registered holder of the Shares tendered therewith and such holder has not completed the box entitled "Special Payment Instructions" on the Letter of Transmittal or (ii) if such Shares are tendered for the account of an Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal. GUARANTEED DELIVERY. If a stockholder desires to tender Shares pursuant to the Offer and such stockholder's certificates evidencing such Shares are not immediately available or time will not permit all required documents to reach the Depositary on or prior to the Expiration Date, or such stockholder cannot complete the procedure for delivery by book-entry transfer on a timely basis, such Shares may nevertheless be tendered if all of the following conditions are met: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided by the Purchaser is received by the Depositary (as provided below) by the Expiration Date; and (iii) the certificates for such Shares (or a confirmation of a book-entry transfer of such Shares into the Depositary's account at one of the Book-Entry Transfer Facilities), together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantee and any other documents required by the Letter of Transmittal, or an Agent's Message, are received by the Depositary within three National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ System") trading days after the date of execution of the Notice of Guaranteed Delivery. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice. THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING THROUGH BOOK-ENTRY TRANSFER FACILITIES, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF CERTIFICATES FOR SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. FEDERAL INCOME TAX WITHHOLDING. Under the federal income tax laws, the Depositary will be required to withhold 31% of the amount of any payments made to certain stockholders pursuant to the 4 Offer. In order to avoid such backup withholding, each tendering stockholder must provide the Depositary with such stockholder's correct taxpayer identification number and certify that such stockholder is not subject to such backup withholding by completing the Substitute Form W-9 included in the Letter of Transmittal (see paragraph 8 of the Terms and Conditions of the Offer set forth in the Letter of Transmittal) or by filing a Form W-9 with the Depositary prior to any such payments. If the stockholder is a nonresident alien or foreign entity not subject to back-up withholding, the stockholder must give the Depositary a completed Form W-8 Certificate of Foreign Status prior to receipt of any payments. APPOINTMENT OF PROXY. By executing a Letter of Transmittal or causing a Book-Entry Transfer Facility to transmit an Agent's Message, a tendering stockholder irrevocably appoints designees of the Purchaser as such stockholder's proxies in the manner set forth in the Letter of Transmittal to the full extent of such stockholder's rights with respect to the Shares tendered by such stockholder and accepted for payment by the Purchaser (and any and all other shares of common stock or other securities issued or issuable in respect of such Shares on or after December 19, 1995). All such proxies shall be irrevocable and coupled with an interest in the tendered Shares. Such appointment is effective only upon the acceptance for payment of such Shares by the Purchaser. Upon such acceptance for payment, all prior proxies and consents granted by such stockholder with respect to such Shares and other securities will, without further action, be revoked, and no subsequent proxies may be given nor subsequent written consents executed by such stockholder (and, if given or executed, will be deemed ineffective). Such designees of the Purchaser will be empowered to exercise all voting and other rights of such stockholder as they, in their sole discretion, may deem proper at any annual, special or adjourned meeting of the Company's stockholders, by written consent or otherwise. The Purchaser reserves the right to require that, in order for Shares to be validly tendered, immediately upon the Purchaser's acceptance for payment of such Shares, the Purchaser is able to exercise full voting rights with respect to such Shares and other securities (including voting at any meeting of stockholders then scheduled or acting by written consent without a meeting). A tender of Shares pursuant to any one of the procedures described above will constitute the tendering stockholder's acceptance of the terms and conditions of the Offer, as well as the tendering stockholder's representation and warranty that (i) such stockholder has the full power and authority to tender, sell, assign and transfer the tendered Shares (and any and all other shares of common stock or other securities issued or issuable in respect of such Shares on or after December 19, 1995), and (ii) when the same are accepted for payment by the Purchaser, the Purchaser will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claims. The Purchaser's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering stockholder and the Purchaser upon the terms and subject to the conditions of the Offer. DETERMINATION OF VALIDITY. All questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Purchaser, in its sole discretion, which determination shall be final and binding. The Purchaser reserves the absolute right to reject any or all tenders of Shares determined by it not to be in proper form or the acceptance for payment of or payment for which may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right to waive any defect or irregularity in any tender of Shares. No tender of Shares will be deemed to have been properly made until all defects and irregularities relating thereto have been cured or waived. The Purchaser's interpretation of the terms and conditions of the Offer in this regard will be final and binding. None of the Purchaser, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defect or irregularity in tenders or incur any liability for failure to give any such notification. 4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior to the Expiration Date. Thereafter, such tenders are irrevocable, except that they may be withdrawn after February 24, 1996 unless theretofore accepted for payment as provided in this Offer to Purchase. 5 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 and must specify the name of the person who tendered the Shares to be withdrawn and the number of Shares to be withdrawn and the name of the registered holders of the Shares, if different from that of the person who tendered such Shares. If the Shares to be withdrawn have been delivered to the Depositary, a signed notice of withdrawal with (except in the case of Shares tendered by an Eligible Institution) signatures guaranteed by an Eligible Institution must be submitted prior to the release of such Shares. In addition, such notice must specify, in the case of Shares tendered by delivery of certificates, the name of the registered holder (if different from that of the tendering stockholder) and the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn or, in the case of Shares tendered by book-entry transfer, the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares. Withdrawals may not be rescinded, and Shares withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered by again following one of the procedures described in Section 3 at any time prior to the Expiration Date. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Purchaser, in its sole discretion, which determination shall be final and binding. None of the Purchaser, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defect or irregularity in any notice of withdrawal or incur any liability for failure to give any such notification. 5. CERTAIN TAX CONSIDERATIONS. Sales of Shares by stockholders of the Company pursuant to the Offer will be taxable transactions for federal income tax purposes and may also be taxable transactions under applicable state and local and other tax laws. In general, a stockholder will recognize gain or loss equal to the difference between the tax basis of his Shares and the amount of cash received in exchange therefor. Such gain or loss will be a capital gain or loss if the Shares are capital assets in the hands of the stockholder and will be long-term gain or loss if the holding period for the Shares is more than one year as of the date of the sale of such Shares. The foregoing discussion may not apply to stockholders who acquired their Shares pursuant to the exercise of stock options or other compensation arrangements with the Company or who are not citizens or residents of the United States or who are otherwise subject to special tax treatment under the Internal Revenue Code of 1986, as amended. THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE OFFER TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE ALTERNATIVE MINIMUM TAX, AND STATE, LOCAL AND FOREIGN TAX LAWS. 6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are traded in the over-the-counter market and price quotations are reported in the National Market System of NASDAQ under the Symbol "CIMC". The following table sets forth, for the periods indicated, the reported high and low sales prices for the Shares as reported by NASDAQ. According to the Company's Annual Report on Form 10-K for the fiscal year ended April 30, 1995 (the "Company 10-K"), the Company did not pay any cash dividends on the Shares during the Company's two most recent fiscal years. 6 CIMCO, INC.
SALES QUOTATIONS ------------------ CALENDAR YEAR HIGH LOW - -------------------------------------------------------------------------- ------- ------- 1993: First Quarter........................................................... $ 9 3/4 $ 6 1/2 Second Quarter.......................................................... 9 7 1/4 Third Quarter........................................................... 8 1/4 6 1/2 Fourth Quarter.......................................................... 9 1/2 6 1/4 1994: First Quarter........................................................... $ 7 1/2 $ 5 3/4 Second Quarter.......................................................... 6 3/4 5 1/2 Third Quarter........................................................... 6 1/4 4 5/8 Fourth Quarter.......................................................... 5 3/4 4 1995: First Quarter........................................................... $ 5 1/2 $ 4 Second Quarter.......................................................... 5 1/2 3 3/8 Third Quarter........................................................... 8 3 1/2 Fourth Quarter (through December 26, 1995).............................. 10 3/4 7 1/4
The Merger Agreement prohibits the Company from declaring or paying any dividend or other distribution on the Shares prior to the consummation of the Merger. On November 7, 1995, the last full day of trading prior to the first public announcement of negotiations between the Company and the Parent and the proposed $10.50 per Share to be paid in a possible transaction between the Parent and the Company, the reported high and low sales prices for the Shares as reported on NASDAQ were $8 3/4 and $7 1/4, respectively. On December 18, 1995, the last full day of trading prior to the first public announcement of the Offer, the reported high and low sales prices for the Shares as reported by NASDAQ were each $9 1/2. On December 26, 1995, the last full day of trading prior to the commencement of the Offer, the reported high and low sales prices for the Shares as reported by NASDAQ were $10 5/16 and $10 1/4, respectively. The Offer represents a twenty percent premium over the reported high sales price per Share reported by NASDAQ on November 7, 1995. As of December 19, 1995, there were approximately 255 holders of record of outstanding Shares according to the Company. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATIONS FOR THE SHARES. 7. CERTAIN INFORMATION CONCERNING THE COMPANY. The Company is a Delaware corporation organized in 1959 as a California corporation and reincorporated in Delaware as CIMCO, Inc. in 1987. The Company's principal executive offices are located at 265 Briggs Avenue, Costa Mesa, California 92626. The Company is principally engaged in the manufacture of high precision thermoplastic components and subassemblies and engineered thermoplastic polymers. The following summary financial information has been taken or derived from the audited financial statements contained in the Company 10-K and the unaudited financial statements contained in the Company's Quarterly Report on Form 10-Q for the quarterly period ended October 31, 1995 (the "Company 10-Q"). More comprehensive financial information is included in the Company 10-K, the Company 10-Q and other documents filed by the Company with the Securities and Exchange Commission (the "Commission"). The financial information that follows is qualified in its entirety by reference to the Company 10-K, the Company 10-Q and such other documents and all the financial information and related notes contained therein. Copies of the Company 10-K and the Company 10-Q may be examined at or obtained from the Commission in the manner set forth below. 7 CIMCO, INC. SELECTED CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED APRIL 30 ----------------------------- SIX MONTHS ENDED 1995 1994 1993 OCTOBER 31, 1995 ---------- ------- ------- ---------------- (UNAUDITED) SUMMARY OF EARNINGS DATA: Net sales................................................. $83,231 $73,880 $76,887 $55,119 Operating profit (loss)................................... (1,047) (1,162) 2,942 422 Other expenses, net....................................... 1,181 674 846 -- Earnings (loss) before provision (benefit) for income taxes.................................................... (2,228) (1,836) 2,096 (294) Net income (loss)......................................... (1,548) (1,214) 1,476 (203) Earnings (loss) per share -- primary...................... $ (0.52) $ (0.41) $ 0.50 $ (.07) BALANCE SHEET DATA: (1) Working capital........................................... $(1,456) $12,867 $10,417 $(1,543) Plant, property and equipment, net........................ 25,869 27,489 22,771 26,465 Total assets.............................................. 58,583 56,648 49,348 65,400 Long-term debt (net)...................................... --(2) 13,536 5,719 --(3) Stockholders' equity...................................... 25,315 27,107 28,208 25,269
- ------------------------ (1) At period end. (2) Working capital has been reduced by $12.1 million due to a reclassification of long-term debt. (3) Working capital has been reduced by $8.8 million due to a reclassification of long-term debt. AVAILABLE INFORMATION. The Company is subject to the information requirements of the Securities Exchange Act of 1934, as amended (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, options granted to them, the principal holders of the Company's securities and any material interest of such persons in transactions with the Company is required to be described in periodic statements filed with the Commission. These reports and other information, including the Company 10-K included as an exhibit to the Company's Solicitation/Recommendation Statement on Schedule 14D-9, should be available for inspection and copying at the Commission's office at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the Commission located at 75 Park Place, New York, New York 10007 and Northwestern Atrium Center, 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 above information concerning the Company has been taken from or based upon the Company 10-K and other publicly available documents on file with the Commission and other publicly available information. Although neither the Purchaser nor the Parent has any knowledge that would indicate that such information contained herein based upon such documents is untrue, neither the Purchaser nor the Parent takes any responsibility for, or makes any representation with respect to, the accuracy or completeness of the information contained in such documents or for any failure by the Company to disclose events that may have occurred and may affect the significance or accuracy of any such information, but which are unknown to the Purchaser or the Parent. In the course of the discussions between representatives of the Parent and the Company (see Section 10) certain projections of the future operating performance of Compounding Technology, Inc. ("CTI"), a California corporation and a wholly owned subsidiary of the Company, were furnished to the 8 Parent's representatives, including projections that (i) gross sales for CTI for fiscal years 1995 through 1997 would be $45 million, $54 million and $65 million, respectively (compared to gross sales of approximately $24 million in fiscal year 1992, $33 million in fiscal year 1993 and $35.5 million in fiscal year 1994) and (ii) operating profits for CTI for fiscal years 1995 through 1997 would be approximately $3.8 million, $5.9 million and $7.3 million, respectively (compared to operating profits of $2.5 million in fiscal year 1992, $3.3 million in fiscal year 1993 and $2.7 million in fiscal year 1994). These projections were not prepared with a view to public disclosure or compliance with published guidelines of the Commission or the guidelines established by the American Institute of Certified Public Accountants regarding projections. The Company and CTI do not as a matter of course make public projections as to future sales or operating performance, and such projected information is included in this Offer to Purchase only because the information was provided to the Parent. None of the Parent, the Purchaser or the Company, or any of their financial advisors or the Dealer Manager assumes any responsibility for the accuracy of these projections. These projections are based upon a variety of assumptions relating to the business of CTI which may not be realized and are subject to significant uncertainties and contingencies, many of which are beyond the control of the Company and CTI. There can be no assurance that these projections will be realized, and actual results may vary materially from those shown. These projections relate solely to CTI, as a separate subsidiary, and do not reflect the projected operating performance of the Company as a whole. 8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND THE PARENT. The Purchaser was formed as a Delaware corporation in 1977 and is a wholly owned subsidiary of the Parent. The Purchaser was originally a general partner in H-G Coal Company, a Delaware general partnership, which mined and shipped coal from a Colorado surface mine. In the mid-1980s H-G Coal Company was wound up and its assets were liquidated. The Purchaser has been idle since that time. As a result, until immediately prior to the time the Purchaser purchases Shares pursuant to the Offer, it is not anticipated that the Purchaser will have any significant assets or liabilities or engage in activities other than those incident to the transactions contemplated by the Offer. Because the Purchaser has minimal assets and capitalization, no meaningful financial information regarding the Purchaser is available. The Parent is a Delaware corporation organized in 1927. Its primary businesses are rubber and plastics compounding, production of color and additives concentrates and distribution of plastic resins and engineered plastic shapes. The name, citizenship, business address, principal occupation or employment and five year employment history of each of the directors and executive officers of the Purchaser and the Parent are set forth in Schedule I hereto. The principal executive offices of the Parent and the Purchaser are located at Suite 36-5000, 200 Public Square, Cleveland, Ohio 44114-2304. Set forth below is a summary of certain consolidated financial information with respect to the Parent and its consolidated subsidiaries excerpted or derived from the information contained in, or incorporated by reference into, the Parent's Annual Report on Form 10-K for the fiscal year ended December 31, 1994 (the "Parent 10-K") and the Parent's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1995 (the "Parent 10-Q"). More comprehensive financial information is included in, or incorporated by reference into, the Parent 10-K, the Parent 10-Q and other documents filed by the Parent with the Commission, and the financial information summary set forth below is qualified in its entirety by reference to the Parent 10-K, the Parent 10-Q and such other documents and all the financial information and related notes contained therein. 9 M.A. HANNA COMPANY SELECTED CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA)
NINE MONTHS YEAR ENDED DECEMBER 31 ENDED ---------------------------------- ------------- 1994 1993 1992 SEPTEMBER 30, ---------- ---------- ---------- 1995 ------------- (UNAUDITED) SUMMARY OF OPERATIONS: Net sales................................................. $1,719,356 $1,412,071 $1,188,541 $1,440,145 Cost of goods sold........................................ 1,393,036 1,146,191 961,925 1,174,532 Selling, general and administrative....................... 213,318 179,228 152,366 164,599 Amortization of intangibles............................... 12,458 12,006 11,069 10,473 Interest on debt.......................................... 28,549 32,258 32,509 20,295 Other income.............................................. (4,066) (5,016) (5,250) (13,322) Other expense............................................. 9,839 9,750 8,917 5,829 Income from continuing operations before income taxes, extraordinary charge and cumulative effect of changes in accounting principles.................................... 62,222 37,654 27,005 77,739 Income taxes.............................................. 29,218 16,357 8,819 33,054 Income from continuing operations before extraordinary charge and cumulative effect of changes in accounting principles............................................... 37,004 21,297 18,186 44,685 Income (loss) from discontinued operations............................................... 9,970 (19,279) 12,304 45,337 Extraordinary charge...................................... (3,680) -- -- -- Net income................................................ 43,294 2,018 19,025 90,022 Per share of common stock Income from continuing operations....................... $ 1.20 $ 0.69 $ 0.63 $ 1.43 Net income.............................................. 1.40 0.07 0.66 2.89 Dividends paid.......................................... 0.51 0.48 0.44 0.405 Cash dividends paid on common stock....................... 15,688 14,003 12,630 12,522 BALANCE SHEET DATA: (1) Current assets............................................ $ 565,615 $ 405,782 $ 416,739 $ 606,540 Current liabilities....................................... 337,491 259,680 229,327 360,828 Working capital........................................... 228,124 146,102 187,412 245,712 Property, plant and equipment -- net...................................................... 204,135 184,296 195,117 224,566 Other assets.............................................. 445,410 438,628 440,873 427,992 Net long-term assets of discontinued operations........... -- 94,904 99,836 -- Other liabilities......................................... (173,888) (176,422) (174,558) (171,719) Long-term debt............................................ (288,869) (322,052) (350,737) (231,859) Total stockholders' equity................................ $ 414,912 $ 365,456 $ 397,943 $ 494,692
- -------------------------- (1) At period end. 10 The Parent is subject to the informational filing 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 Parent's directors and officers, their remuneration, options granted to them, the principal holders of the Parent's securities and any material interest of such persons in transactions with the Parent is required to be described in periodic statements filed with the Commission. Such reports and other information, including the Parent 10-K and the Parent 10-Q, may be inspected and copies may be obtained from the offices of the Commission in the same manner as set forth in Section 7. Except as set forth in this Offer to Purchase, none of the Parent, the Purchaser or any of their affiliates (collectively the "Purchaser Entities"), or, to the best knowledge of any of the Purchaser Entities, any of the persons listed on Schedule I, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any securities of the Company, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies. Except as set forth in this Offer to Purchase, none of the Purchaser Entities, or, to the best knowledge of any of the Purchaser Entities, any of the persons listed on Schedule I, has had, since May 1, 1992, any transactions with the Company or any of its executive officers, directors or affiliates that would require reporting under the rules of the Commission. Except as set forth in this Offer to Purchase, since May 1, 1992, there have been no contacts, negotiations or transactions between the Purchaser Entities, or their respective subsidiaries or, to the best knowledge of any of the Purchaser Entities, any of the persons listed on Schedule I, and the Company or its affiliates, concerning a merger, consolidation or acquisition, tender offer or other acquisition of securities, election of directors or a sale or other transfer of a material amount of assets. None of the Purchaser Entities or, to the best knowledge of any of the Purchaser Entities, any of the persons listed on Schedule I, beneficially owns any Shares or has effected any transactions in the Shares in the past 60 days. 9. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by the Purchaser to acquire all outstanding Shares pursuant to the Offer and the Merger, to consummate the transactions contemplated by the Merger Agreement, and to pay fees and expenses related to the Offer and the Merger is estimated to be approximately $35,000,000, which includes estimated expenses of $750,000. These funds are expected to be provided to the Purchaser in the form of capital contributions or advances made by the Parent. The Parent plans to obtain the funds for such capital contributions or advances from its available cash and working capital. The Purchaser has not conditioned the Offer on obtaining financing. The Credit Agreement dated as of February 1, 1995, as amended, between the Company and Wells Fargo Bank, National Association ("Wells Fargo"), provides, among other things, that the Company is not permitted to merge into any other entity without the prior written consent of Wells Fargo and that any change in ownership during the term of the Credit Agreement of an aggregate of 25% or more of the Shares constitutes an event of default under the Credit Agreement. In addition, certain transfers of the Shares cause an event of default under the promissory note dated as of August 24, 1995 executed by the Company in favor of Wells Fargo in the original principal amount of $1,800,000 (the "Bridge Note") and certain defaults under the Credit Agreement and/or the Bridge Note may also cause an event of default under the Pledge Agreement, dated as of August 24, 1995, executed by the Company in favor of Wells Fargo (the "Pledge Agreement"). On December 19, 1995, Wells Fargo executed an agreement with the Company, CTI and Medical Molding Corporation of America ("MMCA")pursuant to which Wells Fargo agreed to waive its right to declare a default or breach under the Credit Agreement, the Bridge Note and the Pledge Agreement due to the transfers of the Shares or the Merger effective upon the timely satisfaction of certain conditions. On December 22, 1995, (i) the Company and Wells Fargo executed the Fourth Amendment to Credit Documents to, among other things, accelerate the maturity of certain promissory notes made by the Company in favor of Wells Fargo and waive compliance with certain financial covenants in the Credit 11 Agreement through April 30, 1996 and (ii) Wells Fargo and Mesa Leasing Company ("Mesa"), a general partnership comprised of the Company and Mr. Gilbert, executed the First Amendment to Promissory Note to accelerate the maturity of a promissory note made by Mesa in favor of Wells Fargo. These amendments satisfied the conditions to Wells Fargo's consent set forth in its December 19, 1995 agreement with the Company, CTI and MMCA and satisfied the condition to the Offer set forth in paragraph (iii)(h) of Section 15. 10. BACKGROUND OF THE OFFER; THE MERGER AGREEMENT; THE STOCKHOLDER TENDER AGREEMENT; THE CONFIDENTIALITY AGREEMENT; APPRAISAL RIGHTS; THE RIGHTS AGREEMENT. BACKGROUND OF OFFER In 1991, 1992 and early 1993, the Parent contacted the Company to express its interest in the Company and, in particular, CTI. These inquiries were rebuffed by the Company. However, in late summer 1993, L. Ronald Trepp, the Chief Financial Officer of the Company, contacted the Parent to discuss the potential of a strategic relationship between the Company and the Parent. In late 1993, operations and financial personnel of the Company and the Parent met to discuss strategic objectives of CTI and the Parent's plastics compounding business and the potential acquisition of CTI by the Parent. In September 1994, at a meeting attended by Russell T. Gilbert, the President and Chief Executive Officer of the Company, and Martin D. Walker, the Chairman and Chief Executive Officer of the Parent, the Parent and the Company discussed and evaluated the possibility of a joint venture involving the Company and the Parent or an acquisition of CTI by the Parent. In October and November 1994, certain operations and financial personnel of the two companies met to tour CTI's facilities in Charlotte, North Carolina, Corona, California and Singapore as well as discuss CTI's business and its long term plans in Asia. On December 15 and 16, 1994, the Parent and the Company and their respective financial and legal advisors met to develop a proposal for the Parent to acquire CTI, which proposal would then be presented to Mr. Gilbert. However, the parties could not agree on the terms of such a proposal, including the price. In February 1995, the Parent submitted a proposal to the Company to acquire CTI for $12 million in cash. The Company rejected this offer. On July 19, 1995, Mr. Walker sent a letter on behalf of the Parent to Mr. Gilbert expressing the Parent's interest in acquiring CTI for a price of $18.5 million in cash. Mr. Walker indicated in the letter that the Parent would consider as an alternative the acquisition of the Company for cash or stock with a subsequent spinoff of the Company's molding division. On August 9, 1995, in response to several unsolicited inquiries by persons other than the Parent, the Company issued a press release announcing that the Board had retained PaineWebber to assist the Board in reviewing and evaluating the inquiries. 12 On August 10, 1995, Mr. Walker, on behalf of the Parent, sent the following letter to the Board outlining the terms and conditions pursuant to which the Parent and an entity unaffiliated with the Parent would acquire the Company: August 10, 1995 The Board of Directors CIMCO, Inc. 265 Briggs Avenue Costa Mesa, CA 92626-4555 Gentlemen: This letter will set forth the terms and conditions pursuant to which M. A. Hanna Company ("Hanna") and [an unaffiliated third party] intend to acquire CIMCO, Inc. 1. Subject to the conditions set forth in this letter, Hanna will acquire all of the outstanding stock of CIMCO, Inc., for an aggregate purchase price of $43.0 million, of which $25.0 million will be used to acquire the outstanding equity and $18.0 million will be allocated to the assumption of outstanding third party debt. The price will be payable at the election of the CIMCO Board of Directors wholly in cash or wholly in shares of Hanna Common Stock at $28.00 per Hanna share. Following the Hanna acquisition of the CIMCO stock, Hanna will immediately sell the CIMCO assets and subsidiaries not related to the Compounding Technology, Inc. ("Compounding") business to an entity designated by [the unaffiliated third party] for $24.0 million in consideration consisting of $6.0 million in cash and approximately $18.0 million in debt assumption, of which approximately $11.0 million is bank debt, $5.0 million is Industrial Development Revenue Bond obligations of CIMCO and $2.1 million is a real estate mortgage on the plant in Costa Mesa. It is anticipated that [the unaffiliated third party] will own a majority equity interest in the designated purchasing entity and that Mr. Russell T. Gilbert will be offered an opportunity to own a minority equity interest and to enter into certain employment arrangements with the entity. In the event of a Hanna acquisition of CIMCO for Hanna Common Stock, rather than cash, it is anticipated that Mr. Gilbert will be offered an opportunity to take out a $1.5 million loan in order to invest in the new entity, said loan to be secured by a pledge of Hanna Common Stock. 2. If the Board of CIMCO accepts this letter of intent, Hanna and [the unaffiliated third party] will conduct due diligence investigations of CIMCO and its businesses. To this end, Hanna and [the unaffiliated third party] accompanied by CIMCO executives would visit Hewlett Packard and 3M to review the contractual relationships with CIMCO and Compounding; Hanna and [the unaffiliated third party] would conduct financial, supplier and legal due diligence investigations and Phase I environmental audits of all facilities to be purchased; Hanna would investigate Compounding's new French facility; and Hanna would prepare and deliver to CIMCO a definitive Purchase Agreement containing provisions that are customary in transactions of this nature. 3. At the conclusion of the three-week period the parties would promptly negotiate the definitive Purchase Agreement and submit the transaction to their respective Boards of Directors for approval. CIMCO will redeem all of the Rights issued under its Shareholders Rights Plan. 4. CIMCO will work exclusively with Hanna and [the unaffiliated third party] on the transactions described herein and will not directly or indirectly encourage, invite, pursue or take any action to facilitate other offers to purchase any capital stock of CIMCO or any of its assets or subsidiaries or effect any other business combination. In the event CIMCO shall receive such an offer, it will immediately notify Hanna and [the unaffiliated third party]. CIMCO also agrees that if during a period of one year from the date of the acceptance of this letter any capital stock of CIMCO or any of its assets or subsidiaries or any assets of its subsidiaries are sold to a third party, CIMCO or its successor will pay Hanna and [the unaffiliated third party] an aggregate fee of 3% of the total value of each third party transaction in cash, to be divided equally between Hanna and [the unaffiliated third party], and reimburse their out-of-pocket expenditures incurred in connection with the transactions proposed in this letter. 13 5. From and after the date of receipt of this letter, CIMCO agrees to conduct its business in the ordinary course consistent with past practice. 6. CIMCO will not make any press release, announcement, report, disclosure or filing with respect to the transactions described in this letter without the prior written consent of Hanna and [the unaffiliated third party] except as required by law based on the advice of counsel. 7. Consummation of the transactions described in this letter is subject among other things to satisfactory completion of the due diligence investigations by Hanna and [the unaffiliated third party]; the approval of the Hanna acquisition of CIMCO and the subsequent sale of assets and assignment of debt to the entity designated by [the unaffiliated third party] by the Hanna and [the unaffiliated third party] Boards of Directors; approval by governmental agencies and regulatory authorities; and the negotiation, execution and delivery of the definitive Purchase Agreement and the definitive sale agreement between Hanna and the purchasing entity designated by [the unaffiliated third party]. 8. We understand that the CIMCO Board will meet on August 12, 1995. We are willing to meet with the full Board or a committee of your Board to discuss the transactions described in this letter further and answer any questions you may have. Our desire is to pursue a negotiated business combination and work amicably with you. 9. It is the intention of Hanna and [the unaffiliated third party], and by signing this letter CIMCO acknowledges that it is CIMCO's intention as well, that this letter and any actions of the parties with respect hereto, NOT be deemed to constitute legally binding obligations except with respect to the matters described in paragraphs 4, 5 and 6 above, or an obligation or commitment to enter into any definitive agreements. Any legal obligation binding upon the parties hereto with respect to the transactions described in this letter, except with respect to paragraphs 4, 5 and 6 above, is subject to, and shall exist only upon, the due execution and delivery of the definitive agreements with respect to such transactions, and all obligations and rights of the parties hereto (except as aforesaid) shall be governed by such agreements. Your signature below shall indicate your intentions and obligations with respect to the matters discussed above; please return a fully signed copy to each of us. If we have not received the fully signed copies by 5:00 p.m. EDST on Wednesday, August 16, 1995, the intentions stated in this letter shall be null and void, and we shall consider other alternatives. We look forward to working with you. Very truly yours, M. A. HANNA COMPANY [UNAFFILIATED THIRD PARTY] /s/ Martin D. Walker /s/ XXXXXXX - ------------------------------------------- ------------------------------------------- Martin D. Walker XXXXXXX Chairman and Chief Executive Officer President
Accepted this ___ day of August, 1995 CIMCO, Inc. - ------------------------------------------- Title The foregoing letter was not signed by the Company. 14 On August 22 through August 24, 1995, operations, financial and legal personnel of the Parent conducted a due diligence review of the facilities of the Company and its subsidiaries. The review was undertaken to identify the major risks and opportunities involved in an acquisition of CTI or the Company and to assist the Parent in valuing CTI's business. On August 25, 1995, Mr. Walker sent a letter to the Board presenting the Parent's offer to purchase CTI for $25,000,000 in cash or, in the alternative, purchase the Company for $22,500,000 plus an amount equal to the cash purchase price paid for all of the Company's non-CTI assets and the assumption of certain of the Company's indebtedness by a third party selected by the Board. In this letter, Mr. Walker reiterated the Parent's desire to acquire and retain only the business and assets of CTI and indicated that the Parent's offer for the Company as a whole was an accomodation to the Company. The purchase price for the Company as a whole reflected the Parent's exposure to certain contingent liabilities unrelated to CTI. The letter provided that this offer expired August 30, 1995. This offer was not acted upon by the Company. On September 20, 1995, Mr. Gilbert, on his own behalf, sent a letter to Mr. Walker expressing his desire to partner with the Parent in its acquisition of the Company and his subsequent acquisition of the Company's molding division. In the letter Mr. Gilbert indicated that he and his partner or partners, acting in concert, would acquire all of the assets of the Company other than CTI for $18,000,000, consisting of $6,200,000 in cash and $11,800,000 in assumed liabilities. On October 2, 1995, Mr. Gilbert, on his own behalf, sent a letter to the Board setting forth the terms and conditions of his proposed acquisition of the Company's molding business. The terms of Mr. Gilbert's offer to the Board differed from the terms presented in his September 20, 1995 letter to Mr. Walker in that the $18,000,000 purchase price for the Company's molding business consisted of $4,100,000 in cash and $13,900,000 in assumed liabilities. Mr. Gilbert's letter stated that his offer expired October 6, 1995. On October 3, 1995, Mr. Walker sent a letter to the Board presenting the Parent's offer to purchase CTI for $32,000,000 in cash, subject to satisfaction of certain conditions, including satisfactory completion of the Parent's due diligence investigation of CTI and receipt of CTI's actual results of operations for August and September 1995 and preliminary results of operations for October 1995 supporting the projections previously provided by CTI to the Parent. The letter provided that this offer would expire on October 6, 1995. On October 5, 1995, Mr. Gilbert, on behalf of the Company, sent a letter to Mr. Walker acknowledging the Parent's October 3, 1995 letter of intent and requesting an extension of the offer contained therein until October 10, 1995. The Parent agreed to extend its offer until October 10, 1995 by letter dated October 6, 1995 to the Board. This offer was not acted upon by the Company. On October 11, 1995, Mr. Walker received letters from Mr. Gilbert and an unaffiliated third party discussing their respective interest in the Company's molding business. The unaffiliated third party stated that it believed the value range of the Company's molding business was $7,000,000 to $10,000,000. Mr. Gilbert revised his October 2, 1995 offer for the Company's molding business by providing two alternative acquisition proposals, each subject to certain terms and conditions. Mr. Gilbert's letter provided that his offer would expire on October 20, 1995 and stated that his offer was considerably higher than other offers and met the fairness criteria set forth by PaineWebber, the investment bank retained by the Company. On October 18, 1995, Mr. Walker received a letter from PaineWebber inviting the Parent to submit an offer to acquire the common stock of the Company. The letter provided that offers had to be received by PaineWebber by 5:00 p.m., California time on October 20, 1995. In addition, Mr. Walker received a letter from Mr. Gilbert dated October 18, 1995, enclosing a copy of Mr. Gilbert's October 7, 1995 letter to the Board, which included Mr. Gilbert's views of the value of the assets of the Company's molding business if the molding business was liquidated. The Parent had previously analyzed and discussed with Mr Gilbert the feasibility of selling the Company's molding business or liquidating its assets after the Merger. 15 On October 20, 1995, the Parent sent a letter to the Board offering to acquire all of the capital stock of the Company for $9.25 per share, subject to certain terms and conditions. The letter provided the Parent's offer expired on October 24, 1995. Also on October 20, 1995, Mr. Walker sent the following letter to Mr. Gilbert: M.A. Hanna Company October 20, 1995 PERSONAL AND CONFIDENTIAL Mr. Russell T. Gilbert 265 Briggs Avenue Costa Mesa, CA 92626-4555 Dear Russ: You as a potential purchaser of CIMCO's components businesses have requested that Hanna confirm its intentions with respect to CIMCO's components businesses if Hanna completes the acquisition of CIMCO. As we have advised you, for strategic and other reasons Hanna intends to sell or liquidate the components businesses promptly after completing the acquisition. While we have not played a role in PaineWebber's auction of the components businesses, we understand that your current offer represents more value for CIMCO than any of the purchase or liquidation alternatives presented to the CIMCO Board, although we have not reviewed these alternatives in any depth. Assuming that this state of facts (including your current offer price) prevails after we complete our purchase of CIMCO, we would be willing to enter into an agreement to sell the components businesses to you subject to substantiation of your financing and negotiation and execution of the definitive documentation. Very truly yours, /s/ Martin D. Walker - ------------------------------------------- Martin D. Walker Chairman and Chief Executive Officer
Mr. Gilbert responded to Mr. Walker's October 20, 1995 letter with a letter dated October 20, 1995 discussing the option of liquidating the Company's molding business and the problems associated with that action and indicating that he would consider executing an agreement to tender his Shares in connection with the Offer but only if the Parent and the Purchaser executed a definitive agreement with him relating to his acquisition of the Company's molding business. On October 27, 1995, the Parent sent another letter to the Board indicating that the Parent's October 20, 1995 offer had expired but that the Parent would be willing to present a revised offer based on certain assumptions and receipt of certain information (although the $9.25 per share price would not change). Between October 27, 1995 and November 2, 1995, the Parent and the Company engaged in discussions regarding the Parent's proposed acquisition of the Company, primarily with respect to price. On November 2, 1995, the Company and the Parent entered into a letter of intent regarding the possible purchase by the Parent of the outstanding Shares at $10.50 per share in cash. The letter of intent provided, among other things, that (i) the Parent and the Company would promptly negotiate a merger agreement, (ii) after approval of the merger agreement by the respective boards of directors of the Parent and the Company, the Parent would make an offer to purchase all outstanding Shares, and (iii) concurrently with the respective boards' approval of the Parent's offer to purchase the Shares, the 16 Board will approve the Parent's option to acquire in the tender offer the Shares owned by Mr. Gilbert, subject to Mr. Gilbert's exercise of his stock options and the amendment of the Company's rights plan to exclude the Offer and the Merger from its operation. The parties acknowledged that the proposed acquisition of the Shares by the Parent was not contingent on Mr. Gilbert's purchase of the Company's molding division. The letter agreement also provided that the Company would, subject to a customary fiduciary-out provision based on the advice of counsel, (i) work exclusively with the Parent on the transactions contemplated by the letter agreement for a period of 30 days from the date of the letter of intent and (ii) not directly or indirectly encourage, invite, pursue or take any action to facilitate other offers to purchase the Company or any of its subsidiaries or any assets of the Company or any of its subsidiaries or effect any other business combination involving the Company or any of its subsidiaries during such 30-day period. The letter of intent also provided that for a period of one year after the date of the letter of intent the Company would reimburse the Parent for expenses incurred in connection with the transactions proposed in the letter of intent, not to exceed $500,000, if the Company chose an alternative transaction within the year and the Parent had not terminated its participation for a reason other than the fault of the Company. This letter of intent was subsequently amended on December 4, 1995, December 11, 1995 and December 15, 1995 to extend the period of exclusivity provided thereunder. On November 8, 1995, the Parent issued a press release announcing a preliminary agreement between the Company and the Parent, pursuant to which the Purchaser would acquire for $10.50 per share all of the outstanding capital stock of the Company, subject to receipt of certain required approvals and execution of definitive documentation. The press release also announced that Mr. Gilbert intended to sell his Shares to the Purchaser on the same terms offered to the Company's other stockholders. In addition, the press release provided that the Parent (i) intended to sell the Company's molding business, (ii) had received an offer from Mr. Gilbert to acquire the molding business, and (iii) had advised Mr. Gilbert that while it intended to sell the molding business to him as a going concern, subject to negotiation of definitive documentation and other conditions, the sale of the molding business to Mr. Gilbert was not a condition to the Purchaser's acquisition of the capital stock of the Company. Thereafter, a draft of the Merger Agreement was prepared, distributed and subsequently negotiated by representatives of the Company, the Purchaser and the Parent. On December 6, 1995, the board of directors of the Parent approved the Merger Agreement. On December 14, 1995 and December 18, 1995, the Board and the board of directors of the Purchaser, respectively, approved the Merger Agreement. Thereafter, the Purchaser, the Parent and the Company executed and delivered the Merger Agreement and Mr. Gilbert executed and delivered the Seller Stockholder Agreement. Concurrent with the execution and delivery of the Merger Agreement and the Seller Stockholder Tender Agreement, Mr. Gilbert also executed and delivered to the Company (i) on behalf of Mesa, a letter agreement pursuant to which Mesa acknowledged that the consummation of the Offer and the Merger will not constitute a prohibited assignment under Mesa's lease with the Company dated December 7, 1984, as amended, and (ii) on behalf of himself as a general partner of Mesa, certain letter agreements which provide, among other things, that Mr. Gilbert will provide one-half of the funds necessary to satisfy all of Mesa's outstanding indebtedness and that Mr. Gilbert acknowledges that the consummation of the Offer and the Merger will not cause Mesa to be dissolved. THE MERGER AGREEMENT The following is a summary of certain provisions of the Merger Agreement, a copy of which is attached hereto as Exhibit A and is incorporated herein by reference. Such summary is qualified in its entirety by reference to the Merger Agreement. THE OFFER. The Merger Agreement provides for the making of the Offer by the Purchaser. The obligation of Purchaser to accept for payment and pay for Shares tendered pursuant to the Offer is subject to the satisfaction of the Minimum Condition and certain other conditions that are described in Section 15. The Purchaser has agreed that, without the written consent of the Company, no change in 17 the Offer may be made which changes the form of consideration to be paid or decreases the price per Share or the maximum number of Shares sought in the Offer, which imposes conditions to the Offer in addition to the Minimum Condition and those other conditions described in Section 15, which broaden the scope of such conditions, which increases the minimum number of Shares which must be tendered as a condition to the acceptance for payment and payment for the Shares, which waives the Minimum Condition if such waiver would result in less than a majority of the Shares being accepted for payment or paid for pursuant to the Offer, which, except as provided in the Merger Agreement, extends the period of the Offer beyond 45 days after the commencement of the Offer or which otherwise amends the terms of the Offer (including any of the conditions set forth in Section 15) in a manner that is materially adverse to the holders of Shares. In addition to extending the Offer up to 45 days after the commencement of the Offer without the consent of the Company, the Purchaser may, without the consent of the Company, (i) extend the Offer if, at the scheduled expiration date of the Offer, any of the conditions to the Purchaser's obligation to purchase Shares have not been satisfied until such time as such conditions are satisfied, or (ii) extend the Offer for a period of not more than 15 business days beyond the latest expiration date that would otherwise be permitted under clause (i) of this sentence if, on the date of such extension, more than two-thirds but less than 90 percent of Shares have been validly tendered and not properly withdrawn pursuant to the Offer. THE MERGER. The Merger Agreement provides that, following the purchase of Shares pursuant to the Offer, the approval of the Merger Agreement by the stockholders of the Company (if required) and the satisfaction or waiver of the other conditions to the Merger, the Purchaser will be merged with and into the Company (the "Surviving Corporation"). The Merger shall become effective at such time as a certificate of merger is filed with the Secretary of State of the State of Delaware, or at such later time as is specified in such certificate of merger (the "Effective Time"). As a result of the Merger, all of the properties, rights, privileges and franchises of the Company and the Purchaser shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and the Purchaser shall become the debts, liabilities and duties of the Surviving Corporation. At the Effective Time, by virtue of the Merger (i) each issued and outstanding Share held in the treasury of the Company, or by the Parent or any wholly owned subsidiary of the Parent shall be cancelled, and no payment shall be made with respect thereto; (ii) each share of common stock of the Purchaser then outstanding shall be converted into and become one share of common stock of the Surviving Corporation; and (iii) each Share outstanding immediately prior to the Effective Time shall, except as otherwise provided in (i) above and except for Shares held by stockholders exercising appraisal rights pursuant to Section 262 of the DGCL, be converted into the right to receive $10.50 in cash or any higher price per Share that may be paid pursuant to the Offer, without interest. The Merger Agreement provides that the Certificate of Incorporation and By-laws of the Company at the Effective Time will be the Certificate of Incorporation and By-laws of the Surviving Corporation. The Merger Agreement also provides that the directors of the Purchaser at the Effective Time will be the directors of the Surviving Corporation and the officers of the Company at the Effective Time will be the officers of the Surviving Corporation. RECOMMENDATION. The Company represents and warrants in the Merger Agreement that the Board of Directors has (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, are fair to, and in the best interests of, the stockholders of the Company, (ii) approved and adopted the Merger Agreement and the transactions contemplated thereby, including the Offer, the Merger and the Stockholder Tender Agreement and the transactions contemplated thereby and (iii) resolved to recommend acceptance of the Offer, the tender of the Shares thereunder and approval and adoption of the Merger Agreement and the Merger by the Company's stockholders. This recommendation of the Board of Directors may be withdrawn, modified or amended if the Board, by a majority vote, determines in its good faith judgment, based as to legal matters on the advice of legal counsel, that such withdrawal, amendment or modification is required by the Board in the proper discharge of its fiduciary duties. Any such withdrawal, modification or amendment may give rise to certain termination rights on the part of the Parent and the Purchaser, as described below. 18 INTERIM AGREEMENTS OF THE PARENT, PURCHASER AND THE COMPANY. Pursuant to the Merger Agreement, the Company has covenanted and agreed that, during the period from the date of the Merger Agreement to the Effective Time, the Company will conduct its business and operations only in the ordinary and usual course of business consistent with past practice. Pursuant to the Merger Agreement, without limiting the generality of the foregoing, and except as otherwise expressly provided in the Merger Agreement, prior to the Effective Time, neither the Company nor any of its subsidiaries will, without the prior written consent of the Parent (which consent will not be unreasonably withheld with respect to the incurrence of indebtedness by the Company evidenced by certain promissory notes but excluding all of the Company's other indebtedness to Wells Fargo pursuant to clause (ii)(a) below): (i) amend its charter or by-laws; (ii)(a) create, incur or assume any indebtedness for money borrowed, including obligations in respect of capital leases, except (A) purchase money mortgages granted in connection with past practice, or (B) indebtedness for borrowed money incurred in the ordinary course of business not aggregating in excess of $7 million outstanding at any time under its revolving credit facility provided by the Company's existing Credit Agreement with Wells Fargo as the same may be amended from time to time ("Credit Agreement") reduced by the net proceeds of any sale of assets by the Company or any subsidiary out of the ordinary course of business, PROVIDED that the proceeds of any borrowing are not distributed to the stockholders of the Company; or (b) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person; PROVIDED, HOWEVER, that the Company may endorse negotiable instruments in the ordinary course of business consistent with past practice; (iii) declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of the Shares; (iv) issue, sell, grant, purchase or redeem, or issue or sell any securities convertible into, or options with respect to, or warrants to purchase or rights to subscribe to, or subdivide or in any way reclassify, any Shares, except in any case above pursuant to outstanding stock purchase rights; (v)(a) increase the aggregate amount of compensation payable or to become payable by the Company to its directors, officers or employees whether by salary or bonus, by more than two percent in the aggregate on an annual basis (excluding commission-only compensation, the rate of which shall not be increased); or (b) increase the rate or term of, or otherwise alter, any bonus (other than any bonus permitted by clause (v)(a) above), insurance, pension, severance or other employee benefit plan, payment or arrangement made to, for or with any such directors, officers or employees; (vi) enter into any agreement, commitment or transaction (other than certain borrowings described above), except agreements, commitments or transactions in the ordinary course of business consistent with past practice; (vii) sell, transfer, mortgage, pledge, grant any security interest or permit the imposition of any lien or other encumbrance on any asset other than in the ordinary course of business consistent with past practice and except (a) pursuant to the Credit Agreement, (b) in connection with any permitted purchase money mortgages or (c) for any lien or other encumbrance as to which the Company has a valid defense; (viii) waive any right under certain contracts and other agreements if such waiver would have a Material Adverse Effect (as defined below); (ix) other than as required by any change in generally accepted accounting principles, make any material change in its accounting methods or practices or make any material change in depreciation or amortization policies or rates adopted by it for accounting purposes or, other than normal writedowns or writeoffs consistent with past practices, make any writedowns of inventory or writeoffs of notes or accounts receivable; (x) make any loan or advance to any of its stockholders, officers, directors, employees (other than advances to field sales personnel, vacation advances, relocation advances and travel advances in each case made in the ordinary course of business in a manner consistent with past practice), or make any other loan or advance to any other person or group otherwise than in the ordinary course of business consistent with past practice; (xi) terminate or fail to renew, where such renewal is at the Company's or subsidiary's option, any contract or other agreement (excluding customer leases or contracts), the termination or failure of which to renew would have a Material Adverse Effect; (xii) enter into any collective bargaining agreement; (xiii) make any addition to or modification of the Company's employee benefits plans; (xiv) take, agree to take or do or, with respect to anything within the Company's or subsidiary's control, knowingly permit to be done or to be taken anything in the conduct of its business which (a) would cause any of the representations of the Company to be or 19 become untrue in any material respect, and (b) would reasonably be expected to have a Material Adverse Effect; provided, however, that nothing in this clause (xiv) shall affect the generality of any of the conditions set forth in Section 15; or (xv) agree to do any of the foregoing. When used in the Merger Agreement, the term "Material Adverse Effect" means a material adverse effect on the business, assets, prospects, financial condition or results of operations of the Company and its subsidiaries considered on a consolidated basis or on the ability of the Company, the Parent or the Purchaser to consummate the transactions contemplated by the Merger Agreement. OTHER AGREEMENTS OF THE PARENT, THE PURCHASER AND THE COMPANY. In the Merger Agreement, the Company, its affiliates and their respective officers, directors, employees, representatives and agents have agreed that they shall immediately cease any existing discussions or negotiations, if any, with any parties conducted heretofore with respect to any acquisition of all or any material portion of the assets of, or any equity interest in, the Company or any business combination with the Company, subject to certain exceptions. The Company may, directly or indirectly, furnish information and access, in each case only in response to unsolicited requests therefor, to any corporation, partnership, person or other entity or group pursuant to confidentiality agreements that do not prohibit or restrict disclosure of any matter to the Parent other than confidential information regarding any such corporation, partnership, person or other entity or group, and may participate in discussions and negotiate with such entity or group concerning any proposed merger, sale of assets, sale of shares of capital stock, acquisition of Shares other than pursuant to the Offer or the Merger or similar transaction involving the Company or any division of the Company (an "Acquisition Proposal"), only if such entity or group has submitted a written proposal to the Board relating to any such transaction and the Board by a majority vote determines in its good faith judgment, based as to legal matters on the advice of legal counsel, that failing to take such action would constitute a breach of the Board's fiduciary obligations under applicable law. The Board shall promptly advise the Parent orally or in writing of any Acquisition Proposal and any inquiries or developments with respect thereto. Except as set forth above, neither the Company or any of its affiliates, nor any of its or their respective officers, directors, employees, representatives or agents shall, directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than the Parent and the Purchaser, any affiliate or associate of the Parent and the Purchaser or any designees of the Parent and Purchaser) concerning any Acquisition Proposal or take any other action to facilitate the making of a proposal that constitutes or could reasonably be expected to lead to an Acquisition Proposal, PROVIDED, HOWEVER, that nothing in the Merger Agreement shall prevent the Board from approving or recommending to the Company's stockholders any unsolicited tender offer or exchange offer by a third party as contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange Act in the event any unsolicited takeover proposal shall have been made by a third party, if, in the good faith judgment of the Board, based as to legal matters on the advice of legal counsel, that withdrawing or modifying such approval or recommendation is required under applicable law in the proper discharge of its fiduciary duties. Notwithstanding the foregoing, nothing shall prevent the Company from negotiating and executing agreements relating to the sale by the Company of its real estate located in Corona, California as long as (i) the terms and conditions of any such agreement shall be reasonably acceptable to the Parent and (ii) the proceeds (net of reasonable expenses of the Company relating to such sale) of any such sale are used to reduce the indebtedness of the Company under the revolving credit facility under the Credit Agreement. Pursuant to the Merger Agreement, between the date of the Merger Agreement and the Effective Time, the Company will give the Parent and the Purchaser and their authorized representatives reasonable access to all personnel, books, records, plants, offices, and other facilities and properties of the Company and its subsidiaries, will permit the Parent and the Purchaser to make such inspections as the Parent and the Purchaser may reasonably request and will cause the Company's officers to furnish Purchaser with such financial and operating data and other information with respect to the business and properties of the Company and its subsidiaries as Purchaser may from time to time reasonably request. 20 The Merger Agreement provides that promptly upon acceptance for payment of, and commencement of payment for such number of Shares which represents at least a majority of the Shares (determined on a fully diluted basis) by the Purchaser, the Purchaser shall be entitled to designate the number of directors, rounded up to the next whole number, on the Company's Board of Directors that equals the product of (i) the total number of directors on the Board of Directors (giving effect to the election of any additional directors pursuant to this paragraph) and (ii) the percentage that the number of Shares owned by the Purchaser (including Shares accepted for payment) bears to the total number of Shares, and the Company shall cause the Purchaser's designees to be elected or appointed to the Board of Directors, including, without limitation, by increasing the number of directors, and seeking and accepting resignations of its incumbent directors. Notwithstanding the foregoing, the Company has agreed to use its best efforts to ensure that two of the current members of the Board who are not officers, employees or affiliates of the Company or the Parent remain members of the Board until the Purchaser owns a majority of the Shares and thereafter until the Effective Time. Pursuant to the Merger Agreement, the Company shall at the Parent's request, cause a meeting of its stockholders (the "Company Stockholder Meeting") to be duly called and held as soon as practicable (provided the Purchaser shall have accepted for payment Shares tendered pursuant to the Offer) for the purposes of voting on the approval and adoption of the Merger Agreement, the Merger and the transactions contemplated thereby. The Merger Agreement provides that the Company will promptly prepare and file with the Commission under the Exchange Act a proxy statement relating to the Company Stockholder Meeting (the "Proxy Statement") and cause the Proxy Statement to be mailed to its stockholders at the earliest practicable time and obtain the necessary approvals by its stockholders of the Merger Agreement. The Parent has agreed to vote and to cause its affiliates (including, without limitation, the Purchaser) to vote all Shares owned by them in favor of adoption of the Merger Agreement. Notwithstanding the foregoing, in the event that Purchaser acquires at least 90% of the Shares and the Purchaser so requests, the Parent, the Purchaser and the Company will take all actions necessary and appropriate to cause the Merger to become effective without a meeting of the stockholders of the Company in accordance with Section 253 of the DGCL. The Parent has agreed that all rights to indemnification now existing in favor of the directors and officers of the Company as provided in the Company's by-laws as of the date of the Merger Agreement shall survive the Merger and shall continue in full force and effect for a period of at least five years. The Parent shall not permit the indemnification agreements between the Company and each of the directors and officers that are in existence as of the date of the Merger Agreement to be amended during the term of such indemnification agreements without the consent of the respective parties. For a period of at least five years after the Effective Time, the Purchaser has agreed to indemnify and hold harmless, to the maximum extent permitted by the DGCL, each of the present or former directors and officers of the Company and advance expenses in connection with such indemnification. In addition, the Parent has agreed that for two years after the Effective Time, the Parent will cause the Surviving Corporation to use reasonable efforts to maintain, if available for an annual premium not in excess of $150,000, officers' and directors' liability insurance with respect to acts or omissions occurring prior to the Effective Time covering each such person currently covered by the Company's officers' and directors' liability insurance policy on terms no less favorable than those of such policy in effect on the date of the Merger Agreement or at the Effective Time, or if such insurance coverage is not available for an annual premium not in excess of $150,000, to obtain the amount of coverage that is available for an annual premium of $150,000. The Merger Agreement provides that the Company, the Purchaser and the Parent will each use their best efforts to consummate the transactions contemplated by the Merger Agreement. REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various customary representations and warranties of the parties thereto including, without limitation, representations by the Company as to undisclosed liabilities, certain changes or events concerning its businesses, compliance with 21 applicable law, employee benefit plans, litigation and environmental liabilities. In addition, the Company represented to the Parent and the Purchaser that the Board, at a meeting duly called and held, has (i) determined that the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, are fair to, and in the best interests of, the stockholders of the Company, and (ii) approved and adopted the Merger Agreement and the transactions contemplated thereby, including the Offer, the Merger, and the Stockholder Tender Agreement and the transactions contemplated thereby in all respects and that such approval constitutes approval of the Offer, the Merger Agreement, the Merger and the Stockholder Tender Agreement and the transactions contemplated thereby for purposes of Article EIGHTH of the Certificate of Incorporation of the Company and Section 203 of the DGCL and similar statutes of other states that might be deemed applicable. CONDITIONS TO THE MERGER. The obligations of each of the Parent, the Purchaser and the Company to effect the Merger are subject to the satisfaction of certain conditions, including (i) the Purchaser shall have accepted for payment Shares tendered pursuant to the Offer; (ii) the Merger Agreement shall have been adopted by the requisite vote, if any is required, of the stockholders of the Company in accordance with applicable law; (iii) no order, statute, rule, regulation, executive order, stay, decree, judgment or injunction shall have been enacted, entered, issued, promulgated or enforced by any court or governmental authority which prohibits or restricts the consummation of the Merger; and (iv) any waiting period applicable to the Merger under the HSR Act shall have terminated or expired. The obligation of the Purchaser and the Parent to effect the Merger is further subject to satisfaction of the conditions, unless waived by the Parent, that (i) the Company shall have performed and complied in all material respects with (a) the agreements and obligations contained in Section 1.03 of the Merger Agreement and (b) the agreements and obligations contained in the Merger Agreement (other than in Section 1.03) required to be performed and complied with by it at or prior to the Effective Time, except where the failure to have performed and complied is not reasonably expected to have a Material Adverse Effect, (ii) all outstanding stock options of the Company shall have been surrendered to the Company as provided in the Merger Agreement and cancelled by the Company, and (iii) the Parent shall have received a comfort letter, in form and substance reasonably requested by the Parent, from Grant Thornton or another nationally recognized public accounting firm regarding the updating of the Company's most recent financial statements. The obligation of the Company to effect the Merger is further subject to the Parent and the Purchaser having performed and complied in all material respects with the agreements and obligations contained in the Merger Agreement required to be performed and complied with by each of them at or prior to the Effective Time, except where the failure to have so performed or complied is not reasonably expected to have a material adverse effect on the ability of the Parent or the Purchaser to consummate the transactions contemplated by the Merger Agreement. TERMINATION. The Merger Agreement may be terminated and the Offer (if the Purchaser has not accepted Shares for payment) and the Merger may be abandoned at any time prior to the Effective Time: (i) by mutual written consent of the Parent, the Purchaser and the Company; (ii) by the Parent and the Purchaser or the Company if any court of competent jurisdiction in the United States or other United States governmental body shall have issued an order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the Merger or the acceptance for payment of and payment for the Shares and such order, decree, ruling or other action shall have become nonappealable; (iii) by the Parent and the Purchaser if, due to an occurrence or circumstance which would result in a failure to satisfy any of the conditions set forth in Section 15, the Purchaser shall have (a) failed to commence the Offer within five business days following the initial public announcement of the Offer, (b) terminated the Offer or allowed the Offer to expire without the purchase of any Shares thereunder, or (c) failed to pay for Shares pursuant to the Offer within 75 days following the commencement of the Offer; (iv) by the Company if (a) there shall not have been a material breach of any representation, warranty, covenant or agreement on the part of the Company which would entitle the Parent or the Purchaser to terminate the Merger Agreement pursuant to clause (v) of this paragraph and, due to an occurrence or circumstance which would result in a failure to satisfy any of the conditions set forth in Section 15, the Purchaser shall have (A) failed to commence the Offer within five business days following the initial public announcement of the Offer, (B) terminated the Offer or allowed the Offer to expire without the purchase of any 22 Shares thereunder, or (C) failed to pay for Shares pursuant to the Offer within 75 days following the commencement of the Offer, or (b) prior to the purchase of Shares pursuant to the Offer, a corporation, partnership, person or other entity or group shall have made a bona fide offer with respect to an Acquisition Proposal that the Board by a majority vote, determines in its good faith judgment and in the discharge of its fiduciary duties, based as to legal matters on the advice of legal counsel and as to financial matters on the written opinion of an investment banking firm of national reputation, is more favorable to the Company's stockholders than the Offer and the Merger and that the failure to terminate the Merger Agreement and accept such offer would be inconsistent with the proper exercise of the Board's fiduciary duties, provided that such termination under this clause (b) shall not be effective until payment of the Termination Fee (as defined below); (v) by the Parent and the Purchaser prior to the purchase of Shares pursuant to the Offer if (a) there shall have been a breach of any representation or warranty on the part of the Company having a Material Adverse Effect on the Company or materially adversely affecting (or materially delaying) the consummation of the Offer, (b) there shall have been a breach of any covenant or agreement on the part of the Company resulting in a Material Adverse Effect on the Company or materially adversely affecting (or materially delaying) the consummation of the Offer, (c) the Company shall engage in negotiations with any entity or group (other than the Parent or the Purchaser) that has proposed a Third Party Acquisition (as defined below), (d) the Board shall have withdrawn or modified (including by amendment of the Schedule 14D-9) in a manner adverse to the Purchaser its approval or recommendation of the Offer, the Merger Agreement or the Merger or shall have recommended another offer, or shall have adopted any resolution to effect any of the foregoing, or (e) a majority of Shares on a fully diluted basis shall not have been tendered in the Offer by the expiration date of the Offer and on or prior to such date an entity or group (other than the Parent or the Purchaser) shall have made and not withdrawn a proposal with respect to a Third Party Acquisition; or (vi) by the Company if (a) there shall have been a breach of any representation or warranty on the part of the Parent or the Purchaser which materially adversely affects (or materially delays) the consummation of the Offer, or (b) there shall have been a material breach of any covenant or agreement on the part of the Parent or the Purchaser and which materially adversely affects (or materially delays) the consummation of the Offer. TERMINATION FEE AND EXPENSES. In the event the Parent and the Purchaser terminate the Merger Agreement pursuant to clause (iii) of the preceding paragraph (other than any termination based upon the failure to satisfy clause (iii)(d) of Section 15 below) or clause (v)(a) of the preceding paragraph, or the Company terminates the Merger Agreement pursuant to clause (iv)(a) of the preceding paragraph, or in the event that the Merger Agreement is terminated in the manner described in clause (ii) of the preceding paragraph, the Company shall reimburse the Parent, the Purchaser and their affiliates (not later than one business day after submission of statements therefor) for all actual documented out-of-pocket fees and expenses, not to exceed $750,000, actually and reasonably incurred by any of them or on their behalf in connection with the Offer and the Merger and the consummation of all transactions contemplated by the Merger Agreement (including, without limitation, attorneys' fees, fees payable to financing sources, investment bankers, counsel to any of the foregoing, and accountants and filing fees and printing costs). In the event the Company terminates the Merger Agreement pursuant to clause (iv)(b) of the preceding paragraph or in the event the Parent and the Purchaser terminate the Merger Agreement pursuant to clause (v)(b), (c), (d) or (e), the Company shall pay to the Purchaser the amount of $1,400,000 (the "Termination Fee") as liquidated damages immediately upon such termination as well as all amounts to which the Parent and the Purchaser would be entitled pursuant to the immediately preceding sentence; provided, however, that if the Parent and the Purchaser terminate the Merger Agreement pursuant to clause (v)(c) of the preceding paragraph, the Company shall pay to the Purchaser the amount of $700,000 as liquidated damages immediately upon such a termination (as well as all amounts to which the Parent and the Purchaser would be entitled to pursuant to the first sentence of this section), and if within 12 months thereafter the Company enters into an agreement with respect to a Third Party Acquisition (as defined below), or a Third Party Acquisition occurs, the Company shall pay to the Purchaser the amount of $700,000 within one business day following the execution of such an agreement on such occurrence, as the case may be; provided, however, that the Parent and the Purchaser will 23 only be entitled to recover only on $1,400,000 payment or two $700,000 payments of liquidated damages even if the Merger Agreement is terminated under more than one of the provisions in clause (iv)(b) or clause (v) described above. "Third Party Acquisition" means the occurrence of any of the following events: (i) the acquisition of the Company by merger or otherwise by any person (which includes a "person" as such term is defined in Section 13(d) (3) of the Exchange Act) or entity other than the Parent, the Purchaser or any affiliate thereof (a "Third Party"); (ii) the acquisition by a Third Party of more than 30% of the total assets of the Company; (iii) the acquisition by a Third Party of 30% or more of the Shares; (iv) the adoption by the Company of a plan of liquidation or the declaration or payment of an extraordinary dividend; or (v) the repurchase by the Company of more than 20% of the Shares. Pursuant to the Merger Agreement, in the event of the termination of the Merger Agreement and abandonment of the Offer and the Merger, the Merger Agreement will become void and have no effect, without any liability on the part of any party or its affiliates, directors, officers or stockholders, provided that a party will not be relieved from liability for any damages arising out of any wilful or intentional breach of the Merger Agreement or from their obligations with respect to brokers and finders, the Termination Fee, expenses of the parties and confidentiality of information. COSTS AND EXPENSES. Except as discussed above, the Merger Agreement provides that all costs and expenses incurred in connection with the transactions contemplated by the Merger Agreement shall be paid by the party incurring such costs and expenses. AMENDMENTS AND MODIFICATIONS. Subject to applicable law, at any time prior to the Effective Time, the Merger Agreement may be amended, modified or supplemented by a written agreement of the Parent (for itself and the Purchaser) and the Company executed by duly authorized officers of the respective parties except that after the earlier of (i) the purchase by the Purchaser of a majority of the Shares on a fully diluted basis, and (ii) the meeting of the stockholders of the Company to approve the Merger, the price per Share to be paid pursuant to the Merger Agreement to the holders of Shares may not be decreased and the form of consideration to be received by the holders of such Shares in the Merger may not be altered without approval of such holders. THE STOCKHOLDER TENDER AGREEMENT Concurrently with the execution of the Merger Agreement, the Purchaser entered into a Stockholder Tender Agreement with the Seller Stockholder. The Seller Stockholder owns 539,734 Shares (representing approximately 16.6% of the Shares outstanding on December 18, 1995 on a fully diluted basis). Pursuant to the Stockholder Tender Agreement, the Seller Stockholder has agreed to tender and sell (and not withdraw) all Shares owned by him to the Purchaser pursuant to and in accordance with the terms of the Offer. Except with respect to the Seller Stockholder Fee (as described below) and the representations and warranties of the Seller Stockholder, the Stockholder Tender Agreement remains in effect until the earlier to occur of the following (i) the Seller Stockholder's Shares are purchased in accordance with the terms of the Offer, (ii) the Merger Agreement is terminated and (iii) March 31, 1996. During the term of the Stockholder Tender Agreement, the Seller Stockholder will not, except pursuant to the terms of the Offer, (i) offer to sell, sell, pledge or otherwise dispose of or transfer any interest in or encumber with any lien any of the Shares, (ii) acquire any shares of Common Stock or other securities (except for additional shares of Common Stock or securities issued as a result of a stock dividend, stock split, recapitalization or similar event and any such additional shares of Common Stock or securities will constitute Shares), including, without limitation, by exercising any options, (iii) deposit the Shares into a voting trust or arrangement with respect to the Shares or grant any proxy or power of attorney with respect to the Shares or (iv) enter into any contract, option or other arrangement or undertaking with respect to the sale, assignment or other disposition of or transfer of any interest in or the voting of any Shares or any other securities of the Company. In addition, the Seller Stockholder agrees to comply with the requirements of Section 6.12 of the Merger Agreement, which provides, among other things, that such Seller Stockholder will not, directly or indirectly, encourage, solicit, 24 participate in or initiate discussions or negotiations with, or provide any information to any corporation, partnership, person or other entity or group (other than the Purchaser and the Parent and their affiliates and associates) concerning any merger, sale of assets, sale of shares of capital stock or similar transaction involving the Company, or take any action to facilitate the making of a proposal that constitutes or could reasonably be expected to lead to an acquisition proposal. The Seller Stockholder appoints the Purchaser, or its nominee, during the term of the Stockholder Tender Agreement, as his proxy to vote each of his Shares at any annual, special or adjourned meeting of the stockholders of the Company, including the right to sign his name (as stockholder) to any consent, certificate or other document relating to the Company which the laws of the State of Delaware may require or permit: (i) in favor of the Merger, the execution and delivery by the Company of the Merger Agreement and the approval and adoption of the terms thereof; (ii) against any action or agreement that would result in a breach in any respect of any covenant, agreement, representation or warranty of the Company under the Merger Agreement; and (iii) against the following actions (other than the Merger and the other transactions contemplated by the Merger Agreement): (a) any extraordinary corporate transaction, such as a merger, consolidation or other business combination involving the Company; (b) a sale, lease or transfer of a material amount of assets of the Company, or a reorganization, recapitalization, dissolution or liquidation of the Company; and (c)(A) any change in a majority of the persons who constitute the Board of Directors as of the date hereof; (B) any change in the present capitalization of the Company or any amendment of the Company's Certificate of Incorporation or By-Laws, as amended to date; (C) any other material change in the Company's corporate structure or business; or (D) any other action which, in the case of each of the matters referred to in clauses (c)(A), (B), (C) and (D), is intended, or could reasonably be expected, to impede, interfere with, delay, postpone, or adversely affect the Merger and the other transactions contemplated by the Merger Agreement and the Seller Stockholder Agreement. The proxy and power of attorney provided for in the Seller Stockholder Agreement is irrevocable and, pursuant thereto, the Seller Stockholder revoked all other proxies with respect to the Shares that he may have heretofore made or granted. The Stockholder Tender Agreement provides that the Seller Stockholder agrees to pay to the Purchaser a fee ("Seller Stockholder Fee") if, as provided below, the Merger Agreement is terminated and the Seller Stockholder subsequently sells or otherwise disposes of his Shares in a Subsequent Transaction (as defined below). Specifically, a Seller Stockholder Fee is payable by the Seller Stockholder to the Purchaser if: (i) the Parent and the Purchaser or the Company terminate the Merger Agreement in accordance with its terms (other than a termination (a) by the Company because of a breach by the Purchaser or the Parent of any of their respective covenants, agreements, representations or warranties contained in the Merger Agreement which materially adversely affects (or materially delays) the consummation of the Offer, (b) by the Parent and the Purchaser or the Company if any court of competent jurisdiction in the United States or other United States governmental body shall have issued an order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the Merger or the acceptance for payment and payment for the Shares in the Offer and such order, decree, ruling or other action is or shall have become nonappealable or (c) by mutual written consent of the Parent, the Purchaser and the Company); and (ii) not later than one year from the date of such termination, (a) the Board of Directors approves or recommends any proposal or offer (an "Acquisition Proposal") concerning any merger, sale of assets, sale of shares of capital stock or similar transaction involving the Company other than from the Purchaser, or (b) the Company enters into an agreement with respect to a merger, acquisition, consolidation, recapitalization, liquidation, dissolution or similar transaction involving, or any purchase of all or a substantial portion of the assets or equity securities of, the Company, or (c) the Seller Stockholder disposes of any or all of his Shares to any person not an affiliate or an associate of the Purchaser or to the Company or any affiliate thereof (or realizes cash proceeds in respect of such Shares as a result of a distribution to the Seller Stockholder by the Company following the sale of a material amount of the Company's assets) in connection with a transaction proposed, described or set forth in such Acquisition Proposal or agreement or (d) the Company undergoes a recapitalization, dissolution, liquidation or similar transaction proposed, described or set forth in such Acquisition Proposal or agreement or the Company issues an extraordinary 25 dividend or other distribution in accordance with such Acquisition Proposal or agreement (each a "Subsequent Transaction") at a per Share price or with equivalent per Share proceeds, as the case may be (the "Subsequent Price") with a value in excess of $10.50 (the "Offer Price"). The Seller Stockholder Fee is an amount equal to one-half of the product of (i) the excess of the Subsequent Price over the Offer Price and (ii) the number of the Seller Stockholder's Shares disposed of or otherwise participating in the Subsequent Transaction. THE CONFIDENTIALITY AGREEMENT On September 2, 1994, the Parent and the Company entered into a confidentiality agreement (the "Confidentiality Agreement"), pursuant to which each party agreed to keep confidential all information (the "Information") provided to it by the other party. The Confidentiality Agreement provides, among other things, that (i) the Information must not be disclosed for any reason by the receiving party or any of its representatives, except with the prior written consent of the disclosing party, (ii) the Information must not be used by the receiving party or its representatives for any purpose other than evaluating a possible transaction involving the Company and the Parent ("Transaction"), except as and to the extent required by a court or regulatory order, (iii) neither party will disclose the fact that Information has been made available or that discussions or negotiations are taking place concerning a possible Transaction, except with the prior written consent of the other party, and (iv) it will terminate on December 31, 1995, unless mutually extended. The parties extended the term of the Confidentiality Agreement to December 31, 1996 in the Merger Agreement and supplemented the Confidentiality Agreement by providing therein that the Parent, the Purchaser or the Company may disclose any information required to be disclosed pursuant to the Exchange Act, or otherwise required or requested to be disclosed by the Commission. APPRAISAL RIGHTS Shares that are not voted in favor of the approval and adoption of the Merger and with respect to which appraisal rights have been demanded and perfected in accordance with Section 262 of the DGCL and not withdrawn will not be converted into the right to receive cash at or after the Effective Time, but such Shares shall instead become the right to receive consideration as may be determined to be due to such holders in respect of such Shares pursuant to the DGCL unless such stockholder withdraws its demand for appraisal or becomes ineligible for such appraisal. If a stockholder withdraws its demand for appraisal or becomes ineligible for appraisal (through failure to perfect or otherwise), then, as of the Effective Time or the occurrence of such event, whichever last occurs, the Shares subject to the demand for appraisal will be automatically converted into and represent the right to receive $10.50 per Share or any higher price per Share that may be paid pursuant to the Offer, without interest. THE RIGHTS AGREEMENT The following description is based upon the Company's Current Report on Form 8-K dated December 5, 1992 (the "Company 8-K"). All statements with respect to the Rights (as defined in the Introduction) and the Rights Agreement (as defined in the Introduction) are based solely upon the description of such Rights in the Company's 8-K. Although each of the Parent and the Purchaser has no knowledge that any such information is untrue, neither the Parent nor the Purchaser takes any responsibility for the accuracy or completeness of the information contained in the Company's 8-K, or for any failure by the Company to disclose events that may have occurred and may affect the significance or accuracy of any such information but which are unknown to the Parent and the Purchaser. The summary of the Rights and the Rights Agreement contained in this Offer to Purchase does not purport to be complete, and is qualified in its entirety by reference to the Company's 8-K and the exhibits thereto. Pursuant to the Rights Agreement, on December 5, 1992, the Board of Directors of the Company declared a dividend of one Right for each Share. The dividend was payable as of the close of business on December 17, 1992 to the stockholders of record on that date. Each Right entitles the registered holder to purchase from the Company one one-hundredth of a share of Series A Junior Participating Preferred Stock, par value $.01 per share (the "Preferred Shares"), of the Company at a price of $25 per one one-hundredth of a Preferred Share (the "Purchase Price"), subject to adjustment. 26 Until the earlier to occur of (a) 10 days following a public announcement that a person or group of affiliated or associated persons has acquired beneficial ownership of 20% or more of the outstanding Shares (an "Acquiring Person") or such earlier date as a majority of the Board becomes aware of the existence of an Acquiring Person (the "Stock Acquisition Date") or (b) 10 days following the commencement of a tender offer or exchange offer that would result in a person or group becoming an Acquiring Person (the earlier of such dates being called the "Distribution Date"), the Rights will be evidenced by the certificates for Shares. The Right Agreement provides that, until the Distribution Date (or earlier redemption or expiration of the Rights), the surrender for transfer of any certificates for Shares will also constitute the surrender for transfer of the Rights associated with the Shares represented by such certificates. The Rights Agreement further provides that, as soon as practicable following the Distribution Date, separate certificates for Rights will be mailed by the Company or the Rights Agent to holders of record of the Shares as of the close of business on the Distribution Date. The Rights will expire on December 4, 2002 (the "Final Expiration Date"), unless the Rights are earlier redeemed by the Company. The Purchase Price payable and the number of Preferred Shares or other securities or property issuable upon exercise of the Rights are subject to adjustment from time to time as provided in the Rights Agreement. Preferred Shares purchasable upon exercise of the Rights will not be redeemable. Each Preferred Share will be entitled to a preferential quarterly dividend payment of the greater of $.25 per share or 100 times the dividend declared per Share. In the event of liquidation, the holders of the Preferred Shares will be entitled to a minimum preferential liquidation payment of the greater of $100 per share or 100 times the payment made per Share. Each Preferred Share will have 100 votes, voting together as a single class with the Shares. Finally, in the event of any merger, consolidation or other transaction in which Shares are exchanged for or changed into other stock or securities, cash and/or other property , each Preferred Share will be entitled to receive 100 times the amount received per Share. Because of the nature of the Preferred Shares' dividend, liquidation and voting rights, the value of the one one-hundredth interest in a Preferred Share purchasable upon exercise of each Right should, according to Company 8-K, approximate the value of one Share. If any person becomes an Acquiring Person (except pursuant to an offer for all outstanding shares of Common Stock which a majority of the independent directors who are not affiliated with the Acquiring Person determines to be fair to and otherwise in the best interests of the Company and its stockholders), then the Rights Agreement requires that proper provision be made so that each holder of a Right, other than Rights beneficially owned by the Acquiring Person and certain affiliated or associated persons (which will thereafter be void), will thereafter have the right to receive upon exercise that number of Shares (or, in certain circumstances, other securities or cash) having a market value of two times the exercise price of the Right. In the event that the Company is acquired in a merger or other business combination transaction or 50% or more of the assets or earning power of the Company and its subsidiaries is sold or transferred, the Rights Agreement requires that proper provisions be made so that each holder of a Right will thereafter have the right to receive, upon the exercise thereof at the then current exercise price of the Right, that number of shares of common stock of the acquiring company that at the time of such transaction will have a market value of two times the exercise price of the Right. The Rights Agreement provides that, at any time prior to the close of business on the earlier of (a) the Stock Acquisition Date and (b) the Final Expiration Date, the Board of Directors of the Company may redeem the Rights in whole, but not in part, at a price of $.01 per Right. The redemption period of may be extended by the Board by amending the Rights Agreement prior to the time when the Rights become nonredeemable. Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder of the Company, including, without limitation, the right to vote or to receive dividends. 27 Other than those provisions relating to the redemption price of the Rights or the Final Expiration Date, any of the provisions of the Rights Agreement may be supplemented or amended by the Company prior to the Distribution Date, without approval of the Rights holders, whether or not a supplement or amendment is adverse to the Rights holders. After the Distribution Date, any provisions of the Rights Agreement (other than those provisions relating to the redemption price of the Rights or the Final Expiration Date) may be amended by the Company in order to make changes which do not materially and adversely affect the interests of holders of Rights (other than any Acquiring Person), PROVIDED, HOWEVER, that the Rights Agreement may not be amended to lengthen (i) the time period governing redemption or the time period during which the Rights Agreement may be amended at the sole discretion of the Company at such time as the Rights are not redeemable, or (ii) any other time period unless such amendment is for the benefit of the Rights holders (other than any Acquiring Person). The foregoing summary of the Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the Rights Agreement and the other documents included in the Company 8-K. The Company 8-K should be available for inspection and copies thereof should be obtainable in the manner set forth below under "Available Information." On December 14, 1995, the Board authorized the amendment of the Rights Agreement to assure that the execution and delivery of the Merger Agreement and the Stockholder Tender Agreement and the consummation of the transactions contemplated thereby will not cause (i) the defined term "Acquiring Person" to apply to the Parent or the Purchaser, (ii) a "Distribution Date" to occur, (iii) the provision of Section 13(a) of the Rights Agreement to be applicable in respect of the capital stock of the Purchaser or any affiliate or (iv) any adjustment under the provision of Section 11(a) of the Rights Agreement. The amendment was executed by the parties to the Rights Agreement on December 19, 1995. Accordingly, the operation of the Rights Agreement will not affect the Offer or the Merger. 11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY. PURPOSE OF THE OFFER. The purpose of the Offer is for the Purchaser to acquire control of, and an equity interest in, the Company. The purpose of the Merger is to acquire all outstanding Shares not tendered and purchased pursuant to the Offer. The acquisition of the entire equity interest in the Company has been structured as a cash tender offer followed by a cash merger in order to provide a prompt and orderly transfer of ownership of the Company from the public stockholders to the Parent and to provide stockholders with cash for all their Shares. The purchase of Shares pursuant to the Offer will increase the likelihood that the Merger will be effected. PLANS FOR THE COMPANY. The Parent and the Purchaser currently intend to dispose of the Company's molding division after consummation of the Offer and the Merger. The Parent believes, based on information provided by PaineWebber, that the Company has received several offers for the molding division; however, the details of these offers have not been made available to the Parent. During the course of its negotiations with the Company regarding the acquisition of CTI or the Company or both, the Parent has had discussions with Mr. Gilbert regarding a potential acquisition of the molding division by a group or entity formed by or including Mr. Gilbert. Neither the Parent nor the Purchaser has any obligation to sell the molding division to Mr. Gilbert or any affiliate of Mr. Gilbert. This fact was acknowledged by the Company in its November 2, 1995 letter agreement with the Parent. (See Section 10). Other than the molding division and except as otherwise noted in this Offer to Purchase, the Parent and the Purchaser do not have any current plans or proposals to dispose of any businesses or other assets of the Company or its subsidiaries or to effect any changes to their operations. If the Parent obtains control of the Company, it intends to conduct further review of the Company and its subsidiaries and their respective assets, businesses, corporate structure, capitalization, operations, properties, policies, management and personnel. After such review it is possible that the Parent might modify its current plans not to dispose of any businesses or assets of the Company (other than the molding division) and not effect any changes in the Company's operations. 28 12. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NASDAQ QUOTATIONS; REGISTRATION UNDER THE EXCHANGE ACT. The purchase of Shares pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and may reduce the number of holders of Shares, which could adversely affect the liquidity and market value of the remaining Shares held by stockholders other than the Purchaser. The Purchaser cannot predict whether the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for or marketability of the Shares or whether it would cause future market prices to be greater or less than the Offer price. Depending upon the number of Shares purchased pursuant to the Offer, the Shares may no longer meet the requirements of the National Association of Securities Dealers, Inc. (the "NASD") for continued inclusion in the NASDAQ System. The NASD requires that an issuer have at least 100,000 publicly held shares, held by at least 300 stockholders, with a market value of at least $200,000, have total assets of at least $2 million and have capital and surplus (total stockholders' equity) of at least $1 million. If, as a result of the purchase of Shares pursuant to the Offer, the Shares no longer meet the requirements for inclusion in the NASDAQ System and inclusion of the Shares is discontinued, the market for the Shares could be adversely affected. If the NASDAQ System were to cease to publish quotations for the Shares, it is possible that the Shares would continue to trade 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 Shares and the availability of such quotations would depend, however, upon such factors as the number of stockholders 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 Shares are currently "margin securities" under the regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of such Shares. Depending upon factors similar to those described above regarding listing and market quotations, the Shares might no longer constitute "margin securities" for the purposes of the Federal Reserve Board's margin regulations and, therefore, 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 if the Shares are not listed on a national securities exchange and there are less than 300 holders of record. Termination of the registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to holders of Shares and to the Commission and would make certain of the provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b), the requirement of furnishing a proxy or information statement in connection with stockholder action and the related requirement of an annual report to stockholders and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions, no longer applicable to the Shares. Furthermore, "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 (the "Securities Act"). If registration of the Shares under the Exchange Act were terminated, the Shares would no longer be "margin securities" or eligible for NASDAQ System reporting. It is the current intention of the Parent to deregister the Shares after consummation of the Offer if the requirements for termination of registration are met. 13. DIVIDENDS AND DISTRIBUTIONS. If, on or after the date of the Merger Agreement, the Company should (i) split, combine or otherwise change the Shares or its capitalization, (ii) issue or sell any additional securities of the Company or otherwise cause an increase in the number of outstanding securities of the Company (except for Shares issuable upon the exercise of employee stock options outstanding on the date of the Merger Agreement) or (iii) acquire currently outstanding Shares or otherwise cause a reduction in the number of outstanding Shares, then, without prejudice to the 29 Purchaser's rights under Sections 1 and 15, the Purchaser, in its sole discretion, subject to the terms of the Merger Agreement, may make such adjustments as it deems appropriate in the purchase price and other terms of the Offer. If, on or after the date of the Merger Agreement, the Company should declare or pay any dividend on the Shares or make any distribution (including, without limitation, cash dividends, the issuance of additional Shares pursuant to a stock dividend or stock split, the issuance of other securities or the issuance of rights for the purchase of any securities) with respect to the Shares that is payable or distributable to stockholders of record on a date prior to the transfer to the name of the Purchaser or its nominee or transferee on the Company's stock transfer records of the Shares purchased pursuant to the Offer, then, without prejudice to the Purchaser's rights under Sections 1 and 15, any such dividend, distribution or right to be received by the tendering stockholders will be received and held by the tendering stockholders for the account of the Purchaser and will be required to be promptly remitted and transferred by each tendering stockholder to the Depositary for the account of the Purchaser, accompanied by appropriate documentation of transfer. Pending such remittance and subject to applicable law, the Purchaser will be entitled to all rights and privileges as owner of any such dividend, distribution or right and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by the Purchaser in its sole discretion. 14. EXTENSION OF TENDER PERIOD; AMENDMENT; TERMINATION. The Purchaser expressly reserves the right, in its sole discretion, at any time or from time to time, regardless of whether or not any of the events set forth in Section 15 shall have occurred or shall have been determined by the Purchaser to have occurred, subject to the terms of the Merger Agreement and applicable rules of the Commission, (i) to extend the period of time during which the Offer is open and thereby delay acceptance for payment of, and the payment for, any Shares, by giving oral or written notice of such extension to the Depositary and (ii) to amend the Offer in any respect by giving oral or written notice of such amendment to the Depositary. The rights reserved by the Purchaser in this paragraph are in addition to the Purchaser's rights to terminate the Offer pursuant to Section 15. Any extension, amendment or termination will be followed as promptly as practicable by public announcement thereof, the announcement in the case of an extension to be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date in accordance with the public announcement requirements of Rule 14d-4(c) under the Exchange Act. Any reduction in the purchase price pursuant to the Merger Agreement will be considered an amendment to the Offer, and will be followed by the appropriate announcement. Without limiting the obligation of the Purchaser under such Rule or the manner in which the Purchaser may choose to make any public announcement, the Purchaser currently intends to make announcements by issuing a release to the Dow Jones News Service or the Reuters News Service. The Purchaser also reserves the right, in its sole discretion, in the event any of the conditions specified in Section 15 shall not have been satisfied and so long as Shares have not theretofore been accepted for payment, to delay (except as otherwise required by applicable law) acceptance for payment of or payment for Shares or to terminate the Offer and not accept for payment or pay for Shares. If the Purchaser extends the Offer, or if the Purchaser (whether before or after its acceptance for payment of Shares) is delayed in its purchase of or payment for Shares or is unable to pay for Shares pursuant to the Offer for any reason, then, without prejudice to the Purchaser's rights under the Offer, the Depositary may retain tendered shares on behalf of the Purchaser, and such Shares may not be withdrawn except to the extent tendering stockholders are entitled to withdrawal rights as described in Section 4. However, the ability of the Purchaser to delay the payment for Shares which the Purchaser has accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which requires that a bidder pay the consideration offered or return the securities deposited by or on behalf of security holders promptly after the termination or withdrawal of such bidder's offer. If the Purchaser makes a material change in the terms of the Offer or the information concerning the Offer or waives a material condition of the Offer (including the Minimum Condition), the Purchaser will disseminate additional tender offer materials and extend the Offer to the extent required by Rules 30 14d-4(c) and 14d-6(d) under the Exchange Act. The minimum period during which the Offer must remain open following material changes in the terms of the Offer or information concerning the Offer, other than a change in price or a change in percentage of securities sought, will depend upon the facts and circumstances, including the relative materiality of the terms or information. With respect to a change in price or a change in percentage of securities sought, a minimum ten business day period is generally required to allow for adequate dissemination to stockholders and investor response. If prior to the Expiration Date, the Purchaser should decide to increase the price per Share being offered in the Offer, such increase will be applicable to all stockholders whose Shares are accepted for payment pursuant to the Offer. As used in this Offer to Purchase, "business day" means any day other than Saturday, Sunday or a federal holiday and consists of the time period from 12:01 A.M. through 12:00 Midnight, New York City time as computed in accordance with Rule 14d-1 under the Exchange Act. 15. CERTAIN CONDITIONS TO THE OFFER. Notwithstanding any other provisions of the Merger Agreement or the Offer, the Purchaser shall not be required to accept for payment, purchase or pay for any Shares of the Company tendered, and may terminate or, subject to the terms of the Merger Agreement, amend the Offer and may postpone the acceptance for payment of or payment for any Shares, if prior to the time of acceptance for payment of Shares tendered pursuant to the Offer: (i) the Minimum Condition shall not have been satisfied; or (ii) any waiting period applicable to the Offer pursuant to the HSR Act shall not have expired or been terminated; or (iii) at any time before the time of acceptance for payment for any such Shares any of the following shall occur or exist: (a) there shall have been instituted or be pending any action, proceeding, application, claim or counterclaim by any government or governmental authority or agency, domestic or foreign, before any court or governmental regulatory or administrative agency, authority or tribunal, domestic or foreign, (A) challenging the acquisition by the Parent or the Purchaser of the Shares, seeking to restrain or prohibit the making or consummation of the Offer or the Merger or seeking to obtain from the Parent or the Purchaser any damages that would result in a Material Adverse Effect if such were assessed against the Company, (B) seeking to prohibit or materially limit the ownership or operation by the Parent or the Surviving Corporation of all or any material portion of the business or assets of the Company or compel the Parent or the Surviving Corporation to dispose of or to hold separate all or any material portion of the business or assets of the Company, or to impose any material limitation on the ability of the Company or the Surviving Corporation to conduct such business or own such assets, or (C) seeking to impose material limitations on the ability of the Parent (or any other affiliate of the Parent) to acquire or hold or to exercise full rights of ownership of the Shares, including, but not limited to, the right to vote the Shares purchased by them on all matters properly presented to the stockholders of the Company; or (b) there shall be any statute, rule, regulation, judgment, order or injunction enacted, promulgated, entered, enforced or deemed applicable to the Offer, the Merger or the Merger Agreement, or any other action shall have been taken by any government, governmental authority or court, domestic or foreign, other than the routine application to the Offer or the Merger of waiting periods under the HSR Act, that has, or has a substantial likelihood of resulting in, any of the consequences referred to in clauses (A) through (C) of paragraph (a) above; or (c) the Company shall have breached or failed to perform in any material respect any of its obligations, covenants or agreements contained in the Merger Agreement, or any of the representations and warranties of the Company set forth in the Merger Agreement shall not have been true and correct in any material respect when made or, except for any representations and warranties made as of a specific date, shall have ceased to be true and correct in any 31 material respect as if made on and as of the Expiration Date (or, in the case of representations and warranties that are specifically qualified as to materiality, shall not have been true and correct when made or shall have ceased to be true and correct on and as of the Expiration Date); or (d) there shall have occurred (A) any general suspension of trading in, or limitation on prices for, securities on the New York Stock Exchange, Inc., (B) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States (whether or not mandatory), (C) the commencement of a war, armed hostilities or other international or national calamity directly or indirectly involving the United States and having a Material Adverse Effect on or materially adversely affecting (or materially delaying) the consummation of the Offer, (D) any limitation (whether or not mandatory), by any U.S. governmental authority or agency on, or any other event that, in the judgment of the Parent, is substantially likely to materially adversely affect the extension of credit by banks or other financial institutions, or (E) from the date of the Merger Agreement through the date of termination or expiration of the Offer, a decline of at least 25% in the Standard & Poor's 500 Index; or (e) the Merger Agreement shall have been terminated in accordance with its terms; or (f) prior to the purchase of Shares pursuant to the Offer, the Board of Directors shall have withdrawn or modified (including by amendment of the Schedule 14D-9) in a manner adverse to the Parent its approval or recommendation of the Offer, the Merger Agreement or the Merger or shall have recommended another offer for the purchase of the Shares, which, in the sole judgment of the Parent in any such case, and regardless of the circumstances (including any action or omission by the Parent) giving rise to such condition, makes it inadvisable to proceed with such acceptance for payment except where as a result of the Company's receipt of an unsolicited acquisition proposal from a third party (A) the Company issues to its stockholders a communication that contains only the statements permitted by Rule 14d-9(e) under the Exchange Act (and does not otherwise withdraw, modify or amend its approval or recommendation of the transactions contemplated hereby) and (B) within five business days of issuing such communication the Company publicly reconfirms its approval and recommendation of the transactions contemplated by the Offer and the Merger Agreement; or (g) there shall have occurred since July 31, 1995, a change, occurrence or circumstance in the Company's business having a Material Adverse Effect thereon; or (h) The failure of the Company to obtain any of the waivers or consents of Wells Fargo pursuant to the letter dated December 19, 1995 from Wells Fargo to the Company, CTI, and Medical Molding Corporation of America. The foregoing conditions are for the sole benefit of the Parent and the Purchaser and may be asserted by the Parent or the Purchaser regardless of the circumstances giving rise to such conditions (including any action or inaction by the Purchaser, unless any such action or inaction would constitute a breach by the Purchaser of any of its covenants under the Merger Agreement) or may be waived by the Parent or the Purchaser in whole or in part at any time and from time to time, in the sole discretion of the Parent and the Purchaser. The conditions may be considered to be material to the Offer. If the Purchaser waives any material conditions of the Offer, it will, if required by applicable law, extend the period of time during which the Offer is open in accordance with applicable law for a period sufficient to allow the holders of Shares to consider the Offer by giving oral or written notice of such extension to the Depositary and by making a public announcement thereof. The failure by the Purchaser at any time to exercise any of the forgoing rights will not be deemed a waiver of any other rights and each such right will be deemed an ongoing right which may be asserted at any time and from time to time. Any determination by the Purchaser or the Parent with respect to such conditions (including, without limitation, the satisfaction of such conditions) will be final and binding on the parties. 32 16. CERTAIN LEGAL MATTERS; REGULATORY APPROVALS. Except as described in this Section 16, based on a review of publicly available information concerning the Company, neither the Parent nor the Purchaser is aware of any license or regulatory permit that appears to be material to the business of the Company that might be adversely affected by the acquisition of Shares by the Purchaser pursuant to the Offer, the Merger or otherwise or of any approval or other action by any governmental, administrative or regulatory agency or authority, domestic or foreign, that would be required prior to the acquisition of Shares by the Purchaser pursuant to the Offer, the Merger or otherwise. Should any such approval or other action be required, the Parent and the Purchaser currently contemplate that it will be sought. While the 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 other 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 or the Purchaser Entities or that certain parts of the business of the Company or the Purchaser Entities might not have to be disposed of in the event that such approvals were not obtained or any other actions were not taken. The Purchaser's obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions, including conditions relating to the legal matters discussed in this Section 16. See Section 15. SECTION 203 OF THE DGCL. Section 203, in general, prohibits a Delaware corporation such as the Company from engaging in a "Business Combination" (defined as a variety of transactions, including mergers, as set forth below) with an "Interested Stockholder" (defined generally as a person that is the beneficial owner of 15% or more of a corporation's outstanding voting stock) for a period of three years following the date that such person became an Interested Stockholder unless (i) prior to the date such person became an Interested Stockholder, the board of directors of the corporation approved either the Business Combination or the transaction that resulted in the stockholder becoming an Interested Stockholder, (ii) upon consummation of the transaction that resulted in the stockholder becoming an Interested Stockholder, the Interested Stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding stock held by directors who are also officers of the corporation and employee stock ownership plans that do not provide employees with the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer or (iii) on or subsequent to the date such person became an Interested Stockholder, the Business Combination is approved by the board of directors of the corporation and authorized at a meeting of stockholders, and not by written consent, by the affirmative vote of the holders of at least 66 2/3% of the outstanding voting stock of the corporation not owned by the Interested Stockholder. Under Section 203, the restrictions described above do not apply if, among other things (i) the corporation's original certificate of incorporation contains a provision expressly electing not to be governed by Section 203; (ii) the corporation, by action of its stockholders, adopts an amendment to its certificate of incorporation or by-laws expressly electing not to be governed by Section 203, provided that, in addition to any other vote required by law, such amendment to the certificate of incorporation or by-laws must be approved by the affirmative vote of a majority of the shares entitled to vote, which amendment would not be effective until 12 months after the adoption of such amendment and would not apply to any Business Combination between the corporation and any person who became an Interested Stockholder of the corporation on or prior to the date of such adoption; (iii) the corporation does not have a class of voting stock that is (A) listed on a national securities association (B) authorized for quotation on an inter-dealer quotation system of a registered national securities association or (C) held of record by more than 2,000 stockholders, unless any of the foregoing results from action taken, directly or indirectly, by an Interested Stockholder or from a transaction in which a person becomes an Interested Stockholder; or (iv) a stockholder becomes an Interested Stockholder "inadvertently" and thereafter divests itself of a sufficient number of shares so that such stockholder ceases to be an Interested Stockholder. Under Section 203, the restrictions described above also do not apply to certain Business Combinations proposed by an Interested Stockholder following the announcement or notification of one 33 of certain extraordinary transactions involving the corporation and a person who had not been an Interested Stockholder during the previous three years or who became an Interested Stockholder with the approval of a majority of the corporation's directors. Section 203 provides that, during such three-year period, the corporation may not merge or consolidate with an Interested Stockholder or any affiliate or associate thereof, and also may not engage in certain other transactions with an Interested Stockholder or any affiliate or associate thereof, including, without limitation, (i) any sale, lease, exchange, mortgage, pledge, transfer or other disposition of assets (except proportionately as a stockholder of the corporation) having an aggregate market value equal to 10% or more of the aggregate market value of all the outstanding stock of the corporation; (ii) any transaction which results in the issuance or transfer by the corporation or by certain subsidiaries thereof any stock of the corporation or such subsidiaries to the Interested Stockholder, except pursuant to a transaction which effects a pro rata distribution to all stockholders of the corporation; (iii) any transaction involving the corporation or certain subsidiaries thereof which has the effect of increasing the proportionate share of the stock of any class or series, or securities convertible into the stock of any class or series, of the corporation or any such subsidiary which is owned directly or indirectly by the Interested Stockholder (except as a result of immaterial changes due to fractional share adjustments) or (iv) any receipt by the Interested Stockholder of the benefit (except proportionately as a stockholder of such corporation) of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. At a meeting on December 14, 1995, the Board of Directors approved the Merger Agreement, the Stockholder Tender Agreement, the Merger, the Offer and the Purchaser's purchase of Shares pursuant to the Offer and the Stockholder Tender Agreement. Accordingly, the provisions of Section 203 of the DGCL have been satisfied with respect to the Offer, the Merger and the Stockholder Tender Agreement, and such provisions will not delay the consummation of the Offer or the Merger. OTHER STATE TAKEOVER STATUTES. A number of other states have adopted "takeover" statutes that purport to apply to attempts to acquire corporations that are incorporated in such states, or whose business operations have substantial economic effects in such states, or which have substantial assets, security holders, employees, principal executive offices or places of business in such states. In EDGAR V. MITE CORPORATION, the Supreme Court of the United States invalidated on constitutional grounds the Illinois Business Takeover Act, which, as a matter of state securities law, made takeovers of corporations meeting certain requirements more difficult. However, in CTS CORP. V. DYNAMICS CORP. OF AMERICA, the Supreme Court 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 under certain conditions, in particular, that the corporation has a substantial number of stockholders in the state and is incorporated there. The Company conducts business in a number of states throughout the United States, some of which have enacted "takeover" statutes. The Purchaser does not know whether any of these statutes will, by their terms, apply to the Offer, and has not complied with any such statutes other than those adopted by the State of Delaware. To the extent that certain provisions of these statutes purport to apply to the Offer, the Purchaser believes that there are reasonable bases for contesting such statutes. If any person should seek to apply any state takeover statute, the Purchaser would take such action as then appears desirable, which action may include challenging the validity or applicability of any such statute in appropriate court proceedings. If it is asserted that one or more takeover statutes apply to the Offer, and it is not determined by an appropriate court that such statute or statutes do not apply or are invalid as applied to the Offer, the Purchaser might be required to file certain information with, or receive approvals from, the relevant state authorities, and the Purchaser might be unable to purchase or pay for Shares tendered pursuant to the Offer, or be delayed in continuing or consummating the Offer. In such case, the Purchaser may not be obligated to accept for payment or pay for Shares tendered. 34 FAIR PRICE AND SUPERMAJORITY PROVISIONS. The Certificate of Incorporation of the Company contains "fair price" and "supermajority vote" provisions which apply to "Business Combinations" with a corporation or other person who directly or indirectly then beneficially owns, or within the preceding two years beneficially owned, 20% or more of the outstanding voting stock of the Company (an "Interested Stockholder"). A "Business Combination" includes a merger or consolidation of the Company or any subsidiary of the Company with or into an Interested Stockholder, a sale of assets to an Interested Stockholder having an aggregate fair market value of 10% of the total value of the assets of the Company and its consolidated subsidiaries as reflected on the Company's most recent balance sheet, the issuance by the Company or any of its subsidiaries of securities to an Interested Stockholder having an aggregate fair market value of $5 million or more, the adoption of a plan for dissolution or liquidation of the Company proposed by an Interested Stockholder, and any reclassification or recapitalization of securities of the Company resulting in an increase in the relative voting power of an Interested Stockholder. The supermajority vote provision provides that a Business Combination with an Interested Stockholder cannot be effected unless approved by (i) holders of two-thirds of the outstanding voting stock of the Company and (ii) holders of a majority of the outstanding voting stock of the Company other than the voting stock of which an Interested Stockholder is the beneficial owner. The supermajority vote provisions are not applicable if (i) in the case of a Business Combination that does not involve any cash or other consideration being received by the stockholders of the Company, the Business Combination shall have been approved by a majority of the "Continuing Directors," or (ii) in the case of any other Business Combination, the Business Combination shall have been approved either by a majority of the Continuing Directors or the so-called "fair price" provisions shall have been satisfied. The fair price provisions derive their name from the fact that they specify a minimum consideration (determined pursuant to a formula based on the highest per share price paid by the Interested Stockholder in acquiring the Company's capital stock plus interest) which must be paid and certain procedural requirements which must be satisfied in order to effect a Business Combination with an Interested Stockholder in certain circumstances. "Continuing Directors" are directors who are unaffiliated with the Interested Stockholder and who were either members of the Board of Directors prior to the time an Interested Stockholder became such or any approved successor to a Continuing Director. Any approval required under the fair price provision or supermajority vote provision is in addition to any approval required under applicable law or other provisions of the Company's Certificate of Incorporation. The fair price and supermajority provisions may not be repealed, amended or otherwise modified unless such repeal, amendment or modification is approved by the affirmative vote of holders of (i) not less than two-thirds of the outstanding voting stock of the Company voting together as a single class, and (ii) not less than a majority of the outstanding voting stock of the Company held by all stockholders other than Interested Stockholders voting together as a single class. At a meeting on December 14, 1995, the Board of Directors approved the Merger Agreement, the Stockholder Tender Agreement, the Merger, the Offer and the Purchaser's purchase of Shares pursuant to the Offer and the Stockholder Tender Agreement. Accordingly, the provisions of the Fair Price and Supermajority Vote provisions of the Company's Certificate of Incorporation have been satisfied with respect to the Offer, the Merger and the Stockholder Tender Agreement, and such provisions will not delay the consummation of the Offer or the Merger. ANTITRUST. Under the HSR Act, certain acquisitions may not be consummated unless information has been furnished to the Federal Trade Commission ("FTC") and the Antitrust Division of the Department of Justice (the "Antitrust Division") and certain waiting period requirements have been satisfied. The Offer and the acquisition of Shares pursuant to the Merger Agreement are subject to the HSR Act, which provides that certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division and the FTC and certain waiting period requirements have been satisfied. The Parent expects to file on or before January 3, 1996 a Notification and Report Form with respect to the Offer. 35 Under the provisions of the HSR Act applicable to the Offer, the purchase of Shares under the Offer may not be consummated until the expiration of a 15-calendar day waiting period following the filing by the Parent. Accordingly, if such filing is made on January 3, 1996, the waiting period with respect to the Offer will expire at 11:59 p.m., New York City time, on January 18, 1996, unless the Parent receives a request for additional information or documentary material, or the Antitrust Division and the FTC terminate the waiting period prior thereto. If, within such 15-day waiting period, either the Antitrust Division or the FTC requests additional information or material from the Parent concerning the Offer, the waiting period will be extended and would expire at 11:59 p.m., New York City time, on the tenth calendar day after the date of substantial compliance by the Parent with such request. Only one extension of the waiting period pursuant to a request for additional information is authorized by the HSR Act. Thereafter, such waiting period may be extended only by court order or with the consent of the Parent. The Purchaser will not accept for payment Shares tendered pursuant to the Offer unless and until the waiting period requirements imposed by the HSR Act with respect to the Offer have been satisfied. See Section 15. No separate HSR Act waiting period requirements with respect to the Merger Agreement will apply, so long as the 15-day waiting period expires or is terminated. Thus, all Shares may be acquired pursuant to the Offer at the close of the 15-day waiting period or on the tenth calendar day after the date of substantial compliance with a request for additional information. The FTC and the Antitrust Division frequently scrutinize the legality under the antitrust laws of transactions such as the Purchaser's acquisition of Shares pursuant to the Offer and the Merger Agreement. At any time before or after the Purchaser's acquisition of Shares, the Antitrust Division or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the acquisition of Shares pursuant to the Offer or otherwise or seeking divestiture of Shares acquired by the Purchaser or divestiture of substantial assets of the Parent or its subsidiaries. Private parties and state attorneys general 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 the Parent and the Company are engaged, the Parent and the Purchaser believe that the acquisition of Shares by the Purchaser will not violate the antitrust laws. Nevertheless, there can be no assurance that a challenge to the Offer or other acquisition of Shares by the Purchaser on antitrust grounds will not be made or, if such a challenge is made, of the result. See Section 15 for certain conditions to the Offer, including conditions with respect to litigation and certain governmental actions. MARGIN RULES. The Purchaser and the Parent believe that the requirements of the margin regulations promulgated by the Federal Reserve Board are not applicable to the financing of the Offer and the Merger. APPRAISAL RIGHTS. Holders of Shares do not have appraisal rights as a result of the Offer. However, if the Merger is consummated, holders of Shares at the effective time of the Merger will have certain rights pursuant to the provisions of Section 262 of the DGCL ("Section 262") to dissent and demand appraisal of their Shares. Under Section 262, dissenting stockholders who comply with the applicable statutory procedures will be entitled to receive a judicial determination of the fair value of their Shares (exclusive of any element of value arising from the accomplishment or expectation of the Merger) and to receive payment of such fair value in cash, together with a fair rate of interest, if any. Any such judicial determination of the fair value of Shares could be based upon factors other than, or in addition to, the price per Share to be paid in the Merger or the market value of the Shares. The value so determined could be more or less than the price per Share to be paid in the Merger. In WEINBERGER V. UOP, INC., the Delaware Supreme Court stated, among other things, that "proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court" should be considered in an appraisal proceeding. Therefore, the value so determined in any appraisal proceeding could be the same, more or less than the purchase price per Share in the Offer or the Merger Consideration (as defined in the Merger Agreement). 36 In addition, several decisions by Delaware courts have held that, in certain circumstances, a controlling stockholder of a company involved in a merger has a fiduciary duty to other stockholders which requires that the merger be fair to such other stockholders. In determining whether a merger is fair to minority stockholders, Delaware courts have considered, among other things, the type and amount of consideration to be received by the stockholders and whether there was fair dealing among the parties. The Delaware Supreme Court stated in WEINBERGER and RABKIN V. PHILIP A. HUNT CHEMICAL CORP. that the remedy ordinarily available to minority stockholders in a cash-out merger is the right to appraisal described above. However, a damages remedy or injunctive relief may be available if a merger is found to be the product of unfairness, including fraud, misrepresentation or other misconduct. If any holder of Shares who demands appraisal under Section 262 of the DGCL fails to perfect, or effectively withdraws or loses his right to appraisal, as provided in the DGCL, the Shares of such stockholder will be converted into the Merger Consideration in accordance with the Merger Agreement. A stockholder may withdraw his demand for appraisal by delivery to Parent of a written withdrawal of his demand for appraisal and acceptance of the Merger. FAILURE TO FOLLOW THE STEPS REQUIRED BY SECTION 262 OF THE DGCL FOR PERFECTING APPRAISAL RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS. 17. FEES AND EXPENSES. The Parent and the Purchaser have engaged Salomon Brothers Inc ("Salomon") as the Dealer Manager in connection with the Offer. The Parent has agreed to pay Salomon a fee of $100,000 for these services, payable to Salomon upon commencement of the Offer. In addition, Salomon is acting as financial advisor to the Parent and the Purchaser in connection with the proposed acquisition of the Company. In consideration for these services the Parent and the Purchaser have agreed to pay Salomon a fee equal to $400,000 (of which $25,000 has already been paid) contingent upon the consummation of the Merger and payable at the closing of the Merger. The Purchaser also has agreed to reimburse Salomon for its expenses, including reasonable counsel fees, and to indemnify it against certain liabilities and expenses, including certain liabilities under the federal securities laws. The Purchaser has retained Georgeson & Company Inc. to act as the Information Agent and National City Bank to act as the Depositary in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, facsimile, telegraph and personal interview and may request brokers, dealers, commercial banks, trust companies and other nominees to forward the Offer material to beneficial owners. The Information Agent and the Depositary each will receive reasonable and customary compensation for their 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. Neither the Information Agent nor the Depositary has been retained to make solicitations or recommendations in connection with the Offer. Neither the Purchaser nor the Parent will pay any fees or commissions to any broker or dealer or other persons for soliciting tenders of Shares pursuant to the Offer (other than the fees of the Dealer Manager). Brokers, dealers, commercial banks and trust companies will be reimbursed by the Purchaser for reasonable expenses incurred by them in forwarding material to their customers. 18. MISCELLANEOUS. The Purchaser is not aware of any jurisdiction in which the making of the Offer is not in compliance with applicable law. If the Purchaser becomes aware of any jurisdiction in which the making of the Offer would not be in compliance with applicable law, the Purchaser will make a good faith effort to comply with any such law. If, after good faith effort, the Purchaser cannot comply with any such law, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares residing in such jurisdiction. 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 is being made on behalf of the Purchaser by the Dealer Manager or one or more registered brokers or dealers which are licensed under the laws of such jurisdiction. 37 NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION ON BEHALF OF THE PURCHASER OR THE PARENT 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. The Purchaser has filed with the Commission the Schedule 14D-1 pursuant to Rule 14d-3 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 and copies may be obtained at the same places and in the same manner as set forth in Section 7 (except they will not be available at the regional offices of the Commission). HANWEST, INC. December 27, 1995 38 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF THE PARENT The name, business address, present principal occupation or employment and five-year employment history of each director and executive officer of the Parent and certain other information are set forth below. Unless otherwise indicated below, the address of each director and officer is c/o M.A. Hanna Company, Suite 36-5000, 200 Public Square, Cleveland, Ohio 44114-2304. No information is provided in the right-hand column where the individual has occupied the position indicated in the middle column for the past five years. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to employment with the Parent. All directors and officers listed below are citizens of the United States (except J.T. Eyton, O.C., who is a citizen of Canada). Directors are identified by a single asterisk.
NAME POSITIONS AND OFFICES HELD WITH PRINCIPAL OCCUPATION AND BUSINESS (AGE AT 12/1/95) THE PARENT (YEAR ELECTED) EXPERIENCE (PAST FIVE YEARS) - -------------------------------- --------------------------------------- --------------------------------------- M.D. Walker (63)* Chairman and Chief Executive Officer (1986); Director (since 1986), Chairman of Executive Committee and member of the Board Composition and Governance Committee D.J. McGregor (54)* President and Chief Operating Officer (1989); Director (since 1990) and member of Executive Committee S.P. Chong (53) Vice President - Total Quality Planning & Technical Services (1989) G.W. Henry (50) Vice President - International Vice President - Operations, 1992-1994 Operations (1994) Vice President - Marine Services and Special Projects, 1990-1992 J.S. Pyke, Jr. (57) Vice President and General Counsel (1979), Secretary (1973) D.R. Schrank (47) Vice President - North American Vice President and Chief Financial Plastics (1995) Officer, 1993-1995 Senior Vice President and Chief Financial Officer, Sealy, Inc., 1989-1993
I-1
NAME POSITIONS AND OFFICES HELD WITH PRINCIPAL OCCUPATION AND BUSINESS (AGE AT 12/1/95) THE PARENT (YEAR ELECTED) EXPERIENCE (PAST FIVE YEARS) - -------------------------------- --------------------------------------- --------------------------------------- M.S. Duffey (41) Vice President, Chief Financial Officer Treasurer, 1994-1995 and Treasurer (1995) Vice President and Treasurer, Foote, Cone & Belding Communications, Inc. (world-wide advertising agency), 1992-1994, Chicago, Illinois Vice President and Treasurer, Outboard Marine Corporation, 1986-1992, Waukegan, Illinois T.E. Lindsey (45) Controller (1990) B.C. Ames (70)* Director (since 1980), member of Partner, Clayton, Dubilier & Rice, Inc. Compensation Committee and Executive (investment bankers), 1990-Present, Committee New York, New York C.A. Cartwright, Ph.D. (54)* Director (since 1994), Chairperson of President, Kent State University Pension Plan Committee and member of (public higher education institution), Audit Committee and Board Composition 1991-Present, Kent, Ohio and Governance Committee Vice Chancellor of Academic Affairs, University of California-Davis, 1988-1991, Davis, California W.R. Embry (58)* Director (since 1990), Chairman of the President and Chief Operating Officer - Board Composition and Governance Team Division, The Cleveland Cavaliers Committee and member of Pension Plan (professional basketball team), Committee and Audit Committee 1986-Present, Cleveland, Ohio J.T. Eyton, O.C. (61)* Director (since 1986) and a member of Chairman, Brascan Limited (natural Compensation Committee and Executive resources, power generation and Committee financial services), 1991-Present, Toronto, Ontario, Canada President, Brascan Limited, prior to 1991 G.D. Kirkham (62)* Director (since 1975), Chairman of the Retired Senior Vice President, Kemper Audit Committee and member of Pension Securities Inc. (stockbrokers) Plan Committee
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NAME POSITIONS AND OFFICES HELD WITH PRINCIPAL OCCUPATION AND BUSINESS (AGE AT 12/1/95) THE PARENT (YEAR ELECTED) EXPERIENCE (PAST FIVE YEARS) - -------------------------------- --------------------------------------- --------------------------------------- M.L. Mann (62)* Director (since 1991), Chairman of Chairman and Chief Executive Officer, Compensation Committee and member of Lexmark International, Inc. (office Audit Committee machines), 1991-Present, Greenwich, Connecticut Vice President of International Business Machines Corporation "IBM") and President and General Manager of various IBM divisions and subsidiaries, 1985-1991, White Plains, New York R.W. Pogue (67)* Director (since 1988) and member of Senior Advisor, Dix & Eaton (public Board Composition and Governance relations firm), 1994-Present, Committee, Compensation Committee and Cleveland, Ohio Executive Committee Senior Partner, Jones, Day, Reavis & Pogue (attorneys), 1993-1994 Managing Partner, Jones, Day, Reavis & Pogue, 1989-1992
I-3 DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER The name, business address, present principal occupation or employment and five-year employment history of each director and executive officer of the Purchaser and certain other information are set forth below. Unless otherwise indicated below, the address of each director and officer is c/o M.A. Hanna Company, Suite 36-5000, 200 Public Square, Cleveland, Ohio 44114-2304. No information is provided in the right-hand column where the individual has occupied the position indicated in the middle column for the past five years. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to employment with the Purchaser. All directors and officers listed below are citizens of the United States. Directors are identified by a single asterisk.
POSITIONS AND OFFICES HELD PRINCIPAL OCCUPATION AND BUSINESS NAME (AGE AT 12/1/95) WITH THE PURCHASER (YEAR ELECTED) EXPERIENCE (PAST FIVE YEARS) - -------------------------------- --------------------------------------- --------------------------------------- D.R. Schrank (47)* President (1995); Director (since 1995) Vice President -- North American Plastics, M.A. Hanna Company, 1995 Vice President and Chief Financial Officer, M.A. Hanna Company, 1993-1995 Senior Vice President and Chief Financial Officer, Sealy, Inc. 1989-1993 G.W. Henry (50)* Vice President (1995); Director (since Vice President -- International 1995) Operations, M.A. Hanna Company, 1994 Vice President -- Operations M.A. Hanna Company, 1992-1994 Vice President -- Marine Services and Special Projects, M.A. Hanna Company, 1990-1992 J.S. Pyke, Jr. (57)* Vice President and Secretary (1995); Vice President and General Counsel, Director (since 1995) M.A. Hanna Company, 1979-Present Secretary, M.A. Hanna Company, 1973 - Present
I-4
POSITIONS AND OFFICES HELD PRINCIPAL OCCUPATION AND BUSINESS NAME (AGE AT 12/1/95) WITH THE PURCHASER (YEAR ELECTED) EXPERIENCE (PAST FIVE YEARS) - -------------------------------- --------------------------------------- --------------------------------------- M.S. Duffey (41) Vice President and Treasurer (1995) Vice President, Chief Financial Officer and Treasurer, M.A. Hanna Company, 1995-Present Treasurer, M.A. Hanna Company, 1994-1995 Vice President and Treasurer, Foote Cone & Belding Communications, Inc. (world-wide advertising agency), 1992-1994 Vice President and Treasurer, Outboard Marine Corporation 1986-1992 T.E. Lindsey (45) Controller (1995) Controller, M.A. Hanna Company, 1990-Present P.W. Phillips (52) Vice President (1995) Executive Director of Tax Compliance and Audit, M.A. Hanna Company, 1988-Present R.E. Hahn (50) Assistant Secretary (1995) Senior Associate Counsel, M.A. Hanna Company, 1977-Present
I-5 EX-99.A-2 3 EXHIBIT 99.A.2 LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS) OF CIMCO, INC. PURSUANT TO THE OFFER TO PURCHASE DATED DECEMBER 27, 1995 OF HANWEST, INC. A WHOLLY OWNED SUBSIDIARY OF M.A. HANNA COMPANY THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JANUARY 25, 1996, UNLESS THE OFFER IS EXTENDED. THE DEPOSITARY FOR THE OFFER IS: NATIONAL CITY BANK BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER: National City Bank, Depositary (216) 476-8367 National City Bank, Depositary P. O. Box 92301 Corporate Trust Operations Cleveland, Ohio 44193-0900 Third Floor - North Annex (800) 622-6757 (SHAREHOLDER 4100 West 150th Street QUESTIONS) Cleveland, Ohio 44135-1385 CONFIRM FACSIMILE BY TELEPHONE: (216) 476-8049
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be used if certificates for Shares (as defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is utilized, if delivery of Shares is to be made by book-entry transfer to the Depositary's account at The Depository Trust Company, Midwest Securities Trust Company or Philadelphia Depository Trust Company (collectively, the "Book-Entry Transfer Facilities" and individually, a "Book Entry Transfer Facility") pursuant to the procedures set forth in Section 3 of the Offer to Purchase. Stockholders who cannot deliver their Shares and all other documents required hereby to the Depositary by the Expiration Date (as defined in 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 set forth in Section 3 of the Offer to Purchase. See Instruction 2. / / CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT A BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING: Name of Tendering Institution_________________________________________ Account No.___________________________________________________________ / / The Depository Trust Company / / Midwest Securities Trust Company / / Philadelphia Depository Trust Company Transaction Code No. _________________________________________________ / / 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 Shareholder(s) _________________________________ Date of Execution of Notice of Guaranteed Delivery ___________________ Name of Institution which Guaranteed Delivery ________________________ IF DELIVERY IS BY BOOK-ENTRY TRANSFER, PLEASE PROVIDE THE FOLLOWING: Name of Tendering Institution ________________________________________ Account No. __________________________________________________________ / / The Depository Trust Company / / Midwest Securities Trust Company / / Philadelphia Depository Trust Company Transaction Code No. _________________________________________________ - ------------------------------------------------------------------------------------------------------------------ DESCRIPTION OF SHARES TENDERED - ------------------------------------------------------------------------------------------------------------------ NAME(S) AND ADDRESS(S) OF REGISTERED HOLDER(S) (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S) TENDERED SHARE CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST, IF NECESSARY) - ------------------------------------------------------------------------------------------------------------------ TOTAL NUMBER OF SHARES REPRESENTED NUMBER OF CERTIFICATE BY SHARES NUMBER(S)* CERTIFICATE(S)* TENDERED** ---------------------------------------------------- ---------------------------------------------------- ---------------------------------------------------- ---------------------------------------------------- ---------------------------------------------------- TOTAL NUMBER OF SHARES - ------------------------------------------------------------------------------------------------------------------ * Need not be completed by stockholders delivering Shares by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Shares represented by any certificates delivered to the Depositary are being tendered. See Instruction 4. - ------------------------------------------------------------------------------------------------------------------
NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: The undersigned hereby tenders to Hanwest, Inc., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of M.A. Hanna Company, the above-described shares of common stock, par value $0.01 per share, including the associated Rights (as defined in the Offer to Purchase) (collectively, the "Shares"), of CIMCO, Inc., a Delaware corporation (the "Company"), pursuant to the Purchaser's offer to purchase all outstanding Shares at a price of $10.50 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated December 27, 1995, receipt of which is hereby acknowledged, and in this Letter of Transmittal (which together constitute the "Offer"). The Purchaser reserves the right to transfer or assign in whole or from time to time in part to one or more of its affiliates the right to purchase Shares tendered pursuant to the Offer. Subject to, and effective upon, acceptance for payment for the Shares tendered herewith in accordance with the terms of the Offer, the undersigned hereby sells, assigns, and transfers to, or upon the order of, the Purchaser all right, title and interest in and to all the Shares that are being tendered hereby (and any and all other Shares or other securities issued or issuable in respect thereof on or after December 19, 1995) and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares (and all such other shares of common stock or securities), with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (a) deliver certificates for such Shares (and all such other shares of common stock or securities), or transfer ownership of such Shares (and all such other shares of common stock or securities) on the account books maintained by a Book-Entry Transfer Facility, together, in any such case, with all accompanying evidence of transfer and authenticity, to or upon the order of the Purchaser, (b) present such Shares (and all such other shares of common stock or securities) for transfer on the books of the Company and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and all such other shares of common stock or securities), all in accordance with the terms of the Offer. The undersigned hereby irrevocably appoints Richard E. Hahn, Francis G. Titas and David J. Roberts, and each of them, the attorneys and proxies of the undersigned, each with full power of substitution, to exercise all voting and other rights of the undersigned in such manner as each such attorney and proxy or his substitute shall in his sole discretion deem proper, with respect to all of the Shares tendered hereby which have been accepted for payment by the Purchaser prior to the time of any vote or other action (and any and all other shares of common stock or other securities issued or issuable in respect thereof on or after December 19, 1995), at any meeting of stockholders of the Company (whether annual or special and whether or not an adjourned meeting), by written consent or otherwise. This proxy is irrevocable and coupled with an interest in the tendered Shares and is granted in consideration of, and is effective upon, the acceptance for payment of such Shares or securities, and no subsequent proxies will be given or written consents will be executed by the undersigned (and if given or executed, will not be deemed to be effective). The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby (and any and all other shares of common stock or other securities issued or issuable in respect thereof on or after December 19, 1995) and that when the same are accepted for payment by the Purchaser, the Purchaser will acquire good and unencumbered title thereto, free and clear of all liens, restrictions, charges and encumbrances and not subject to any adverse claims. The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered hereby (and all such other shares of common stock or securities). All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Except as stated in the Offer, this tender is irrevocable. The undersigned understands that a tender of Shares pursuant to any one of the procedures described in Section 3 of the Offer to Purchase will constitute the tendering stockholder's acceptance of the terms and conditions of the Offer, as well as the tendering stockholder's representation and warranty that such stockholder has the full power and authority to tender and assign the Shares tendered, as specified in this Letter of Transmittal. The Purchaser's acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering stockholder and the Purchaser upon the terms and subject to the conditions of the Offer. Unless otherwise indicated under "Special Payment Instructions", please issue the check for the purchase price of any Shares purchased, and return any Shares not tendered or not purchased, in the name(s) of the undersigned (and, in the case of Shares tendered by book-entry transfer, by credit to the account at the Book-Entry Transfer Facility designated above). Similarly, unless otherwise indicated under "Special Delivery Instructions", please mail the check for the purchase price of any Shares purchased and any certificates for Shares not tendered or not purchased (and accompanying documents, as appropriate) to the undersigned at the address shown below the undersigned's signature(s). In the event that both "Special Payment Instructions" and "Special Delivery Instructions" are completed, please issue the check for the purchase price of any Shares purchased and return any Shares not tendered or not purchased in the name(s) of, and mail the check and any certificates to, the person(s) so indicated. The undersigned recognizes that the Purchaser has no obligation, pursuant to the "Special Payment Instructions", to transfer any Shares from the name of the registered holder(s) thereof if the Purchaser does not accept for payment any of the Shares so tendered. SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if check for the purchase price of Shares purchased or certificates for Shares not tendered or not purchased are to be issued in the name of someone other than the undersigned, or if Shares tendered by book-entry transfer that are not purchased are to be returned by credit to an account at a Book-Entry Transfer Facility other than that designated above. Issue / / check / / certificate(s) to: Name ------------------------------------------------ (Please Print) Address ----------------------------------------------- ----------------------------------------------- (Zip Code) ------------------------------------------------------ TAXPAYER IDENTIFICATION NUMBER 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 certificates for 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 / / certificate(s) to: Name ------------------------------------------------ (Please Print) Address ----------------------------------------------- ----------------------------------------------- (Zip Code) / / Credit unpurchased Shares tendered by book-entry transfer to the account set forth below: Name of Account Party Account No. / / The Depository Trust Company / / Midwest Securities Trust Company / / Philadelphia Depository Trust Company IMPORTANT STOCKHOLDERS: SIGN HERE (PLEASE COMPLETE SUBSTITUTE FORM W-9 BELOW) 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 and see Instruction 5.) Name(s): (Please Print) Capacity (full title): Address: (Include Zip Code) Area Code and Telephone No.: Taxpayer Identification or Social Security No.: (See Substitute Form W-9 below) GUARANTEE OF SIGNATURE(S) (See Instructions 1 and 5) Authorized Signature: Name: (Please Type or Print) Title: Name of Firm: Address: (Include Zip Code) Area Code and Telephone No: Dated: , 199 PAYER'S NAME: NATIONAL CITY BANK PART I -- Taxpayer Identification Number -- For all accounts enter your taxpayer identification number in the appropriate box. For most individuals and sole proprietors, this is your Social Security Number. For other entities, it is your Employer Identification Number. If you do not have a number, see "How to Obtain a TIN" in the enclosed GUIDELINES. Note: if the account is in more than one name, see the chart on page 2 of the SUBSTITUTE enclosed GUIDELINES to determine what FORM W-9 number to enter. Department of ---------------------------------------- Social Security Number the Treasury PART II -- For Payees Exempt From Backup OR Internal Withholding (see enclosed Guidelines and Employer Identification Number Revenue Service complete as instructed therein). [ ] Awaiting TIN CERTIFICATION. -- Under penalties of perjury, I certify that: (1) The number shown on this form is my correct taxpayer identification number, or I am waiting for a number to be issued to me and either (a) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office or (b) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number within sixty (60) days, 31% of all reportable payments made to me thereafter will be withheld until I provide a number; (2) I am not subject to backup withholding either because (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service ("IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding; and (3) Any other information provided on this form is true, correct and complete. CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of underreporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out item (2). PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER SIGNATURE DATE , 199
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR INSTRUCTIONS. 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 bank, broker or other institution which is a member of a Medallion Signature Guaranty Program (each, an "Eligible Institution"). Signatures on this Letter of Transmittal need not be guaranteed (a) if this Letter of Transmittal is signed by the registered holder(s) of the Shares (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) tendered herewith and such holder(s) have not completed the instruction entitled "Special Payment Instructions" on this Letter of Transmittal or (b) if such Shares are tendered for the account of an Eligible Institution. See Instruction 5. 2. DELIVERY OF LETTER OF TRANSMITTAL AND CERTIFICATES. This Letter of Transmittal is to be used either if certificates are to be forwarded herewith or if delivery of Shares is to be made by book-entry transfer, without utilizing an Agent's Message, pursuant to the procedures set forth in Section 3 of the Offer to Purchase. Certificates for all physically delivered Shares, or a confirmation of a book-entry transfer into the Depositary's account at a Book-Entry Transfer Facility of all Shares delivered electronically, as well as either a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantee or an Agent's Message, 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 front page of this Letter of Transmittal by the Expiration Date. Stockholders who cannot deliver their Shares and all other required documents to the Depositary by the Expiration Date must tender their Shares pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (a) such tender must be made by or through an Eligible Institution, (b) a properly completed and duly executed Notice of Guaranteed Delivery substantially in the form provided by the Purchaser must be received by the Depositary by the Expiration Date and (c) the certificates for all physically delivered Shares, or a confirmation of a book-entry transfer into the Depositary's account at a Book-Entry Transfer Facility of all Shares delivered electronically, as well as either a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantee or an Agent's Message, and any other documents required by this Letter of Transmittal, must be received by the Depositary within three National Association of Securities Dealers, Inc. Automated Quotation System ("NASDAQ System") trading days after the date of execution of such Notice of Guaranteed Delivery, all as provided in Section 3 of the Offer to Purchase. THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING THROUGH A BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF CERTIFICATES FOR SHARES ARE SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. No alternative, conditional or contingent tenders will be accepted, and no fractional Shares will be purchased. By executing this Letter of Transmittal (or facsimile thereof) or causing an Agent's Message to be transmitted, the tendering stockholder waives any right to receive any notice of the acceptance for payment of Shares. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the certificate numbers and/or the number of Shares should be listed on a separate schedule attached hereto. 4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY BOOK-ENTRY TRANSFERS). If fewer than all the Shares represented by any certificate delivered to the Depositary are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered". In such case, a new certificate for the remainder of the Shares represented by the old certificate will be sent to the person(s) signing this Letter of Transmittal, unless otherwise provided in the appropriate box on this Letter of Transmittal, as promptly as practicable following the expiration or termination of the Offer. All Shares represented by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificates without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby are held 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 different names on different certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, no endorsements of certificates or separate stock powers are required unless payment of the purchase price is to be made, or Shares not tendered or not purchased are to be returned, in the name of any person other than the registered holder(s). Signatures on any such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares tendered hereby, certificates 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 the certificates for such Shares. Signature(s) on any such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal or any 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 the Purchaser of the authority of such person so to act must be submitted. 6. STOCK TRANSFER TAXES. The Purchaser will pay any 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 is to be made to, or Shares not tendered or not purchased are to be returned in the name of, any person other than the registered holder(s), or if a transfer tax is imposed for any reason other than the sale or transfer of Shares to the Purchaser pursuant to the Offer, then the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person or otherwise) will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes, or exemption therefrom, is submitted herewith. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If the check for the purchase price of any Shares purchased is to be issued, or any Shares not tendered or not purchased are to be returned, in the name of a person other than the person(s) signing this Letter of Transmittal or if the check or any certificates for Shares not tendered or not purchased are to be mailed to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal at an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. Stockholders tendering Shares by book-entry transfer may request that Shares not purchased be credited to such account at a Book-Entry Transfer Facility as such stockholder may designate under "Special Payment Instructions". If no such instructions are given, any such Share not purchased will be returned by crediting the account at the Book-Entry Transfer Facility designated above. If the box entitled "Special Payment Instructions" is completed, the signature(s) of the person(s) signing this Letter of Transmittal must be guaranteed. See Instruction 1. 8. SUBSTITUTE FORM W-9. Under the federal income tax laws, the Depositary will be required to withhold 31% of the amount of any payments made to certain stockholders pursuant to the Offer. In order to avoid such backup withholding, each tendering stockholder, and, if applicable, each other payee, must provide the Depositary with such stockholder's or payee's correct taxpayer identification number and certify that such stockholder or payee is not subject to such backup withholding by completing the Substitute Form W-9 set forth above or by filing a properly completed Form W-9. In general, if a stockholder or payee is an individual, the taxpayer identification number is the Social Security number of such individual. If the Depositary is not provided with the correct taxpayer identification number, the stockholder or payee may be subject to a $50 penalty imposed by the Internal Revenue Service. Certain stockholders or payees (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order to satisfy the Depositary that a foreign individual qualifies as an exempt recipient, such stockholder or payee must submit a statement, signed under penalties of perjury, attesting to that individual's exempt status. Such statements can be obtained from the Depositary. For further information concerning backup withholding and instructions for completing the Substitute Form W-9 (including how to obtain a taxpayer identification number if you do not have one and how to complete the Substitute Form W-9 if Shares are held in more than one name), consult the enclosed GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9. Failure to complete the Substitute Form W-9 (or to file a Form W-9) will not, by itself, cause Shares to be deemed invalidly tendered, but may require the Depositary to withhold 31% of the amount of any payments made pursuant to the Offer. Backup withholding is not an additional federal income tax. Rather, the federal income tax liability of a person subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained provided that the required information is furnished to the Internal Revenue Service. NOTE: FAILURE TO COMPLETE AND RETURN THE SUBSTITUTE FORM W-9 MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. 9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for assistance or additional copies of the Offer to Purchase and this Letter of Transmittal may be obtained from the Information Agent or Dealer Manager at their respective addresses or telephone numbers set forth below. 10. IRREGULARITIES. All questions as to the form of documents and the validity, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Purchaser, in its sole discretion, which determination shall be final and binding. The Purchaser reserves the absolute right to reject any or all tenders of Shares determined by it not to be in proper form or the acceptance for payment of or payment for which may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right to waive any defect or irregularity in any tender of Shares. No tender of Shares will be deemed to have been properly made until all defects and irregularities relating thereto have been cured or waived. The Purchaser's interpretation of the terms and conditions of the Offer in this regard will be final and binding. None of the Purchaser, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defect or irregularity in tenders or incur any liabililty for failure to give any such notification. (DO NOT WRITE IN SPACES BELOW) Date Received Accepted By Checked By SHARES SHARES SHARES CHECK NO. AMOUNT OF SHARES CERTIFICATE BLOCK NO. SURRENDERED TENDERED ACCEPTED CHECK RETURNED NO. Or Net Delivery Prepared By Checked By Date
THE INFORMATION AGENT IS: [GEORGESON & COMPANY INC. LOGO] Wall Street Plaza New York, New York 10005 (212) 509-6240 (Collect) (800) 223-2064 (Toll Free) Banks and Brokers call (212) 440-9800 THE DEALER MANAGER FOR THE OFFER IS: SALOMON BROTHERS INC Seven World Trade Center New York, New York 10048 (312) 876-8478 (Call Collect) EX-99.A-3 4 EXHIBIT 99.A.3 Salomon Brothers Inc 8700 Sears Tower Chicago, Illinois 60606 (312) 876-8700 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS) OF CIMCO, INC. BY HANWEST, INC. A WHOLLY OWNED SUBSIDIARY OF M.A. HANNA COMPANY AT $10.50 NET PER SHARE THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JANUARY 25, 1996, UNLESS THE OFFER IS EXTENDED. TO BROKERS, DEALERS, COMMERCIAL BANKS, DECEMBER 27, 1995 TRUST COMPANIES AND OTHER NOMINEES: We have been appointed by Hanwest, Inc., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of M.A. Hanna Company, a Delaware corporation, to act as Dealer Manager in connection with its offer to purchase all outstanding shares of common stock, par value $0.01 per share, including the associated Rights (as defined in the Offer to Purchase) (collectively, the "Shares"), of CIMCO, Inc., a Delaware corporation (the "Company"), at $10.50 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Purchaser's Offer to Purchase, dated December 27, 1995, and the related Letter of Transmittal (which together constitute the "Offer"). For your information and for forwarding to your clients for whom you hold Shares registered in your name or in the name of your nominee, we are enclosing the following documents: 1. Offer to Purchase, dated December 27, 1995; 2. Letter of Transmittal for your use to tender Shares and for the information of your clients, together with Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 providing information relating to backup federal income tax withholding; 3. Notice of Guaranteed Delivery for Shares to be used to accept the Offer if certificates for Shares ("Share Certificates") and all other required documents are not immediately available or cannot be delivered to 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; 4. A form of 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; 5. Solicitation/Recommendation Statement on Schedule 14D-9 issued by the Company; and 6. Return envelope addressed to National City Bank, the Depositary. YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JANUARY 25, 1996, UNLESS THE OFFER IS EXTENDED. In order to accept the Offer, a duly executed and properly completed Letter of Transmittal and any required signature guarantees, or an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry transfer of Shares, and any other required documents should be sent to the Depositary and either Share Certificates representing tendered Shares should be delivered to the Depositary, or Shares should be tendered by book-entry transfer into the Depositary's account maintained at one of the Book-Entry Transfer Facilities (as described in the Offer to Purchase), all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. If holders of Shares wish to tender their Shares, but it is impracticable for them to forward their Share Certificates or other required documents on or prior to the Expiration Date or to comply with the book-entry transfer procedures on a timely basis, a tender may be effected by following the guaranteed delivery procedures specified in Section 3 of the Offer to Purchase. The Purchaser will not pay any fees or commissions to any broker or dealer or other person (other than the Dealer Manager) for soliciting tenders of Shares pursuant to the Offer. The Purchaser will, however, upon request, reimburse you for reasonable expenses incurred by you in forwarding any of the enclosed materials to your clients. The Purchaser will pay or cause to be paid any stock transfer taxes payable on the transfer of the 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, and additional copies of the enclosed materials may be obtained from, the Information Agent or the undersigned at their respective addresses and telephone numbers set forth on the back cover of the Offer to Purchase. Very truly yours, SALOMON BROTHERS INC NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS AN AGENT OF THE PURCHASER, THE COMPANY, ANY AFFILIATE OF THE COMPANY, M.A. HANNA COMPANY, THE DEALER MANAGER, THE INFORMATION AGENT OR THE DEPOSITARY, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE STATEMENTS CONTAINED THEREIN. 2 EX-99.A-4 5 EXHIBIT 99.A.4 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS) OF CIMCO, INC. BY HANWEST, INC. A WHOLLY OWNED SUBSIDIARY OF M.A. HANNA COMPANY AT $10.50 NET PER SHARE THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JANUARY 25, 1996, UNLESS THE OFFER IS EXTENDED. To Our Clients: Enclosed for your consideration are the Offer to Purchase, dated December 27, 1995 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer") and other materials relating to the offer by Hanwest, Inc., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of M.A. Hanna Company, a Delaware corporation, to purchase all outstanding shares of common stock, par value $0.01 per share, including the associated Rights (as defined in the Offer to Purchase) (collectively, the "Shares"), of CIMCO, Inc., a Delaware corporation (the "Company"), at $10.50 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer. We are (or our nominee is) 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 ACCOMPANYING THIS LETTER 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 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 directed to the following: 1. The tender price is $10.50 per Share, net to the seller in cash. 2. The Offer is being made for all outstanding Shares. 3. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on Thursday, January 25, 1996, unless the Offer is extended. 4. The Board of Directors of the Company unanimously has determined that the Offer and the Merger (as defined in the Offer to Purchase) are fair to, and in the best interests of, the stockholders of the Company, has approved the Offer and the Merger and recommends that the Company's stockholders accept the Offer and tender their Shares pursuant to the Offer. 5. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn immediately prior to the Expiration Date (as defined in the Offer to Purchase) that number of Shares representing at least a majority of the total number of Shares then outstanding on a fully diluted basis. 6. Tendering stockholders will not be obligated to pay brokerage fees or commissions or, except as otherwise provided in Instruction 6 of the Letter of Transmittal, any stock transfer taxes on the purchase of the Shares by the Purchaser pursuant to the Offer. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares residing in any jurisdiction in which the making of the Offer or acceptance thereof would not be in compliance with the laws of such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by Salomon Brothers Inc, the Dealer Manager of the Offer, or one or more registered brokers or dealers licensed under the laws of such jurisdictions. If you wish to have us tender any or all of the Shares held by us for your account, please so instruct us by completing, executing and returning to us the instruction form set forth below. Please forward your instructions to us in ample time to permit us to submit a tender on your behalf prior to the Expiration Date. IF YOU AUTHORIZE THE TENDER OF YOUR SHARES, ALL SUCH SHARES WILL BE TENDERED UNLESS OTHERWISE SPECIFIED ON THE INSTRUCTION FORM SET FORTH BELOW. 2 INSTRUCTIONS WITH RESPECT TO OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS) OF CIMCO, INC. BY HANWEST, INC. The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated December 27, 1995, and the related Letter of Transmittal, in connection with the offer by Hanwest, Inc., a Delaware corporation and a wholly owned subsidiary of M.A. Hanna Company, a Delaware corporation, to purchase for cash all outstanding shares of common stock, par value $0.01 per share, including associated Rights (collectively, the "Shares"), of CIMCO, Inc., a Delaware corporation. This will instruct you to tender the number of Shares indicated below (or if no number is indicated below, all Shares) that are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. Dated: ________________, 199___ NUMBER OF SHARES TO BE TENDERED: ______________ SHARES* ______________________________________________________ ______________________________________________________ SIGNATURE(S) ______________________________________________________ PLEASE PRINT NAME(S) ______________________________________________________ ______________________________________________________ PLEASE PRINT ADDRESS(ES) ______________________________________________________ AREA CODE AND TELEPHONE NUMBER(S) ______________________________________________________ TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER(S) - ------------------------ * I (we) understand that if I (we) sign this instruction form without indicating a lesser number of Shares in the space above, all Shares held by you for my (our) account will be tendered. 3 EX-99.A-5 6 EXHIBIT 99.A.5 NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS) OF CIMCO, INC. (NOT TO BE USED FOR SIGNATURE GUARANTEES) This Notice of Guaranteed Delivery, or one substantially equivalent to this form, must be used to accept the Offer (as defined below) if the certificates representing shares of common stock, par value $0.01 per share, of CIMCO, Inc., including the associated Rights (as defined in the Offer to Purchase) (collectively, the "Shares"), are not immediately available or time will not permit all required documents to reach National City Bank (the "Depositary") on or prior to the Expiration Date (as defined in the Offer to Purchase), or the procedures for delivery by book-entry transfer cannot be completed on a timely basis. This Notice of Guaranteed Delivery may be delivered by hand or facsimile transmission or mail to the Depositary. See Section 3 of the Offer to Purchase. THE DEPOSITARY FOR THE OFFER IS: NATIONAL CITY BANK BY MAIL: BY FACSIMILE TRANSMISSION: BY HAND OR OVERNIGHT COURIER: National City Bank, Depositary (216) 476-8367 National City Bank, Depositary P. O. Box 92301 Corporate Trust Operations Cleveland, Ohio 44193-0900 Third Floor - North Annex (800) 622-6757 (SHAREHOLDER 4100 West 150th Street QUESTIONS) Cleveland, Ohio 44135-1385 CONFIRM FACSIMILE BY TELEPHONE: (216) 476-8049
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This Notice of Guaranteed Delivery 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. Ladies and Gentlemen: The undersigned hereby tenders to Hanwest, Inc. (the "Purchaser"), a Delaware corporation and a wholly owned subsidiary of M.A. Hanna Company, a Delaware corporation, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated December 27, 1995 (the "Offer to Purchase"), and the related Letter of Transmittal (which together constitute the "Offer"), receipt of which is hereby acknowledged, the number of Shares indicated below pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Share Certificate Nos. (if available): Name(s) of Record Holder(s): - ------------------------------------------ ------------------------------------------ - ------------------------------------------ ------------------------------------------ If Shares will be delivered by book-entry PLEASE TYPE OR PRINT transfer, check the box: Address(es) ------------------------------ / / The Depository Trust Company ------------------------------------------ / / Midwest Securities Trust Company ZIP CODE / / Philadelphia Depository Trust Company Area Code and Telephone Number: Account Number ------------------------- ------------------------------------------ Dated: ---------------- , 199 --- ------------------------------------------ ------------------------------------------ ------------------------------------------ SIGNATURE(S)
THE GUARANTEE BELOW MUST BE COMPLETED GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a bank, broker or other institution that is a member of a Medallion Signature Guaranty Program (each, an "Eligible Institution"), hereby guarantees to deliver to the Depositary at one of its addresses set forth above either the certificates representing all tendered Shares, in proper form for transfer, or timely confirmation of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company, Midwest Securities Trust Company or Philadelphia Depository Trust Company together with a properly completed and duly executed Letter of Transmittal (or manually signed facsimile thereof), with any required signature guarantees, or, in the case of book-entry transfer of Shares, an Agent's Message (as defined in the Offer to Purchase), and any other documents required by the Letter of Transmittal within three National Association of Securities Dealers, Inc. Automated Quotation System trading days after the date of execution of this Notice of Guaranteed Delivery. 2 The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal (unless an Agent's Message is utilized) and certificates for Shares to the Depositary within the time period shown herein. Failure to do so could result in a financial loss to such Eligible Institution. Name of Firm: ----------------------------- ------------------------------------------- Address: ---------------------------------- AUTHORIZED SIGNATURE Name: ------------------------------------ - ------------------------------------------ PLEASE TYPE OR PRINT ZIP CODE Title:------------------------------------- Area Code and Dated: --------------------------- , 199 --- Tel. No.: ----------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS FORM. CERTIFICATES ARE TO BE DELIVERED WITH THE LETTER OF TRANSMITTAL. 3 EX-99.A-6 7 EXHIBIT 99.A.6 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE 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. - -------------------------------------------------------------------------------- FOR THIS TYPE OF ACCOUNT: GIVE THE SOCIAL SECURITY NUMBER OF -- - -------------------------------------------------------------------------------- 1. An individual's account The individual 2. Two or more individuals (joint The actual owner of the account or, account) 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(1) account (grantor is also trustee) b. So-called trust account that is not The actual owner(1) a legal or valid trust under State Law 5. Sole proprietorship account The owner(3) - -------------------------------------------------------------------------------- FOR THIS TYPE OF ACCOUNT: GIVE THE EMPLOYER IDENTIFICATION NUMBER OF -- - -------------------------------------------------------------------------------- 6. A valid trust, estate, or pension The legal entity (Do not furnish the trust identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title)(4) 7. Corporate account The corporation 8. Association, club, religious, The organization charitable, educational or other tax-exempt organization 9. Partnership account The partnership 10. A broker or registered nominee The broker or nominee 11. 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 the name of the owner. (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, the number will be considered to be that of the first name listed. 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 Number 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). (3) The United States or any 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. 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) An trust exempt from tax under Section 664 or described in section 4947. Payments of dividends generally not subject to 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 partner. - Payments made by certain foreign organizations. Payments of interest generally not subject to backup withholding include the following: - Payments of interest on obligations issued by individuals. NOTE: YOU MAY BE SUBJECT TO BACKUP WITHHOLDING IF THIS INTEREST IS $600 OR MORE AND IS PAID IN THE COURSE OF THE 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 by 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, 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 qualified 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 EXHIBIT 99.A.7 NEWS RELEASE For Immediate Release Investor contact: Barb Gould 216/589-4085 Media contact: Andy Opila 216/589-4018 CIMCO, Inc. contact: Tammy Trenkmann 714/546-4460 Pondel Parsons & Wilkinson contact: Cecilia Wilkinson 310/207-9300 M.A. HANNA REACHES DEFINITIVE AGREEMENT TO ACQUIRE CIMCO CLEVELAND (December 20, 1995) -- M.A. Hanna Company (NYSE/CHX:MAH), an international specialty chemicals company, and CIMCO, Inc. (NASD:CIMC) jointly announced that they have entered into a definitive merger agreement whereby M.A. Hanna will acquire for $10.50 per share in cash all of the outstanding capital stock of CIMCO, a producer of thermoplastic compounds and plastic components. M.A. Hanna will promptly commence a tender offer to acquire all outstanding shares of CIMCO common stock for $10.50 per share in cash. The tender offer will be conditioned upon governmental approvals, among other clearances, and the acquisition of a majority of the CIMCO commmon shares by M.A. Hanna. Russell T. Gilbert, president and chief executive officer of CIMCO and that company's largest stockholder, agreed to tender his 539,734 shares to M.A. Hanna pursuant to the tender offer. The merger agreement provides that following the consummation of the offer the remaining CIMCO common shares will be acquired for $10.50 per share in cash through a merger in which CIMCO will become a business unit of M.A. Hanna. In connection with its approval of the definitive agreement, CIMCO amended its share purchase rights to exclude the M.A. Hanna transaction. Gilbert said, "My objective and that of the CIMCO management team and board of directors has been to maximize shareholder value. This transaction fulfills that objective, and we're pleased that Hanna has recognized our achievements." Consistent with its strategy as an intermediary between the polymer producer and the end product manufacturer, M.A. Hanna intends to sell CIMCO's plastics components business and retain its plastics compounding operations. CIMCO's plastics compounding businesses, which operate as Compounding Technology, Inc. (CTi), are located in Singapore; Corona, Calif.; and Charlotte, N.C. accounting for 31 million pounds of capacity. Another facility is under construction in France. "The acquisition of CTi helps us on three fronts to have a more balanced market profile. First, we will grow out international business. CTi provides Hanna with an excellent base for growth in Asia," said Martin D. Walker, M.A. Hanna chairman and chief executive officer. "Second, CTi's strong engineering plastics compounding business will add breadth to our specialty compounding portfolio throughout the world," Walker continued. "Third, we are able to build a stronger position in the electrical and electronics and business machines markets." CTi, formed in 1980, had sales of $44 million in fiscal 1995 and has 95 associates. Through the first six months of fiscal 1996, CTi's sales have nearly doubled and operating profits are running five times greater than the same period in fiscal 1995. The company develops and produces engineering plastic compounds with an emphasis on polycarbonate resins, which are used in the electrical/electronics, business machine and appliance markets because of the material's toughness, clarity and heat resistance. CIMCO, Inc., with headquarters in Costa Mesa, Calif., reported sales of $83 million for fiscal 1995. CIMCO was founded in 1959. M.A. Hanna Company is a leading international specialty chemicals company. It's primary businesses are plastics and rubber compounding, color and additive concentrates and distribution of plastic resins and engineered shapes. EX-99.A-8 9 EXHIBIT 99.A.8 THIS ANNOUNCEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN OFFER TO SELL SHARES (AND ASSOCIATED RIGHTS). THE OFFER IS MADE SOLELY BY THE OFFER TO PURCHASE DATED DECEMBER 27, 1995 AND THE RELATED LETTER OF TRANSMITTAL AND IS NOT BEING MADE TO (NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF SHARES RESIDING IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. IN ANY JURISDICTION WHERE THE SECURITIES, BLUE SKY OR OTHER LAWS REQUIRE THE OFFER TO BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER SHALL BE DEEMED TO BE MADE ON BEHALF OF THE PURCHASER BY SALOMON BROTHERS INC, THE DEALER MANAGER OF THE OFFER, OR ONE OR MORE REGISTERED BROKERS OR DEALERS LICENSED UNDER THE LAWS OF SUCH JURISDICTIONS. NOTICE OF OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED RIGHTS) OF CIMCO, INC. BY HANWEST, INC. A WHOLLY OWNED SUBSIDIARY OF M.A. HANNA COMPANY AT $10.50 NET PER SHARE Hanwest, Inc., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of M.A. Hanna Company, a Delaware corporation (the "Parent"), is offering to purchase all outstanding shares of common stock, par value $0.01 per share, including the associated Rights (collectively, the "Shares"), of CIMCO, Inc., a Delaware corporation (the "Company"), at $10.50 per Share, net to the seller in cash, without interest, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated December 27, 1995 (the "Offer to Purchase") and in the related Letter of Transmittal (which together constitute the "Offer"). THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON THURSDAY, JANUARY 25, 1996, UNLESS THE OFFER IS EXTENDED. THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY HAS DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF THE COMPANY, HAS APPROVED THE OFFER AND THE MERGER AND RECOMMENDS THAT THE COMPANY'S STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN IMMEDIATELY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE) THAT NUMBER OF SHARES REPRESENTING AT LEAST A MAJORITY OF THE TOTAL NUMBER OF SHARES THEN OUTSTANDING ON A FULLY DILUTED BASIS (THE "MINIMUM CONDITION"). The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of December 19, 1995 (the "Merger Agreement"), among the Parent, the Purchaser and the Company. The Merger Agreement provides that, among other things, the Purchaser will make the Offer and that, following 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 relevant provisions of the Delaware General Corporation Law ("DGCL"), the Purchaser will be merged with and into the Company (the "Merger"). Following consummation of the Merger, the Company will continue as the surviving corporation and will be a wholly owned subsidiary of the Parent. At the effective time of the Merger (the "Effective Time"), each Share issued and outstanding immediately prior to the Effective Time (other than Shares held in the treasury of the Company or by the Parent or any wholly owned subsidiary of the Parent and other than Shares held by stockholders exercising appraisal rights pursuant to Section 262 of the DGCL) will be cancelled and automatically converted into the right to receive cash without interest in an amount equal to the price per share paid pursuant to the Offer. Pursuant to the Company's Certificate of Incorporation and the DGCL, the affirmative vote of holders of a majority of the outstanding Shares is required to approve and adopt the Merger Agreement and the Merger. Concurrently with the execution of the Merger Agreement, the Purchaser entered into an agreement (the "Stockholder Tender Agreement") with Russell T. Gilbert, the President and Chief Executive Officer of the Company (the "Seller Stockholder"), who owns 539,734 Shares (representing approximately 16.6% of the Shares outstanding on December 18, 1995 on a fully diluted basis). Pursuant to the Stockholder Tender Agreement, the Seller Stockholder has agreed to tender and sell (and not withdraw) all of the Shares owned by such Seller Stockholder pursuant to and in accordance with the terms of the Offer. The Stockholder Tender Agreement also provides that the Purchaser is entitled to receive a fee from the Seller Stockholder, under certain circumstances, in connection with certain subsequent transactions involving the Shares. The Offer is subject to certain conditions set forth in the Offer to Purchase. If any such condition is not satisfied, the Purchaser may (i) terminate the Offer and return all tendered Shares to tendering stockholders, (ii) extend the Offer and, subject to withdrawal rights as set forth below, retain all such Shares until the expiration of the Offer as so extended, (iii) waive such condition and, subject to any requirement to extend the time during which the Offer is open, purchase all Shares validly tendered prior to the Expiration Date and not withdrawn or (iv) delay acceptance for payment of or payment for Shares, subject to applicable law, until satisfaction or waiver of the conditions to the Offer. The Purchaser expressly reserves the right, in its sole discretion, at any time or from time to time, to extend the period of time during which the Offer is open by giving oral or written notice of such extension to National City Bank (the "Depositary"). Any such extension will be followed as promptly as practicable by public announcement thereof no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. For purposes of the Offer, the Purchaser shall be deemed to have accepted for payment (and thereby purchased) tendered Shares when, as and if the Purchaser gives oral or written notice to the Depositary of its acceptance of the tenders of such Shares. Payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of certificates for such Shares (or a confirmation of a book-entry transfer of such Shares into the Depositary's account at a Book-Entry Transfer Facility (as defined in the Offer to Purchase)), a properly completed and duly executed Letter of Transmittal (or facsimile thereof) (unless, in the case of book-entry transfer, an Agent's Message (as defined in the Offer to Purchase) is utilized) and any other documents required by the Letter of Transmittal or, in case of book-entry transfer, an Agent's Message. Tenders of Shares made pursuant to the Offer may be withdrawn at any time prior to the Expiration Date. Thereafter, such tenders are irrevocable, except that they may be withdrawn at any time after February 24, 1996 unless theretofore accepted for payment as provided in the Offer to Purchase. 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 in the Offer to Purchase and must specify the name of the person who tendered the Shares to be withdrawn and the number of Shares to be withdrawn and the name of the registered holders of the Shares if different from the person who tendered the Shares. If the Shares to be withdrawn have been delivered to the Depositary, a signed notice of withdrawal with (except in the case of Shares tendered by an Eligible Institution (as defined in the Offer to Purchase)) signatures guaranteed by an Eligible Institution must be submitted prior to the release of such Shares. In addition, such notice must specify, in the case of Shares tendered by delivery of certificates, the name of the registered holder (if different from that of the tendering stockholder) and the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn or, in the case of Shares tendered by book-entry transfer, the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares. The information required to be disclosed by paragraph (e)(1)(vii) of Rule 14d-6 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended, is contained in the Offer to Purchase and is incorporated herein by reference. The Company has agreed to provide the Purchaser with the Company's stockholder 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 and will be furnished to brokers, banks and similar persons whose names, or the names of whose nominees, appear on the stockholder list or, if applicable, who are listed as participants in a clearing agency's security position listing 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 CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. Requests for copies of the Offer to Purchase, 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 the Purchaser's expense. The Purchaser will not pay any fees or commissions to any broker or dealer or any other person (other than the Dealer Manager) for soliciting tenders of Shares pursuant to the Offer. THE INFORMATION AGENT FOR THE OFFER IS: [GEORGESON & COMPANY INC. LOGO] Wall Street Plaza New York, New York 10005 (212) 509-6240 (Collect) (800) 223-2064 (Toll Free) Banks and Brokers call (212) 440-9800 THE DEALER MANAGER FOR THE OFFER IS: SALOMON BROTHERS INC Seven World Trade Center New York, New York 10048 (312) 876-8478 (Call Collect) December 27, 1995 EX-99.C-1 10 EXHIBIT 99.C.1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- AGREEMENT AND PLAN OF MERGER AMONG CIMCO, INC., M.A. HANNA COMPANY AND HANWEST, INC. DATED AS OF DECEMBER 19, 1995 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- AGREEMENT AND PLAN OF MERGER TABLE OF CONTENTS (Not Part of the Agreement) Page ---- ARTICLE I -- THE TENDER OFFER. . . . . . . . . . . . . . . . . . . . . . . . 1 1.01 The Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1.02 Company Action . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.03 Board of Directors and Committees; Section 14(f) . . . . . . . . . 6 ARTICLE II -- THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2.01 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2.02 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2.03 Certificate of Incorporation . . . . . . . . . . . . . . . . . . . 7 2.04 By-Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 2.05 Directors and Officers . . . . . . . . . . . . . . . . . . . . . . 8 2.06 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 8 2.07 Stockholders' Meeting. . . . . . . . . . . . . . . . . . . . . . . 8 ARTICLE III -- CONVERSION OR CANCELLATION OF SHARES; STOCK RIGHTS. . . . . . 10 3.01 Conversion or Cancellation of Shares . . . . . . . . . . . . . . . 10 3.02 Exchange of Certificates; Paying Agent . . . . . . . . . . . . . . 10 3.03 Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . . . 12 3.04 Transfer of Shares After the Effective Time. . . . . . . . . . . . 12 3.05 Company Stock Rights . . . . . . . . . . . . . . . . . . . . . . . 13 ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . . . . . . 13 4.01 Organization; Qualification. . . . . . . . . . . . . . . . . . . . 13 4.02 Company Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 13 4.03 The Company's Capitalization . . . . . . . . . . . . . . . . . . . 14 4.04 Company Equity Investments . . . . . . . . . . . . . . . . . . . . 15 4.05 Authority Relative to this Agreement . . . . . . . . . . . . . . . 15 4.06 Consents and Approvals; No Violation . . . . . . . . . . . . . . . 16 4.07 SEC Reports; Financial Statements. . . . . . . . . . . . . . . . . 17 4.08 Proxy Statement; Offer Documents . . . . . . . . . . . . . . . . . 17 4.09 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . 18 4.10 Absence of Certain Changes or Events . . . . . . . . . . . . . . . 18 4.11 Title, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 4.12 Patents, Trademarks, Etc.. . . . . . . . . . . . . . . . . . . . . 19 4.13 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 4.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 20 4.15 Legal Proceedings, Etc.. . . . . . . . . . . . . . . . . . . . . . 21 4.16 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 4.17 Material Agreements. . . . . . . . . . . . . . . . . . . . . . . . 22 4.18 Compliance with Law. . . . . . . . . . . . . . . . . . . . . . . . 23 4.19 Insider Interests. . . . . . . . . . . . . . . . . . . . . . . . . 23 4.20 Officers, Directors and Employees. . . . . . . . . . . . . . . . . 23 4.21 Environmental Protection . . . . . . . . . . . . . . . . . . . . . 23 - i - Page ---- 4.22 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . . . 24 4.23 Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 24 4.24 Respiratory Medical Products Sale. . . . . . . . . . . . . . . . . 25 4.25 No Other Representations or Warranties . . . . . . . . . . . . . . 25 ARTICLE V -- REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . 25 5.01 Corporation Organization . . . . . . . . . . . . . . . . . . . . . 25 5.02 Authorized Capital . . . . . . . . . . . . . . . . . . . . . . . . 26 5.03 Corporation Authority. . . . . . . . . . . . . . . . . . . . . . . 26 5.04 No Prior Activities. . . . . . . . . . . . . . . . . . . . . . . . 26 5.05 No Financing Contingency . . . . . . . . . . . . . . . . . . . . . 26 5.06 Governmental Filings; No Violations. . . . . . . . . . . . . . . . 27 5.07 Brokers and Finders. . . . . . . . . . . . . . . . . . . . . . . . 27 5.08 Offer Documents; Proxy Statement; Other Information. . . . . . . . 27 5.09 No Other Representations or Warranties . . . . . . . . . . . . . . 28 ARTICLE VI -- COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . . . 28 6.01 Conduct of Business of the Company . . . . . . . . . . . . . . . . 28 6.02 Notification of Certain Matters. . . . . . . . . . . . . . . . . . 30 6.03 Access to Information. . . . . . . . . . . . . . . . . . . . . . . 31 6.04 Further Information. . . . . . . . . . . . . . . . . . . . . . . . 32 6.05 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 32 6.06 Interim Financial Statements . . . . . . . . . . . . . . . . . . . 32 6.07 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . 32 6.08 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 6.09 Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 6.10 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . 34 6.11 Indemnity; D&O Insurance . . . . . . . . . . . . . . . . . . . . . 34 6.12 Other Potential Bidders. . . . . . . . . . . . . . . . . . . . . . 36 ARTICLE VII -- CONDITIONS TO THE MERGER. . . . . . . . . . . . . . . . . . . 38 7.01 Conditions to Each Party's Obligation to Effect the Merger . . . . 38 7.02 Conditions to the Obligations of the Parent and the Purchaser to Effect the Merger. . . . . . . . . . . . . . . . . . . . . . . . . 38 7.03 Conditions to the Obligations of the Company to Effect the Merger. 39 ARTICLE VIII -- CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . 39 8.01 Time and Place . . . . . . . . . . . . . . . . . . . . . . . . . . 39 8.02 Filings at the Closing . . . . . . . . . . . . . . . . . . . . . . 39 ARTICLE IX -- TERMINATION; AMENDMENT; WAIVER . . . . . . . . . . . . . . . . 39 9.01 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 9.02 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . 41 9.03 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 42 - ii - Page ---- ARTICLE X -- MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 43 10.01 Survival of Representations, Warranties, Covenants and Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . 43 10.02 Amendment and Modification. . . . . . . . . . . . . . . . . . 43 10.03 Waiver of Compliance; Consents. . . . . . . . . . . . . . . . 43 10.04 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 44 10.05 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 44 10.06 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 10.07 Entire Agreement, Assignment Etc. . . . . . . . . . . . . . . 45 10.08 Validity. . . . . . . . . . . . . . . . . . . . . . . . . . . 45 10.09 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 45 10.10 Specific Performance. . . . . . . . . . . . . . . . . . . . . 45 ANNEX A Certain Conditions to Offer ANNEX B Form of Stockholder Tender Agreement - iii - DEFINITIONS Page ---- Acquiring Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Bridge Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . 7 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Company Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Company Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 Company Disclosure Letter. . . . . . . . . . . . . . . . . . . . . . . . . . .16 Company Right. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Company Rights Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Confidentiality Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . .32 Constituent Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Delaware Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . 7 Department of Justice. . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Dissenting Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Dissenting Stockholders. . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Distribution Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Environmental Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Equity Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20 Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 FTC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Funds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16 Indemnified Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34 Independent Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 Line of Credit Note. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . . . . . .16 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Merger Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Minimum Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 MMCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 Offer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Offer Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Options. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Other Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 PaineWebber. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 - iv - Page ---- Parent Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Parent Disclosure Letter . . . . . . . . . . . . . . . . . . . . . . . . . . .27 Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 Pertinent Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . .24 Preferred Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 Real Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 Redelivering Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 Related Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Revolving Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28 Schedule 14D-9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 SEC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Series A Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31 Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Stock Option Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Stockholder Tender Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 4 Stockholders' Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22 Third Party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 Third Party Acquisition. . . . . . . . . . . . . . . . . . . . . . . . . . . .41 Transfer Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 - v - AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"), dated as of December 19, 1995, among CIMCO, Inc., a Delaware corporation (the "Company"), Hanwest, Inc., a Delaware corporation (the "Purchaser"), and M.A. Hanna Company, a Delaware corporation (the "Parent"). WHEREAS, the Board of Directors of the Company has determined that it is in the best interests of its stockholders for the Purchaser to acquire the Company upon the terms and subject to the conditions set forth herein; WHEREAS, the Company, the Parent and the Purchaser desire to make certain representations, warranties and agreements in connection with this Agreement; WHEREAS, in furtherance of such acquisition, the Parent proposes to cause the Purchaser to make the Offer (as defined in Section 1.01) to purchase all of the issued and outstanding shares of common stock of the Company, par value $0.01 per share (the "Common Stock"), upon the terms and subject to the conditions of this Agreement, and the Board of Directors of the Company has approved the Offer and determined to recommend that the Company's stockholders accept the Offer; and WHEREAS, to complete such acquisition, the respective Boards of Directors of the Parent, the Purchaser and the Company, and the Parent acting as the sole stockholder of the Purchaser, have approved the Offer and the merger of the Purchaser with and into the Company upon the terms and subject to the conditions of this Agreement, whereby each issued and outstanding share of Common Stock not owned directly or indirectly by the Parent or the Company, except shares of Common Stock held by persons who object to such merger and demand payment of the value of their shares of Common Stock, will be converted into the right to receive in cash the same price per share of Common Stock paid pursuant to the Offer; NOW, THEREFORE, in consideration of the representations, warranties and agreements herein contained, and subject to the terms and conditions herein contained, the parties hereto hereby agree as follows: ARTICLE I THE TENDER OFFER 1.01 THE OFFER. (a) Provided that this Agreement shall not have been terminated in accordance with Article IX and none of - 2 - the events or conditions set forth in Annex A shall have occurred and be existing, then, not later than the first business day after execution of this Agreement, the Parent shall issue a public announcement of the execution of this Agreement, and not later than the fifth business day after the date of the public announcement of the execution of this Agreement, the Purchaser shall, subject to the provisions of this Agreement, commence a tender offer (the "Offer") for all of the outstanding shares of Common Stock, together with the associated rights issued pursuant to the Rights Agreement dated as of December 5, 1992, as amended (the "Company Rights Agreement"), between the Company and First Interstate Bank of California, as Rights Agent (collectively, the "Shares") at a price of $10.50 per Share, net to the seller in cash. The Purchaser shall accept for payment and pay for all Shares which have been validly tendered and not withdrawn pursuant to the Offer at the earliest time following expiration of the Offer that all conditions to the Offer set forth in Annex A hereto shall have been satisfied or waived by the Purchaser. The obligation of the Purchaser to accept for payment, purchase and pay for Shares tendered pursuant to the Offer shall be subject to the conditions set forth in Annex A hereto, including the condition that a number of Shares representing not less than a majority of the Shares on a fully diluted basis shall have been validly tendered and not withdrawn prior to the expiration date of the Offer (the "Minimum Condition"). Solely for purposes of determining whether the Minimum Condition has been satisfied, any Shares owned by Parent or Purchaser shall be deemed to have been validly tendered and not withdrawn pursuant to the Offer. The Purchaser expressly reserves the right to increase the price per Share payable in the Offer or to make any other changes in the terms and conditions of the Offer; PROVIDED, HOWEVER, that, unless previously approved by the Company in writing, no change may be made which decreases the price per Share payable in the Offer, which changes the form of consideration to be paid in the Offer, which reduces the maximum number of Shares to be purchased in the Offer, which imposes conditions to the Offer in addition to those set forth in Annex A hereto, which broadens the scope of such conditions, which increases the minimum number of Shares which must be tendered as a condition to the acceptance for payment and payment for shares in the Offer, which waives the Minimum Condition if such waiver would result in less than a majority of Shares being accepted for payment or paid for pursuant to the Offer, which, except as hereinafter set forth in this Subsection 1.01(a), extends the period of the Offer beyond 45 days after the date of commencement of the Offer, or which otherwise amends the terms of the Offer (including any of the conditions set forth in Annex A) in a manner that is materially adverse to holders of Shares. Notwithstanding the foregoing, the Purchaser may, without the consent of the Company, (i) extend the Offer if, at the scheduled expiration date of the Offer, any of the conditions to the Purchaser's obligation to purchase Shares shall not be satisfied until such time as such conditions are satisfied, or (ii) extend the Offer for a period of not more than 15 business days beyond the latest expiration date that would otherwise be - 3 - permitted under clause (i) of this sentence if, on the date of such extension, more than two-thirds but less than 90 percent of Shares have been validly tendered and not properly withdrawn pursuant to the Offer. It is agreed that the conditions set forth in Annex A are for the sole benefit of the Parent and the Purchaser and may be asserted by the Parent or the Purchaser regardless of the circumstances giving rise to any such condition (including any action or inaction by the Purchaser, unless any such action or inaction by the Purchaser would constitute a breach by the Purchaser of any of its covenants under this Agreement) or may be waived by the Parent or the Purchaser, in whole or in part at any time and from time to time, in its sole discretion. The failure by the Parent or the Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. Any determination by the Parent or the Purchaser with respect to any of the foregoing conditions (including, without limitation, the satisfaction of such conditions) shall be final and binding on the parties. The Company agrees that no Shares held by the Company will be tendered in the Offer. (b) As promptly as reasonably practicable following execution of this Agreement, the Parent and the Purchaser shall file with the Securities and Exchange Commission (the "SEC") a Tender Offer Statement on Schedule 14D-1 with respect to the Offer, which shall contain an offer to purchase and related letter of transmittal and summary advertisement (such Schedule 14D-1 and the documents therein pursuant to which the Offer will be made, together with any supplements or amendments thereto, the "Offer Documents"). The Offer Documents shall comply as to form in all material respects with the requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder and, on the date filed with the SEC and on the date first published, sent or given to the holders of Shares, shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation is made by the Parent or the Purchaser with respect to information supplied by the Company in writing specifically for inclusion in the Offer Documents. Each of the Parent, the Purchaser and the Company agrees promptly to correct any information supplied by it specifically for inclusion in the Offer Documents if and to the extent that such information shall have become false or misleading in any material respect, and each of the Parent and the Purchaser further agrees to take all steps necessary to cause the Offer Documents as so corrected to be filed with the SEC and to be disseminated to holders of Shares, in each case as and to the extent required by applicable Federal securities laws. The Parent and the Purchaser agree to provide the Company and its counsel in writing with any comments the Parent, the Purchaser or their counsel may receive from the SEC or its Staff with respect to the Offer Documents - 4 - promptly after the receipt of such comments. The Company and its counsel shall be given a reasonable opportunity to review and comment upon the Offer Documents and all amendments and supplements thereto prior to their filing with the SEC or dissemination to the stockholders of the Company. 1.02 COMPANY ACTION. (a) The Company hereby approves of and consents to the Offer and represents and warrants that the Board of Directors of the Company (the "Board"), at a meeting duly called and held, has unanimously adopted resolutions (i) determining that this Agreement and the transactions contemplated hereby, including the Offer and the Merger (as defined in Section 2.01), are fair to, and in the best interests of, the stockholders of the Company, (ii) approving and adopting this Agreement and the transactions contemplated hereby, including the Offer, the Merger, and the Stockholder Tender Agreement of even date between the Purchaser and a certain stockholder of the Company (the "Stockholder Tender Agreement") and the transactions contemplated thereby, in all respects and that such approval constitutes approval of the Offer, this Agreement, the Merger and the Stockholder Tender Agreement, and the transactions contemplated hereby and thereby, for purposes of Section 203 of the General Corporation Law of the State of Delaware (the "DGCL") and similar provisions of any other similar state statutes that might be deemed applicable to the transactions contemplated hereby, and Article EIGHTH of the Certificate of Incorporation (as defined in Section 2.03 of this Agreement), and (iii) recommending that the stockholders of the Company accept the Offer, tender their Shares thereunder to the Purchaser and approve and adopt this Agreement and the Merger; PROVIDED, HOWEVER, that such recommendation may be withdrawn, modified or amended to the extent that the Board, by a majority vote, determines in its good faith judgment, based as to legal matters on the advice of legal counsel, that the Board is required to do so for the proper discharge of its fiduciary duties. (b) The Company has been advised by each of its executive officers who as of the date hereof is aware of the transactions contemplated hereby and each of its Directors, that each such person intends to tender pursuant to the Offer all Shares owned by such person. The Company represents that the Board has received the opinion of PaineWebber Incorporated ("PaineWebber") that the proposed consideration to be received by holders of Shares pursuant to the Offer and the Merger is fair to such holders from a financial point of view. (c) The Company shall use its best efforts to file with the SEC a Solicitation/ Recommendation Statement on Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from time to time, the "Schedule 14D-9") on the date the Offer Documents are filed with the SEC, and in any event shall file with the SEC the Schedule 14D-9 not later than the date required pursuant to the Exchange Act and the applicable rules and regulations promulgated thereunder, containing the recommendation - 5 - described in Section 1.02(a) and shall mail the Schedule 14D-9 to the stockholders of the Company. The Schedule 14D-9 shall comply in all material respects with the requirements of the Exchange Act and the rules and regulations promulgated thereunder on the date filed with the SEC and on the date first published, sent or given to the Company's stockholders, and shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except that no representation is made by the Company with respect to information supplied in writing by the Parent or the Purchaser specifically for inclusion or incorporation by reference in the Schedule 14D-9. Each of the Company, the Parent and the Purchaser agrees promptly to correct any information provided by it for use in the Schedule 14D-9 if and to the extent that such information shall have become false or misleading in any material respect, and the Company further agrees to take all steps necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule 14D-9 as so amended or supplemented to be filed with the SEC and disseminated to the Company's stockholders, in each case as and to the extent required by applicable Federal securities laws. The Parent and its counsel shall be given a reasonable opportunity to review and comment upon the Schedule 14D-9 and all amendments and supplements thereto prior to their filing with the SEC or dissemination to stockholders of the Company. (d) In connection with the Offer, the Company will, and will cause its transfer agent (the "Transfer Agent") to, furnish promptly to the Parent and the Purchaser mailing labels containing the names and addresses of all record holders of Shares as of a recent date and of those persons becoming record holders after such date, together with copies of all lists of stockholders and security position listing and computer files and all other information in the Company's possession and control regarding the beneficial ownership of Shares. The Company shall promptly furnish the Parent and the Purchaser with such additional information (including, but not limited to, updated lists of holders of Shares and their addresses, mailing labels and security position listings and computer files) and such other assistance as the Parent and the Purchaser or their agents may reasonably request in communicating the Offer to the record and beneficial holders of Shares. Subject to the requirements of law, and except for such steps as are necessary or advisable to disseminate the Offer and any other documents necessary to consummate the Merger and to solicit tenders of Shares and the approval of the Merger, Parent and Purchaser and each of their affiliates shall hold in confidence the information contained in any of such labels, lists and additional information, shall use such information only in connection with the Offer and the Merger, and, if this Agreement shall be terminated, shall deliver to the Company all copies of such information then in their possession or under their control. - 6 - 1.03 BOARD OF DIRECTORS AND COMMITTEES; SECTION 14(f). (a) Promptly upon acceptance for payment of, and commencement of payment for, such number of Shares which represent at least a majority of the Shares (determined on a fully diluted basis) by Purchaser pursuant to the Offer and from time to time thereafter, the Purchaser shall be entitled to designate up to such number of directors, rounded up to the next whole number, on the Board as will give the Purchaser representation on the Board equal to the product of the number of directors on the Board (giving effect to any increase in the number of directors pursuant to this Section 1.03) and the percentage that such number of Shares beneficially owned by the Purchaser and its affiliates bears to the total number of Shares, and the Company shall, at such time, cause the Purchaser's designees to be elected or appointed, upon request by the Purchaser. In connection with the foregoing, the Company shall promptly, as reasonably agreed by the Parent and the Company, either increase the size of the Board and/or secure the resignation of such number of its current directors as is necessary to enable the Purchaser's designees to be elected or appointed to the Board and to cause the Purchaser's designees to be so elected or appointed. At such times and, subject to the last sentence of this Section 1.03(a), to the extent requested by the Parent, the Company will use its best efforts to cause persons designated by the Purchaser to constitute the same percentage of each committee of the Board (other than any committee of the Board established to take action under this Agreement) as the Purchaser's designees constitute on the Board. Notwithstanding the foregoing, the Company, the Parent and the Purchaser shall each use its best efforts to ensure that two of the members of the Board as of the date hereof who are not officers, employees or affiliates of the Company or the Parent (the "Independent Directors") shall remain members of the Board until the Purchaser owns a majority of the Shares and thereafter until the Effective Time (as defined in Section 2.02) and if the number of the Independent Directors shall be reduced below two for any reason, any remaining Independent Director(s) shall be entitled to designate independent persons to fill such vacancies and such persons shall be deemed to be Independent Directors; or, if no Independent Directors then remain, the other directors shall designate two independent persons to fill such vacancies, and such persons shall be deemed to be Independent Directors. (b) The Company's obligation to appoint designees to the Board shall be subject to Section 14(f) of the Exchange Act, and Rule 14f-1 promulgated thereunder. The Company shall promptly take all action required pursuant to such Section and Rule in order to fulfill its obligations under this Section 1.03, including mailing to its stockholders with the Schedule 14D-9 such information as is required under such Section and Rule in order to fulfill its obligations under this Section 1.03. The Purchaser will supply to the Company in writing and be solely responsible for any information with respect to itself and its nominees, officers, directors and affiliates required by such Section and Rule. - 7 - (c) Following the election or appointment of the Purchaser's designees pursuant to this Section 1.03, any amendment of this Agreement, any termination of this Agreement by the Company, any recommendation made by the Board pursuant to Section 2.07(a)(ii) of this Agreement, any extension by the Company of the time for the performance of any of the obligations or other acts of the Purchaser or the Parent hereunder or waiver of any of the Company's rights or waiver by the Company of any condition hereunder, will require the concurrence of a majority of the Independent Directors. ARTICLE II THE MERGER 2.01 THE MERGER. Subject to the terms and conditions of this Agreement, at the Effective Time (as defined in Section 2.02), the Parent shall cause the Purchaser to merge (the "Merger") with and into the Company and the separate corporate existence of the Purchaser shall thereupon cease. The Company shall be the surviving corporation in the Merger (the Purchaser and the Company are sometimes hereinafter referred to as the "Constituent Corporations" and the Company is sometimes hereinafter referred to as the "Surviving Corporation") and shall, following the Merger, be governed by the laws of the State of Delaware, and the separate corporate existence of the Company, with all its rights, privileges, immunities, powers and franchises, of a public as well as of a private nature, shall continue unaffected by the Merger. From and after the Effective Time, the Merger shall have the effects specified in the DGCL. 2.02 EFFECTIVE TIME. At the Closing contemplated in Section 8.01, the Company and the Parent will cause a Certificate of Merger (the "Delaware Certificate of Merger") to be executed and filed by the Company and the Purchaser with the Secretary of State of the State of Delaware as provided in the DGCL. The Merger shall become effective as of the date and at the time the Delaware Certificate of Merger is duly filed with the Secretary of State of the State of Delaware, and such time is hereinafter referred to as the "Effective Time." 2.03 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of the Company (the "Certificate of Incorporation") in effect immediately prior to the Effective Time shall be the Certificate of Incorporation of the Surviving Corporation, until duly amended in accordance with the terms thereof and the DGCL. 2.04 BY-LAWS. The By-Laws of the Company as in effect immediately prior to the Effective Time shall be the By-Laws of the Surviving Corporation, until duly amended in accordance with the terms thereof and the DGCL. - 8 - 2.05 DIRECTORS AND OFFICERS. At the Effective Time, the directors of the Purchaser immediately prior to the Effective Time shall be the directors of the Surviving Corporation, each of such directors to hold office, subject to the applicable provisions of the Certificate of Incorporation and By-Laws of the Surviving Corporation, until their respective successors shall be duly elected or appointed and qualified. The officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified. 2.06 FURTHER ASSURANCES. If at any time after the Effective Time the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments or assurances or any other acts or things are necessary, desirable or proper: (a) to vest, perfect or confirm, of record or otherwise, in the Surviving Corporation, its right, title or interest in, to or under any of the rights, privileges, powers, franchises, properties or assets of either of the Constituent Corporations, or (b) otherwise to carry out the purposes of this Agreement, the proper officers and directors of the Surviving Corporation are hereby authorized on behalf of the respective Constituent Corporations to execute and deliver, in the name and on behalf of the respective Constituent Corporations, all such deeds, bills of sale, assignments and assurances and do, in the name and on behalf of the Constituent Corporations, all such other acts and things necessary, desirable or proper to vest, perfect or confirm its right, title or interest in, to or under any of the rights, privileges, powers, franchises, properties or assets of the Constituent Corporations and otherwise to carry out the purposes of this Agreement. 2.07 STOCKHOLDERS' MEETING. (a) After the Purchaser has accepted for payment the Shares tendered pursuant to the Offer, the Company, acting through the Board, shall, at the Parent's request and in accordance with applicable law: (i) duly call, give notice of, convene and hold an annual or special meeting of its stockholders (the "Stockholders' Meeting"), to be held as soon as practicable for the purpose of approving this Agreement, the Merger and the transactions contemplated hereby and thereby; (ii) include in the Proxy Statement (as defined in Section 4.08) the recommendation of the Board that stockholders of the Company vote in favor of the approval and adoption of this Agreement and the Merger and the other transactions contemplated hereby and thereby and that the cash consideration to be received by the stockholders of the Company pursuant to the Merger is fair to such stockholders; and (iii) as soon as practicable after the Parent's request, prepare and file a preliminary Proxy Statement with the SEC and, after consultation with the Parent and the Purchaser, - 9 - respond promptly to any comments made by the SEC with respect to the Proxy Statement and any preliminary version thereof and cause the Proxy Statement to be mailed to its stockholders at the earliest practicable time after responding to all such comments to the satisfaction of the Staff of the SEC and to obtain the necessary approvals by its stockholders of this Agreement. Without limiting the generality of the foregoing, the Company agrees that its obligations pursuant to this Section 2.07(a) shall not be affected by either the commencement, public proposal, public disclosure or other communication to the Company of any offer to acquire some or all of the Shares or all or any substantial portion of the assets of the Company or any change in the recommendation of the Board. (b) The Company, the Parent and the Purchaser, as the case may be, shall promptly prepare and file any other filings required under the Exchange Act or any other Federal or state securities or corporate laws relating to the Merger and the transactions contemplated herein (the "Other Filings"). Each of the parties hereto shall notify the other parties hereto promptly of the receipt by it of any comments from the SEC or its Staff and of any request of the SEC for amendments or supplements to the Proxy Statement or by the SEC or any other governmental officials with respect to any Other Filings or for additional information and will supply the other parties hereto with copies of all correspondence between it and its representatives, on the one hand, and the SEC or the members of its Staff or any other governmental officials, on the other hand, with respect to the Proxy Statement, any Other Filings or the Merger. The Company, the Parent and the Purchaser each shall use its best efforts to obtain and furnish the information required to be included in the Proxy Statement, any Other Filings or the Merger. If at any time prior to the time of approval of this Agreement by the Company's stockholders there shall occur any event that should be set forth in an amendment or supplement to the Proxy Statement, the Company shall promptly prepare and mail to its stockholders such amendment or supplement. The Company shall not mail the Proxy Statement or, except as required by the Exchange Act or the rules and regulations promulgated thereunder, any amendment or supplement thereto, to the Company's stockholders unless the Company has first obtained the consent of the Parent to such mailing. (c) At the Stockholders' Meeting, the Parent, the Purchaser and their affiliates will vote all Shares owned by them in favor of approval and adoption of this Agreement, the Merger, and the transactions contemplated hereby and thereby. (d) Notwithstanding the foregoing, in the event that the Purchaser shall acquire at least 90 percent of the Shares, the parties hereto agree, at the request of the Purchaser, to take all necessary and appropriate action to cause the Merger to become effective, in accordance with Section 253 of the DGCL, as soon as reasonably practicable after such acquisition and satisfaction or - 10 - waiver of the conditions of Article VII, without a meeting of the stockholders of the Company. ARTICLE III CONVERSION OR CANCELLATION OF SHARES; STOCK RIGHTS 3.01 CONVERSION OR CANCELLATION OF SHARES. At the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof: (a) Each Share issued and outstanding immediately prior to the Effective Time (other than Shares owned by the Parent or any wholly-owned subsidiary of the Parent (collectively, the "Parent Companies"), Shares held by stockholders exercising appraisal rights pursuant to Section 262 of the DGCL (the "Dissenting Stockholders"), and any shares held in the treasury of the Company) shall be converted into and represent the right to receive, without interest, an amount in cash equal to the greater of $10.50 net or the amount per share which may be paid pursuant to the Offer as it may be amended (the "Merger Consideration") upon surrender of the certificate or certificates that, immediately prior to the Effective Time, represented issued and outstanding Shares (the "Certificates"). As of the Effective Time, all such Shares shall no longer be outstanding, shall be automatically cancelled and shall cease to exist, and each holder of a Certificate representing any such Shares shall thereafter cease to have any rights with respect to such Shares, except the right to receive the Merger Consideration without interest for such Shares upon the surrender of such Certificate or Certificates in accordance with Section 3.02. (b) Each Share issued and outstanding immediately prior to the Effective Time and owned by any of the Parent Companies, and each Share issued and held in the Company's treasury immediately prior to the Effective Time, shall no longer be outstanding, shall be cancelled without payment of any consideration therefor and shall cease to exist, and each holder of a Certificate representing any such Shares shall thereafter cease to have any rights with respect to such Shares. (c) Each share of Common Stock, without par value, of the Purchaser issued and outstanding immediately prior to the Effective Time shall be converted into and become one fully-paid and non-assessable share of Common Stock, par value $0.01 per share, of the Surviving Corporation. 3.02 EXCHANGE OF CERTIFICATES; PAYING AGENT. (a) Prior to the Closing, the Parent shall select a bank or trust company to act as paying agent (the "Paying Agent") for the payment of the cash consideration specified in Section 3.01 upon surrender of Certificates converted into the right to receive cash pursuant to the Merger. From time to time at and after the Effective Time, - 11 - the Parent shall make available, or cause the Purchaser or the Surviving Corporation to make available, to the Paying Agent immediately available funds in amounts and at times necessary for the payment of the Merger Consideration (the "Funds") upon surrender of Certificates pursuant to Section 3.01, it being understood that any and all interest earned on the Funds shall be paid over by the Paying Agent as the Parent shall direct. (b) Promptly after the Effective Time, the Paying Agent shall mail to each person who was, at the Effective Time, a holder of record of a Certificate or Certificates, other than the Company or any of the Parent Companies, a letter of transmittal and instructions for use in effecting the surrender, in exchange for payment in cash therefor, of the Certificates. The letter of transmittal shall specify that delivery shall be effected, and risk of loss and title shall pass, only upon proper delivery to and receipt of such Certificates by the Paying Agent and shall be in such form and have such provisions as the Parent shall reasonably specify. Upon surrender to the Paying Agent of such Certificates, together with the letter of transmittal, duly executed and completed in accordance with the instructions thereto and such other documents as may be reasonably required by the Paying Agent, the Paying Agent shall promptly pay to the persons entitled thereto, out of the Funds, a check in the amount to which such persons are entitled pursuant to Section 3.01(a), after giving effect to any required tax withholdings, and such Certificate shall forthwith be cancelled. No interest will be paid or will accrue on the amount payable upon the surrender of any such Certificates. If payment is to be made to a person other than the registered holder of the Certificates surrendered, it shall be a condition of such payment that the Certificates so surrendered shall be properly endorsed or otherwise in proper form for transfer and that the person requesting such payment shall pay any transfer or other taxes required by reason of the payment to a person other than the registered holder of the Certificates surrendered or establish to the satisfaction of the Surviving Corporation or the Paying Agent that such tax has been paid or is not applicable. Until surrendered as contemplated by this Section 3.02, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the amount of cash, without interest, into which the Shares theretofore represented by such Certificate shall have been converted pursuant to Section 3.01. No interest shall accrue or be paid on any portion of the Merger Consideration. (c) One hundred eighty days following the Effective Time, the Surviving Corporation shall be entitled to cause the Paying Agent to deliver to it any Funds (including any interest, dividends, earnings or distributions received with respect thereto which shall be paid as directed by the Parent) made available to the Paying Agent by the Parent which have not been disbursed, and thereafter holders of Certificates who have not theretofore complied with the instructions for exchanging their Certificates shall be entitled to look only to the Surviving Corporation for - 12 - payment as general creditors thereof with respect to the cash payable upon due surrender of their Certificates. (d) Except as otherwise provided herein, the Parent shall pay all charges and expenses, including those of the Paying Agent, in connection with the exchange of the Merger Consideration for Certificates. (e) Notwithstanding anything to the contrary in this Section 3.02, none of the Paying Agent, the Parent, the Company, the Surviving Corporation or the Purchaser shall be liable to a holder of a Certificate formerly representing Shares for any amount properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. If Certificates are not surrendered prior to two years after the Effective Time (or immediately prior to such earlier date on which any payment pursuant to this Article III would otherwise escheat or become the property of any Federal, state or local government agency or authority, court or commission), unclaimed funds payable with respect to such Certificates shall, to the extent permitted by applicable law, become the property of the Surviving Corporation, free and clear of all claims or interest of any person previously entitled thereto. 3.03 DISSENTERS' RIGHTS. Notwithstanding the provisions of Section 3.01 or any other provision of this Agreement to the contrary, Shares that have not been voted in favor of the approval and adoption of the Merger and with respect to which dissenters' rights shall have been demanded and perfected in accordance with Section 262 of the DGCL (the "Dissenting Shares") and not withdrawn shall not be converted into the right to receive cash at or after the Effective Time, but such Shares shall become the right to receive such consideration as may be determined to be due to holders of Dissenting Shares pursuant to the laws of the State of Delaware unless and until the holder of such Dissenting Shares withdraws his or her demand for such appraisal or becomes ineligible for such appraisal. If a holder of Dissenting Shares shall withdraw his or her demand for such appraisal or shall become ineligible for such appraisal (through failure to perfect or otherwise), then, as of the Effective Time or the occurrence of such event, whichever last occurs, such holder's Dissenting Shares shall automatically be converted into and represent the right to receive the Merger Consideration, without interest, as provided in Section 3.01(a). The Company shall give the Parent (i) prompt notice of any demands for appraisal of Shares received by the Company and (ii) the opportunity to participate in and direct all negotiations and proceedings with respect to any such demands. The Company shall not, without the prior written consent of the Parent, make any payment with respect to, or settle, offer to settle or otherwise negotiate, any such demands. 3.04 TRANSFER OF SHARES AFTER THE EFFECTIVE TIME. No transfers of Shares shall be made in the stock transfer books of the Surviving Corporation at or after the Effective Time. If, - 13 - after the Effective Time, Certificates formerly representing Shares are presented to the Surviving Corporation, they shall be cancelled and exchanged for the Merger Consideration set forth in Section 3.01. 3.05 COMPANY STOCK RIGHTS. Prior to the Effective Time, the Company shall use its best efforts to procure the surrender as of the Effective Time of all outstanding options to purchase shares of Common Stock of the Company (the "Options") pursuant to the CIMCO, Inc. 1988 Incentive Stock Option Plan and the CIMCO, Inc. 1991 Incentive Stock Option Plan (collectively, the "Stock Option Plans"), in consideration of the payment at the Effective Time of an amount of cash per share subject to each such Option equal to the difference between the exercise price of such Option and the Merger Consideration, less an amount equal to all taxes required to be withheld from such payment. As to any Option not so surrendered, the Company shall use its best efforts to obtain, prior to the Effective Time, the consent of the holder of the Option to acquire upon payment of the exercise price an amount of cash equal to the Merger Consideration, less an amount equal to all taxes required to be withheld from such payment, in lieu of each Share formerly covered thereby. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents and warrants to the Parent and the Purchaser that: 4.01 ORGANIZATION; QUALIFICATION. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all requisite corporate power and authority to own, lease and operate its properties and carry on its business as now being conducted. The Company is duly qualified to do business and is in good standing in each jurisdiction in which the nature of the Company's business or the location of its properties makes such qualification necessary, except for any such failure to qualify or be in good standing as shall not have a Material Adverse Effect (as defined in Section 4.06) on the Company. The Company Disclosure Letter (as defined in Section 4.06) identifies, and the Company has heretofore made available to the Parent, complete and correct copies of the Certificate of Incorporation and By-Laws of the Company, as currently in effect. 4.02 COMPANY SUBSIDIARIES. (a) The Company Disclosure Letter lists all subsidiaries of the Company. Except as indicated in the Company Disclosure Letter, all of the outstanding shares of capital stock of each such subsidiary are owned by the Company either directly or indirectly through another of its subsidiaries. Except as set forth in the Company Disclosure Letter, no equity securities of any subsidiary of the Company are or may be required - 14 - to be issued (other than to the Company or its other subsidiaries) by reason of any Equity Rights (as defined in Section 4.03) for shares of the capital stock of any subsidiary of the Company, and there are no contracts, commitments, understandings or arrangements by which any subsidiary of the Company is bound to issue (other than to the Company) additional shares of its capital stock or options, warrants or rights to purchase or acquire any additional shares of its capital stock. Except as set forth in the Company Disclosure Letter, there are no contracts, commitments, understandings or arrangements by which the Company or any of its subsidiaries is or may be obligated to transfer any shares of the capital stock of any subsidiary of the Company. Except as set forth in the Company Disclosure Letter, all of the shares of capital stock of each subsidiary of the Company held by the Company or any subsidiary of the Company are fully paid and nonassessable and are owned by the Company or such subsidiary of the Company free and clear of any claim, lien or encumbrance other than restrictions on transferability under federal and any applicable state securities laws. Each subsidiary of the Company is duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated or organized, has the corporate power and authority necessary for it to own or lease its properties and assets and to carry on its business as it is now being conducted, and is duly qualified to do business and in good standing in the states of the United States in which the ownership of its property or the conduct of its business requires it to be so qualified, except for such jurisdictions in which the failure to be so qualified and in good standing would not have a Material Adverse Effect. As used in this Agreement, the term "subsidiary" shall mean, with respect to the Company, any corporation or other legal entity of which the Company or any of its subsidiaries controls or owns, directly or indirectly, 50% or more of the stock or other equity interest entitled to vote on the election of members to the board of directors or similar governing body. (b) Except for interests in the Company's subsidiaries and except as set forth in the Company Disclosure Letter, neither the Company nor any of the Company's subsidiaries owns, directly or indirectly, any interest or investment (whether equity or debt) in any corporation, partnership, joint venture, business, trust or entity, other than (i) non-controlling investments made in the ordinary course of business and corporate partnering, development, cooperative marketing and similar undertakings and arrangements entered into in the ordinary course of business, and (ii) other investments of less than $250,000 in the aggregate. 4.03 THE COMPANY'S CAPITALIZATION. The authorized capital stock of the Company consists of (i) ten million Shares, and (ii) five million shares of Preferred Stock, $.01 par value (the "Preferred Shares"), which Preferred Shares include one hundred thousand shares of Series A Junior Participating Preferred Stock, $.01 par value (the "Series A Shares"). As of the close of business on December 18, 1995, there were (i) 2,970,481 Shares - 15 - issued and outstanding and no Shares held in the Company's treasury, (ii) no Preferred Shares issued and outstanding, and (iii) no Series A Shares issued and outstanding. All outstanding Shares have been duly authorized and validly issued, and are fully paid, nonassessable and were issued free of preemptive rights. Except for the Options described in Section 3.05 hereof and except as set forth on the Company Disclosure Letter there are not now, and at the Effective Time there will not be, any subscriptions, options, warrants, calls, rights, agreements or commitments relating to the issuance, sale, delivery or transfer by the Company (including any right of conversion or exchange under any outstanding security or other instrument) of its Shares (collectively, "Equity Rights"). There are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any Shares. The Company Disclosure Letter contains a complete and accurate list of all holders of Options and any other options or rights of any kind to purchase or acquire shares of the Common Stock of the Company, together with the number of such options and the terms of such options held by each such holder. 4.04 COMPANY EQUITY INVESTMENTS. Except as set forth on the Company Disclosure Letter, neither the Company nor any of its subsidiaries owns, directly or indirectly, or has the right to acquire, any equity security of another entity nor has the Company or any of its subsidiaries made any loan or advance to any other entity. 4.05 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has full corporate power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly and validly approved by the Board, and the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Board and, except for the approval of the Merger by the holders of at least a majority of the Shares in accordance with the DGCL, no other corporate actions on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated hereby, including the acquisition of Shares pursuant to the Offer and the Merger. The Company has taken all actions necessary to render the prohibitions of Section 203 of the DGCL and the provisions of Article EIGHTH of the Certificate of Incorporation to be inapplicable to the execution and delivery of this Agreement and the Stockholder Tender Agreement and the transactions contemplated hereby and thereby, including the acquisition of the Shares pursuant to the Offer and the Merger. To the knowledge of the Company, no other "fair price", "merger moratorium", "control share acquisition" or other anti-takeover statute or similar statute or regulation applies or purports to apply to the Merger, this Agreement or any of the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company and, assuming due authorization, execution and delivery by the Parent and the - 16 - Purchaser, constitutes a valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, except to the extent that enforceability may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other laws affecting the enforcement of creditors' rights generally as at the time in effect and by general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law. 4.06 CONSENTS AND APPROVALS; NO VIOLATION. Except as set forth on the Company Disclosure Letter delivered to the Parent as of the date of this Agreement (the "Company Disclosure Letter"), and except for any required approval of the Merger by the stockholders of the Company and the filing of the Delaware Certificate of Merger in accordance with the DGCL, neither the execution, delivery and performance of this Agreement by the Company nor the consummation by it of the transactions contemplated hereby will (i) conflict with or result in any breach of any provision of the Certificate of Incorporation or By-Laws of the Company; (ii) require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, except (A) in connection with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (B) in connection with the Exchange Act, (C) where the failure to obtain such consent, approval, authorization or permit, or to make such filing or notification, would not have a Material Adverse Effect, and (D) for any requirements which became applicable to the Company as a result of the specific regulatory status of the Parent or the Purchaser or as a result of any other facts that specifically relate to the business or activities in which the Parent or the Purchaser is or proposes to be engaged; (iii) constitute a breach or result in a default under, or give rise to any right of termination, amendment, cancellation or acceleration under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, contract, agreement or other instrument or obligation of any kind to which the Company is a party or by which the Company or any of its assets may be bound, except for any such breach, default or right as to which requisite waivers or consents have been obtained or which, in the aggregate, would not have a Material Adverse Effect; or (iv) assuming compliance with the DGCL and the HSR Act, violate any order, writ, injunction, judgment, decree, law, statute, rule, regulation or governmental permit or license applicable to the Company or any of its assets, which violation would have a Material Adverse Effect. For purposes of this Agreement, "Material Adverse Effect" means a material adverse effect on the business, assets, prospects, financial condition or results of operation of the Company and its subsidiaries considered on a consolidated basis or on the ability of the Company, the Parent or the Purchaser to consummate the transactions contemplated by this Agreement. - 17 - 4.07 SEC REPORTS; FINANCIAL STATEMENTS. The Company has filed all required forms, reports and documents with the SEC since May 1, 1992 (collectively, the "SEC Reports"), 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 Exchange Act, each as in effect on the dates so filed. 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 Company has heretofore made available or promptly will make available to the Parent, a complete and correct copy of any amendment to the SEC Reports. The Company has previously furnished to the Parent audited consolidated balance sheets of the Company and its subsidiaries as of April 30th in each of the years 1991 through 1995, and the related audited consolidated statements of income, statements of cash flow or changes in financial position and changes in stockholders' equity of the Company and its subsidiaries for the fiscal years then ended (collectively, the "Related Statements"), together with the respective reports thereon of Grant Thornton. The unaudited consolidated balance sheet of the Company and its subsidiaries as of October 31, 1995 is hereinafter referred to as the "Company Balance Sheet." Each of the balance sheets included in the financial statements referred to in this Section 4.06 (including the related notes thereto) presents fairly the financial position of the Company and its subsidiaries as of their respective dates, and the Related Statements included therein (including the related notes thereto) present fairly the consolidated results of operations, the cash flows or changes in financial position, and changes in stockholders' equity for the periods then ended, all in conformity with generally accepted accounting principles applied on a consistent basis, except as otherwise noted therein. 4.08 PROXY STATEMENT; OFFER DOCUMENTS. Any proxy or similar materials distributed to the Company's stockholders in connection with the Merger, including any amendments or supplements thereto (the "Proxy Statement"), will comply in all material respects with applicable federal securities laws and will not contain any untrue statements of a material fact required to be stated therein 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 that no representation is made by the Company with respect to information supplied by the Parent in writing for inclusion in the Proxy Statement. None of the information supplied by the Company in writing for inclusion in the Offer Documents or provided by the Company in the Schedule 14D-9 will, at the respective times that the Offer Documents and the Schedule 14D-9 or any amendments or supplements thereto are filed with the SEC and are first published or sent or - 18 - given to holders of Shares, 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 were made, not misleading. 4.09 UNDISCLOSED LIABILITIES. Except as set forth on the Company Disclosure Letter or reflected in the financial statements referred to in Section 4.07, neither the Company nor any of its subsidiaries has any liability or obligation, secured or unsecured (whether absolute, accrued, contingent or otherwise, and whether due or to become due) except those which would not, individually or in the aggregate, have a Material Adverse Effect. 4.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth on the Company Disclosure Letter, since the date of the Company Balance Sheet (i) the business of the Company and its subsidiaries has been conducted in the ordinary course consistent with past practice (except as otherwise contemplated by this Agreement), (ii) there has not been any change which has had a Material Adverse Effect, and (iii) neither the Company nor any of its subsidiaries has taken any action described in Section 6.01. 4.11 TITLE, ETC. (a) The Company Disclosure Letter sets forth a list of all of the land, which includes the buildings, structures and other improvements located thereon (the "Real Property"), which is owned in fee by the Company and any of its subsidiaries. The Company or such subsidiary, as the case may be, has, with respect to personal property, good, and, with respect to real property, good, marketable and insurable, title to all of the properties and assets which it purports to own and which are material to the business, operation or financial condition of the Company and its subsidiaries free and clear of all mortgages, security interests, liens, claims, charges or other encumbrances of any nature whatsoever, except for (i) any liens, encumbrances or defects reflected in the Company Balance Sheet or disclosed in the notes thereto; (ii) any liens, encumbrances or defects which do not, individually or in the aggregate, materially detract from the fair market value (free of such liens, encumbrances or defects) of the property or assets subject thereto or materially interfere with the current use by the Company and its subsidiaries of the property or assets subject thereto or affected thereby or otherwise have a Material Adverse Effect; (iii) any liens or encumbrances for taxes not delinquent or which are being contested in good faith, provided that adequate reserves for the same have been established on the Company Balance Sheet to the extent required by generally accepted accounting principles; (iv) any liens or encumbrances for current taxes and assessments not yet past due; (v) any inchoate mechanic's and materialmen's liens and encumbrances for construction in progress; (vi) any workmen's, repairmen's, warehousemen's and carriers' liens and encumbrances arising in the ordinary course of business, so long as such liens have not been filed; (vii) any liens of the type referred to in (vi) above that have been filed, so long as such - 19 - liens do not aggregate in excess of $25,000; (viii) liens securing obligations under the Credit Agreement (as defined in Section 6.01); and (ix) with respect to Real Property, any liens, encumbrances or defects which are matters of record, including but not limited to, easements, quasi-easements, rights of way, land use ordinances and zoning plans. (b) The Company Disclosure Letter sets forth a list of all of the leases and subleases (the "Real Property Leases") under which, as of the date hereof, the Company or any subsidiary has the right to occupy space. The Company has heretofore delivered to the Parent a true, correct and complete copy of all of the Real Property Leases, including all amendments thereto. All Real Property Leases and material leases pursuant to which the Company or any subsidiary leases personal property from others are, in all material respects, valid, binding and enforceable in accordance with their terms; neither the Company nor any subsidiary has received notice of any default by the Company or any subsidiary under any Real Property Lease which would have a Material Adverse Effect; there are no existing defaults, or any condition or event which with the giving of notice or lapse of time would constitute a default, by the Company or any subsidiary thereunder which would have a Material Adverse Effect; and, with respect to the Company's or any subsidiary's obligations thereunder without qualification and with respect to the obligations of all other parties thereto, to the knowledge of the Company, no uncured default or event or condition on the part of any landlord exists under any Real Property Lease which with the giving of notice or the lapse of time would constitute a default thereunder which would have a Material Adverse Effect. (c) All of the land, buildings, structures and other improvements occupied by the Company and its subsidiaries in the conduct of its business are included in the Real Property or the Real Property Leases. (d) Neither the Company or any subsidiary owns or holds, nor is obligated under or a party to, any option, right of first refusal or other contractual right to purchase, acquire, sell or dispose of the Real Property and the Real Property Leases or any portion thereof or interest therein. 4.12 PATENTS, TRADEMARKS, ETC. The Company Disclosure Letter identifies all registered trademarks, copyrights and patents owned or licensed by the Company and its subsidiaries as of the date hereof. To the Company's best knowledge, the Company or its subsidiaries own, or are licensed or otherwise have adequate right to use, all patents, patent rights, trademarks, trademark rights, service marks, service mark rights, trade names, trade name rights, copyrights, know-how, technology, trade secrets and other proprietary information (collectively, the "Intellectual Property") which are material to the conduct of the business of the Company and its subsidiaries. Except as set forth in the Company Disclosure Letter, no claims have been asserted by any - 20 - person, and neither the Company nor any of its subsidiaries has asserted a claim against any person, with respect to any of the Intellectual Property owned or used by the Company or its subsidiaries or challenging or questioning the validity or effectiveness of any license or agreement relating thereto to which the Company or any subsidiary is a party. 4.13 INSURANCE. The Company Disclosure Letter identifies all material property, general liability and casualty insurance policies which currently insure the Company and its subsidiaries and the Company shall use its reasonable efforts to keep such policies in full force and effect up to the Closing Date. Such policies are adequate in the view of the management of the Company for the assets and operations of the Company and its subsidiaries. 4.14 EMPLOYEE BENEFIT PLANS. (a) For purposes of this Section 4.14, "Company Benefit Plans" means all employee benefit plans and arrangements described in section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), with respect to which the Company or any subsidiary has a liability, whether direct or indirect, actual or contingent, and any material bonus, incentive and similar plans maintained by the Company or any subsidiary. (b) The Company Disclosure Letter sets forth a list of all Company Benefit Plans and the Company has delivered or made available to the Parent, where applicable, accurate and complete copies of all Company Benefit Plan texts and related agreements. (c) Except as set forth in the Company Disclosure Letter with respect to each Company Benefit Plan: (i) to the best knowledge of the Company, such plan has been administered and enforced in all material respects in accordance with its terms and applicable law; (ii) to the best knowledge of the Company after reasonable inquiry, no breach of fiduciary duty or prohibited transaction has occurred; (iii) no actions, suits, claims or disputes are pending, or to the knowledge of the Company, threatened, other than routine claims for benefits; (iv) all contributions and premiums due have been made on a timely basis; (v) to the Company's best knowledge, all contributions made or required to be made under such Company Benefit Plan meet the requirements for deductibility under the Internal Revenue Code of 1986, as amended (the "Code"); and (vi) no Company Benefit Plan is a multiemployer plan (as defined in ERISA section 3(37)), a multiple employer plan within the meaning of the Code or ERISA, a defined benefit plan within the meaning of ERISA section 3(35), a plan subject to section 302 of ERISA or section 412 of the Code, or funded through a "welfare benefit fund" (as defined in Section 419(e) of the Code). (d) Except as set forth on the Company Disclosure Letter or as specifically provided in Section 3.05, the consummation of the transactions contemplated by this Agreement - 21 - will not (i) entitle any individual to severance pay, or (ii) accelerate the time of payment or vesting, or increase the amount, of compensation due to any individual. The Company has delivered to the Parent true, correct and complete copies of each plan, agreement or arrangement relating to the foregoing, including all amendments thereto. (e) The Company Disclosure Letter sets forth a description of all obligations of the Company and its subsidiaries with respect to retiree medical and retiree life insurance benefits under the Company Benefit Plans. The Company has delivered to the Parent written material which is representative in all material respects of written communications of the Company and its subsidiaries with respect to retiree medical and retiree life insurance benefits under the Company Benefit Plans, a list of which is set forth on the Company Disclosure Letter. (f) Each Company Benefit Plan intended to be qualified under section 401(a) of the Code is so qualified, and each trust or other funding vehicle related thereto is exempt from federal income tax under section 501(a) of the Code. (g) With respect to any insurance policy providing funding for benefits under any Company Benefit Plan, (i) there is no material liability of the Company or any subsidiary in the nature of a retroactive or retrospective rate adjustment, loss sharing arrangement, or other actual or contingent liability, nor would there be any such material liability if such insurance policy was terminated on the date hereof, and (ii) to the knowledge of the Company, no insurance company issuing any such policy is in receivership, conservatorship, liquidation or similar proceeding and, to the knowledge of the Company, no such proceeding with respect to any insurer is imminent. 4.15 LEGAL PROCEEDINGS, ETC. Except as set forth on the Company Disclosure Letter, (i) there is no claim, action, proceeding or investigation pending or, to the knowledge of the Company, threatened against or relating to the Company or any subsidiary before any court or governmental or regulatory authority or body with respect to which there is a reasonable likelihood of a determination which would have a Material Adverse Effect, and (ii) neither the Company nor any subsidiary is subject to any outstanding order, writ, judgment, injunction or decree of any court or governmental or regulatory authority or body. 4.16 TAXES. Except as set forth on the Company Disclosure Letter, (i) each of the Company and its subsidiaries has timely paid or adequately reserved for in the Company Balance Sheet all Taxes (as defined below) required to be paid by it through the date hereof (other than Taxes or audit adjustments which would not, in the aggregate, have a Material Adverse Effect) and shall timely pay any Taxes required to be paid by it after the date hereof and on or before the Effective Time (unless the payment of such Taxes is being contested by the Company or such - 22 - subsidiary in good faith and an adequate reserve therefor is set up on the Company's books to the extent required by generally accepted accounting principles), (ii) each of the Company and its subsidiaries has timely filed all notices, reports and returns for Taxes ("Tax Returns") that it is required to file through the date hereof and shall, on or before the Effective Time, correctly prepare and timely file, consistent with prior years in all material respects, all Tax Returns that it is required to file after the date hereof and on or before the Effective Time, (iii) the Company has correctly prepared, in all material respects, all previously filed Tax Returns which remain open for assessment and have not been examined or are currently under examination by the appropriate governmental taxing authority, (iv) no material penalties or other material charges are due with respect to the late filing of any Tax Return, (v) neither the Company nor any subsidiary has been notified that it is currently being audited by any taxing authority, (vi) no extension of time with respect to any date on which any Tax Return was or is to be filed by the Company or any subsidiary is in force as of the date hereof, (vii) no waiver or agreement by the Company or any subsidiary is in force as of the date hereof for the extension of time for the assessment or payment of any Tax, (viii) neither the Company nor any subsidiary has agreed to make nor is required to make any adjustment under Section 481(a) of the Code by reason of a change in accounting method or otherwise, and (ix) the Company has not agreed to indemnify or reimburse any subsidiary for the amount of any savings in Taxes which the Company realized for any year as a result of including such subsidiary in the combined and consolidated Tax Returns which the Company filed for such year, and neither the Company nor any subsidiary has agreed to indemnify or reimburse, or to pay any refund to, any third party for any liability or benefit with respect to Taxes that such third party may owe or be entitled to receive, as the case may be. "Taxes" shall mean all taxes, levies or other fiscal assessments, including, without limitation, income, excise, property, sales, use, gross receipts, value added, payroll, employment, import and franchise taxes and customs duties imposed by the United States, or any state, county, local or foreign government, or subdivision or agency thereof, and including any interest, penalties or additions attributable thereto. 4.17 MATERIAL AGREEMENTS. Except as set forth on the Company Disclosure Letter and except for agreements made for the purpose of completing the transactions contemplated by this Agreement, neither the Company nor any of its subsidiaries is as of the date hereof a party to, or bound by, any material agreement of any kind to be performed in whole or in part after the Effective Time. Solely for the purpose of this Section, the term "material agreement" shall mean any single agreement which involves the payment or receipt by the Company or any subsidiary, subsequent to the date of this Agreement, of more than $100,000. Except as set forth on the Company Disclosure Letter, to the best knowledge of the Company, there is no breach or default and there are no facts which with notice or the passage of time would - 23 - constitute a breach or default under, or give rise to any right of termination, amendment, cancellation or acceleration under, whether as a result of the consummation of the transactions contemplated hereby or otherwise, any obligation to be performed by any party to a material agreement to which the Company or any subsidiary is a party, which breach, default or right (assuming the exercise thereof) would have a Material Adverse Effect. 4.18 COMPLIANCE WITH LAW. Except as set forth on the Company Disclosure Letter, to the best knowledge of the Company, the business of the Company and its subsidiaries is not being conducted and the properties and assets of the Company and its subsidiaries are not currently owned or operated in violation of any law, ordinance, regulation, order, judgment, injunction, award or decree of any governmental or regulatory entity or court or arbitrator, except for possible violations which either individually or in the aggregate do not, and so far as can be reasonably foreseen will not, have a Material Adverse Effect. 4.19 INSIDER INTERESTS. The Company Disclosure Letter sets forth all material contracts, agreements with and other obligations to officers, directors and employees or stockholders of the Company and its subsidiaries. Except as set forth on the Company Disclosure Letter, no officer, director or stockholder of the Company or any subsidiary, and no entity controlled by any such officer, director or stockholder, and no relative or spouse who resides with any such officer, director or stockholder (i) owns, directly or indirectly, any material interest in any person that is or is engaged in business, other than on an arm's-length basis, as a competitor, lessor, lessee, customer or supplier of the Company or any subsidiary or (ii) owns, in whole or in part, any tangible or intangible property that the Company or any subsidiary uses in the conduct of the business of the Company and its subsidiaries. 4.20 OFFICERS, DIRECTORS AND EMPLOYEES. The Company Disclosure Letter sets forth the name and current compensation of each officer, director or employee of the Company and its subsidiaries whose current annual rate of compensation from the Company (including bonuses but excluding commission-only compensation) exceeds $50,000. 4.21 ENVIRONMENTAL PROTECTION. Except as set forth on the Company Disclosure Letter, the Company and each of its subsidiaries have obtained all material permits, certificates, licenses, approvals and other authorizations (collectively "Environmental Permits") relating to pollution or protection of the environment, including those relating to emissions, discharges, releases of pollutants, contaminants or chemicals, or industrial, toxic or hazardous substances or wastes into the environment (including, without limitation, ambient air, surface water, ground water, or land) or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of pollutants, contaminants or - 24 - chemicals, or industrial, toxic or hazardous substances or wastes, except where the failure to have obtained any Environmental Permits shall not have a Material Adverse Effect on the Company. To the best knowledge of the Company, except as set forth on the Company Disclosure Letter, the Company and each of its subsidiaries is in material compliance with all terms and conditions of the Environmental Permits, and the Company and each of its subsidiaries is also in material compliance with all other limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in all applicable environmental laws or contained in any regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder, if any ("Pertinent Environmental Laws"), except where the failure to have complied shall not have a Material Adverse Effect on the Company. Except as set forth on the Company Disclosure Letter, to the best knowledge of the Company, there are no past, present or future events, conditions, circumstances, activities, practices, incidents, actions or plans which may materially interfere with or prevent material compliance or continued compliance with Pertinent Environmental Laws, or which may give rise to any material common law or legal liability, or otherwise form the basis of any material claim, action, demand, suit, proceeding, hearing, study or investigation, based on or related to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling, or the emission, discharge, release or threatened release into the environment, of any pollutant, contaminant or chemical, or industrial, toxic or hazardous substance or waste. Except as set forth on the Company Disclosure Letter, there is no civil, criminal or administrative action, suit, demand, claim, hearing, notice or demand letter, notice of violation, investigation, or proceeding pending or, to the Company's knowledge, threatened against the Company or any subsidiary relating in any way to any Pertinent Environmental Laws. 4.22 BROKERS AND FINDERS. Neither the Company or its subsidiaries nor any of their respective officers, directors or employees has employed any broker, finder or investment banker or incurred any liability for any brokerage fees, commissions, finders' fees or investment banking fees in connection with the transactions contemplated herein, except that the Company has employed, and will pay the fees and expenses of, PaineWebber Incorporated as its financial advisor, the arrangements with which have been disclosed in writing to the Parent prior to the date hereof. 4.23 RIGHTS AGREEMENT. The Company Rights Agreement has been amended to provide that the execution and delivery of this Agreement and the Stockholder Tender Agreement and the consummation of the transactions contemplated hereby and thereby will not cause (a) Parent or Purchaser to become an "Acquiring Person" (as such term is defined in the Company Rights Agreement), (b) the "Distribution Date" (as such term is defined in the - 25 - Company Rights Agreement) to occur, (c) the provisions of Section 13(a) of the Company Rights Agreement to be applicable in respect of capital stock of the Purchaser or the Parent or the capital stock of any affiliate of the Purchaser or the Parent or (d) any adjustment under the provisions of Section 11(a) of the Company Rights Agreement. 4.24 RESPIRATORY MEDICAL PRODUCTS SALE. The Asset Purchase Agreement, dated as of December 4, 1995, between Medical Molding Corporation of America, a California corporation and wholly owned subsidiary of the Company ("MMCA"), and Vital Signs CA, Inc. ("VSCA"), a California corporation and wholly owned subsidiary of Vital Signs, Inc., a New Jersey corporation, provides for (i) the assumption by VSCA of all substantial liabilities known to the Company, whether absolute or contingent, arising out of the Respiratory Medical Products business of MMCA and (ii) aggregate cash consideration paid by VSCA to MMCA of no less than $2,151,000, and at least $113,000 of liabilities assumed by VSCA, taking into account all provisions for adjustment of such cash consideration. $2,000,000 of the cash consideration paid by VSCA to MMCA in connection with the sale of the Respiratory Medical Products business of MMCA was used to reduce the indebtedness of the Company provided pursuant to the Company's existing Credit Agreement with Wells Fargo Bank, National Association ("Wells Fargo"), as the same may be amended from time to time (the "Credit Agreement"). 4.25 NO OTHER REPRESENTATIONS OR WARRANTIES. Subject solely to the information set forth in the Company Disclosure Letter, each of the representations and warranties of the Company in this Agreement is true and correct as of the date of this Agreement. Any document delivered by the Company pursuant to this Agreement is a true, correct and complete copy of such document, and has not been modified or amended unless such amendment or modification is included with such document or has been delivered to Parent on or prior to the date hereof. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE PURCHASER 5.01 CORPORATION ORGANIZATION. The Parent is a corporation duly organized and validly existing and in good standing under the laws of the State of Delaware and the Purchaser is a corporation duly organized and validly existing and in good standing under the laws of the State of Delaware. The Parent and the Purchaser each has all requisite corporate power and authority to own its assets and carry on its business as now being conducted or proposed to be conducted. Each of the Parent and the Purchaser has delivered to the Company complete and correct copies of its - 26 - Certificate of Incorporation and By-Laws as in effect on the date hereof. 5.02 AUTHORIZED CAPITAL. The authorized capital stock of the Purchaser consists of 10,000 shares of Common Stock, without par value, of which 100 shares are outstanding as of the Effective Time and are owned, beneficially or of record, by Parent. All of the issued and outstanding shares of capital stock of the Purchaser are validly issued, fully paid, nonassessable and free of preemptive rights and all liens. 5.03 CORPORATION AUTHORITY. Each of the Parent and the Purchaser has the necessary corporate power and authority to enter into this Agreement and to carry out its obligations hereunder. The execution and delivery of this Agreement by each of the Parent and the Purchaser, the performance by the Parent and the Purchaser of their respective obligations hereunder and the consummation by the Parent and the Purchaser of the transactions contemplated hereby have been duly authorized by its Board of Directors and approved by the Parent as sole stockholder of the Purchaser, and no other corporate proceeding on the part of the Parent or the Purchaser is necessary for the execution and delivery of this Agreement by the Parent and the Purchaser and the performance by the Parent and the Purchaser of their respective obligations hereunder and the consummation by the Parent and the Purchaser of the transactions contemplated hereby. This Agreement has been duly executed and delivered by each of the Parent and the Purchaser and, assuming the due authorization, execution and delivery hereof by the Company, is a legal, valid and binding obligation of the Parent and the Purchaser, enforceable against each of the Parent and the Purchaser in accordance with its terms, except to the extent that its enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors' rights generally or by general equitable principles, regardless of whether such enforceability is considered in a proceeding in equity or at law. 5.04 NO PRIOR ACTIVITIES. The Purchaser has not incurred, directly or indirectly, any liabilities or obligations, except those incurred in connection with its incorporation or with the negotiation of this Agreement, the Offer Documents and the consummation of the transactions contemplated hereby and thereby. The Purchaser has not engaged, directly or indirectly, in any business or activity of any type or kind, or entered into any agreement or arrangement with any person or entity, and is not subject to or bound by any obligation or undertaking, that is not contemplated by or in connection with this Agreement, the Offer Documents and the transactions contemplated hereby and thereby. 5.05 NO FINANCING CONTINGENCY. The Parent has sufficient funds to consummate all of the transactions contemplated by this Agreement and will make available to the Purchaser sufficient funds in sufficient time to consummate the - 27 - Offer and the Merger in accordance with the terms of this Agreement. 5.06 GOVERNMENTAL FILINGS; NO VIOLATIONS. (a) No notices, reports or other filings are required to be made by the Parent or the Purchaser with, nor are any consents, registrations, approvals, permits or authorizations required to be obtained by the Parent or the Purchaser from, any governmental or regulatory authorities of the United States, the several States or any foreign jurisdictions in connection with the execution and delivery of this Agreement by the Parent and the Purchaser and the consummation by the Parent and the Purchaser of the transactions contemplated hereby, the failure to make or obtain any or all of which could prevent, materially delay or materially burden the transactions contemplated by this Agreement, except (A) in connection with the HSR Act, and (B) in connection with the Exchange Act. (b) Neither the execution and delivery of this Agreement by the Parent or the Purchaser nor the consummation by the Parent or the Purchaser of the transactions contemplated hereby nor compliance by the Parent or the Purchaser with any of the provisions hereof will: (i) conflict with or result in any breach of any provision of its Certificate of Incorporation or By-Laws, (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 termination, cancellation or acceleration) under, or require any consent under, any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license, contract, agreement or other instrument or obligation to which the Parent or the Purchaser is a party or by which it or any of its properties or assets may be bound, (iii) require the creation or imposition of any lien upon or with respect to the properties of the Parent or the Purchaser or (iv) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Parent or the Purchaser or any of its properties or assets, excluding from the foregoing clauses (iii) and (iv) violations, breaches or defaults which in the aggregate, would neither have a material adverse effect on the business, financial condition or operations of the Parent or the Purchaser nor prevent, materially delay or materially burden the transactions contemplated by this Agreement. 5.07 BROKERS AND FINDERS. Neither the Parent, the Purchaser nor any of its officers, directors or employees has employed any broker, finder or investment banker or incurred any liability for any brokerage fees, commissions, finders fees or investment banking fees in connection with the transactions contemplated herein, except that the Parent has employed and will pay the fees and expenses of Salomon Brothers Inc. 5.08 OFFER DOCUMENTS; PROXY STATEMENT; OTHER INFORMATION. None of the information included in the Offer Documents (including any amendments or supplements thereto) or any - 28 - schedules required to be filed with the SEC in connection therewith and described therein as being supplied by the Parent or the Purchaser will, at the respective times that the Offer Documents or any amendments or supplements thereto or any such schedules are filed with the SEC, 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 were made, not misleading. None of the information supplied in writing by the Parent or the Purchaser specifically for inclusion in the Proxy Statement, Schedule 14D-9 or any statement required pursuant to Section 14(f) of the Exchange Act or any other schedules or statements required to be filed with the SEC in connection therewith will 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 not misleading. 5.09 NO OTHER REPRESENTATIONS OR WARRANTIES. Each of the representations and warranties of the Parent and the Purchaser in this Agreement is true and correct as of the date of this Agreement. Any document delivered by the Parent or the Purchaser pursuant to this Agreement is a true, correct and complete copy of such document, and has not been modified or amended unless such amendment or modification is included with such document or has been delivered to the Company on or prior to the date hereof. ARTICLE VI COVENANTS OF THE PARTIES 6.01 CONDUCT OF BUSINESS OF THE COMPANY. Except as contemplated by this Agreement or as set forth on the Company Disclosure Letter, during the period from the date of this Agreement to the Effective Time, the Company and its subsidiaries will conduct their business and operations only in the ordinary and usual course of business consistent with past practice. Without limiting the generality of the foregoing, and, except as contemplated in this Agreement or as set forth on the Company Disclosure Letter, prior to the Effective Time, without the advance written consent of the Parent (which consent will not be unreasonably withheld with respect to the incurrence of indebtedness by the Company under the revolving facility provided by Wells Fargo pursuant to the Credit Agreement, as currently evidenced by the Promissory Note made by the Company in favor of Wells Fargo, dated as of June 9, 1995, in the original principal amount of $6,758,500 (the "Line of Credit Note") and the Promissory Note made by the Company in favor of Wells Fargo, dated as of August 24, 1995, in the original principal amount of $1,800,000 (the "Bridge Note"), but excluding all of the Company's other indebtedness to Wells Fargo (the "Revolving Line") pursuant to Section 6.01(b)(i)), neither the Company nor any of its subsidiaries will: - 29 - (a) Amend its Certificate of Incorporation or By-Laws or similar governing documents; (b) (i) Create, incur or assume any indebtedness for money borrowed, including obligations in respect of capital leases, except (A) purchase money mortgages granted in connection with past practice, (B) in the case of the Company, indebtedness for borrowed money incurred in the ordinary course of business not aggregating in excess of $7,000,000 outstanding at any time under the Revolving Line, reduced by the net proceeds of any sale of assets by the Company or any subsidiary out of the ordinary course of business, PROVIDED that the proceeds of any borrowing are not distributed to the stockholders of the Company; or (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person; PROVIDED, HOWEVER, that the Company and its subsidiaries may endorse negotiable instruments in the ordinary course of business consistent with past practice; (c) Declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of the Common Stock of the Company or any capital stock of any subsidiary; (d) Issue, sell, grant, purchase or redeem, or issue or sell any securities convertible into, or options with respect to, or warrants to purchase or rights to subscribe to, or subdivide or in any way reclassify, any Shares, except in any case above pursuant to the Stock Option Plans; (e) (i) Increase the aggregate amount of compensation payable or to become payable by the Company or any subsidiary to its directors, officers or employees, whether by salary or bonus, by more than two percent in the aggregate on an annual basis (excluding commission-only compensation, the rate of which shall not be increased); or (ii) increase the rate or term of, or otherwise alter, any bonus (other than any bonus permitted by clause (i) of this Section 6.01(e)), insurance, pension, severance or other employee benefit plan, payment or arrangement made to, for or with any such directors, officers or employees; (f) Enter into any agreement, commitment or transaction (other than borrowings permitted by Section 6.01(b)), except agreements, commitments or transactions in the ordinary course of business consistent with past practice; (g) Sell, transfer, mortgage, pledge, grant any security interest or permit the imposition of any lien or other encumbrance on any asset other than in the ordinary course of business consistent with past practice and except (i) pursuant to the Credit Agreement, (ii) in connection with purchase money mortgages permitted by Section 6.01(b) or (iii) for any lien or other encumbrance as to which the Company has a valid defense; - 30 - (h) Waive any right under any contract or other agreement identified on the Company Disclosure Letter if such waiver would have a Material Adverse Effect; (i) Other than as required by any change in generally accepted accounting principles, make any material change in its accounting methods or practices or make any material change in depreciation or amortization policies or rates adopted by it for accounting purposes or, other than normal writedowns or writeoffs consistent with past practices, make any writedowns of inventory or writeoffs of notes or accounts receivable; (j) Make any loan or advance to any of its stockholders, officers, directors, employees (other than advances to field sales personnel, vacation advances, relocation advances and travel advances in each case made in the ordinary course of business in a manner consistent with past practice) or make any other loan or advance to any other person or group otherwise than in the ordinary course of business consistent with past practice; (k) Terminate or fail to renew, where such renewal is at the Company's or a subsidiary's option, any contract or other agreement (excluding customer leases or contracts), the termination or failure of which to renew would have a Material Adverse Effect; (l) Enter into any collective bargaining agreement; (m) Make any addition to or modification of the Company Benefits Plans; (n) Take, agree to take, or do or, with respect to anything within the Company's or its subsidiaries control, knowingly permit to be done or to be taken anything in the conduct of its business which (i) would cause any of the representations of the Company to be or become untrue in any material respect, and (ii) would reasonably be expected to have a Material Adverse Effect, PROVIDED, HOWEVER,that nothing in this Section 6.01(n) shall affect the generality of any provision of Annex A hereto; or (o) Agree to do any of the foregoing. 6.02 NOTIFICATION OF CERTAIN MATTERS. (a) The Company shall give prompt notice to the Parent of: (i) 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; (ii) any notice or other communication from any regulatory authority in connection with the transactions contemplated by this Agreement; and (iii) the occurrence of any event having, or which insofar as can be reasonably foreseen would have, a Material Adverse Effect. (b) Between the date of this Agreement and the Effective Time, the Company shall give prompt notice to the Parent of any - 31 - proposed settlement or similar agreement ("Settlement") with the Internal Revenue Service or any other state, local or foreign governmental taxing authority providing for any adjustment with respect to any Tax Return or any additional liability for Taxes, and shall not enter into any Settlement without the prior written consent of the Parent, which consent shall not be unreasonably withheld. 6.03 ACCESS TO INFORMATION. (a) Between the date of this Agreement and the Effective Time, the Company will during ordinary business hours and upon reasonable advance notice, (i) give the Parent and the Parent's authorized representatives all access the Parent shall reasonably request to all of its and its subsidiaries' books, records (including, without limitation, the workpapers of the Company's outside accountants), contracts, commitments, plants, offices and other facilities and properties, and its and its subsidiaries' personnel, representatives, accountants and agents; PROVIDED, HOWEVER, that all such access shall take place after appropriate prior consultation with the officers of the Company, (ii) permit the Parent to make such inspections thereof as it may reasonably request (including, without limitation, observing the Company's or a subsidiary's physical inventory of its assets), (iii) cause its and its subsidiaries' officers and advisors to furnish to the Parent its financial and operating data and such other existing information with respect to its business, properties, assets, liabilities and personnel (including, without limitation, title insurance reports, real property surveys and environmental reports, if any), as the Parent may from time to time reasonably request, (iv) take such actions as the Parent reasonably deems appropriate to verify the existence and condition of equipment leased by the Company or any of its subsidiaries to its customers, and (v) permit the Parent's accountants to conduct such confirmation and testing procedures with respect to the receivables of the Company and its subsidiaries as the Parent reasonably deems appropriate; PROVIDED, HOWEVER, that (A) any such investigation shall be conducted in such a manner as not to interfere unreasonably with the operation of the business of the Company, (B) neither the Company nor any of its subsidiaries shall be required to take any action which would constitute a waiver of the attorney-client privilege, (C) neither the Company nor any of its subsidiaries need supply the Parent with any information which it is under a legal obligation not to supply, and (D) until such time as the Parent and/or its affiliates are the beneficial owners of a majority of the Shares, any such activities by the Parent prior to the purchase by the Purchaser of Shares pursuant to the Offer shall be for the purposes of verifying the accuracy of representations and warranties of the Company and the compliance by the Company with its covenants contained in this Agreement. (b) Any information provided pursuant to this Agreement shall be held by the Parent in accordance with and shall be subject to the terms of the Confidentiality Agreement dated September 2, 1994 between the Company and the Parent (the - 32 - "Confidentiality Agreement"), the term of which the parties hereby agree to extend to December 31, 1996. Notwithstanding anything herein or in the Confidentiality Agreement to the contrary, the Parent, the Purchaser or the Company may disclose any information required to be disclosed pursuant to the Exchange Act, or otherwise required or requested to be disclosed by the SEC. 6.04 FURTHER INFORMATION. The Company and the Parent shall give prompt written notice to the other of (i) any representation or warranty made by it contained in this Agreement becoming untrue or inaccurate in any material respect (including the Company, the Parent or the Purchaser receiving knowledge of any fact, event or circumstance which may cause any representation qualified as to knowledge to be or become untrue in any material respect) or (ii) the failure by it to comply with or satisfy in any material respect any covenant, condition or agreement to be complied with or satisfied by it under this Agreement; PROVIDED, HOWEVER, that no such notification shall affect the representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this Agreement. 6.05 FURTHER ASSURANCES. Consistent with the terms and conditions hereof, each party hereto will execute and deliver such instruments and take such other action as the other parties hereto may reasonably require in order to carry out this Agreement and the transactions contemplated hereby. 6.06 INTERIM FINANCIAL STATEMENTS. Within 45 days after the end of each fiscal quarter and 90 days after the end of any fiscal year after the date of this Agreement, and until the Effective Time, the Company will deliver to the Parent its Form 10-Q's or 10-K's, as the case may be, for such quarter or year. The financial statements contained therein shall fairly present their respective financial condition, results of operations and cash flows as at the date or for the periods indicated in accordance with generally accepted accounting principles consistently applied in accordance with past practice (except as may be indicated in the notes thereto and except, in the case of unaudited statements, as may be permitted by Form 10-Q of the Exchange Act), and shall be prepared in conformity with the requirements of Regulation S-X under the Exchange Act and Item 303 of Regulation S-K. 6.07 FAIRNESS OPINION. Within three business days of the execution of this Agreement, the Company shall provide to the Parent a signed copy of the written opinion of PaineWebber Incorporated that the Offer is fair to the Company stockholders from a financial point of view, which PaineWebber Incorporated has advised the Company it fully expects to be able to deliver at such time. 6.08 BEST EFFORTS. Subject to the terms and conditions of this Agreement, each of the parties hereto will use their best - 33 - efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by this Agreement and shall use its best efforts to satisfy the conditions to the transactions contemplated hereby and to obtain all waivers, permits, consents and approvals and to effect all registrations, filings and notices with or to third parties or governmental or public bodies or authorities which are necessary or desirable in connection with the transactions contemplated by this Agreement, including, but not limited to, filings to the extent required under the Exchange Act and HSR Act, and obtaining consent to the Merger from Wells Fargo Bank, National Association pursuant to the Credit Agreement. If 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 or directors of each of the parties hereto shall take such action. Without limiting the generality of the foregoing, the Parent as the sole stockholder of the Purchaser, and the Purchaser as a stockholder of the Company, will consent and/or vote in favor of the transactions contemplated hereunder, and Company, the Parent, and the Purchaser will vigorously defend against any lawsuit or proceeding, whether judicial or administrative, challenging this Agreement or the consummation of any of the transactions contemplated hereby. Subject to the terms and conditions of this Agreement, from time to time after the date hereof, without further consideration, the Company will, at its own expense, execute and deliver such documents to the Parent as the Parent may reasonably request in order to consummate the transactions contemplated by this Agreement. Subject to the terms and conditions of this Agreement, from time to time after the date hereof, without further consideration, each of the Parent and the Purchaser will, at its own expense, execute and deliver such documents to the Company as the Company may reasonably request in order to consummate the transactions contemplated by this Agreement. 6.09 FILINGS. The Company and the Parent will file, or cause to be filed, as promptly as possible and, in the case of the Parent in no event later than five business days after the date hereof, with the United States Federal Trade Commission (the "FTC") and the Antitrust Division of the United States Department of Justice (the "Department of Justice") pursuant to the HSR Act the notification required by the HSR Act, including all requisite documents, materials and information therefor, and request early termination of the waiting period under the HSR Act. Each of the Company and the Parent shall furnish to the other such necessary information and reasonable assistance as the other may request in connection with its preparation of any filing or submission which is necessary under the HSR Act. The Company and the Parent shall each keep the other apprised of the status of any inquiries or requests for additional information made by any governmental authority and shall comply promptly with any such inquiry or request. - 34 - 6.10 PUBLIC ANNOUNCEMENTS. The initial press release with respect to the transactions contemplated hereby shall be a joint press release, and thereafter the Company and the Parent shall consult with each other before issuing any press release or otherwise making any public statements with respect to the transactions contemplated hereby and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by law or any listing agreement with a national securities exchange or with National Association of Securities Dealers, Inc., or in order to carry out the fiduciary duties of the Board, as advised by counsel. 6.11 INDEMNITY; D&O INSURANCE. (a) The Parent shall cause all rights to indemnification by the Company now existing in favor of each present and former director or officer of the Company (hereinafter referred to in this Section as the "Indemnified Parties") as provided in the Company's By-Laws to survive the Merger and to continue in full force and effect as rights to indemnification by the Surviving Corporation for a period of five years following the Effective Time. The Parent shall not permit the indemnification agreements between the Company and each of the Indemnified Parties that are in existence as of the date of this Agreement to be amended during the term of such indemnification agreements without the consent of the respective parties thereto. (b) Subject to the terms set forth herein, the Surviving Corporation shall indemnify and hold harmless, to the fullest extent permitted under applicable law (and shall also advance expenses as incurred by an Indemnified Party to the extent permitted under applicable law, provided the person to whom expenses are advanced provides an undertaking to repay such advances if it is ultimately determined that such person is not entitled to indemnification), each Indemnified Party against any costs or expenses (including attorneys' fees), judgments, fines, losses, claims, damages, liabilities and amounts paid in settlement in connection with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative or investigative, arising out of or pertaining to any action, alleged action, omission or alleged omission occurring on or prior to the Effective Time in their capacity as director or officer (including, without limitation, any claims, actions, suits, proceedings and investigations which arise out of or relate to the transactions contemplated by this Agreement) for a period of five years after the Effective Time, provided that, in the event any claim or claims are asserted or made within such five year period, all rights to indemnification in respect of any such claim or claims shall continue until final disposition of any and all such claims. (c) Any Indemnified Party wishing to claim indemnification under this Section 6.11, upon learning of any such claim, action, suit, proceeding or investigation, shall promptly notify the Surviving Corporation thereof, but the failure to so - 35 - notify shall not relieve the Surviving Corporation of any obligation to indemnify such Indemnified Party or of any other obligation imposed by this Section 6.11 unless and to the extent that such failure prejudices the Parent or the Surviving Corporation; it being understood that it shall be deemed to materially prejudice the Parent or the Surviving Corporation, as the case may be, if, as a result of such failure to notify, the Parent or the Surviving Corporation is not given an opportunity to assume the defense of such claim, action, suit, proceeding or investigation within a reasonably prompt time after such claim, action, suit, proceeding or investigation is asserted or initiated. In the event of any such claim, action, suit, proceeding or investigation, (i) the Surviving Corporation or the Parent shall have the right to assume the defense thereof and shall not be liable to such Indemnified Party for any legal expenses of other counsel or any other expenses subsequently incurred by such Indemnified Party in connection with the defense hereof, except that if the Parent or Surviving Corporation elects not to assume such defense or counsel for the Indemnified Party advises that there are issues which raise conflicts of interest between the Parent or Surviving Corporation and the Indemnified Party, the Indemnified Party may retain counsel satisfactory to it, and the Surviving Corporation shall pay all reasonable fees and expenses of such counsel for the Indemnified Party promptly as statements therefore are received; PROVIDED, HOWEVER, that in no event shall the Parent or Surviving Corporation be required to pay fees and expenses, including disbursements and other charges, for more than one firm of attorneys in any one legal action or group of related legal actions unless (A) counsel for the Indemnified Party advises that there are issues which raise conflicts of interest that require more than one firm of attorneys, or (B) local counsel of record is needed in any jurisdiction in which any such action is pending, (ii) the Parent and the Indemnified Party shall cooperate in the defense of any such matter, and (iii) the Parent and the Surviving Corporation shall not be liable for any settlement effected without the prior written consent of one of them (which consent shall not be unreasonably withheld); and PROVIDED, FURTHER, that the Parent and Surviving Corporation shall not have any obligation hereunder to any Indemnified Party if and to the extent a court of competent jurisdiction ultimately determines, and such determination shall have become final, that the indemnification of such Indemnified Party in the manner contemplated hereby is prohibited by applicable law. (d) For two years after the Effective Time, the Parent shall cause the Surviving Corporation to use reasonable efforts to maintain, if available for an annual premium not in excess of $150,000, the officers' and directors' liability insurance covering the Indemnified Parties who are presently covered by the Company's officers' and directors' liability insurance (copies of which have been delivered to the Parent), with respect to acts or omissions occurring at or prior to the Effective Time, on terms no less favorable than those in effect on the date hereof or at the Effective Time, or if such insurance coverage is not available for - 36 - an annual premium not in excess of $150,000, to obtain the amount of coverage that is available for an annual premium of $150,000. (e) In the event the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any person (except for any sale of the Company's molding business whether through a merger, sale of assets, sale of stock or otherwise), then and in each such case, proper provisions shall be made so that the successors and assigns of the Surviving Corporation, or at Parent's option, Parent, shall assume the obligations set forth in this Section 6.11. Notwithstanding the foregoing, if a majority of the shares of common stock of the Company or Surviving Corporation are sold or transferred to a third party, but the Parent, or any subsidiary of Parent, retains ownership either of any of Company's subsidiaries that immediately prior to the date hereof were engaged in, or substantially all of the assets that prior to the date hereof were used in, the plastics compounding business of the Company, the Parent shall assume the obligations of the Surviving Corporation set forth in this Section 6.11. (f) In the event that any of the provisions of Section 6.11(a), (b) or (c) above would conflict with any of the provisions of the Company's By-Laws or the indemnification agreements referenced in Section 6.11(a) above in a manner that, if held applicable, would limit or restrict, or impose conditions or obligations on the exercise by any of the Indemnified Parties of, any of the indemnification rights granted to them under the Company's By-Laws or such indemnification agreements, then, in any such event or circumstance the applicable provisions of the Company's By-Laws or the indemnification agreements shall control, as it is the intention of the parties that the Indemnified Parties shall have indemnification rights no less favorable than those which they have under the Company's By-Laws and such indemnification agreements, as in effect on the date hereof. (g) The covenants contained in this Section 6.11 shall survive the Effective Time until fully discharged and are intended to benefit each of the Indemnified Parties. 6.12 OTHER POTENTIAL BIDDERS. The Company, its affiliates and their respective officers, directors, employees, investment bankers, attorneys and other representatives and agents shall immediately cease any existing discussions or negotiations, if any, with any parties conducted heretofore with respect to any acquisition of all or any material portion of the assets of, or any equity interest in, the Company or any business combination with the Company. Prior to the acceptance for payment of Shares, the Company, directly or indirectly, (a) may furnish information and access, in each case only in response to unsolicited requests therefor, to any corporation, partnership, person or other entity - 37 - or group pursuant to confidentiality agreements that do not prohibit or restrict disclosure to the Parent of any matter other than confidential information regarding any such corporation, partnership, person or other entity or group and (b) may participate in discussions and negotiate with such entity or group concerning any proposed merger, sale of assets, sale of shares of capital stock, acquisition of Shares other than pursuant to the Offer or the Merger or similar transaction involving the Company or any division of the Company (an "Acquisition Proposal"), only if such entity or group to which information or access is furnished or discussions or negotiations are held has submitted a written proposal to the Board relating to any such transaction and the Board by a majority vote has determined in its good faith judgment, based as to legal matters on the advice of legal counsel, that failing to take such action would constitute a breach of the Board's fiduciary obligations under applicable law. Except as set forth above, neither the Company or any of its affiliates, nor any of its or their respective officers, directors, employees, representatives or agents, shall, directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, or provide any information to, any corporation, partnership, person or other entity or group (other than the Parent and the Purchaser, any affiliate or associate of the Parent and the Purchaser or any designees of the Parent and the Purchaser) concerning any Acquisition Proposal, or take any other action to facilitate the making of a proposal that constitutes or could reasonably be expected to lead to an Acquisition Proposal. Without limiting the foregoing, it is understood that any violation of the restrictions set forth in the preceding sentence by any executive officer of the Company or any of its subsidiaries shall be deemed to be a breach of this Section 6.12 by the Company. The Company shall use its best efforts to ensure that the officers, directors and employees of the Company and its subsidiaries and any investment banker or other advisor or representatives retained by the Company are aware of the restrictions set forth in the preceding sentences, and the Company hereby represents that the Board has adopted resolutions directing the officers, directors and employees of the Company and its subsidiaries to comply with such restrictions. The Company promptly shall advise the Parent orally and in writing of any Acquisition Proposal and any inquiries or developments with respect thereto. Neither the Board nor any committee thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to the Parent or the Purchaser the approval or recommendation by the Board of the Offer, the Merger or this Agreement, or (ii) approve or recommend, or propose to approve or recommend, any Acquisition Proposal. Notwithstanding the foregoing, nothing contained in this Agreement shall prevent the Board from approving or recommending to the Company stockholders any unsolicited tender offer or exchange offer by a third party as contemplated by Rules 14d-9 and 14e-2 promulgated under the Exchange Act (and, in connection therewith, withdrawing or modifying the approval or recommendation by the Board of the Offer, the Merger or this Agreement) in the event any unsolicited - 38 - takeover proposal shall have been made by a third party if, in the good faith judgment of the Board, based as to legal matters on the advice of legal counsel, withdrawing or modifying such approval or recommendation is required under applicable law in the proper discharge of its fiduciary duties. Notwithstanding the foregoing, nothing contained in this Section 6.12 shall prevent the Company from negotiating and executing agreements relating to the sale by the Company of its remaining parcel of real estate located in Corona, California as long as (i) the terms and conditions of any such agreement shall be reasonably acceptable to Parent and (ii) the proceeds (net of reasonable expenses of the Company relating to such sale) of any such sale are used to reduce the indebtedness of the Company under the revolving credit facility under the Credit Agreement. ARTICLE VII CONDITIONS TO THE MERGER 7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The respective obligations of each party to this Agreement to consummate the Merger shall be subject to the following conditions, which have not been waived at or prior to the Closing: (a) The Purchaser shall have accepted for payment Shares tendered pursuant to the Offer; (b) This Agreement and the Merger shall have been approved and adopted by the requisite vote or consent, if any is required, of the stockholders of the Company required by the Company's Certificate of Incorporation and the DGCL; (c) Any waiting period (and any extension thereof) applicable to the Merger under the HSR Act shall have expired or been terminated; and (d) No order, statute, rule, regulation, execution order, stay, decree, judgment, or injunction shall have been enacted, entered, issued, promulgated or enforced by any court or governmental authority which prohibits or restricts the consummation of the Merger. 7.02 CONDITIONS TO THE OBLIGATIONS OF THE PARENT AND THE PURCHASER TO EFFECT THE MERGER. The obligation of the Purchaser and the Parent to effect the Merger shall be further subject to satisfaction of the conditions, unless waived by the Parent, that (i) the Company shall have performed and complied in all material respects with the agreements and obligations contained in Section 1.03, (ii) the Company shall have performed and complied in all material respects with the agreements and obligations contained in this Agreement (other than in Section 1.03) required to be performed and complied with by it at or prior to the Effective - 39 - Time, except where the failure to have so performed and complied is not reasonably expected to have a Material Adverse Effect, (iii) all outstanding Options shall have been surrendered to the Company as provided in Section 3.05 of this Agreement and cancelled by the Company, and (iv) the Parent shall have received a comfort letter, in form and substance reasonably requested by the Parent, from Grant Thornton or another nationally recognized public accounting firm regarding the updating of the Company's most recent financial statements. 7.03 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY TO EFFECT THE MERGER. The obligation of the Company to effect the Merger shall be further subject to the Parent and the Purchaser having performed and complied in all material respects with the agreements and obligations contained in this Agreement required to be performed and complied with by each of them at or prior to the Effective Time, except where the failure to have so performed or complied is not reasonably expected to have a material adverse effect on the ability of the Parent or the Purchaser to consummate the transactions contemplated by this Agreement. ARTICLE VIII CLOSING 8.01 TIME AND PLACE. The closing of the Merger (the "Closing") shall take place at the offices of Jones, Day, Reavis & Pogue, North Point, 901 Lakeside Avenue, Cleveland, Ohio 44114, at 10:00 a.m. local time on a date to be specified by the parties which shall be no later than the third business day after the date on which the last of the closing conditions set forth in Article VII is satisfied or waived (if waivable) unless another time, date or place is agreed upon in writing by the parties hereto. The date on which the Closing actually occurs is herein referred to as the "Closing Date." 8.02 FILINGS AT THE CLOSING. At the Closing, the Purchaser shall cause the Delaware Certificate of Merger to be filed and recorded with the Secretary of State of the State of Delaware in accordance with the provisions of Section 103 of the DGCL, and shall take any and all other lawful actions and do any and all other lawful things necessary to cause the Merger to become effective. ARTICLE IX TERMINATION; AMENDMENT; WAIVER 9.01 TERMINATION. This Agreement may be terminated and the Offer (if Purchaser has not accepted Shares for payment) and the Merger may be abandoned at any time prior to the Effective Time: - 40 - (a) by mutual written consent of the Parent, the Purchaser and the Company; (b) by the Parent and the Purchaser or the Company if any court of competent jurisdiction in the United States or other United States governmental body shall have issued an order, decree or ruling or taken any other final action restraining, enjoining or otherwise prohibiting the Merger or the acceptance for payment and payment for the Shares in the Offer and such order, decree, ruling or other action is or shall have become nonappealable; (c) by the Parent and the Purchaser if, due to an occurrence or circumstance which would result in a failure to satisfy any of the conditions set forth in Annex A hereto, the Purchaser shall have (A) failed to commence the Offer within five business days following the date of the initial public announcement of the Offer, (B) terminated the Offer or allowed the Offer to expire without the purchase of any Shares thereunder, or (C) failed to pay for Shares pursuant to the Offer within 75 days following the commencement of the Offer; (d) by the Company if (i) there shall not have been a material breach of any representation, warranty, covenant or agreement on the part of the Company which would entitle the Parent or the Purchaser to terminate this Agreement pursuant to Section 9.01(e) and, due to an occurrence or circumstance which would result in a failure to satisfy any of the conditions set forth in Annex A hereto, the Purchaser shall have (A) failed to commence the Offer within five business days following the date of the initial public announcement of the Offer, (B) terminated the Offer or allowed the Offer to expire without the purchase of any Shares thereunder, or (C) failed to pay for Shares pursuant to the Offer within 75 days following the commencement of the Offer, or (ii) prior to the purchase of Shares pursuant to the Offer, a corporation, partnership, person or other entity or group shall have made a bona fide offer with respect to an Acquisition Proposal that the Board by a majority vote determines in its good faith judgment and in the exercise of its fiduciary duties, based as to legal matters on the advice of legal counsel and as to financial matters on the written fairness opinion of an investment banking firm of national reputation, is more favorable to the Company's stockholders than the Offer and the Merger and that the failure to terminate this Agreement and accept such offer would be inconsistent with the proper exercise of the Board's fiduciary duties, provided that such termination under this clause (ii) shall not be effective until payment of the fee required by Section 9.03(b) hereof; (e) by the Parent and the Purchaser prior to the purchase of Shares pursuant to the Offer, if (i) there shall have been a breach of any representation or warranty on the part of the Company having a Material Adverse Effect or materially adversely affecting (or materially delaying) the consummation of the Offer, (ii) there shall have been a breach of any covenant or agreement - 41 - on the part of the Company resulting in a Material Adverse Effect or materially adversely affecting (or materially delaying) the consummation of the Offer, (iii) the Company shall engage in negotiations with any entity or group (other than the Parent or the Purchaser) that has proposed a Third Party Acquisition (as defined below), (iv) the Board shall have withdrawn or modified (including by amendment of the Schedule 14D-9) in a manner adverse to the Purchaser, its approval or recommendation of the Offer, this Agreement or the Merger or shall have recommended another offer, or shall have adopted any resolution to effect any of the foregoing, or (v) a majority of the Shares on a fully diluted basis shall not have been tendered in the Offer by the expiration date of the Offer and on or prior to such date an entity or group (other than the Parent or the Purchaser) shall have made and not withdrawn a proposal with respect to a Third Party Acquisition; or (f) by the Company if (i) there shall have been a breach of any representation or warranty on the part of the Parent or the Purchaser which materially adversely affects (or materially delays) the consummation of the Offer or (ii) there shall have been a material breach of any covenant or agreement on the part of the Parent or the Purchaser and which materially adversely affects (or materially delays) the consummation of the Offer. "Third Party Acquisition" means the occurrence of any of the following events (i) the acquisition of the Company by merger or otherwise by any person (which includes a "person" as such term is defined in Section 13(d)(3) of the Exchange Act) or entity other than the Parent, the Purchaser or any affiliate thereof (a "Third Party"); (ii) the acquisition by a Third Party of more than 30% of the total assets of the Company, taken as a whole; (iii) the acquisition by a Third Party of 30% or more of the Shares; (iv) the adoption by the Company of a plan of liquidation or the declaration or payment of an extraordinary dividend; or (v) the repurchase by the Company of more than 20% of the Shares. 9.02 EFFECT OF TERMINATION. In the event of the termination of this Agreement and the abandonment of the Offer and the Merger pursuant to Section 9.01, this Agreement shall forthwith become void and have no effect, without any liability on the part of any party hereto or its affiliates, directors, officers or stockholders, provided that no such termination shall relieve any of the Company, the Parent or the Purchaser from liability for damages arising (a) from any willful or intentional breach of this Agreement or (b) from their obligations under Sections 4.22, 5.07, 6.03(b) and 9.03, this Section 9.02 and Article X. If this Agreement is terminated as provided herein, upon request therefor each party (the "Redelivering Party") shall redeliver all documents, work papers and other materials obtained (whether before or after execution of this Agreement) by the Redelivering Party from the requesting party in connection with the transaction contemplated hereby, together with all copies thereof in the possession of the Redelivering Party. - 42 - 9.03 FEES AND EXPENSES. (a) In the event the Parent and the Purchaser terminate this Agreement pursuant to Section 9.01(c) (other than any such termination based upon the failure to satisfy clause (iii)(d) of Annex A) or 9.01(e)(i) hereof, or the Company terminates this Agreement pursuant to Section 9.01(d)(i), or in the event that this Agreement is terminated in a manner described in Section 9.03(b), the Company shall reimburse the Parent, the Purchaser and their affiliates (not later than one business day after submission of statements therefor) for all actual documented out-of-pocket fees and expenses, not to exceed $750,000, actually and reasonably incurred by any of them or on their behalf in connection with the Offer and the Merger and the consummation of all transactions contemplated by this Agreement (including, without limitation, attorneys' fees, fees payable to financing sources, investment bankers, counsel to any of the foregoing, and accountants and filing fees and printing costs). Upon the termination of this Agreement pursuant to any provision described in the first sentence of this Section 9.01(a), Parent and Purchaser will promptly provide the Company with an estimate of the amount of such fees and expenses and a request for reimbursement hereunder, and will provide the Company in due course with invoices or other reasonable evidence of such expenses upon request. The Company shall in any event pay the amount requested (not to exceed $750,000) within one business day of such request, subject to the Company's right to demand a return of any portion as to which invoices are not received in due course. (b) In the event the Company terminates this Agreement pursuant to Section 9.01(d)(ii) or in the event the Parent and the Purchaser terminate this Agreement pursuant to 9.01(e)(ii), (iii), (iv) or (v) hereof, the Parent and the Purchaser would suffer direct and substantial damages, which damages cannot be determined with reasonable certainty. To compensate the Parent and the Purchaser for such damages, the Company shall pay to the Purchaser the amount of $1,400,000 as liquidated damages immediately upon such a termination as well as all amounts to which the Parent and the Purchaser would be entitled pursuant to Section 9.03(a); PROVIDED, HOWEVER, that if the Parent and the Purchaser terminate this Agreement pursuant to 9.01(e)(iii) hereof, the Company shall pay to the Purchaser the amount of $700,000 as liquidated damages immediately upon such a termination (as well as all amounts to which the Parent and the Purchaser would be entitled pursuant to Section 9.03(a)), and if within 12 months thereafter the Company enters into an agreement with respect to a Third Party Acquisition, or a Third Party Acquisition occurs, the Company shall pay to the Purchaser the amount of $700,000 within one business day following the execution of such an agreement or such occurrence, as the case may be; PROVIDED FURTHER, HOWEVER, that Parent and Purchaser will only be entitled to recover only one $1,400,000 payment or two $700,000 payments of liquidated damages under this Section 9.03(b) (and one payment of fees and expenses pursuant to Section 9.03(a)) even if this Agreement is or may be terminated under more than one of the provisions of Section 9.01 - 43 - described in the first sentence of this Section 9.03(b). It is specifically agreed that the amount to be paid pursuant to this Section 9.03 represents liquidated damages and not a penalty. (c) Except as specifically provided in this Section 9.03 each party shall bear its own expenses in connection with this Agreement and the transactions contemplated hereby. ARTICLE X MISCELLANEOUS 10.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS. The representations, warranties and agreements of the parties contained in Sections 2.06, 3.01, 3.02 (but only to the extent that such Section expressly relates to actions to be taken after the Effective Time), 3.03, 3.04, 3.05, 6.05, 6.08, 6.09, 6.11 and Article X hereof, shall survive the consummation of the Offer and the Merger. The agreements of the parties contained in Sections 6.03(b), 9.02, 9.03 and Article X hereof and the representations and warranties in Sections 4.22 and 5.07 shall survive the termination of this Agreement without termination. All other representations, warranties, agreements and covenants in this Agreement shall not survive the consummation of the Offer and the Merger or the termination of this Agreement. 10.02 AMENDMENT AND MODIFICATION. Subject to applicable law, this Agreement may be amended, modified or supplemented only by written agreement of the Parent (for itself and the Purchaser) and the Company at any time prior to the Effective Time with respect to any of the terms contained herein executed by duly authorized officers of the respective parties, except that after the earlier of (a) the purchase by the Purchaser of a majority of the Shares on a fully diluted basis, and (b) the meeting of stockholders to approve the Merger contemplated by this Agreement, the price per Share to be paid pursuant to this Agreement to the holders of Shares shall in no event be decreased and the form of consideration to be received by the holders of such Shares in the Merger shall in no event be altered without the approval of such holders. 10.03 WAIVER OF COMPLIANCE; CONSENTS. At any time prior to the Effective Time, the parties hereto may extend the time for performance of any of the obligations or other acts or waive any inaccuracies in the representations and warranties contained herein or in the documents delivered pursuant hereto. Any failure of the Parent (for itself and the Purchaser), on the one hand, or the Company, on the other hand, to comply with any obligation, covenant, agreement or condition herein may be waived in writing by the Parent (for itself and the Purchaser) or the Company, respectively, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of or estoppel with - 44 - respect to any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto or any extensions, such consent or extension shall be given in writing in a manner consistent with the requirements for a waiver of compliance as set forth in this Section 10.03. 10.04 COUNTERPARTS. This Agreement may be executed in any number of counterparts each of which shall be deemed an original but all of which together shall constitute one and the same instrument. 10.05 GOVERNING LAW. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to its conflicts of laws rules. 10.06 NOTICES. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or mailed by registered or certified mail (return receipt requested) or by overnight courier service to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) If to the Company, to: Prior to the Effective Time, CIMCO, Inc. 265 Briggs Avenue Costa Mesa, California 92626-4555 Attention: Chief Executive Officer After the Effective Time, CIMCO, Inc. c/o M.A. Hanna Company Suite 36-5000 200 Public Square Cleveland, Ohio 44114-2304 Attention: General Counsel with copies to: Stradling, Yocca, Carlson & Rauth, P.C. 660 Newport Center Drive Suite 1600 Newport Beach, California 92660-6441 Attention: Nick E. Yocca, Esq. (b) if to the Parent or the Purchaser, to: M. A. Hanna Company Suite 36-5000 200 Public Square Cleveland, Ohio 44114-2304 Attention: General Counsel - 45 - with copies to: Jones, Day, Reavis & Pogue North Point 901 Lakeside Avenue Cleveland, Ohio 44114 Attention: Lyle G. Ganske, Esq. 10.07 ENTIRE AGREEMENT, ASSIGNMENT ETC. This Agreement, which hereby incorporates the Company Disclosure Letter, the Parent Disclosure Letter, the Confidentiality Agreement and the Stockholder Tender Agreement, embodies the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and, except for Section 6.11, is not intended to confer upon any other person any rights or remedies hereunder. This Agreement supersedes all prior agreements and understanding of the parties with respect to the subject matter hereof other than the Confidentiality Agreement. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but neither this Agreement nor any of the rights, interest or obligations hereunder shall be assigned by any party hereto without the prior written consent of the other parties hereto, except that the Parent shall have the right to assign the rights of the Purchaser to any other (directly or indirectly) wholly-owned subsidiary of the Parent without the prior written consent of the Company. 10.08 VALIDITY. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions of this Agreement, which shall remain in full force and effect. 10.09 HEADINGS; CERTAIN DEFINITIONS. The Articles and Section headings contained in this Agreement are solely for the purpose of reference, are not part of the agreement of the parties and shall not affect in any way the meaning or interpretation of this Agreement. Every reference herein to the word "days," if not preceded by the word "business," shall mean calendar days, and every reference herein to the words "business days" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in the city of New York are authorized or obligated by law to close. 10.10 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 - 46 - being in addition to any other remedy to which they are entitled at law or in equity. [INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the date first above written. CIMCO, INC. By: /s/ Russell T. Gilbert -------------------------------------- Name: Russell T. Gilbert Title: President and Chief Executive Officer M.A. HANNA COMPANY By: /s/ Michael S. Duffey -------------------------------------- Name: Michael S. Duffey Title: Vice President HANWEST, INC. By: /s/ Michael S. Duffey -------------------------------------- Name: Michael S. Duffey Title: Vice President 47 ANNEX A The capitalized terms used herein have the meanings set forth in the Agreement and Plan of Merger to which this Annex A is attached Notwithstanding any other provision of the Agreement and Plan of Merger to which this ANNEX A is attached (the "MERGER AGREEMENT") or the Offer, the Purchaser shall not be required to accept for payment, purchase or pay for any Shares of the Company tendered, and may terminate or, subject to the terms of the Merger Agreement, amend the Offer and may postpone the acceptance for payment of and payment for any Shares, if prior to the time of acceptance for payment of Shares tendered pursuant to the Offer: (i) at least a majority of the Shares on a fully diluted basis shall not have been validly tendered and, if tendered, not withdrawn immediately prior to the expiration of the Offer (the "MINIMUM CONDITION"); (ii) any waiting period applicable to the Offer pursuant to the HSR Act shall not have expired or been terminated; (iii) at any time before the time of acceptance for payment for any such Shares any of the following shall occur or exist: (a) there shall have been instituted or be pending any action, proceeding, application, claim or counterclaim by any government or governmental authority or agency, domestic or foreign, before any court or governmental regulatory or administrative agency, authority or tribunal, domestic or foreign, (i) challenging the acquisition by the Parent or the Purchaser of the Shares, seeking to restrain or prohibit the making or consummation of the Offer or the Merger or seeking to obtain from the Parent or the Purchaser any damages that would result in a Material Adverse Effect if such were assessed against the Company, (ii) seeking to prohibit or materially limit the ownership or operation by the Parent or the Surviving Corporation of all or any material portion of the business or assets of the Company or compel the Parent or the Surviving Corporation to dispose of or to hold separate all or any material portion of the business or assets of the Company, or to impose any material limitation on the ability of the Company or the Surviving Corporation to conduct such business or own such assets, or (iii) seeking to impose material limitations on the ability of the Parent (or any other affiliate of the Parent) to acquire or hold or to exercise full rights of ownership of the Shares, including, but not limited to, the right to vote the Shares purchased by them on all matters properly presented to the stockholders of the Company; or (b) there shall be any statute, rule, regulation, judgment, order or injunction enacted, promulgated, entered, enforced or deemed applicable to the Offer, the Merger or the Merger Agreement, or any other action shall have been taken by any government, governmental authority or court, domestic or foreign, other than the routine application to the Offer or the Merger of waiting periods under the HSR Act, that has, or has a substantial likelihood of resulting in, any of the consequences referred to in clauses (i) through (iii) of paragraph (a) above; or (c) the Company shall have breached or failed to perform in any material respect any of its obligations, covenants or agreements contained in the Merger Agreement, or any of the representations and warranties of the Company set forth in the Merger Agreement shall not have been true and correct in any material respect when made or, except for any representations and warranties made as of a specific date, shall have ceased to be true and correct in any material respect as if made on and as of the scheduled expiration of the Offer, as it may be extended from time to time (the "EXPIRATION DATE") (or, in the case of representations and warranties that are specifically qualified as to materiality, shall not have been true and correct when made or shall have ceased to be true and correct on and as of the Expiration Date); or (d) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on the New York Stock Exchange, Inc. (ii) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States (whether or not mandatory), (iii) the commencement of a war, armed hostilities or other international or national calamity directly or indirectly involving the United States and having a Material Adverse Effect on or materially adversely affecting (or materially delaying) the consummation of the Offer, (iv) any limitation (whether or not mandatory), by any U.S. governmental authority or agency on, or any other event that, in the judgment of the Parent, is substantially likely to materially adversely affect, the extension of credit by banks or other financial institutions, or (v) from the date of the Merger Agreement through the date of termination or expiration of the Offer, a decline of at least 25% in the Standard & Poor's 500 Index; or (e) the Merger Agreement shall have been terminated in accordance with its terms; or (f) prior to the purchase of Shares pursuant to the Offer, the Company Board of Directors shall have withdrawn or modified (including by amendment of the Schedule 14D-9) in a manner adverse to the Parent its approval or recommendation of the Offer, the Merger Agreement or the Merger or shall have recommended another offer for the purchase of the Shares, which, in the sole judgment of the Parent in any such case, and regardless of the circumstances (including any action or omission by the Parent) giving rise to such condition, makes it inadvisable to proceed with such acceptance for payment except where as a result of the Company's receipt of an unsolicited acquisition proposal from a third party (A) the Company issues to its stockholders a communication that contains only the statements permitted by Rule 14d-9(e) under the Securities Exchange Act of 1934 (and does not otherwise withdraw, modify or amend its approval or recommendation of the transactions contemplated hereby) and (B) within five business days of issuing such communication the Company publicly reconfirms its approval and recommendation of the transactions contemplated by the Offer and the Merger Agreement; (g) There shall have occurred since July 31, 1995, a change, occurrence or circumstance in the Company's business having a Material Adverse Effect thereon; or (h) The failure of the Company to obtain any of the waivers or consents of Wells Fargo pursuant to the letter dated December 19, 1995 from Wells Fargo to the Company, Compounding Technology, Inc., and Medical Molding Corporation of America. EX-99.C-2 11 EXHIBIT 99.C.2 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- STOCKHOLDER TENDER AGREEMENT by and between HANWEST, INC. and RUSSELL T. GILBERT Dated as of December 19, 1995 - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- STOCKHOLDER TENDER AGREEMENT STOCKHOLDER TENDER AGREEMENT, dated as of December 19, 1995 (this "Agreement"), by and between Hanwest, Inc., a Delaware corporation ("Purchaser"), and Russell T. Gilbert ("Stockholder"). WHEREAS, the Stockholder is the owner of 539,734 shares (the "Shares") of Common Stock, $.01 par value per share (the "Common Stock"), of CIMCO, Inc., a Delaware corporation (the "Company"), including 4,394 Shares owned of record by Stockholder for the benefit of his grandchildren and 10,257 Shares (the "ESOP Shares") credited under the Company's Employee Stock Ownership Plan (the "ESOP") to the account of Stockholder as of the date hereof, and holds stock options (the "Options") to acquire an aggregate of 76,250 shares of Common Stock granted pursuant to the Company's 1991 Incentive Stock Option Plan and the Company's 1988 Incentive Stock Option Plan; and WHEREAS, M.A. Hanna Company, a Delaware corporation ("Parent"), the Purchaser and the Company, have entered into an Agreement and Plan of Merger, dated as of the date hereof (as amended from time to time, the "Merger Agreement"), which provides, among other things, that, upon the terms and subject to the conditions therein, Purchaser will make a cash tender offer (the "Offer") for all of the outstanding shares of Common Stock and will merge with the Company (the "Merger"); and WHEREAS, as a condition to the willingness of Parent and Purchaser to enter into the Merger Agreement, Purchaser has requested that the Stockholder agree, and in order to induce Parent and Purchaser to enter into the Merger Agreement, the Stockholder has agreed, to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing premises and the representations, warranties, covenants and agreements set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and subject to the terms and conditions set forth herein, the parties hereto hereby agree as follows: 1. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The Stockholder represents and warrants to the Purchaser as follows: (a) The Stockholder is the sole record (except for the ESOP Shares) and beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which meaning will apply for all purposes of this Agreement) of, and has good title to, all of the Shares, and there exist no liens, claims, security interests, options, proxies, voting agreements, charges or encumbrances of whatever nature ("Liens") affecting the Shares, subject, in the case of the ESOP Shares, to the terms of the ESOP. (b) Upon transfer to the Purchaser by the Stockholder of the Shares upon consummation of the Offer or the Merger (whichever is earlier), Purchaser will have good title to the Shares, free and clear of all Liens. (c) Other than the Options, the Shares constitute all of the securities (as defined in Section 3(10) of the Exchange Act, which definition will apply for all purposes of this Agreement) of the Company beneficially owned, directly or indirectly, by the Stockholder (excluding any securities beneficially owned by any of his affiliates or associates (as such terms are defined in Rule 12b-2 under the Exchange Act, which definition will apply for all purposes of this Agreement) as to which he does not have voting or investment power). (d) Except for the Shares and the Options, the Stockholder does not, directly or indirectly, beneficially own or have any option, warrant or other right to acquire any securities of the Company that are or may by their terms become entitled to vote or any securities that are convertible or exchangeable into or exercisable for any securities of the Company that are or may by their terms become entitled to vote, nor is the Stockholder subject to any contract, commitment, arrangement, understanding or relationship (whether or not legally enforceable) that allows or obligates him to vote or acquire any securities of the Company. (e) The execution and delivery of this Agreement by the Stockholder does not, and the performance by the Stockholder of his obligations hereunder will not, constitute a violation of, conflict with, result in a default (or an event which, with notice or lapse of time or both, would result in a default) under, or result in the creation of any Lien on any Shares under, (i) any contract, commitment, agreement, understanding, arrangement or restriction of any kind to which Stockholder is a party or by which the Stockholder is bound or (ii) any judgment, writ, decree, order or ruling applicable to the Stockholder. (f) Neither the execution and delivery of this Agreement nor the performance by the Stockholder of his obligations hereunder will (i) violate any order, writ, injunction or judgment applicable to the Stockholder or (ii) to the best knowledge of Stockholder, violate any law, decree, statute, rule or regulation applicable to the Stockholder or require any consent, authorization or approval of, filing with or notice to, any court, administrative agency or other governmental body or authority, other than any required notices or filings pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the "HSR Act") or the federal securities laws. 2 2. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and warrants to the Stockholder as follows: (a) Purchaser is duly organized and validly existing and in good standing under the laws of the State of Delaware, has the requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby, and has taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement. This Agreement has been duly and validly executed and delivered by Purchaser and constitutes the legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except that (i) the enforceability hereof may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereinafter in effect, affecting creditors' rights generally, and (ii) the availability of the remedy of specific performance or injunctive or other forms of equitable relief may be subject to equitable defenses and would be subject to the discretion of the court before which any proceeding therefor may be brought. (b) The execution and delivery of this Agreement by Purchaser does not, and the performance by Purchaser of its obligations hereunder will not, constitute a violation of, conflict with, or result in a default (or an event which, with notice or lapse of time or both, would result in a default) under, its certificate of incorporation or bylaws or any contract, commitment, agreement, understanding, arrangement or restriction of any kind to which Purchaser is a party or by which Purchaser is bound or any judgment, writ, decree, order or ruling applicable to Purchaser. (c) Neither the execution and delivery of this Agreement nor the performance by Purchaser of its obligations hereunder will violate any order, writ, injunction, judgment, law, decree, statute, rule or regulation applicable to Purchaser or require any consent, authorization or approval of, filing with, or notice to, any court, administrative agency or other governmental body or authority, other than any required notices or filings pursuant to the HSR Act or the federal securities laws. 3. TENDER OF SHARES. The Stockholder will tender and sell (and not withdraw) pursuant to and in accordance with the terms of the Offer all of the Shares. Upon the purchase of all the Shares pursuant to the Offer in accordance with this Section 3, this Agreement will terminate. In the event, notwithstanding the provisions of the first sentence of this Section 3, any Shares are for any reason withdrawn from the Offer or are not purchased pursuant to the Offer, such Shares will remain subject to the terms of this Agreement. The Stockholder acknowledges that Purchaser's obligation to accept for payment and pay for the Shares in the Offer is subject to all the terms and conditions of the Offer. 3 4. TRANSFER OF THE SHARES. During the term of this Agreement, except as otherwise provided herein, the Stockholder will not (a) offer to sell, sell, pledge or otherwise dispose of or transfer any interest in or encumber with any Lien any of the Shares, (b) acquire any shares of Common Stock or other securities of the Company (otherwise than in connection with a transaction of the type described in Section 7 and any such additional shares or securities will be deemed Shares and included in the Shares subject to this Agreement), including, without limitation, by exercising any of the Options, (c) deposit the Shares into a voting trust, enter into a voting agreement or arrangement with respect to the Shares or grant any proxy or power of attorney with respect to the Shares, or (d) enter into any contract, option or other arrangement or undertaking with respect to the direct or indirect acquisition or sale, assignment or other disposition of or transfer of any interest in or the voting of any shares of Common Stock or any other securities of the Company. 5. VOTING OF SHARES. The Stockholder, by this Agreement, does hereby constitute and appoint Purchaser, or any nominee thereof, with full power of substitution, during and for the term of this Agreement, as his true and lawful attorney and proxy for and in his name, place and stead, to vote each of such Shares at any annual, special or adjourned meeting of the stockholders of the Company (and this appointment will include the right to sign his name (as stockholder) to any consent, certificate or other document relating to the Company which the laws of the State of Delaware may require or permit) (a) in favor of the Merger, the execution and delivery by the Company of the Merger Agreement and the approval and adoption of the terms thereof and hereof; (b) against any action or agreement that would result in a breach in any respect of any covenant, agreement, representation or warranty of the Company under the Merger Agreement; and (c) against the following actions (other than the Merger and the other transactions contemplated by the Merger Agreement): (i) any extraordinary corporate transaction, such as a merger, consolidation or other business combination involving the Company or its subsidiaries; (ii) a sale, lease or transfer of a material amount of assets of the Company or one of its subsidiaries, or a reorganization, recapitalization, dissolution or liquidation of the Company or its subsidiaries; (iii) (A) any change in a majority of the persons who constitute the board of directors of the Company as of the date hereof; (B) any change in the present capitalization of the Company or any amendment of the Company's Certificate of Incorporation or By-Laws, as amended to date; (C) any other material change in the Company's corporate structure or business; or (D) any other action which, in the case of each of the matters referred to in clauses (iii)(A), (B), (C) and (D), is intended, or could reasonably be expected, to impede, interfere with, delay, postpone, or adversely affect the Merger and the other transactions contemplated by this Agreement and the Merger Agreement. This proxy and power of attorney is a proxy and power 4 coupled with an interest, and the Stockholder declares that it is irrevocable. The Stockholder hereby revokes all and any other proxies with respect to the Shares that he may have heretofore made or granted. 6. ENFORCEMENT OF THE AGREEMENT. The Stockholder acknowledges 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 Purchaser will 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 it is entitled at law or in equity, including without limitation under Section 12 hereof. 7. ADJUSTMENTS. The number and type of securities subject to this Agreement will be appropriately adjusted in the event of any stock dividends, stock splits, recapitalizations, combinations, exchanges of shares or the like or any other action that would have the effect of changing the Stockholder's ownership of the Company's capital stock or other securities. 8. COMPLIANCE WITH MERGER AGREEMENT. Stockholder shall comply with the requirements of Section 6.12 of the Merger Agreement. 9. TERMINATION. Except for Section 12 hereof which will only terminate as and when provided therein, this Agreement will terminate on the earlier of (a) the date the Merger Agreement is terminated in accordance with its terms, (b) the purchase of all the Shares pursuant to the Offer in accordance with Section 3, and (c) March 31, 1996. 10. EXPENSES. All fees and expenses incurred by either of the parties hereto will be borne by the party incurring such fees and expenses. 11. BROKERAGE. Purchaser and the Stockholder represent and warrant to the other that the negotiations relevant to this Agreement have been carried on by Purchaser, on the one hand, and the Stockholder, on the other hand, directly with the other, and that there are no claims for finder's fees or brokerage commissions or other like payments in connection with this Agreement or the transactions contemplated hereby. Purchaser, on the one hand, and the Stockholder, on the other hand, will indemnify and hold harmless the other from and against any and all claims or liabilities for finder's fees or brokerage commissions or other like payments incurred by reason of action taken by him, it or any of them, as the case may be. 12. FEE. If (a) Parent and Purchaser or the Company terminates the Merger Agreement pursuant to Section 9.01(c), (d) 5 or (e) thereof and (b) on or after the date hereof and not later than one year from the date of such termination, (i) the Board of Directors of the Company approves or recommends any proposal or offer (an "Acquisition Proposal") concerning any merger, sale of assets, sale of shares of capital stock or similar transaction involving the Company other than from Purchaser, or (ii) the Company enters into an agreement with respect to a merger, acquisition, consolidation, recapitalization, liquidation, dissolution or similar transaction involving, or any purchase of all or a substantial portion of the assets or equity securities of, the Company, or (iii) Stockholder disposes of any or all of his Shares to any person not an affiliate or an associate of Purchaser or to the Company or any affiliate thereof (or realizes cash proceeds in respect of such Shares as a result of a distribution to the Stockholder by the Company following the sale of a material amount of the Company's assets) in connection with a transaction proposed, described or set forth in such Acquisition Proposal or agreement or pursuant to such acquisition or (iv) the Company undergoes a recapitalization, dissolution, liquidation or similar transaction proposed, described or set forth in such Acquisition Proposal or agreement or the Company issues an extraordinary dividend or other distribution in accordance with such Acquisition Proposal or agreement (each, a "Subsequent Transaction") at a per share price or with equivalent per share proceeds, as the case may be (the "Subsequent Price"), with a value in excess of $10.50 (the "Offer Price"), then the Stockholder will promptly pay to Purchaser an amount equal to one-half of the product of (x) the excess of the Subsequent Price over the Offer Price and (y) the number of Shares disposed of or otherwise participating in the Subsequent Transaction. In the event of any stock dividends, stock splits, recapitalizations, combinations, exchanges of shares or the like or any other action that would have the effect of changing the Stockholder's ownership of the Company's capital stock or other securities, the Offer Price will be appropriately adjusted for the purpose of this Section 12. 13. MISCELLANEOUS. (a) All representations and warranties contained herein will survive for one year after the termination hereof. (b) Any provision of this Agreement may be waived at any time by the party that is entitled to the benefits thereof. No such waiver, amendment or supplement will be effective unless in a writing and is signed by the party or parties sought to be bound thereby. Any waiver by any party of a breach of any provision of this Agreement will not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement or one or more sections hereof will not be considered a waiver or deprive that party of the right thereafter 6 to insist upon strict adherence to that term or any other term of this Agreement. (c) This Agreement contains the entire agreement among Purchaser and the Stockholder with respect to the subject matter hereof, and supersedes all prior agreements among Purchaser and the Stockholder with respect to such matters. This Agreement may not be amended, changed, supplemented, waived or otherwise modified, except upon the delivery of a written agreement executed by the parties hereto. (d) This Agreement will be governed by and construed in accordance with the laws of the State of Delaware applicable to contracts made and performed in that state. (e) The descriptive headings contained herein are for convenience and reference only and will not affect in any way the meaning or interpretation of this Agreement. (f) All notices and other communications hereunder will be in writing and will be given (and will be deemed to have been duly given upon receipt) by delivery in person, by telecopy, or by registered or certified mail, postage prepaid, return receipt requested, addressed as follows: If to the Stockholder to: Mr. Russell T. Gilbert c/o Cimco, Inc. 265 Briggs Avenue Costa Mesa, California 92626-4555 Telecopier: (714) 549-1167 With a copy to: O'Melveny & Myers Suite 1700 610 Newport Center Drive Newport Beach, California 92660 Attention: David A. Krinsky, Esq. Telecopier:(714) 669-6994 If to the Purchaser to: Hanwest, Inc. c/o M.A. Hanna Company Suite 36-5000 200 Public Square Cleveland, Ohio 44114-2304 Attention: General Counsel Telecopier: (216) 589-4200 7 with copies to: Jones, Day, Reavis & Pogue North Point 901 Lakeside Avenue Cleveland, Ohio 44114 Attention: Lyle G. Ganske, Esq. Telecopier: (216) 579-0212 or to such other address as any party may have furnished to the other parties in writing in accordance herewith. (g) This Agreement may be executed in any number of counterparts, each of which will be deemed to be an original, but all of which together will constitute one agreement. (h) This Agreement is binding upon and is solely for the benefit of the parties hereto and their respective successors, legal representatives and assigns. Neither this Agreement nor any of the rights, interests or obligations under this Agreement will be assigned by any of the parties hereto without the prior written consent of the other parties, except that Purchaser will have the right to assign to Purchaser or any other direct or indirect wholly owned subsidiary of Parent any and all rights and obligations of Purchaser under this Agreement, including the right to purchase Shares tendered by the Stockholder pursuant to the terms hereof and the Offer, provided that any such assignment will not relieve Purchaser from any of its obligations hereunder. (i) If any term or other provision of this Agreement is determined to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other terms and provisions of this Agreement will nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party hereto. Upon any such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto will negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated by this Agreement are consummated to the extent possible. (j) All rights, powers and remedies provided under this Agreement or otherwise available in respect hereof at law or in equity will be cumulative and not alternative, and the exercise of any thereof by either party will not preclude the simultaneous or later exercise of any other such right, power or remedy by such party. 8 IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on the date first above written. HANWEST, INC. By: /s/ Michael S. Duffy ---------------------------------- Name: Michael S. Duffy Title: Vice President Stockholder /s/ Russell T. Gilbert -------------------------------------- Russell T. Gilbert 9 EX-99.C-3 12 EXHIBIT 99.C.3 M.A. HANNA COMPANY Suite 36-5000 200 Public Square Cleveland, Ohio 44114-2304 (216) 589-4000 (216) 489-4200 (Facsimile) September 2, 1994 CONFIDENTIAL CIMCO, Inc. 265 Briggs Avenue Costa Mesa, CA 92626-4555 Attention: Mr. Russell T. Gilbert, President and Chief Operating Officer Gentlemen: In connection with our discussion of a possible transaction involving our respective companies (the "Transaction"), each party hereto will be furnishing the other with certain information with respect to its respective businesses (the "Business") which is either non-public, confidential or proprietary in nature. All information furnished to each party hereto, its respective directors, employees, attorneys, accountants and financial advisors (collectively "representatives") (whether before or after the date of this Agreement), together with analyses, compilations, studies or other documents prepared by each party or its respective representatives which contain or otherwise reflect such information or our review of, or interest in, the Business or the Transaction is hereafter referred to as the "Information." In consideration of each party being furnished with the Information, each party agrees that: 1. The information will be kept confidential and will not, without the prior written consent of the disclosing party, be disclosed by the receiving party, or by its representatives, in any manner whatsoever, in whole or in part, and shall not be used by the receiving party or its representatives for any purpose other than evaluating the Transaction, except as and to the extent required by a court or regulatory order. Moreover, the receiving party agrees to transmit the Information only to its representatives who need to know the Information for the purpose of evaluating the Transaction and who are informed by the receiving party of the confidential nature of the Information and who agree to be bound by the terms of this Agreement. 2. Without the prior written consent of the other party and except as required by a court or regulatory order, each party and its respective representatives will not disclose to any other corporation, partnership or other entity or any other individual the fact that Information has been made available or that discussions or negotiations are taking place concerning a possible Transaction. 3. The Information which is furnished to each party, or to its respective representatives, will be destroyed or returned to the disclosing party immediately upon its request without retaining any copies thereof. That portion of the Information which consists of analyses, compilations, studies or other documents prepared by each party, or by its respective representatives, will be destroyed or held by each party and kept confidential and subject to the terms of this Agreement. 4. This Agreement shall be inoperative as to such portions of the Information which (i) are or become generally available to the public through no fault or action by the receiving party or by its representatives; (ii) become available to the receiving party or to the general public on a non-confidential basis from a source, other than the disclosing such portions by a contractual, legal or fiduciary obligation; or (iii) were known to the receiving party on a non-confidential basis prior to its disclosure to the receiving party by the disclosing party or one of its representatives or are developed independently by the receiving party without reference to any of the Information disclosed to the receiving party. 5. Except as otherwise provided therein, this Agreement supersedes all previous agreements and shall terminate on December 31, 1995, unless mutually extended. If the foregoing is acceptable, please sign and return the enclosed copy of this letter, whereupon this will become a binding Agreement. Sincerely, M.A. HANNA COMPANY By /s/_John S. Pyke, Jr.______________ John S. Pyke, Jr. Vice President, General Counsel and Secretary Enclosure Agreed this 13th day of September, 1994 CIMCO, Inc. By /s/_Russell T. Gilbert_____________ Russell T. Gilbert President and CEO 2 EX-99.C-4 13 EXHIBIT 99.C.4 M.A. HANNA COMPANY Suite 36-5000 200 Public Square Cleveland, Ohio 44114-2304 (216) 589-4000 (216) 489-4200 (Facsimile) HIGHLY CONFIDENTIAL VIA TELECOPIER AND OVERNIGHT COURIER November 2, 1995 The Board of Directors CIMCO, Inc. 265 Briggs Avenue Costa Mesa, CA 92626-4555 Dear Madam and Sirs: We hereby offer to acquire all of the capital stock of CIMCO for $10.50 per share in cash on the following terms and conditions: 1. Subject to the conditions set forth in this letter, Hanna will promptly negotiate with CIMCO a Merger Agreement containing provisions standard in such agreements. After approval of the Merger Agreement by the Boards of Directors of Hanna and CIMCO, Hanna will make a tender offer to acquire all of the outstanding stock of CIMCO (the "Acquisition"). Concurrently with the approval of the Merger Agreement, the CIMCO Board will also approve the Hanna option to acquire in the tender the CIMCO shares owned by Russell T. Gilbert and the CIMCO shares subject to acquisition by exercise of stock options held by Mr. Gilbert, and the amendment of CIMCO's stockholder rights plan to exclude Hanna's transaction from its operation. It is understood that the proposed acquisition is not contingent upon Mr. Gilbert's purchase of the molding division. 2. For purposes of this offer, we have assumed that (a) the Phase 1 environmental audits of CIMCO's properties being prepared for CIMCO will not indicate any actual or potential substantial liabilities, (b) the Respiratory Medical Products business will be sold for a cash consideration of at least $2,568,000, the purchaser will assume trade liabilities relating to the business of no less than $290,000 and CIMCO will not retain any substantial liabilities arising out of that business and (c) the two Corona properties of CIMCO will be sold for at least a gross price of $1,130,000 and $650,000 each and the cash proceeds of the sales will be used to reduce CIMCO's indebtedness and the purchaser of the Corona property now occupied by Compounding Technology, Inc. will enter into a lease with Compounding Technology, Inc. on arms-length, commercial terms. 3. Hanna reserves the right to complete its due diligence investigation and requests delivery of definitive documentation reflecting the audits and transactions referred to in paragraph 2 above. 4. After reviewing the PaineWebber engagement letter dated August 16, 1995, Hanna requests that CIMCO obtain written confirmation from PaineWebber that it agrees that in the event that the transaction described in this letter is consummated, its M&A Advisory Fee will not apply to transactions executed subsequent to the date of acceptance of this letter. 5. For a period of 30 days commencing with the acceptance of this letter subject to customary fiduciary out provisions based upon advice of counsel, CIMCO will work exclusively with Hanna on the Acquisition and will not directly or indirectly encourage, invite, pursue or take any action to facilitate other offers to purchase CIMCO and/or its subsidiaries or any assets of CIMCO and/or its subsidiaries or effect any other business combination involving CIMCO and/or its subsidiaries. In the event CIMCO shall receive such an offer, it will immediately notify Hanna and provide details of the offer. For a period of one year after the date of this letter CIMCO also agrees to reimburse Hanna for its expenses incurred in connection with the transactions proposed in this letter, not to exceed $500,000, if CIMCO closes an alternative transaction within such year and Hanna has not terminated its participation for a reason other than the fault of CIMCO. 6. From and after the date of receipt of this letter CIMCO agrees to conduct its businesses in the ordinary course consistent with past practice and will grant Hanna the right to review and veto any disposal or acquisition of stock or assets having a value in excess of $500,000 proposed to be made after the acceptance of this letter which veto rights shall not be used unreasonably. 7. CIMCO will not make any press release, announcement, report, disclosure, or filing with respect to the transaction described in this letter without the prior written consent of Hanna, except as required by law based on the advice of counsel. 8. Closing of the Acquisition transaction described in this letter is subject among other things to: - Approval by the governmental agencies and regulatory authorities; and - the absence at the time of the Acquisition of any environmental, health, safety, product or other liabilities known to CIMCO's management which, if realized, would have a material adverse affect on the financial condition of CIMCO. 9. It is the intention of Hanna, and by signing this letter CIMCO acknowledges that it is CIMCO's intention as well, that this letter and any actions of the parties with respect hereto, not be deemed to constitute legally binding obligations except with respect to the matters described in paragraphs 5, 6 and 7 above, or an obligation or commitment to enter into any definitive agreements. Any legal obligations binding upon the parties hereto with respect to the transactions described in this letter, except with respect to paragraphs 5, 6 and 7 above, is subject to, and shall exist only upon the due execution and delivery of the definitive agreements with respect to such transactions, and all obligations and rights of the parties hereto (except as aforesaid) shall be governed by such agreements. Your signature below shall indicate your intentions and obligations with respect to the matters discussed above; please return a fully signed copy to us. Upon your execution of this letter, we will deliver to you a draft Merger Agreement which we have already prepared. If we have not received a fully signed copy of this letter by 5:00 p.m. EST on Friday, November 3, 1995, this offer will expire and the intentions stated in this letter shall be null and void. Whether or not you elect to accept this letter, please be kind enough to provide a written response. Very truly yours, M. A. HANNA COMPANY /s/ Martin D. Walker - --------------------------------------------- Martin D. Walker Chairman and Chief Executive Officer cc: PaineWebber, Incorporated, Attention: G.R. Brundage Accepted this 3rd day of November, 1995. CIMCO, Inc. /s/ Russell T. Gilbert - --------------------------------------------- Russell T. Gilbert President and Chief Executive Officer M.A. HANNA COMPANY Suite 36-5000 200 Public Square Cleveland, Ohio 44114-2304 (216) 589-4000 (216) 589-4200 (Facsimile) HIGHLY CONFIDENTIAL December 15, 1995 The Board of Directors CIMCO, Inc. 265 Briggs Avenue Costa Mesa, CA 92626-4555 Attention: Mr. Russell T. Gilbert President and Chief Executive Officer Dear Madam and Sirs: Please reference our letter dated November 2, 1995 to you, accepted by CIMCO, Inc. on November 3, 1995, as amended by our letters dated December 4, 1995 and December 11, 1995. This will confirm our agreement reached today to amend the first sentence of paragraph 5 of the letter to extend the period of exclusivity to and including December 22, 1995. All other provisions of the November 2, 1995 letter shall remain in full force and effect. Your signature below shall indicate your obligations with respect to the matters discussed above; please return a fully signed copy to us. Thank you. Very truly yours, M. A. HANNA COMPANY /s/ John S. Pyke, Jr. - --------------------------------------------- John S. Pyke, Jr. Vice President, General Counsel and Secretary Accepted this 15th day of December, 1995. CIMCO, Inc. /s/ Russell T. Gilbert - --------------------------------------------- Russell T. Gilbert President and Chief Executive Officer M.A. HANNA COMPANY Suite 36-5000 200 Public Square Cleveland, Ohio 44114-2304 (216) 589-4000 (216) 589-4200 (Facsimile) HIGHLY CONFIDENTIAL December 11, 1995 The Board of Directors CIMCO, Inc. 265 Briggs Avenue Costa Mesa, CA 92626-4555 Attention: Mr. Russell T. Gilbert President and Chief Executive Officer Dear Madam and Sirs: Please reference our letter dated November 2, 1995 to you, accepted by CIMCO, Inc. on November 3, 1995, as amended by our letter dated December 4, 1995. This will confirm our agreement reached today to amend the first sentence of paragraph 5 of the letter to extend the period of exclusivity to and including December 15, 1995. All other provisions of the November 2, 1995 letter shall remain in full force and effect. Your signature below shall indicate your obligations with respect to the matters discussed above; please return a fully signed copy to us. Thank you. Very truly yours, M. A. HANNA COMPANY /s/ Michael S. Duffey - --------------------------------------------- Michael S. Duffey Vice President, Chief Financial Officer and Treasurer Accepted this 11th day of December, 1995. CIMCO, Inc. /s/ Russell T. Gilbert - --------------------------------------------- Russell T. Gilbert President and Chief Executive Officer M.A. HANNA COMPANY Suite 36-5000 200 Public Square Cleveland, Ohio 44114-2304 (216) 589-4000 (216) 589-4200 (Facsimile) HIGHLY CONFIDENTIAL December 4, 1995 The Board of Directors CIMCO, Inc. 265 Briggs Avenue Costa Mesa, CA 92626-4555 Attention: Mr. Russell T. Gilbert President and Chief Executive Officer Dear Madam and Sirs: Please reference our letter dated November 2, 1995 to you, accepted by CIMCO, Inc. on November 3, 1995. This will confirm our agreement reached on December 1, 1995 to amend the first sentence of paragraph 5 of the letter to extend the period of exclusivity to and including December 11, 1995. All other provisions of the November 2, 1995 letter shall remain in full force and effect. Your signature below shall indicate your obligations with respect to the matters discussed above; please return a fully signed copy to us. Thank you. Very truly yours, M. A. HANNA COMPANY /s/ John S. Pyke, Jr. - --------------------------------------------- John S. Pyke, Jr. Vice President, General Counsel and Secretary Accepted this 4th day of December, 1995. CIMCO, Inc. /s/ Russell T. Gilbert - --------------------------------------------- Russell T. Gilbert President and Chief Executive Officer -----END PRIVACY-ENHANCED MESSAGE-----