-----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, FccMNZnysiHHWaZDvmCQXnV4jrAgkFRtlx658SGUIWcWYsfpHKPEzpVxzg7H5XjX tsptaVjphaEFuDZ7kSVUzQ== 0000950133-99-001645.txt : 19990505 0000950133-99-001645.hdr.sgml : 19990505 ACCESSION NUMBER: 0000950133-99-001645 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 19990504 GROUP MEMBERS: EASTMAN CHEMICAL CO GROUP MEMBERS: LIPSTICK ACQUISITION INC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: LAWTER INTERNATIONAL INC CENTRAL INDEX KEY: 0000058091 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS, MATERIALS, SYNTH RESINS & NONVULCAN ELASTOMERS [2821] IRS NUMBER: 361370818 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-14022 FILM NUMBER: 99609875 BUSINESS ADDRESS: STREET 1: ONE TERRA WAY STREET 2: 8601 95TH STREET CITY: KENOSHA STATE: WI ZIP: 53412-7716 BUSINESS PHONE: 4149477300 MAIL ADDRESS: STREET 1: ONE TERRA WAY STREET 2: 8601 95TH STREET CITY: KENOSHA STATE: WI ZIP: 53412-7716 FORMER COMPANY: FORMER CONFORMED NAME: LAWTER CHEMICALS INC DATE OF NAME CHANGE: 19810602 FORMER COMPANY: FORMER CONFORMED NAME: KRUMBHAAR CHEMICALS INC DATE OF NAME CHANGE: 19701117 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: EASTMAN CHEMICAL CO CENTRAL INDEX KEY: 0000915389 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS, MATERIALS, SYNTH RESINS & NONVULCAN ELASTOMERS [2821] IRS NUMBER: 621539359 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: PO BOX 511 CITY: KINGSPORT STATE: TN ZIP: 37662 BUSINESS PHONE: 6152292000 MAIL ADDRESS: STREET 1: P O BOX BOX 511 B-54D CITY: KINGSPORT STATE: TN ZIP: 37662 SC 14D1 1 SCHEDULE 14D-1 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ LAWTER INTERNATIONAL, INC. (NAME OF SUBJECT COMPANY) LIPSTICK ACQUISITION CORP. EASTMAN CHEMICAL COMPANY (BIDDERS) COMMON STOCK, PAR VALUE $1.00 PER SHARE (TITLE OF CLASS OF SECURITIES) 520786104 (CUSIP NUMBER OF CLASS OF SECURITIES) HAROLD L. HENDERSON 100 NORTH EASTMAN ROAD KINGSPORT, TENNESSEE 37662 TELEPHONE: (423) 229-2000 (NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER) ------------------------ WITH A COPY TO: MICHAEL P. ROGAN, ESQ. MARCIA R. NIRENSTEIN, ESQ. SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 1440 NEW YORK AVENUE, N.W. WASHINGTON, D.C. 20005 TELEPHONE: (202) 371-7000 CALCULATION OF FILING FEE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Transaction valuation* Amount of filing fee** $432,358,128 $86,472
- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- * For purposes of calculating the filing fee only. This calculation assumes the purchase of an aggregate of 35,294,541 shares of common stock, par value $1.00 per share, of Lawter International, Inc. at $12.25 net per share in cash. The amount reflects the purchase of 33,068,076 outstanding shares and 2,226,465 shares issuable pursuant to the exercise of options. ** The amount of the filing fee, calculated in accordance with Rule 0-11(d) of the Securities Exchange Act of 1934, as amended, equals 1/50th of one percent of the aggregate value of cash offered by Lipstick Acquisition Corp. for such number of shares. [ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount previously paid: Not applicable. Filing Party: Not applicable. Form or registration Date Filed: Not applicable. no.: Not applicable.
Page 1 of 8 pages Exhibit Index is Located on Page 8 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 CUSIP NO. 520786104 14D-1 PAGE 2 OF 8 - --------------------------------------------------------------------------- 1. NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Lipstick Acquisition Corp. (E.I.N. applied for) - --------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] - --------------------------------------------------------------------------- 3. SEC USE ONLY - --------------------------------------------------------------------------- 4. SOURCE OF FUNDS* AF - --------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) or 2(f) [ ] - --------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - --------------------------------------------------------------------------- 7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON None - --------------------------------------------------------------------------- 8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES* [ ] - --------------------------------------------------------------------------- 9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) - --------------------------------------------------------------------------- 10. TYPE OF REPORTING PERSON* CO - ---------------------------------------------------------------------------
2 3 CUSIP NO. 520786104 14D-1 PAGE 3 OF 8 - --------------------------------------------------------------------------- 1. NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Eastman Chemical Company (E.I.N. 62-1539359) - --------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] - --------------------------------------------------------------------------- 3. SEC USE ONLY - --------------------------------------------------------------------------- 4. SOURCE OF FUNDS* WC - --------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) or 2(f) [ ] - --------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - --------------------------------------------------------------------------- 7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON None - --------------------------------------------------------------------------- 8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES* [ ] - --------------------------------------------------------------------------- 9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) - --------------------------------------------------------------------------- 10. TYPE OF REPORTING PERSON* CO - ---------------------------------------------------------------------------
3 4 ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is Lawter International, Inc., a Delaware corporation (the "Company"). The address of the Company's principal executive offices is One Terra Way, 8601 95th Street, Pleasant Prairie, Wisconsin 53142. (b) This Statement on Schedule 14D-1 relates to the offer by Lipstick Acquisition Corp. (the "Purchaser"), a Delaware corporation and a wholly owned subsidiary of Eastman Chemical Company ("Parent"), a Delaware corporation, to purchase all shares of common stock, par value $1.00 per share (the "Shares"), of the Company upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 4, 1999, and in the related Letter of Transmittal (which, together with any amendments or supplements thereto, constitute the "Offer"), at a purchase price of $12.25 per share, net to the tendering stockholder in cash, without interest thereon. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of April 27, 1999 (the "Merger Agreement"), by and among Parent, the Purchaser and the Company. Pursuant to the Merger Agreement and the Delaware General Corporation Law, as amended (the "DGCL"), as soon as practicable after the completion of the Offer and satisfaction or waiver, if permissible, of all conditions set forth in the Merger Agreement, including the purchase of Shares pursuant to the Offer and the approval and adoption of the Merger Agreement by the stockholders of the Company (if required by applicable law), the Purchaser shall be merged with and into the Company (the "Merger") and each Share then outstanding, other than Shares held by (i) the Company or any of its subsidiaries, (ii) Parent or any of its subsidiaries, including the Purchaser and (iii) stockholders who properly perfect their dissenters' rights under the DGCL, will be converted into the right to receive $12.25 in cash or any higher price per Share paid in the Offer (the "Merger Consideration"), without interest thereon. The Company has represented and warranted to Parent and the Purchaser in the Merger Agreement that, as of April 27, 1999, 33,068,076 Shares were issued and outstanding and 2,226,465 Shares were issuable pursuant to the exercise of options. The Merger Agreement provides, among other things, that the Company will not, without the prior written consent of Parent, issue any additional Shares (except upon the exercise of options outstanding on the date thereof) or other securities convertible into, or exercisable or exchangeable for, Shares. The information set forth in the Introduction of the Offer to Purchase annexed hereto as Exhibit (a)(1) is incorporated herein by reference. (c) The information set forth in Section 6 ("Price Range of the Shares; Dividends") of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d); (g) This Statement is being filed by the Purchaser and Parent. The information set forth in Section 9 ("Certain Information Concerning Parent and the Purchaser") of the Offer to Purchase and Schedule I thereto is incorporated herein by reference. (e) and (f) The information set forth in Section 9 ("Certain Information Concerning Parent and the Purchaser") of the Offer to Purchase is incorporated herein by reference. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a)-(b) The information set forth in the Introduction, Section 9 ("Certain Information Concerning Parent and the Purchaser"), Section 11 ("Background of the Offer; Purpose of the Offer and the Merger; the Merger Agreement and Certain Other Agreements") and Section 12 ("Plans for the Company; Other Matters") of the Offer to Purchase is incorporated herein by reference. 4 5 ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a)-(b) The information set forth in Section 10 ("Source and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. (c) Not applicable. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. (a)-(e) The information set forth in the Introduction, Section 11 ("Background of the Offer; Purpose of the Offer and the Merger; the Merger Agreement and Certain Other Agreements") and Section 12 ("Plans for the Company; Other Matters") of the Offer to Purchase is incorporated herein by reference. (f)-(g) The information set forth in Section 7 ("Effect of the Offer on the Market for the Shares; NYSE Listing; Exchange Act Registration; Margin Regulations") of the Offer to Purchase is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) The information set forth in the Introduction and Section 9 ("Certain Information Concerning Parent and the Purchaser") of the Offer to Purchase are incorporated herein by reference. (b) The information set forth in Section 9 ("Certain Information Concerning Parent and the Purchaser") of the Offer to Purchase 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 the Introduction and Section 9 ("Certain Information Concerning Parent and the Purchaser"), Section 11 ("Background of the Offer; Purpose of the Offer and the Merger; the Merger Agreement and Certain Other Agreements") and Section 12 ("Plans for the Company; Other Matters") of the Offer to Purchase is incorporated herein by reference. ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in the Introduction and Section 16 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. Not applicable. ITEM 10. ADDITIONAL INFORMATION. (a) Not applicable. (b)-(c) The information set forth in the Introduction and Section 15 ("Certain Legal Matters") of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Section 7 ("Effect of the Offer on the Market for the Shares; NYSE Listing; Exchange Act Registration; Margin Regulations") and Section 15 ("Certain Legal Matters") of the Offer to Purchase is incorporated herein by reference. (e) Not applicable. (f) The information set forth in the Offer to Purchase and the Letter of Transmittal, copies of which are attached hereto as Exhibits (a)(1) and (a)(2), respectively, is incorporated herein by reference. 5 6 ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase, dated May 4, 1999. (2) Letter of Transmittal. (3) Notice of Guaranteed Delivery. (4) Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees. (6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (7) Summary Advertisement as published on May 4, 1999. (8) Text of Press Release, dated April 28, 1999, issued by Parent (incorporated by reference to Current Report on Form 8-K, filed by Parent on May 3, 1999). (9) Text of Press Release, dated May 4, 1999, issued by Parent. (b) Not applicable. (c)(1) Agreement and Plan of Merger, dated as of April 27, 1999 by and among Parent, the Purchaser and the Company (incorporated by reference to Current Report on Form 8-K, filed by Parent on May 3, 1999). (2) Short Form Merger Option Agreement, dated as of April 27, 1999 by and among Parent, the Purchaser and the Company (incorporated by reference to Current Report on Form 8-K, filed by Parent on May 3, 1999). (3) Confidentiality Agreement, dated as of October 30, 1998 by and among Parent and the Company. (4) Employment Agreement, dated as of April 27, 1999, between Parent, the Company and John P. O'Mahoney. (5) Letter Agreement, dated April 27, 1999, between Parent and John P. O'Mahoney, granting stock options. (d) Not applicable. (e) Not applicable. (f) Not applicable. 6 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: May 4, 1999 LIPSTICK ACQUISITION CORP. By: /s/ ALLAN R. ROTHWELL ------------------------------------ Name: Allan R. Rothwell Title: President EASTMAN CHEMICAL COMPANY By: /s/ ALLAN R. ROTHWELL ------------------------------------ Name: Allan R. Rothwell Title: Senior Vice President and Chief Financial Officer 7 8 EXHIBIT INDEX (a)(1) Offer to Purchase, dated May 4, 1999. (2) Letter of Transmittal. (3) Notice of Guaranteed Delivery. (4) Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees. (5) Letter to Clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and other Nominees. (6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (7) Summary Advertisement as published on May 4, 1999. (8) Text of Press Release, dated April 28, 1999, issued by Parent (incorporated by reference to Current Report on Form 8-K, filed by Parent on May 3, 1999). (9) Text of Press Release, dated May 4, 1999, issued by Parent. (b) Not applicable. (c)(1) Agreement and Plan of Merger, dated as of April 27, 1999 by and among Parent, the Purchaser and the Company (incorporated by reference to Current Report on Form 8-K, filed by Parent on May 3, 1999). (2) Short Form Merger Option Agreement, dated as of April 27, 1999 by and among Parent, the Purchaser and the Company (incorporated by reference to Current Report on Form 8-K, filed by Parent on May 3, 1999). (3) Confidentiality Agreement, dated as of October 30, 1998 by and among Parent and the Company. (4) Employment Agreement, dated as of April 27, 1999, between Parent, the Company and John P. O'Mahoney. (5) Letter Agreement, dated April 27, 1999, between Parent and John P. O'Mahoney, granting stock options. (d) Not applicable. (e) Not applicable. (f) Not applicable. 8 EX-99.A1 2 OFFER TO PURCHASE DATED MAY 4, 1999 1 Exhibit (a)(1) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF LAWTER INTERNATIONAL, INC. AT $12.25 NET PER SHARE IN CASH BY LIPSTICK ACQUISITION CORP., A WHOLLY OWNED SUBSIDIARY OF EASTMAN CHEMICAL COMPANY THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JUNE 1, 1999, UNLESS THE OFFER IS EXTENDED. THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED AS OF APRIL 27, 1999, BY AND AMONG EASTMAN CHEMICAL COMPANY ("PARENT"), LIPSTICK ACQUISITION CORP. (THE "PURCHASER") AND LAWTER INTERNATIONAL, INC. (THE "COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER (EACH AS DEFINED HEREIN), AND HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED HEREIN) THAT NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT OR THE PURCHASER (IF ANY), REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT. THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. SEE SECTION 14. ------------------------ IMPORTANT Any stockholder desiring to tender all or any portion of such stockholder's Shares (as defined herein) should either (i) complete and sign the enclosed Letter of Transmittal (or a facsimile thereof) in accordance with the Instructions in the Letter of Transmittal, have such stockholder's signature thereon guaranteed (if required by Instruction 1 to the Letter of Transmittal), mail or deliver the Letter of Transmittal (or a facsimile thereof) and any other required documents to the Depositary (as defined herein) and either deliver the certificates for such Shares to the Depositary or tender such Shares pursuant to the procedure for book-entry transfer set forth in Section 3 of this Offer to Purchase or (ii) request such stockholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such stockholder. Any stockholder whose Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee to tender such Shares. Any stockholder who desires to tender Shares and whose certificates evidencing such Shares are not immediately available, or who cannot comply with the procedures for book-entry transfer on a timely basis, or who cannot deliver all required documents to the Depositary prior to the expiration of the Offer, may tender such Shares by following the procedures for guaranteed delivery set forth in Section 3 of this Offer to Purchase. Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. Requests for additional copies of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and other tender offer materials may be directed to the Information Agent or brokers, dealers, commercial banks or trust companies. ------------------------ The Dealer Manager for the Offer is: MERRILL LYNCH & CO. May 4, 1999 2 TABLE OF CONTENTS INTRODUCTION....................................................... 1 THE OFFER.......................................................... 3 1. Terms of the Offer.......................................... 3 2. Acceptance for Payment and Payment for Shares............... 4 3. Procedures for Tendering Shares............................. 5 4. Withdrawal Rights........................................... 8 5. Certain United States Federal Income Tax Consequences....... 8 6. Price Range of the Shares; Dividends........................ 9 7. Effect of the Offer on the Market for the Shares; NYSE Listing; Exchange Act Registration; Margin Regulations...... 9 8. Certain Information Concerning the Company.................. 10 9. Certain Information Concerning Parent and the Purchaser..... 12 10. Source and Amount of Funds.................................. 14 11. Background of the Offer; Purpose of the Offer and the Merger; the Merger Agreement and Certain Other Agreements... 14 12. Plans for the Company; Other Matters........................ 25 13. Dividends and Distributions................................. 27 14. Conditions to the Offer..................................... 27 15. Certain Legal Matters....................................... 29 16. Fees and Expenses........................................... 32 17. Miscellaneous............................................... 32 SCHEDULE I INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER......................................... I-1
3 To the Holders of Common Stock of Lawter International, Inc.: INTRODUCTION Lipstick Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Eastman Chemical Company, a Delaware corporation ("Parent"), hereby offers to purchase all outstanding shares of common stock, par value $1.00 per share (the "Shares"), of Lawter International, Inc., a Delaware corporation (the "Company"), at a price of $12.25 per Share, net to the seller in cash, without interest (the "Offer Price"), upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which, as amended or supplemented from time to time, collectively constitute the "Offer"). Tendering stockholders of record who tender Shares directly will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser pursuant to the Offer. Stockholders who hold their shares through a bank or broker should check with such institution as to whether they charge any service fees. The Purchaser will not pay such service fees. The Purchaser will pay all fees and expenses of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), as Dealer Manager (in such capacity, the "Dealer Manager"), ChaseMellon Shareholder Services, L.L.C., as Depositary (the "Depositary"), and Kissel Blake, as Information Agent (the "Information Agent"), incurred in connection with the Offer and in accordance with the terms of the agreements entered into between the Purchaser and/or Parent and each such person. See Section 16. THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT (AS DEFINED BELOW) AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER (AS DEFINED BELOW), AND HAS UNANIMOUSLY DETERMINED THAT THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER. ABN AMRO Incorporated, financial advisor to the Company, has delivered to the Company Board its opinion, dated as of April 27, 1999 (the "Financial Advisor Opinion"), to the effect that, as of such date and based upon and subject to certain assumptions and matters stated therein, the consideration to be received by the holders of Shares (other than Parent and its affiliates) in the Offer and the Merger is fair, from a financial point of view, to such holders. A copy of the Financial Advisor Opinion is attached as an exhibit to the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"), which has been filed by the Company with the Securities and Exchange Commission (the "Commission") in connection with the Offer and which is being mailed to holders of Shares herewith. Holders of Shares are urged to, and should, read the Financial Advisor Opinion carefully. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED BELOW) THAT NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT OR THE PURCHASER (IF ANY), REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT (THE "MINIMUM CONDITION"). THE OFFER IS ALSO SUBJECT TO THE OTHER CONDITIONS SET FORTH IN THIS OFFER TO PURCHASE. SEE SECTION 14. As used in this Offer to Purchase, "fully diluted basis" takes into account the exercise of all outstanding options. The Company has represented and warranted to Parent and the Purchaser that, as of April 27, 1999, there were (i) 33,068,076 Shares issued and outstanding and (ii) 2,226,465 Shares issuable pursuant to the exercise of options. The Merger Agreement provides, among other things, that the Company will not, without the prior written consent of Parent, issue any additional Shares (except upon the exercise of outstanding options) or other securities convertible into, or exercisable or exchangeable for, Shares. See Section 11. Based on the foregoing and assuming the issuance of 2,226,465 Shares issuable upon the exercise of outstanding options, the Purchaser believes that the Minimum Condition will be satisfied if 17,647,271 Shares are validly tendered and not withdrawn prior to the Expiration Date. The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of April 27, 1999 (the "Merger Agreement"), by and among Parent, the Purchaser and the Company. Pursuant to the Merger Agreement and the Delaware General Corporation Law, as amended (the "DGCL"), as soon as practicable 4 after the completion of the Offer and satisfaction or waiver, if permissible, of all conditions, including the purchase of Shares pursuant to the Offer (sometimes referred to herein as the "consummation" of the Offer) and the approval and adoption of the Merger Agreement by the stockholders of the Company (if required by applicable law), the Purchaser will be merged with and into the Company (the "Merger") and the Company will be the surviving corporation in the Merger (the "Surviving Corporation"). At the effective time of the Merger (the "Effective Time"), each Share then outstanding, other than Shares held by (i) the Company or any of its subsidiaries, (ii) Parent or any of its subsidiaries, including the Purchaser, and (iii) stockholders who properly perfect their dissenters' rights under the DGCL, will be converted into the right to receive $12.25 in cash or any higher price per Share paid in the Offer (the "Merger Consideration"), without interest. The Merger Agreement is more fully described in Section 11. The Merger Agreement provides that, upon the purchase by the Purchaser of at least a majority of the Shares pursuant to the Offer and from time to time thereafter, Parent will be entitled to designate such number of directors, rounded up to the next whole number, on the Company Board so that the percentage of Parent's nominees on the Company Board equals the percentage of outstanding Shares beneficially owned by the Purchaser, Parent and their affiliates. The Company will, at such time, upon the request of Parent, promptly use its best efforts to take all action necessary to cause such persons designated by Parent to be appointed or elected to the Company Board, if necessary, by increasing the size of the Company Board or securing resignations of incumbent directors or both. Consummation of the Merger is conditioned upon, among other things, the approval and adoption by the requisite vote of stockholders of the Company of the Merger Agreement, if required by applicable law and the Company's Certificate of Incorporation (the "Certificate of Incorporation"). See Section 11. Under the DGCL and pursuant to the Certificate of Incorporation, the affirmative vote of the holders of a majority of the outstanding Shares is the only vote of any class or series of the Company's capital stock that would be necessary to approve the Merger Agreement at a meeting of the Company's stockholders. If the Purchaser purchases at least a majority of the outstanding Shares in the Offer (which will be the case if the Minimum Condition is satisfied and the other conditions to the Offer are satisfied or waived), the Purchaser will be able to effect the Merger without the affirmative vote of any other stockholder. Pursuant to the Merger Agreement, Parent and the Purchaser have agreed to vote the Shares acquired by them pursuant to the Offer in favor of the Merger. See Section 12. Under Section 253 of the DGCL, if a corporation owns at least 90% of the outstanding shares of each class of a subsidiary corporation, the corporation holding such stock may merge such subsidiary into itself, or itself into such subsidiary, without any action or vote on the part of the board of directors or the stockholders of such other corporation (a "short-form merger"). In the event that the Purchaser acquires in the aggregate at least 90% of the outstanding Shares pursuant to the Offer or otherwise, then, at the election of Parent, a short-form merger could be effected without any further approval of the Company Board or the stockholders of the Company. Even if the Purchaser does not own 90% of the outstanding Shares following consummation of the Offer, Parent or the Purchaser could seek to purchase additional Shares in the open market or otherwise in order to reach the 90% threshold and employ a short-form merger. The per Share consideration paid for any Shares so acquired in open market purchases may be greater or less than the Offer Price. In connection with the Merger Agreement, Parent, the Purchaser and the Company have entered into a Short Form Merger Option Agreement, dated as of April 27, 1999 (the "Stock Option Agreement"), pursuant to which the Company granted to the Purchaser an irrevocable option to purchase from the Company, at the Offer Price, newly issued Shares in an amount equal to the number of Shares (up to a maximum of 19.9% of the number of Shares outstanding) that, when added to the number of Shares owned by the Purchaser and its affiliates immediately following consummation of the Offer, constitutes 90% of the Shares then outstanding on a fully diluted basis (giving effect to the issuance of such Shares). The Stock Option Agreement is described more fully in Section 11. Parent currently intends to effect a short-form merger, if permitted to do so under the DGCL, pursuant to which the Purchaser will be merged with and into the Company. See Section 12. 2 5 THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION AND SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. THE OFFER 1. TERMS OF THE OFFER. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any extension or amendment), the Purchaser will accept for payment and pay for all Shares validly tendered prior to the Expiration Date and not withdrawn in accordance with Section 4. The term "Expiration Date" means 12:00 Midnight, New York City time, on Tuesday, June 1, 1999, unless and until the Purchaser, in accordance with the terms of the Merger Agreement, has extended the period of time during which the Offer is open, in which event the term "Expiration Date" means the latest time and date at which the Offer, as so extended by the Purchaser, expires. In the Merger Agreement, Parent and the Purchaser have agreed that if all conditions to the Purchaser's obligation to accept for payment and pay for Shares pursuant to the Offer are not satisfied on the scheduled Expiration Date, the Purchaser may, in its sole discretion, extend the Offer for additional periods; provided, however, that the Purchaser may not extend the Offer beyond October 31, 1999, without the consent of the Company. The Offer is conditioned upon the satisfaction of the Minimum Condition, the expiration or termination of all waiting periods imposed by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and any foreign antitrust or competition laws or regulations, and the other conditions set forth in Section 14. If such conditions are not satisfied prior to the Expiration Date, the Purchaser reserves the right, subject to the terms of the Merger Agreement and subject to complying with applicable rules and regulations of the Commission, to (i) decline to purchase any Shares tendered in the Offer and terminate the Offer and return all tendered Shares to the tendering stockholders, (ii) waive any or all conditions to the Offer (except the Minimum Condition) and, to the extent permitted by applicable law, purchase all Shares validly tendered, (iii) extend the Offer and, subject to the right of stockholders to withdraw Shares until the Expiration Date, retain all Shares which have been tendered during the period or periods for which the Offer is extended or (iv) subject to the next sentence, amend the Offer. The Merger Agreement provides that Purchaser will not waive the Minimum Condition, decrease the Offer Price, decrease the number of Shares sought or amend any other condition to the Offer in any manner materially adverse to the holders of the Shares without the written consent of the Company. The Merger Agreement requires the Purchaser to accept for payment and pay for all Shares validly tendered and not withdrawn pursuant to the Offer if all conditions to the Offer are satisfied or waived on the Expiration Date. Any extension, amendment or termination of the Offer will be followed as promptly as practicable by public announcement thereof, the announcement in the case of an extension to be issued no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date in accordance with Rules 14d-4(c), 14d-6(d) and 14e-1(d) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). As used in this Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1 under the Exchange Act. Without limiting the obligation of the Purchaser under such Rules or the manner in which the Purchaser may choose to make any public announcement, the Purchaser currently intends to make announcements by issuing a press release to the Dow Jones News Service. If the Purchaser extends the Offer, or if the Purchaser (whether before or after its acceptance for payment of Shares) is delayed in its purchase of, or payment for, Shares or is unable to pay for Shares pursuant to the Offer for any reason, then, without prejudice to the Purchaser's rights under the Offer, the Depositary may retain tendered Shares on behalf of the Purchaser, and such Shares may not be withdrawn except to the extent tendering stockholders are entitled to withdrawal rights as described in Section 4. However, the ability of the Purchaser to delay the payment for Shares which the Purchaser has accepted for payment is limited by Rule 14e-1(c) under the Exchange Act, which requires that a bidder pay the 3 6 consideration offered or return the securities deposited by, or on behalf of, holders of securities promptly after the termination or withdrawal of the Offer. If the Purchaser makes a material change in the terms of the Offer or the information concerning the Offer or waives a material condition of the Offer, the Purchaser will disseminate additional tender offer materials and extend the Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which the Offer must remain open following material changes in the terms of the Offer or information concerning the Offer, other than a change in price or a change in the percentage of securities sought, will depend upon the facts and circumstances then existing, including the relative materiality of the changed terms or information. In a public release, the Commission has stated its view that an offer must remain open for a minimum period of time following a material change in the terms of the Offer and that waiver of a material condition, such as the Minimum Condition, is a material change in the terms of the Offer. The release states that an offer should remain open for a minimum of five (5) business days from the date a material change is first published, or sent or given to security holders and that, if material changes are made with respect to information not materially less significant than the offer price and the number of shares being sought, a minimum of ten (10) business days may be required to allow adequate dissemination and investor response. The requirement to extend the Offer will not apply to the extent that the number of business days remaining between the occurrence of the change and the then-scheduled Expiration Date equals or exceeds the minimum extension period that would be required because of such amendment. If, prior to the Expiration Date, the Purchaser increases the consideration offered to holders of Shares pursuant to the Offer, such increased consideration will be paid to all holders whose Shares are purchased in the Offer whether or not such Shares were tendered prior to such increase. The Company has provided the Purchaser with the Company's stockholder lists and security position listings for the purpose of disseminating the Offer to holders of Shares. This Offer to Purchase and the related Letter of Transmittal will be mailed to record holders of Shares and will be furnished to brokers, dealers, banks and similar persons whose names, or the names of whose nominees, appear on the stockholder lists or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any extension or amendment), the Purchaser will accept for payment and will pay for, as soon as practicable after the Expiration Date, all Shares validly tendered prior to the Expiration Date and not properly withdrawn in accordance with Section 4. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, Shares properly tendered to the Purchaser and not withdrawn, if, as and when the Purchaser gives oral or written notice to the Depositary of the Purchaser's acceptance for payment of such Shares. Payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from the Purchaser and transmitting payment to tendering stockholders. In all cases, payment for Shares accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates for such Shares (or a timely Book-Entry Confirmation (as defined below) with respect thereto), (ii) a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message (as defined below) and (iii) any other documents required by the Letter of Transmittal. The per Share consideration paid to any holder of Shares pursuant to the Offer will be the highest per Share consideration paid to any other holder of such Shares pursuant to the Offer. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE PURCHASE PRICE TO BE PAID BY THE PURCHASER FOR THE SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. The Purchaser expressly reserves the right, in its sole discretion, to delay acceptance for payment of, or payment for, Shares in order to comply in whole or in part with any applicable law. If the Purchaser is delayed 4 7 in its acceptance for payment of, or payment for, Shares or is unable to accept for payment or pay for Shares pursuant to the Offer for any reason, then, without prejudice to the Purchaser's rights under the Offer (including such rights as are set forth in Sections 1 and 14) (but subject to compliance with Rule 14e-1(c) under the Exchange Act), the Depositary may, nevertheless, on behalf of the Purchaser, retain tendered Shares, and such Shares may not be withdrawn except to the extent tendering stockholders are entitled to exercise, and duly exercise, withdrawal rights as described in Section 4. If any tendered Shares are not purchased pursuant to the Offer for any reason, or if certificates are submitted representing more Shares than are tendered, certificates evidencing Shares not tendered or not accepted for purchase will be returned to the tendering stockholder, or such other person as the tendering stockholder shall specify in the Letter of Transmittal, as promptly as practicable following the expiration, termination or withdrawal of the Offer. In the case of Shares delivered by book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility (as defined below) pursuant to the procedures set forth in Section 3, such Shares will be credited to such account maintained at the Book-Entry Transfer Facility as the tendering stockholder shall specify in the Letter of Transmittal, as promptly as practicable following the expiration, termination or withdrawal of the Offer. If no such instructions are given with respect to Shares delivered by book-entry transfer, any such Shares not tendered or not purchased will be returned by crediting the account at the Book-Entry Transfer Facility designated in the Letter of Transmittal as the account from which such Shares were delivered. The Purchaser reserves the right to transfer or assign, in whole or, from time to time, in part, to one or more of its affiliates, the right to purchase Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 3. PROCEDURES FOR TENDERING SHARES. Valid Tender. For Shares to be validly tendered pursuant to the Offer, either (i) a properly completed and duly executed Letter of Transmittal (or facsimile thereof), together with any required signature guarantees, or in the case of a book-entry transfer, an Agent's Message, and any other required documents, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date and either certificates evidencing tendered Shares must be received by the Depositary at one of such addresses or such Shares must be delivered to the Depositary pursuant to the procedures for book-entry transfer set forth below and a Book-Entry Confirmation must be received by the Depositary, in each case prior to the Expiration Date, or (ii) the tendering stockholder must comply with the guaranteed delivery procedures described below. Book-Entry Transfer. The Depositary will establish an account with respect to the Shares at The Depository Trust Company (the "Book-Entry Transfer Facility") for purposes of the Offer within two (2) business days after the date of this Offer to Purchase. Any financial institution that is a participant in the Book-Entry Transfer Facility's system may make book-entry delivery of Shares by causing the Book-Entry Transfer Facility to transfer such Shares into the Depositary's account in accordance with such Book-Entry Transfer Facility's procedures for such transfer. Even though delivery of Shares may be effected through book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility, a Letter of Transmittal (or facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message, and any other required documents must, in any case, be transmitted to, and received by, the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase prior to the Expiration Date, or the tendering stockholder must comply with the guaranteed delivery procedures described below. The confirmation of a book-entry transfer of Shares into the Depositary's account at the Book-Entry Transfer Facility as described above is referred to herein as a "Book-Entry Confirmation." DELIVERY OF THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. 5 8 The term "Agent's Message" means a message transmitted by the Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has received an express acknowledgment from the participant in such Book-Entry Transfer Facility tendering the Shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Purchaser may enforce such agreement against such participant. THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. Signature Guarantees. No signature guarantee is required on the Letter of Transmittal (i) if the Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this Section, includes any participant in the Book-Entry Transfer Facility's system whose name appears on a security position listing as the owner of the Shares) of Shares tendered therewith and such registered holder has not completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" on the Letter of Transmittal or (ii) if such Shares are tendered for the account of a financial institution (including most commercial banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agent's Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (each, an "Eligible Institution" and, collectively, "Eligible Institutions"). In all other cases, all signatures on Letters of Transmittal must be guaranteed by an Eligible Institution. See Instructions 1 and 5 to the Letter of Transmittal. If the certificates for Shares are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made, or certificates for Shares not tendered or not accepted for payment are to be returned, to a person other than the registered holder of the certificates surrendered, then the tendered certificates for such Shares must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name or names of the registered holders or owners appear on the certificates, with the signatures on the certificates or stock powers guaranteed as aforesaid. See Instructions 1 and 5 to the Letter of Transmittal. Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to the Offer and such stockholder's certificates for Shares are not immediately available or the procedures for book-entry transfer cannot be completed on a timely basis or time will not permit all required documents to reach the Depositary prior to the Expiration Date, such stockholder's tender may be effected if all the following conditions are met: (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, prior to the Expiration Date; and (iii) the certificates for (or a Book-Entry Confirmation with respect to) such Shares, together with a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message, and any other required documents, are received by the Depositary within three (3) trading days after the date of execution of such Notice of Guaranteed Delivery. A "trading day" is any day on which the New York Stock Exchange, Inc. (the "NYSE") is open for business. The Notice of Guaranteed Delivery may be delivered by hand to the Depositary or transmitted by telegram, facsimile transmission or mailed to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery. Upon the acceptance of Shares for payment pursuant to the Offer, the valid tender of Shares pursuant to one of the procedures described above will constitute a binding agreement between the tendering stockholder and the Purchaser upon the terms and subject to the conditions of the Offer. 6 9 Appointment. By executing the Letter of Transmittal as set forth above (including delivery through an Agent's Message), the tendering stockholder will irrevocably appoint designees of Parent as such stockholder's attorneys-in-fact and proxies in the manner set forth in the Letter of Transmittal, each with full power of substitution, to the full extent of such stockholder's rights with respect to the Shares tendered by such stockholder and accepted for payment by the Purchaser and with respect to any and all non-cash dividends, distributions, rights, other Shares or other securities issued or issuable in respect of such Shares on or after April 27, 1999 (collectively, "Distributions"). All such powers of attorney and proxies will be considered coupled with an interest in the tendered Shares. Such appointment will be effective if, as and when, and only to the extent that, the Purchaser accepts for payment Shares tendered by such stockholder as provided herein. All such powers of attorney and proxies will be irrevocable and will be deemed granted in consideration of the acceptance for payment by the Purchaser of Shares tendered in accordance with the terms of the Offer. Upon such appointment, all prior powers of attorney, proxies and consents given by such stockholder with respect to such Shares (and any and all Distributions) will, without further action, be revoked and no subsequent powers of attorney, proxies, consents or revocations may be given by such stockholder (and, if given, will not be deemed effective). The designees of Parent will thereby be empowered to exercise all voting and other rights with respect to such Shares (and any and all Distributions), including, without limitation, in respect of any annual or special meeting of the Company's stockholders (and any adjournment or postponement thereof), actions by written consent in lieu of any such meeting or otherwise, as each such attorney-in-fact and proxy or his substitute shall in his sole discretion deem proper. The Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon the Purchaser's acceptance for payment of such Shares, the Purchaser must be able to exercise full voting, consent and other rights with respect to such Shares (and any and all Distributions), including voting at any meeting of stockholders. Determination of Validity. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares will be determined by the Purchaser, in its sole discretion, which determination will be final and binding. The Purchaser reserves the absolute right to reject any or all tenders of any Shares determined by it not to be in proper form or the acceptance for payment of which, or payment for which, may, in the opinion of the Purchaser's counsel, be unlawful. The Purchaser also reserves the absolute right, in its sole discretion, subject to the provisions of the Merger Agreement, to waive any defect or irregularity in any tender of Shares of any particular stockholder, whether or not similar defects or irregularities are waived in the case of other stockholders. No tender of Shares will be deemed to have been validly made until all defects or irregularities relating thereto have been cured or waived. None of the Purchaser, Parent, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. Subject to the terms of the Merger Agreement, the Purchaser's interpretation of the terms and conditions of the Offer in this regard (including the Letter of Transmittal and the instructions thereto) will be final and binding. Backup Withholding. In order to avoid "backup withholding" of federal income tax on payments of the Offer Price pursuant to the Offer, a stockholder surrendering Shares in the Offer must, unless an exemption applies, provide the Depositary with such stockholder's correct taxpayer identifying number ("TIN") on a Substitute Form W-9 and certify under penalty of perjury that such TIN is correct and that such stockholder is not subject to backup withholding. Certain stockholders (including, among others, all corporations and certain foreign individuals and entities) are not subject to backup withholding. If a stockholder does not provide its correct TIN or fails to provide the certifications described above, the Internal Revenue Service ("IRS") may impose a penalty on such stockholder and payment of the Offer Price to such stockholder pursuant to the Offer may be subject to backup withholding of 31% of the amount payable to such stockholder. All stockholders surrendering Shares pursuant to the Offer should complete and sign the main signature form and the Substitute Form W-9 included as part of the Letter of Transmittal to provide the information and certification necessary to avoid backup withholding (unless an applicable exemption exists and is proven in a manner satisfactory to the Purchaser and the Depositary). Noncorporate foreign stockholders should complete and sign the main signature form and a Form W-8, Certificate of Foreign Status, a copy of which may be obtained from the Depositary, in order to avoid backup withholding. See Instruction 10 to the Letter of Transmittal. 7 10 4. WITHDRAWAL RIGHTS. Except as otherwise provided in this Section 4 or as provided by applicable law, tenders of Shares are irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to the procedures set forth below at any time prior to the Expiration Date and, unless theretofore accepted for payment and paid for by Purchaser pursuant to the Offer, may also be withdrawn at any time after July 2, 1999. For a withdrawal to be effective, a written, telegraphic or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of the Shares to be withdrawn, if different from the name of the person who tendered the Shares. If certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and, unless such Shares have been tendered by an Eligible Institution, the signatures on the notice of withdrawal must be guaranteed by an Eligible Institution. If Shares have been delivered pursuant to the procedures for book-entry transfer as set forth in Section 3, any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares and otherwise comply with such Book-Entry Transfer Facility's procedures. Withdrawals of tendered Shares may not be rescinded, and any Shares withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be re-tendered at any time prior to the Expiration Date by again following one of the procedures described in Section 3. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Purchaser, in its sole discretion, which determination will be final and binding. None of the Purchaser, Parent, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. 5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES. The following discussion is a summary of certain material United States federal income tax consequences of the Offer and the Merger to holders of Shares who hold the Shares "as capital assets" within the meaning of Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code"), which generally includes property held for investment. The discussion set forth below is for general information only and may not apply to certain categories of holders of Shares subject to special treatment under the Code, such as foreign holders and holders who acquired such Shares pursuant to the exercise of employee stock options or otherwise as compensation. This summary is based upon laws, regulations, rulings and interpretations currently in effect, all of which are subject to change, retroactively or prospectively. The receipt of cash for Shares pursuant to the Offer or the Merger will be a taxable transaction for United States federal income tax purposes. In general, a holder who sells Shares pursuant to the Offer, or who receives cash in exchange for Shares pursuant to the Merger, will recognize gain or loss for federal income tax purposes equal to the difference, if any, between the amount of cash received and the holder's adjusted tax basis in the Shares sold pursuant to the Offer or surrendered for cash pursuant to the Merger. The gain or loss recognized by a holder of Shares pursuant to the Offer or the Merger will be capital gain or loss and if, as of the date of the tender pursuant to the Offer or surrender for cash pursuant to the Merger, as the case may be, the holder has held the Shares surrendered for more than one year, such capital gain will be long-term. The amount of any gain or loss recognized and its character as short-term or long-term will be calculated and determined separately for each identifiable block of Shares tendered pursuant to the Offer or surrendered for cash pursuant to the Merger. Unless a stockholder complies with certain reporting and/or certification procedures or is an exempt recipient under applicable provisions of the Code and Treasury Regulations promulgated thereunder, such stockholder may be subject to a withholding tax of 31% with respect to any cash payments received pursuant 8 11 to the Offer and the Merger. See the discussion regarding backup withholding in Section 3. Foreign stockholders should consult with their own tax advisors regarding withholding taxes in general. THE ABOVE DISCUSSION MAY NOT APPLY TO CERTAIN CATEGORIES OF HOLDERS SUBJECT TO SPECIAL TREATMENT UNDER THE CODE, SUCH AS FOREIGN STOCKHOLDERS AND STOCKHOLDERS WHOSE SHARES WERE ACQUIRED PURSUANT TO THE EXERCISE OF ANY EMPLOYEE STOCK OPTION OR OTHERWISE AS COMPENSATION. STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE OFFER AND THE MERGER, INCLUDING ANY FEDERAL, STATE, LOCAL OR OTHER TAX CONSEQUENCES (INCLUDING ANY TAX RETURN FILING OR OTHER TAX REPORTING REQUIREMENTS) OF THE OFFER AND THE MERGER. 6. PRICE RANGE OF THE SHARES; DIVIDENDS. The Shares are traded on the NYSE under the symbol "LAW". The following table sets forth, for each of the fiscal quarters indicated, the high and low sales prices per Share on the NYSE and the amount of cash dividends paid per Share, all as reported in published financial sources. LAWTER INTERNATIONAL, INC.
COMMON STOCK ---------------------------- HIGH LOW DIVIDENDS ---- --- --------- Fiscal Year Ended December 31, 1997 First Quarter............................................. $12 3/4 $11 1/4 $0.10 Second Quarter............................................ 12 5/8 10 5/8 0.10 Third Quarter............................................. 14 1/8 12 1/8 0.10 Fourth Quarter............................................ 12 1/2 10 5/8 0.10 Fiscal Year Ended December 31, 1998 First Quarter............................................. $12 1/2 $10 3/8 $0.10 Second Quarter............................................ 11 7/16 9 3/16 0.10 Third Quarter............................................. 11 7 0.10 Fourth Quarter............................................ 11 5/8 6 1/8 0.10 Fiscal Year Ended December 31, 1999 First Quarter............................................. $11 5/8 $ 6 $0.10 Second Quarter (through May 3, 1999)...................... 12 1/16 6 11/16 --
On April 27, 1999, the last full trading day prior to the public announcement of the execution of the Merger Agreement by the Company, Parent and the Purchaser, the last reported closing sales price of the Shares on the NYSE was $8 15/16 per Share. On May 3, 1999, the last full trading day prior to the commencement of the Offer, the last reported closing sales price of the Shares on the NYSE was $12 per Share. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES. Under the terms of the Merger Agreement, the Company is not permitted to declare or pay dividends with respect to the Shares without the prior written consent of Parent and Parent does not intend to consent to any such declaration or payment. 7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; NYSE LISTING; EXCHANGE ACT REGISTRATION; MARGIN REGULATIONS. Market for the Shares. The purchase of Shares by the Purchaser pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly, could reduce the number of holders of Shares and, depending upon the number of Shares so purchased, could adversely affect the liquidity and market value of the remaining Shares held by the public. 9 12 NYSE Listing. The Shares are listed on the NYSE. Depending upon the aggregate market value and the per share price of any Shares not purchased pursuant to the Offer, the Shares may no longer meet the requirements for continued listing on the NYSE. According to the NYSE's published guidelines, the NYSE would consider delisting the Shares if, among other things, the number of record holders of at least 100 or more Shares should fall below 1,200, the number of publicly held Shares (exclusive of holdings of officers and directors of the Company and their immediate families and other concentrated holdings of 10% or more (the "NYSE Excluded Holdings")) should fall below 600,000, or the aggregate market value of the publicly held Shares (exclusive of the NYSE Excluded Holdings) should fall below $5,000,000. If the NYSE were to delist the Shares, the market therefor could be adversely affected. It is possible that such Shares would continue to trade on other securities exchanges or in the over-the-counter market, and that price quotations would be reported by such exchanges or through the Nasdaq or other sources. The extent of the public market for the Shares and the availability of such quotations would, however, depend upon the number of stockholders and/or the aggregate market value of such Shares remaining at such time, the interest in maintaining a market in such Shares on the part of securities firms, the possible termination of registration of such Shares under the Exchange Act and other factors. The Purchaser cannot predict whether the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for, or marketability of, the Shares or whether it would cause future market prices to be greater or less than the Offer Price. Exchange Act Registration. The Shares are currently registered under the Exchange Act. Registration of the Shares under the Exchange Act may be terminated upon application of the Company to the Commission if the Shares are neither listed on a national securities exchange nor held by 300 or more holders of record. Termination of registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to its stockholders and to the Commission and would make certain provisions of the Exchange Act no longer applicable to the Company, such as the short-swing profit recovery provisions of Section 16(b), the requirement of furnishing a proxy statement pursuant to Section 14(a) in connection with stockholders' meetings and the related requirement of furnishing an annual report to stockholders and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions. Furthermore, the ability of "affiliates" of the Company and persons holding "restricted securities" of the Company to dispose of such securities pursuant to Rule 144 or Rule 144A promulgated under the Securities Act of 1933, as amended (the "Securities Act"), may be impaired or eliminated. Margin Regulations. The Shares are currently "margin securities" under the regulations of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which status has the effect, among other things, of allowing brokers to extend credit on the collateral of the Shares. Depending upon factors similar to those described above regarding stock exchange listing and market quotations, it is possible that, following the Offer, the Shares would no longer constitute "margin securities" for the purposes of the margin regulations of the Federal Reserve Board and therefore could no longer be used as collateral for loans made by brokers. In addition, if registration of the Shares under the Exchange Act were terminated, the Shares would no longer constitute "margin securities." The Purchaser currently intends to seek delisting of the Shares from the NYSE and the termination of the registration of the Shares under the Exchange Act as soon after the completion of the Offer as the requirements for such delisting and termination are met. If the NYSE listing and the Exchange Act registration of the Shares are not terminated prior to the Merger, then the Shares will be delisted from the NYSE and the registration of the Shares under the Exchange Act will be terminated following the consummation of the Merger. 8. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning the Company contained in this Offer to Purchase, including financial information, has been furnished by the Company or has been taken from or based upon publicly available documents and records on file with the Commission and other public sources. None of Parent, the Purchaser, the Dealer Manager, the Depositary or the Information Agent assumes any responsibility for the accuracy or 10 13 completeness of the information concerning the Company contained in such documents and records or for any failure by the Company to disclose events which may have occurred or may affect the significance or accuracy of any such information but which are unknown to Parent, the Purchaser, the Dealer Manager, the Depositary or the Information Agent. The Company is a leading supplier of speciality polymers to the graphic arts industry. The Company produces printing ink vehicles, resins and slip additives, as well as additives for coatings and adhesives. Printing ink vehicles, which are fluid and gelled compositions that allow lithographic and letterpress printing inks to apply color and coatings to paper, plastic, metal and other surfaces, influence critical production issues such as print quality, gloss, drying speed, adhesion, rub resistance and press speed. The Company's synthetic and hydrocarbon resins are used in the production of adhesives, liquid printing inks and printing ink vehicles, rubber compounds and paints and coatings to improve durability, chemical resistance, appearance, adhesion and drying speed. The Company's products are sold worldwide to ink manufacturers and other customers involved in developing specialty inks, paints, coatings and adhesives. The Company has more than 600 employees in ten countries. The Company is a Delaware corporation with its principal executive offices at One Terra Way, 8601 95th Street, Pleasant Prairie, Wisconsin 53158. The telephone number of the Company is (414) 947-7300. Selected Financial Information. Set forth below is selected consolidated financial information with respect to the Company, excerpted or derived from the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1998 (the "Company 10-K"), as filed with the Commission pursuant to the Exchange Act. Parent and the Purchaser make no representation as to the accuracy of such financial information. More comprehensive financial information is included in the Company 10-K and in other documents filed by the Company with the Commission. The following summary is qualified in its entirety by reference to the Company 10-K and such other documents, including the financial information and related notes contained therein. The Company 10-K and such other documents may be inspected and copies may be obtained from the Commission or the NYSE in the manner set forth below. LAWTER INTERNATIONAL, INC. SELECTED CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, ------------------------------ 1998 1997 1996 -------- -------- -------- INCOME STATEMENT DATA: Net Sales................................................. $212,843 $206,539 $193,814 Operating Income.......................................... 36,349 26,282 35,640 Net Earnings.............................................. 21,465 37,326 28,775 Net Earnings per Share.................................... .59 .82 .64
AT DECEMBER 31, ------------------------------ 1998 1997 1996 -------- -------- -------- BALANCE SHEET DATA: Total Assets.............................................. $254,250 $276,184 $293,123 Net Working Capital....................................... 76,709 117,961 74,410 Long-term Obligations..................................... 129,050 29,050 29,050 Stockholders' Equity...................................... 33,524 161,357 145,615
Available Information. The Company is subject to the information and reporting requirements of the Exchange Act and, in accordance therewith, is required to file reports and other information with the Commission relating to its business, financial condition and other matters. Information, as of particular dates, concerning the Company's directors and officers, their remuneration, stock options granted to them, the 11 14 principal holders of the Company's securities and any material interests of such persons in transactions with the Company is required to be disclosed in proxy statements distributed to the Company's stockholders and filed with the Commission. These reports, proxy statements and other information should be available for inspection at the public reference facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the Commission located at Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies of these materials should be obtainable by mail, upon payment of the Commission's customary fees, by writing to the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a website on the Internet at http://www.sec.gov that contains reports, proxy statements and other information relating to the Company. Reports, proxy statements and other information concerning the Company should also be available for inspection at the offices of the NYSE, 20 Broad Street, New York, New York 10005. 9. CERTAIN INFORMATION CONCERNING PARENT AND THE PURCHASER. Parent and the Purchaser. Parent, a Delaware corporation, is a global chemical company with a broad portfolio of plastic, chemical, and fiber products. Parent manufactures and sells polyester plastics such as polyethylene terephthalate sold under the trademark EASTAPAK polymers, a plastic widely used in beverage and food containers, and also manufactures and sells coatings and paint raw materials, industrial and fine chemicals, and acetate tow. In 1998, Parent had sales of $4.481 billion, operating earnings of $434 million and net earnings of $249 million. Parent began business in 1920 for the purpose of producing chemicals for Eastman Kodak Company's photographic business. As of December 31, 1993, Parent became an independent entity when Eastman Kodak Company spun off its chemical business. Parent is one of the largest chemical producers in the United States and a leader in the application of several manufacturing technologies. Parent pioneered the application of coal gasification technology for the production of chemicals (also referred to as "chemicals from coal technology") and currently operates one of the largest coal gasification facilities in the United States, thereby reducing Parent's dependence on petrochemicals in the manufacture of acetate tow, certain plastics and other chemicals. Parent is also a leader in the manufacture of oxo chemicals that are used in the production of numerous coatings and resin intermediates, the manufacture of fine chemicals used in photographic and other custom chemicals, and the application of advanced environmental waste management practices for chemical manufacturing operations. Parent is a world leader in production and recycling of a wide variety of polyester plastics, including polyethylene terephthalate and other flexible packaging materials. The Purchaser is a newly incorporated Delaware corporation organized in connection with the Offer and the Merger and has not carried on any significant activities other than in connection with the Offer and the Merger. All of the outstanding capital stock of the Purchaser is owned directly by Parent. Until immediately prior to the time the Purchaser purchases Shares pursuant to the Offer, it is not anticipated that the Purchaser will have any significant assets or liabilities or engage in any significant activities other than those incident to its formation and capitalization and the transactions contemplated by the Offer and the Merger. The principal offices of Parent and the Purchaser are located at 100 N. Eastman Road, Kingsport, Tennessee 37660. The telephone number of Parent and the Purchaser is (423) 229-2000. The name, citizenship, business address, principal occupation or employment and five-year employment history for each of the directors and the executive officers of Parent and the Purchaser are set forth in Schedule I hereto. Except as set forth in this Offer to Purchase, neither Parent, the Purchaser nor any persons controlling Parent or the Purchaser, nor to the best knowledge of Parent or the Purchaser, any of the persons listed on Schedule I hereto or any associate or majority owned subsidiary of such persons, beneficially owns any equity security of the Company, and none of Parent or the Purchaser, or to the best of knowledge of Parent or the Purchaser, any of the other persons or entities referred to above, or any of the respective directors, executive officers or subsidiaries of any of the foregoing has effected any transaction in any equity security of the Company during the past sixty (60) days. 12 15 Except as set forth in this Offer to Purchase, neither Parent, the Purchaser nor any persons controlling Parent or the Purchaser, nor to the best knowledge of Parent or the Purchaser, any of the persons listed on Schedule I hereto, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any securities of the Company, 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 below or as otherwise set forth in this Offer to Purchase, neither Parent, the Purchaser nor any persons controlling Parent or the Purchaser, nor to the best knowledge of Parent or the Purchaser, any of the persons listed on Schedule I hereto, has had, since January 1, 1996, any business relationships or transactions with the Company or any of its executive officers, directors or affiliates that would be required to be reported under the rules of the Commission. Except as set forth in this Offer to Purchase, since January 1, 1996 there have been no contacts, negotiations or transactions between Parent, the Purchaser, their respective subsidiaries, any persons controlling Parent or the Purchaser or, to the best knowledge of Parent or the Purchaser, any of the persons listed on Schedule I hereto, on the one hand, and the Company or its executive officers, directors or affiliates, on the other hand, concerning a merger, consolidation or acquisition, tender offer or other acquisition of securities, election of directors or a sale or other transfer of a material amount of assets. See Section 11 -- "Background of the Offer; Purpose of the Offer and the Merger; the Merger Agreement and Certain Other Agreements." In the ordinary course of business, Parent and the Company have entered into transactions whereby Parent has sold certain of its products to the Company, aggregating approximately $4.8 million since January 1996. As previously reported in Parent's Form 10-Q for the quarterly period ended September 30, 1998 and Form 10-K for the fiscal year ended December 31, 1998, on September 30, 1998 Parent entered into a voluntary plea agreement with the Department of Justice and agreed to pay an $11 million fine to resolve a charge brought against it for violation of Section One of the Sherman Act. Under the agreement, Parent entered a plea of guilty to one count of price-fixing for sorbates, a class of food preservatives, from January 1995 through June 1997. The plea agreement was approved by the United States District Court for the Northern District of California in San Francisco on October 21, 1998. Parent recognized the entire fine in third quarter 1998 and is paying the fine in installments over a period of five years. Except as set forth above, during the last five years, neither Parent, the Purchaser nor any persons controlling Parent or the Purchaser, nor, to the best knowledge of Parent or the Purchaser, any of the persons listed on Schedule I hereto, (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction as a result of which any such person was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. Available Information. Parent is subject to the information and reporting requirements of the Exchange Act and, in accordance therewith, is required to file reports and other information with the Commission relating to its business, financial condition and other matters. Information, as of particular dates, concerning Parent's directors and officers, their remuneration, stock options granted to them, the principal holders of Parent's securities and any material interests of such persons in transactions with Parent is required to be disclosed in proxy statements distributed to Parent's stockholders and filed with the Commission. These reports, proxy statements and other information should be available for inspection at the public reference facilities of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the regional offices of the Commission located at Seven World Trade Center, Suite 1300, New York, NY 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies of these materials should be obtainable by mail, upon payment of the Commission's customary fees, by writing to the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. The Commission also maintains a website at http://www.sec.gov that contains reports, proxy statements and other information relating to Parent. 13 16 Reports, proxy statements and other information concerning Parent should also be available at the offices of the NYSE, 20 Broad Street, New York, NY 10005. 10. SOURCE AND AMOUNT OF FUNDS. The Offer is not conditioned upon any financing arrangements. The total amount of funds required by the Purchaser to purchase the maximum number of Shares pursuant to the Offer is approximately $433 million. The Purchaser will obtain all such funds from Parent in the form of capital contributions and/or loans. Parent will provide such funds through a combination of its cash on hand and short-term borrowings. 11. BACKGROUND OF THE OFFER; PURPOSE OF THE OFFER AND THE MERGER; THE MERGER AGREEMENT AND CERTAIN OTHER AGREEMENTS. Contacts with the Company; Background of the Offer. Parent continually evaluates and considers other businesses of varying sizes as potential strategic partners and candidates for acquisition. In November 1997 and again during the first quarter of 1998, Parent was contacted by SBC Warburg Inc. with respect to the potential purchase of a block of Shares from the Estate of Daniel J. Terra, one of the founders of the Company. Although Parent conducted a preliminary analysis of the strategic benefits of a significant but minority equity investment in the Company, it determined not to proceed with such an investment at that time. In the course of periodically reviewing potential acquisition candidates, Parent continued to analyze the potential benefits of entering into a business combination with the Company. In August 1998, Parent retained Merrill Lynch to provide financial advice regarding a potential business combination with the Company. On September 27, 1998, the Board of Directors of Parent (the "Parent Board") formally authorized Parent to pursue negotiations with the Company to enter into a possible transaction, subject to final review and approval of the Parent Board. In mid-October 1998, Earnest W. Deavenport, Jr., Chairman of the Board and Chief Executive Officer of Parent, contacted John P. O'Mahoney, Chairman of the Board and Chief Executive Officer of the Company, regarding the possibility of a meeting to learn more about the Company. On October 19, 1998, Mr. Deavenport, Allan R. Rothwell, Senior Vice President and Chief Financial Officer of Parent, and Bruce E. Moore, Vice President and General Manager of Coatings, Inks & Resins of Parent, met with Mr. O'Mahoney and the Company's representatives at the Company executive offices in Pleasant Prairie, Wisconsin. At that meeting, Parent expressed its interest in entering into a business combination transaction with the Company. As a result of this meeting, Parent and the Company agreed to enter into a confidentiality agreement, with Parent executing the confidentiality agreement on October 30, 1998 and the Company executing the confidentiality agreement on November 3, 1998. On November 3, 1998, at Parent's executive offices in Kingsport, Tennessee, Messrs. Rothwell and Moore, together with other members of senior management of Parent and Parent's financial advisor, met with Mr. O'Mahoney, Mark W. Joslin, Chief Financial Officer and Treasurer of the Company, Jack Baarends, Vice President of the Company, and other Company representatives. This meeting continued to be exploratory in nature, with the parties discussing in general terms the strategic benefits of Parent's proposed acquisition of the Company. Members of management of Parent and the Company met again on November 20, 1998, and held discussions throughout December 1998. Members of management of Parent and the Company, together with their respective advisors, met on January 7, 1999 and Messrs. Rothwell and O'Mahoney met again on January 25, 1999. None of these contacts led to any agreements or understandings regarding an acquisition of the Company by Parent and on February 4, 1999, Parent determined to terminate negotiations regarding Parent's potential acquisition of the Company. 14 17 In late March 1999, Mr. O'Mahoney informed Mr. Rothwell that other companies had expressed interest in acquiring the Company and inquired as to whether Parent would again be interested in entering into a business combination with the Company. As a result of this conversation, on April 1, 1999, Messrs. Rothwell, Moore and Prentice McKibben, Business Development Director for Parent, met with Mr. O'Mahoney to renew negotiations regarding a business combination transaction. Throughout the next week, the parties engaged in a series of conversations. On April 6, 1999, Mr. Deavenport sent a letter to Mr. O'Mahoney submitting a non-binding proposal to acquire, subject to Parent's due diligence investigation, all of the Company's issued and outstanding Shares at a price in the range of $12.25 to $12.75 per Share. Following conversations between Messrs. Rothwell and O'Mahoney, on April 7, 1999, Mr. Deavenport sent another letter to Mr. O'Mahoney submitting a non-binding proposal to acquire, subject to Parent's due diligence investigation, all of the Company's issued and outstanding Shares, this time at a price in the range of $12.50 to $12.75 per Share. On April 8, 1999, Parent, its financial advisor and independent auditors met with the Company and its outside legal counsel and commenced Parent's due diligence investigation. Parent expanded its due diligence activities to include the world-wide operations of the Company, and engaged in due diligence until execution of the Merger Agreement. From April 10 through April 12, Messrs. Rothwell, Moore and O'Mahoney continued discussions regarding the terms of Parent's proposed acquisition of the Company, with Parent's representatives informing Mr. O'Mahoney that after due diligence conducted thus far Parent was then considering a price in the range of $12.00 to $12.25 per Share. On April 13, 1999, Messrs. Rothwell and O'Mahoney discussed a non-binding proposal to acquire, still subject to completion of ongoing due diligence, all of the Company's issued and outstanding Shares at a price in the range of $12.25 to $12.50 per Share. On April 19, 1999, outside legal counsel to Parent and the Purchaser provided initial drafts of the Merger Agreement and the Stock Option Agreement to the Company and its outside legal counsel. During the period from April 19, 1999 through April 27, 1999, the parties conducted negotiations with respect to the Merger Agreement and the Stock Option Agreement. On April 24, 1999, following Parent's due diligence investigation, Messrs. Rothwell, Moore and McKibben conducted discussions with Mr. O'Mahoney resulting in a tentative agreement on a price of $12.25 per Share, subject to satisfactory completion of negotiations with respect to the Merger Agreement and the Stock Option Agreement. At a meeting of the Parent Board, held on April 27, 1999, the Parent Board approved and adopted the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, and the Stock Option Agreement. At a meeting of the Company Board held on April 27, 1999, the Company Board unanimously approved and adopted the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, and the Stock Option Agreement, and determined that the terms of the Offer and the Merger are fair to, and in the best interests of, the holders of the Shares, and unanimously recommended that stockholders of the Company accept the Offer and tender their Shares. At the Company Board meeting, ABN AMRO Incorporated delivered to the Company Board its opinion to the effect that, as of such date and based upon and subject to certain matters and assumptions stated therein, the consideration to be received by the holders of Shares pursuant to the Offer and under the terms of the Merger Agreement is fair to such holders from a financial point of view. Following the approval of the Company Board, on April 27, 1999, Parent, the Purchaser and the Company executed and delivered the Merger Agreement and on April 28, 1999, they issued a press release announcing the execution of the Merger Agreement and the transactions contemplated thereby. On May 4, 1999, pursuant to the terms of the Merger Agreement, the Purchaser and Parent commenced the Offer. 15 18 Purpose of the Offer and the Merger. The purpose of the Offer and the Merger is to enable Parent to acquire control of, and the entire equity interest in, the Company. Upon consummation of the Merger, the Company will become a wholly owned subsidiary of Parent. The Offer is being made pursuant to the Merger Agreement and is intended to increase the likelihood that the Merger will be effected. Stockholders of the Company who sell their Shares in the Offer will cease to have any equity interest in the Company and any right to participate in its earnings and future growth. If the Merger is consummated, non-tendering stockholders will no longer have an equity interest in the Company and instead will have only the right to receive cash consideration pursuant to the Merger Agreement or to exercise statutory appraisal rights under Section 262 of the DGCL. See Section 12. Similarly, after selling their Shares in the Offer or the subsequent Merger, stockholders of the Company will not bear the risk of any decrease in the value of the Company. The primary benefits of the Offer and the Merger to the stockholders of the Company are that such stockholders are being afforded an opportunity to sell all of their Shares for cash at a price which represents a premium of approximately 37% over the closing sales price of the Shares on April 27, 1999, the last full trading day prior to the initial public announcement that the Company, the Purchaser and Parent had executed the Merger Agreement. MERGER AGREEMENT The following is a summary of certain provisions of the Merger Agreement. This summary is not a complete description of the terms and conditions of the Merger Agreement and is qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which is filed with the Commission as an exhibit to the Tender Offer Statement on Schedule 14D-1 filed by Parent and the Purchaser with the Commission (the "Schedule 14D-1"). Capitalized terms not otherwise defined below shall have the meanings set forth in the Merger Agreement. The Merger Agreement may be examined, and copies obtained, at the places and in the manner as set forth in Section 9 of this Offer to Purchase. The Offer. The Merger Agreement provides that the Purchaser will commence the Offer and that, upon the terms and subject to the satisfaction or waiver of the conditions of the Offer, the Purchaser will purchase all Shares validly tendered pursuant to the Offer. The obligation of the Purchaser to accept for payment and pay for any Shares validly tendered and not withdrawn prior to the expiration of the Offer is conditioned upon satisfaction of the Minimum Condition and the satisfaction or waiver of the conditions described in Annex A to the Merger Agreement. The Merger Agreement provides that the Purchaser may not amend or waive the Minimum Condition, or decrease the Offer Price or the number of Shares sought, or amend any other condition of the Offer in any manner adverse to the holders of Shares without the written consent of the Company. Notwithstanding the foregoing provisions, if on the initial scheduled expiration of the Offer (as it may be extended), all conditions to the Offer have not been satisfied or waived, the Offer may be extended from time to time until October 31, 1999. In addition, the Offer Price may be increased and the Offer may be extended to the extent required by law in connection with such increase, in each case without the consent of the Company. Designation of Directors. The Merger Agreement provides that, promptly upon the purchase of and payment for Shares by Parent or any of its subsidiaries which represent at least a majority of the outstanding Shares (on a fully diluted basis), Parent will be entitled to designate such number of directors, rounded up to the next whole number, on the Company Board so that the percentage of Parent's nominees on the Company Board equals the percentage of outstanding Shares beneficially owned by Parent, the Purchaser and their affiliates. The Company will, upon request of Parent, use its best efforts promptly either to increase the size of the Company Board or to secure the resignations of incumbent directors, or both, and cause Parent's designees to be so elected or appointed to the Company Board. Notwithstanding the foregoing, until the effective time of the Merger (the "Effective Time"), the Company will use its reasonable efforts to retain as members of the Company Board at least two directors who were directors of the Company on the date the Merger Agreement was executed; provided, that, subsequent to the purchase of and payment for Shares pursuant to the Offer, 16 19 Parent will always have its designees represent at least a majority of the entire Company Board. The Company's obligation to elect or appoint Parent's designees to the Company Board is subject to compliance with Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. Following the election of Parent's designees to the Company Board, any amendment of the Merger Agreement, any termination of the Merger Agreement by the Company, any extension of time for performance of any of the obligations of Parent or the Purchaser, or any waiver of any condition or any of the Company's rights thereunder may be effected only by the action of a majority of the directors of the Company then in office who were directors on the date of the Merger Agreement, which action will be deemed to constitute the action of the full Company Board; provided, that, if there are no such directors, such actions may be effected by the majority vote of the entire Company Board, and provided, further, that if there are no such directors, the Merger Agreement may not be amended to reduce the Merger Consideration to be less than the Offer Price or otherwise amended in a manner materially adverse to the holders of Shares other than Parent and the Purchaser. The Merger. The Merger Agreement provides that, subject to the terms and conditions thereof, the Purchaser will be merged with and into the Company, with the Company continuing as the Surviving Corporation and a wholly owned Subsidiary of Parent. At Parent's election, the Merger may be restructured so that the Company is merged with and into Parent or any other direct or indirect Subsidiary of Parent or so that any direct or indirect Subsidiary of Parent other than the Purchaser is merged with and into the Company. At the Effective Time, each issued and outstanding Share (other than Shares owned by Parent, the Purchaser or any other wholly owned Subsidiary of Parent, Shares owned by the Company as treasury stock and Shares held by holders who perfect any available dissenters rights under the DGCL) will be converted into the right to receive the Offer Price, without interest thereon, and each issued and outstanding share of common stock of the Purchaser will be converted into and become one fully paid and nonassessable share of common stock of the Surviving Corporation. Treatment of Options. The Merger Agreement provides that Parent and the Company will take all actions necessary so that, as of the Effective Time, each outstanding option to purchase Shares which has been granted under the Company's stock option plans, whether or not then vested or exercisable, will be cancelled. In consideration for such cancellation, Parent will, or will cause the Surviving Corporation to, pay to the holder of each option to purchase Shares, an amount equal to the product of (A) the excess, if any, of the Offer Price over the per share exercise price thereof and (B) the number of Shares subject to such option. The Merger Agreement provides that the Company will take all actions necessary so that, as of the Effective Time, all plans, programs or arrangements of the Company providing for the issuance or grant of options or other interests in the capital stock of the Company will be terminated. Conditions. The respective obligations of each party to effect the Merger are subject to the satisfaction on or prior to the closing of the Merger, of each of the following conditions: (a) the Merger Agreement and the Merger have been approved and adopted by the requisite vote of the holders of Shares if required by the DGCL in order to consummate the Merger; (b) no statute, rule, order, decree or regulation has been enacted or promulgated by any Governmental Entity of competent jurisdiction which prohibits the consummation of the Merger and all foreign or domestic governmental consents, orders and approvals required for the consummation of the Merger and the transactions contemplated by the Merger Agreement have been obtained and are in effect at the Effective Time; (c) there is no order or injunction of a foreign or United States federal or state court or other governmental authority of competent jurisdiction in effect precluding, restraining, enjoining or prohibiting consummation of the Merger; and (d) Parent, the Purchaser or their affiliates have purchased Shares pursuant to the Offer. Stockholders' Meeting. Pursuant to the Merger Agreement, the Company will, if required by applicable law in order to consummate the Merger, (i) duly call, give notice of, convene and hold a special meeting of its stockholders as soon as practicable following the acceptance for payment and purchase of Shares by the Purchaser pursuant to the Offer for the purpose of considering and taking action upon the Merger Agreement; (ii) prepare and file with the Commission a preliminary proxy or information statement relating to the Merger and the Merger Agreement and will use its best efforts to cause a definitive Proxy Statement to be mailed to its stockholders; (iii) include in the Proxy Statement the recommendation of the Company Board that stockholders of the Company vote in favor of the approval of the Merger and the adoption of the Merger 17 20 Agreement; and (iv) use its best efforts to solicit from holders of Shares proxies in favor of the Merger and take all other action necessary to secure any stockholder approval required by the DGCL to effect the Merger. In the event that Parent, the Purchaser or any other Subsidiary of Parent acquires at least 90% of the outstanding Shares, pursuant to the Offer, exercise of the option granted pursuant to the Stock Option Agreement or otherwise, the parties will take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after such acquisition, without a meeting of the Company's stockholders, in accordance with the DGCL. Representations and Warranties. The Merger Agreement contains various representations and warranties of the parties thereto, including representations by the Company as to, among other things (i) organization, good standing and Subsidiaries, (ii) capitalization, (iii) authorization, validity of the Merger Agreement and the Stock Option Agreement and all required Company action taken with respect to the Offer and the Merger, (iv) vote required to approve the Merger, (v) required consents or approvals, (vi) no material misstatements in filings made with the Commission or financial statements, (vii) absence of material adverse changes, (viii) no undisclosed liabilities, (ix) no misstatements or omissions of a material fact in the Schedule 14D-9, Proxy Statement or other filings with the Commission with respect to the Offer and the Merger, (x) employee benefit plans and ERISA, (xi) litigation, (xii) compliance with environmental laws and regulations, (xiii) tax returns and tax liabilities, (xiv) labor relations, (xv) compliance with laws, (xvi) insurance, (xvii) material contracts, (xviii) accounts receivable, (xix) valid title to, or leasehold interests in, property, (xx) valid title to, or leasehold interests in, plant and equipment, (xxi) all necessary permits and licenses, (xxii) intellectual property, (xxiii) Year 2000 issues, (xxiv) major customers, (xxv) receipt of fairness opinion from financial advisor and (xxvi) full disclosure. In addition, the Merger Agreement contains representations by Parent and the Purchaser as to, among other things, (i) organization and good standing, (ii) authorization, validity of the Merger Agreement and the Stock Option Agreement and all required Parent and Purchaser action taken with respect to the Offer and the Merger, (iii) required consents or approvals, (iv) no misstatements or omissions of a material fact in the Schedule 14D-1 or other filings with the Commission with respect to the Offer and the Merger, (v) financing the Offer and the Merger and (vi) operations of the Purchaser. Interim Operations. Pursuant to the Merger Agreement, the Company has agreed that after the date of the Merger Agreement and prior to the Effective Time, unless Parent otherwise agrees in writing or except as otherwise contemplated by the Merger Agreement: (a) the business of the Company and each of its Subsidiaries will be conducted only in the ordinary and usual course and, to the extent consistent therewith, each of the Company and its Subsidiaries will use its reasonable best efforts to preserve its business organization intact and maintain its existing relations with customers, suppliers, employees, creditors and business partners; (b) the Company will not, and will not permit its Subsidiaries to: (i) amend its certificate of incorporation or by-laws or similar organizational documents; (ii) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; (iii) issue, sell, transfer, pledge, dispose of or encumber any shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class or bonds, debentures, notes or other indebtedness having general voting rights (or convertible into securities having such rights) ("Voting Debt") of the Company or any of its Subsidiaries, other than Shares reserved for issuances pursuant to the exercise of stock options outstanding on the date of the Merger Agreement; (iv) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of its Subsidiaries; or (v) redeem, purchase or otherwise acquire directly or indirectly any shares of its capital stock or any instrument or security which consists of or includes a right to acquire such shares; (c) the Company will not, and will not permit any of its Subsidiaries to, transfer, lease, license, sell, mortgage, pledge, dispose of or encumber any assets other than in the ordinary and usual course of business and consistent with past practice, provided that such transactions, other than sales of inventory, do not exceed $25,000 per transaction and $250,000 in the aggregate and other than sales of specified 18 21 property, provided, however, that Parent's consent is required for any indemnification provision or for the incurrence or obligation to incur any environmental remediation costs related to any such sale of property; (d) the Company will not, and will not permit any of its Subsidiaries to, acquire or publicly propose to acquire or agree to acquire (i) by merging or consolidating with, or by purchasing an equity interest in or a substantial portion of the assets of, or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof or (ii) any assets except purchases of assets in the ordinary course of business consistent with past practice and which do not individually exceed $150,000 or in the aggregate $1,500,000 and other than a purchase of specified property; (e) the Company will not, and will not permit any of its Subsidiaries to: (i) grant any increase in the compensation payable or to become payable by the Company or any of its Subsidiaries to any of its executive officers or employees or (A) enter into or adopt any new, or (B) amend or otherwise increase, or accelerate the payment or vesting of any benefit or amount payable or to become payable under any bonus, incentive compensation, deferred compensation, severance, profit sharing, stock option, stock purchase, insurance, pension, retirement or other employee benefit plan, or other contract, agreement, commitment, arrangement, plan, trust fund or policy maintained or contributed to or entered into by the Company or any of its Subsidiaries; or (ii) enter into any employment (other than "at will") or severance agreement with or, except in accordance with the written policies of the Company existing on the date of the Merger Agreement, grant any severance or termination pay to any officer, director or employee of the Company or any of its Subsidiaries; (f) the Company will not, and will not permit any of its Subsidiaries to, (i) except in the ordinary course of business consistent with past practice, enter into new contracts, modify, amend, terminate, renew or fail to use reasonable business efforts to renew any contract or agreement to which the Company or any of its Subsidiaries is a party, which is material to the Company and its Subsidiaries taken as a whole and provided that the term of any new contract or any contract modification, amendment or renewal does not exceed twelve (12) months and, provided further, that no loans or advances may be made or extended to any customers in connection with any such contract, modification, amendment or renewal, or waive, release or assign any material rights or claims therein, or (ii) enter into, modify, amend or renew any contract or agreement outside the ordinary course of business or on a basis not consistent with past practice if the dollar value of such new contract or agreement, or existing contract or agreement as so amended, modified or renewed, is or would be in excess of $150,000 (not to exceed $1,500,000 in the aggregate) or have an initial term (or a renewal or extension term) greater than twelve (12) months; (g) the Company will, and will cause each of its Subsidiaries to, maintain with financially responsible insurance companies insurance in such amounts and against such risks and losses as are customary for companies engaged in the business of the Company and its Subsidiaries, consistent with the Company's past practices; (h) the Company will not, and will not permit any of its Subsidiaries to: (i) incur or assume any long-term debt, or except in the ordinary course of business, incur or assume any short-term indebtedness in amounts not consistent with past practice; (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person; (iii) make any loans, advances or capital contributions to, or investments in, any other person (other than to wholly owned Subsidiaries of the Company consistent with past practice); or (iv) make any new capital expenditure or expenditures which exceed the amounts budgeted therefor in the 1999 capital expenditure budget for the Company; (i) the Company will not, and will not permit any of its Subsidiaries to, change any of the accounting principles used by it except as required by law, rule, regulation or United States generally accepted accounting principles; 19 22 (j) the Company will not, and will not permit any of its Subsidiaries to, make any material Tax election other than in the ordinary course of business and consistent with past practice, or settle or compromise any Tax liability in excess of $100,000 arising from or in connection with any single issue; (k) the Company will not, and will not permit any of its Subsidiaries to, pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction of any such claims, liabilities or obligations, (i) in the ordinary course of business and consistent with past practice, properly reflected or reserved against in the consolidated financial statements (or the notes thereto) as of and for the fiscal year ended December 31, 1998 of the Company and its consolidated Subsidiaries, (ii) incurred since December 31, 1998 in the ordinary course of business and consistent with past practice or (iii) which are immaterial in nature and amount; (l) the Company will not, and will not permit any of its Subsidiaries to, adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (m) the Company will not, and will not permit any of its Subsidiaries to, amend, renew, terminate or cause to be extended any lease, agreement or arrangement relating to any of its leased real properties or enter into any lease, agreement or arrangement with respect to any real property; (n) the Company will, and will cause each of its Subsidiaries to, use reasonable best efforts to maintain in effect all existing Permits that are material to the operations of the Company or any of its Subsidiaries; (o) subject to certain other restrictions set forth in the Merger Agreement, the Company will not, and will not permit any of its Subsidiaries to, enter into any agreement or arrangement with any of their respective affiliates other than such agreements and arrangements as are entered into in the usual, ordinary and regular course of business and which have been negotiated on an arms-length basis and are no less favorable to the Company or its Subsidiaries than the Company or such Subsidiary would have obtained from an unaffiliated third party; (p) the Company will not, and will not permit any of its Subsidiaries to, take, or agree to commit to take, any action that (i) would make any representation or warranty of the Company contained in the Merger Agreement inaccurate in any respect at, or as of any time prior to, the Effective Time, (ii) would result in any of the conditions to the Offer or any conditions to the consummation of the Merger not being satisfied, or (iii) would materially impair the ability of the Company, Parent or the Purchaser to consummate the Offer or the Merger in accordance with the terms of the Merger Agreement or materially delay such consummation; and (q) the Company will not, and will not permit any of its Subsidiaries to, enter into an agreement, contract, commitment or arrangement to do any of the foregoing, or to authorize, recommend, propose or announce an intention to do any of the foregoing. No Solicitation. Pursuant to the Merger Agreement, the Company has agreed that from the date of the Merger Agreement until the earlier of the termination of the Merger Agreement in accordance with its terms or the expiration of the Offer without Parent or the Purchaser or their affiliates, as the case may be, having purchased any Shares pursuant thereto, neither the Company nor any of its Subsidiaries or affiliates will (and the Company will use its reasonable best efforts to cause its and each of its Subsidiaries' officers, directors, employees, representatives and agents, including, but not limited to, investment bankers, attorneys and accountants, not to), directly or indirectly, encourage, solicit, participate in or initiate discussions or negotiations with, provide any information to, or enter into any agreement with, any corporation, partnership, person or other entity or group (other than Parent, any of its affiliates or representatives) concerning any merger, business combination, tender offer, exchange offer, sale of assets (other than as expressly permitted by Section 5.1 of the Merger Agreement), sale of shares of capital stock or debt securities or similar transactions involving the Company or any Subsidiary, division or operating or principal business unit of the Company (an "Acquisition Proposal"). The Company also agreed to immediately cease any existing activities, discussions or 20 23 negotiations with any other persons with respect to any of the foregoing. Notwithstanding the foregoing, the Company may, directly or indirectly, provide access and furnish information concerning its business, properties or assets to any corporation, partnership, person or other entity or group pursuant to appropriate confidentiality agreements, and may negotiate and participate in discussions and negotiations with such entity or group if (w) such entity or group has submitted an unsolicited bona fide written proposal to the Company Board relating to any such transaction, (x) such proposal provides for the acquisition for cash and/or publicly traded securities of all of the outstanding Shares, (y) the Company Board determines in good faith, after consultation with its independent financial advisor, that such proposal is financially superior to the Offer and the Merger and fully financed or reasonably capable of being financed, and (z) the Company Board determines in good faith, after consultation with independent legal counsel, that the failure to provide such information or access or to engage in such discussions or negotiations would violate their fiduciary duties to the Company's stockholders under applicable law. A proposal meeting all of the criteria in the preceding sentence is referred to in the Merger Agreement as a "Superior Proposal." The Merger Agreement does not prohibit the Company or the Company Board from taking and disclosing to the Company's stockholders a position with respect to a tender offer by a third party pursuant to Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act. The Company has agreed to immediately notify Parent of any Acquisition Proposal, or if an inquiry is made, to keep Parent fully apprised of all developments with respect thereto, to immediately provide to Parent copies of any written materials received by the Company in connection with any Acquisition Proposal or inquiry, and to identify the party making any Acquisition Proposal or inquiry or engaging in such discussion or negotiation. The Company has also agreed to promptly provide to Parent any non-public information concerning the Company provided to any other party which was not previously provided to Parent. The Company has agreed not to release any third party from, or waive any provisions of, any confidentiality or standstill agreement to which the Company is a party. The Merger Agreement provides that, except in connection with the valid termination of the Merger Agreement in connection with a Superior Proposal, neither the Company Board nor any committee thereof shall (i) withdraw, or modify or change in a manner adverse to Parent or the Purchaser the approval or recommendation by the Company Board of the Offer, the Merger Agreement or the Merger or propose to do so, (ii) approve or recommend any Acquisition Proposal or propose to do so, or (iii) enter into any agreement (other than a confidentiality agreement) with respect to any Acquisition Proposal. Directors' and Officers' Indemnification and Insurance. The Merger Agreement provides that for six years after the Effective Time, the Surviving Corporation will indemnify, defend and hold harmless to the fullest extent permitted under Delaware law the present and former officers, directors, employees and agents of the Company and its Subsidiaries against all losses, claims, damages, liabilities, fees and expenses (including reasonable fees and disbursements of counsel and judgments, fines, losses, claims, liabilities and amounts paid in settlement (provided that any such settlement is effected with the written consent of Parent or the Surviving Corporation)) in connection with any claim, suit, action, proceeding or investigation that is, in whole or in part, based on or arising out of the fact that such person is or was a director, officer, employee or agent of the Company or its Subsidiaries and arising out of actions or omissions occurring at or prior to the Effective Time. The Merger Agreement further provides that for six years after the Effective Time, Parent will, or will cause the Surviving Corporation to, maintain in effect, if available, directors' and officers' liability insurance covering those persons currently covered by the Company's directors' and officers' liability insurance policy, to the extent that it provides coverage for events occurring on or prior to the Effective Time, on terms (including the amounts of coverage and the amounts of deductibles, if any) that are no less favorable than the terms of the Company's current policy. If the premium for such coverage exceeds 150% of the annual premium currently paid by the Company for such coverage, Parent or the Surviving Corporation are required only to purchase a policy with the greatest coverage available for an annual premium up to such amount. 21 24 Termination. The Merger Agreement provides that it may be terminated or abandoned at any time prior to the Effective Time, whether before or after stockholder approval thereof: (a) by the mutual consent of the Parent Board and the Company Board. (b) by either of the Company Board or the Parent Board: (i) if Shares have not been purchased pursuant to the Offer on or prior to October 31, 1999; provided, that the right to terminate the Merger Agreement pursuant to this paragraph is not available to any party whose failure to fulfill any obligation under the Merger Agreement has been the cause of, or resulted in, the failure of the Purchaser to purchase Shares pursuant to the Offer on or prior to such date; or (ii) if any Governmental Entity has issued an order, decree or ruling or taken any other action (which order, decree, ruling or other action the parties will use their reasonable efforts to lift), in each case permanently restraining, enjoining, or otherwise prohibiting the transactions contemplated by the Merger Agreement and such order, decree, ruling or other action has become final and non-appealable. (c) by the Company Board: (i) if, prior to the purchase of Shares pursuant to the Offer, the Company Board has withdrawn, or modified or changed in a manner adverse to Parent or the Purchaser, its approval or recommendation of the Offer, the Merger Agreement or the Merger in order to approve and permit the Company to execute a definitive agreement providing for a Superior Proposal; provided that (A) at least five business days prior to terminating the Merger Agreement pursuant to this paragraph the Company has provided Parent with written notice advising Parent that the Company Board has received a Superior Proposal that it intends to accept, specifying the material terms and conditions of such Superior Proposal and identifying the person making such Superior Proposal, and (B) the Company has caused its financial and legal advisors to negotiate in good faith with Parent to make such adjustments in the terms and conditions of the Merger Agreement as would enable the Company to proceed with the transactions contemplated therein on such adjusted terms; and further provided that the Company may not terminate the Merger Agreement pursuant to this paragraph if the Company is in material breach of the Merger Agreement; or (ii) if, prior to the purchase of Shares pursuant to the Offer, Parent or the Purchaser breaches in any material respect any of its material covenants, agreements, representations or warranties contained in the Merger Agreement, which breach is incapable of being cured within 30 days of notice from the Company to Parent; or (iii) if Parent or the Purchaser has terminated the Offer, or the Offer has expired, without Parent or the Purchaser, as the case may be, purchasing any Shares pursuant thereto; provided that the Company may not terminate the Merger Agreement pursuant to this paragraph if the Company is in material breach of the Merger Agreement. (d) by the Parent Board: (i) if, due to an occurrence that if occurring after the commencement of the Offer would result in a failure to satisfy any of the conditions set forth in Section 14 below, Parent, the Purchaser, or any of their affiliates has failed to commence the Offer on or prior to five business days following the date of the initial public announcement of the Offer, provided that Parent may not terminate the Merger Agreement pursuant to this paragraph if Parent or the Purchaser is in material breach of the Merger Agreement; or (ii) if prior to the purchase of Shares pursuant to the Offer, the Company Board has withdrawn, or modified or changed in a manner adverse to Parent or the Purchaser, its approval or recommendation of the Offer, the Merger Agreement or the Merger or has recommended an Acquisition Proposal or offer, or has executed an agreement in principle or definitive agreement 22 25 providing for a tender offer or exchange offer for any shares of capital stock of the Company, or a merger, consolidation or other business combination with a person or entity other than Parent, the Purchaser or their affiliates (or the Company Board resolves to do any of the foregoing); provided that Parent may not terminate the Merger Agreement pursuant to this paragraph if Parent or the Purchaser is in material breach of the Merger Agreement; or (iii) if Parent or the Purchaser has terminated the Offer, or the Offer has expired without Parent or the Purchaser purchasing any Shares thereunder, provided that Parent may not terminate the Merger Agreement pursuant to this paragraph if it or the Purchaser has failed to purchase Shares in the Offer in violation of the material terms thereof. Effect of Termination; Termination Fee. The Merger Agreement provides that in the event of termination, the Merger Agreement will forthwith become null and void, and there will be no liability on the part of Parent, the Purchaser or the Company except (A) for fraud or for willful material breach of the Merger Agreement and (B) as described below with respect to the payment of certain fees and expenses. Set forth below are the circumstances under which a Termination Fee (as defined below) is payable under the terms of the Merger Agreement. All references to paragraph numbers refer to the section entitled "Termination" above. If (w) the Company Board terminates the Merger Agreement pursuant to paragraph (c)(i), (x) the Parent Board terminates the Merger Agreement pursuant to paragraph (d)(ii), (y) the Company Board terminates the Merger Agreement pursuant to paragraph (b)(i) or paragraph (c)(iii) or the Parent Board terminates the Merger Agreement pursuant to paragraph (b)(i) or (d)(iii) and prior thereto there has been publicly announced another Acquisition Proposal or (z) the Parent Board, due to a material breach of the Merger Agreement by the Company, terminates the Merger Agreement pursuant to paragraph (d)(i) or (d)(iii), (each such case of termination being referred to as a "Trigger Event"), then the Company is obligated to pay to Parent $14 million. Such payment is due not later than one business day after such termination of the Merger Agreement except in the case of any termination by the Company pursuant to paragraph (c)(i), in which case, payment is due simultaneously with the termination. The Merger Agreement further provides that upon the termination of the Merger Agreement due to the occurrence of a Trigger Event, the Company will also promptly reimburse Parent for the actual, documented and reasonable out-of-pocket expenses of Parent, the Purchaser and their affiliates (including the fees and expenses of legal counsel, accountants, financial advisors, other consultants, financial printers and financing sources) ("Expenses") in connection with the Offer and the Merger Agreement, in an amount not to exceed $2.5 million. The Merger Agreement also provides that if the Company terminates the Merger Agreement pursuant to paragraph (c)(ii), and the Company is not in material breach of the Merger Agreement at the time of such termination, Parent will pay to the Company (not later than one business day after such termination) $14 million plus an amount not to exceed $2.5 million as reimbursement to the Company for its actual, documented and reasonable out-of-pocket Expenses. Fees and Expenses. The Merger Agreement provides that, except as set forth above, all costs and expenses incurred in connection with the Merger Agreement and the transactions contemplated thereby will be paid by the party incurring such expenses. STOCK OPTION AGREEMENT The following is a summary of certain provisions of the Stock Option Agreement. This summary is not a complete description of the terms and conditions of the Stock Option Agreement and is qualified in its entirety by reference to the full text of the Stock Option Agreement, a copy of which is filed with the Commission as an exhibit to the Schedule 14D-1. Capitalized terms not otherwise defined below have the meanings set forth in the Stock Option Agreement. The Stock Option Agreement may be examined, and copies obtained, at the places and in the manner as set forth in Section 9 of this Offer to Purchase. 23 26 Grant and Exercise of Option. Under the Stock Option Agreement, the Company has granted to the Purchaser an irrevocable option (the "Stock Option") to purchase up to that number of newly issued Shares that, when added to the number of Shares owned by the Purchaser and its affiliates immediately following consummation of the Offer, will constitute 90% of the Shares then outstanding on a fully diluted basis (giving effect to the issuance of the Shares under the Stock Option) (up to a maximum of 19.9% of the Shares outstanding at the time of the grant of the Stock Option) at a price of $12.25 per Share. The Stock Option may be exercised by the Purchaser at any time after the acceptance for payment by the Purchaser of Shares pursuant to the Offer. The Stock Option will terminate upon the earlier of (i) the termination of the Merger Agreement in accordance with its terms or (ii) the Effective Time. Adjustment Upon Changes in Capitalization. The Stock Option Agreement provides that, in the event of any change in the number of issued and outstanding Shares by reason of any stock dividend, subdivision, merger, recapitalization, combination, conversion or exchange of shares, or any other change in the corporate or capital structure of the Company (including, without limitation, the declaration or payment of any extraordinary dividend of cash or securities) which would have the effect of diluting or otherwise adversely affecting the Purchaser's rights and privileges under the Stock Option Agreement, the number and kind of the shares and the consideration payable in respect of the shares will be appropriately and equitably adjusted to restore to the Purchaser its rights and privileges under the Stock Option Agreement. CONFIDENTIALITY AGREEMENT The following is a summary of certain provisions of the Confidentiality Agreement. This summary is not a complete description of the terms and conditions of the Confidentiality Agreement and is qualified in its entirety by reference to the full text of the Confidentiality Agreement, a copy of which is filed with the Commission as an exhibit to the Schedule 14D-1. Capitalized terms not otherwise defined below shall have the meanings set forth in the Confidentiality Agreement. The Confidentiality Agreement may be examined, and copies obtained, at the places and in the manner as set forth in Section 9 of this Offer to Purchase. Pursuant to the terms of the Confidentiality Agreement that Parent and the Company entered into on October 30, 1998, the Company and Parent agreed to provide, among other things, for the confidential treatment of their discussions regarding the Offer and the Merger and the exchange of certain confidential information concerning each of them. The parties agreed that for a period of two years from the date of the Confidentiality Agreement that they will not knowingly, as a result of knowledge or information obtained from the exchange of certain confidential information (i) divert or attempt to divert any business or customer of the other party or any of its affiliates nor (ii) employ or attempt to employ or divert any employee of the party. The parties further agreed that, upon receipt of proprietary, non-public, confidential information, neither of them would propose to the other or any other person any transaction between the companies or their securityholders or involving any of their securities or securityholders unless the other company has requested in writing that such a proposal be made, and that neither company will acquire, or assist, advise or encourage any other persons in acquiring, directly or indirectly, control of the other company or any of the other company's securities, businesses or assets for a period of two years from the date of the Confidentiality Agreement unless the other company has consented in advance in writing to such acquisition. EMPLOYMENT AGREEMENTS The following is a summary of certain provisions of the Employment Agreement (as defined herein) and a letter agreement related thereto. This summary is not a complete description of the terms and conditions of the Employment Agreement and the related letter agreement and is qualified in its entirety by reference to the full text of the Employment Agreement and the related letter agreement, copies of which are filed with the Commission as exhibits to the Schedule 14D-1. Capitalized terms not otherwise defined below shall have the meanings set forth in the Employment Agreement. The Employment Agreement and the related letter agreement may be examined, and copies obtained, at the places and in the manner as set forth in Section 9 of this Offer to Purchase. 24 27 Parent and the Company have agreed to new employment arrangements with Mr. O'Mahoney that, effective upon the date that a majority of Shares are acquired by Parent (the "Acquisition Date"), will replace Mr. O'Mahoney's current employment agreement with the Company. The new agreement entered into among Mr. O'Mahoney, Parent and the Company (the "Employment Agreement") provides that in lieu of any payment under Mr. O'Mahoney's current agreement, Mr. O'Mahoney will be employed by Parent for an initial period of two years after the Acquisition Date at an initial annual base salary of $350,000, subject to increase at the discretion of Parent, and will receive fringe benefits and perquisites at least equal to those received by Mr. O'Mahoney immediately before the date of the Employment Agreement. The Employment Agreement also provides that Mr. O'Mahoney will receive, upon the Acquisition Date, a signing bonus of $100,000 in cash and a grant of shares of restricted stock of Parent with a value of $300,000 and, provided his employment with Parent continues on the day following the first anniversary of the Acquisition Date, a grant of shares of restricted stock of Parent with a value of $300,000 on such day. Pursuant to the Employment Agreement, if Parent terminates Mr. O'Mahoney's employment without cause, as defined in the Employment Agreement, then Parent will pay Mr. O'Mahoney an amount equal to the amount of salary he would have earned during the remaining initial two-year term of the Employment Agreement. In addition, if Mr. O'Mahoney's employment is terminated without cause (i) on or before the first anniversary of the Acquisition Date, then he will receive a cash payment of $300,000 and all restrictions on his restricted stock will be lifted, or (ii) after the day following the first anniversary of the Acquisition Date but before the second anniversary of the Acquisition Date, then all restrictions on his restricted stock will be lifted. If Mr. O'Mahoney terminates his employment or if Parent terminates Mr. O'Mahoney's employment for cause, then Mr. O'Mahoney will not receive any payments other than payments owed to him up to the date of his termination. The Employment Agreement also provides that for a period of eighteen months following Mr. O'Mahoney's termination of employment with Parent, Mr. O'Mahoney may not, directly or indirectly, engage in any business which competes with Parent or the Company. The Employment Agreement places certain restrictions upon Mr. O'Mahoney's ability to communicate confidential information concerning Parent or the Company to third parties. The Employment Agreement also provides that Parent will pay Mr. O'Mahoney such additional amounts as may be necessary to cover certain taxes that Mr. O'Mahoney would have to pay on certain payments he is entitled to receive. In addition, pursuant to a letter agreement supplementing the Employment Agreement, Parent has also agreed to grant to Mr. O'Mahoney, upon Parent becoming the owner of a majority of the issued and outstanding Shares (provided that such date is not later than October 31, 1999), an option to purchase 5,000 shares of common stock of Parent at an exercise price equal to the stock's closing price on the NYSE on the last regular trading day immediately preceding the grant date. The option will vest in two equal installments on each of the first and second anniversaries of the grant date. 12. PLANS FOR THE COMPANY; OTHER MATTERS. Plans for the Company. Parent is conducting a detailed review of the Company and its assets, corporate structure, dividend policy, capitalization, operations, properties, policies, management and personnel and will consider, subject to the terms of the Merger Agreement, what, if any, changes would be desirable in light of the circumstances existing upon completion of the Offer. Such changes could include, among other things, changes in the Company's business, corporate structure, capitalization, management or dividend policy. Assuming the Minimum Condition is satisfied and the Purchaser purchases Shares pursuant to the Offer, Parent intends to promptly exercise its rights under the Merger Agreement to obtain majority representation on, and control of, the Company Board. See "Merger Agreement--Designation of Directors" above. Parent will exercise such rights by causing the Company to elect to the Company Board Messrs. Allan R. Rothwell, Bruce E. Moore, Darryl K. Williams and David A. Beanblossom. Information with respect to such directors is contained in the Schedule 14D-9. The Merger Agreement provides that, upon the purchase of and payment for any Shares by Parent or any of its Subsidiaries pursuant to the Offer, Parent will be entitled to designate such number of directors, rounded up to the next whole number, on the Company Board such that the percentage of its designees on the Company Board equals the percentage of the outstanding Shares beneficially owned by the Purchaser, Parent and any of their affiliates. See Section 11. The Merger Agreement 25 28 provides that the directors of the Purchaser and the officers of the Company, in each case immediately prior to the Effective Time, will, from and after the Effective Time, be the initial directors and officers, respectively, of the Surviving Corporation. Except as disclosed in this Offer to Purchase, and except as may be effected in connection with the integration of operations referred to above, neither Parent nor the Purchaser has any present plans or proposals that would result in an extraordinary corporate transaction, such as a merger, reorganization, liquidation, relocation of operations or sale or transfer of a material amount of assets, involving the Company or its Subsidiaries, or any material changes in the Company's capitalization, corporate structure, business or composition of its management or the Company Board. Stockholder Approval. Under the DGCL, the approval of the Company Board and the affirmative vote of the holders of a majority of the outstanding Shares are required to adopt and approve the Merger Agreement and transactions contemplated thereby. The Company has represented in the Merger Agreement that the execution and delivery of the Merger Agreement by the Company and the consummation by the Company of the transactions contemplated by the Merger Agreement have been duly authorized by all necessary corporate action on the part of the Company, subject to the approval of the Merger by the Company's stockholders in accordance with the DGCL. In addition, the Company has represented that the affirmative vote of the holders of a majority of the outstanding Shares is the only vote of the holders of any class or series of the Company's capital stock which is necessary to approve the Merger Agreement and the transactions contemplated thereby, including the Merger. Therefore, unless the Merger is consummated pursuant to the short-form merger provisions under the DGCL described below (in which case no further corporate action by the stockholders of the Company will be required to complete the Merger), the only remaining required corporate action of the Company will be the approval of the Merger Agreement and the transactions contemplated thereby by the affirmative vote of the holders of a majority of the Shares. The Merger Agreement provides that Parent will vote, or cause to be voted, all of the Shares then owned by Parent, the Purchaser or any of Parent's other Subsidiaries and affiliates in favor of the approval of the Merger and the adoption of the Merger Agreement. In the event that Parent, the Purchaser and Parent's other Subsidiaries and affiliates acquire in the aggregate at least a majority of the Shares entitled to vote on the approval of the Merger and the Merger Agreement (which would be the case if the Minimum Condition is satisfied and the Purchaser were to accept for payment Shares tendered in the Offer), they would have the ability to effect the Merger without the affirmative votes of any other stockholders. Short-Form Merger. Section 253 of the DGCL provides that, if a corporation owns at least 90% of the outstanding shares of each class of another corporation, the corporation holding such stock may merge itself into such corporation without any action or vote on the part of the board of directors or the stockholders of such other corporation (a "short-form merger"). In the event that Parent, the Purchaser and any other Subsidiaries of Parent acquire in the aggregate at least 90% of the outstanding Shares, pursuant to the Offer or otherwise, then, at the election of Parent, a short-form merger could be effected without any approval of the stockholders of the Company, subject to compliance with the provisions of Section 253 of the DGCL. Even if Parent and the Purchaser do not own 90% of the outstanding Shares following consummation of the Offer, Parent and the Purchaser could seek to purchase additional Shares in the open market or otherwise in order to reach the 90% threshold and employ a short-form merger. The per Share consideration paid for any Shares so acquired may be greater or less than that paid in the Offer. In addition, the Purchaser intends to exercise the Stock Option pursuant to which it would reach the 90% threshold. Parent and the Purchaser presently intend to effect a short-form merger if permitted to do so under the DGCL. Appraisal Rights. Holders of the Shares do not have appraisal rights in connection with the Offer. However, if the Merger is consummated, holders of the Shares at the Effective Time will have certain rights pursuant to the provisions of Section 262 of the DGCL, including the right to dissent and demand appraisal of, and to receive payment in cash of the fair value of, their Shares. Under Section 262 of the DGCL, dissenting stockholders of the Company who comply with the applicable statutory procedures will be entitled to receive a judicial determination of the fair value of their Shares (exclusive of any element of value arising from the accomplishment or expectation of the Merger) and to receive payment of such fair value in cash, together with a fair rate of interest thereon, if any. Any such judicial determination of the fair value of the Shares could 26 29 be based upon factors other than, or in addition to, the price per Share to be paid in the Merger or the market value of the Shares. The value so determined could be more or less than the price per Share to be paid in the Merger. THE FOREGOING SUMMARY OF THE RIGHTS OF DISSENTING STOCKHOLDERS UNDER THE DGCL DOES NOT PURPORT TO BE A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS DESIRING TO EXERCISE ANY APPRAISAL RIGHTS AVAILABLE UNDER THE DGCL. THE PRESERVATION AND EXERCISE OF APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE DGCL. Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act which is applicable to certain "going private" transactions and which may under certain circumstances be applicable to the Merger or another business combination following the purchase of Shares pursuant to the Offer in which the Purchaser seeks to acquire the remaining Shares not held by it. The Purchaser believes, however, that Rule 13e-3 will not be applicable to the Merger because it is anticipated that the Merger would be effected within one (1) year following consummation of the Offer and in the Merger stockholders would receive the same price per Share as paid in the Offer. If Rule 13e-3 were applicable to the Merger, it would require, among other things, that certain financial information concerning the Company, and certain information relating to the fairness of the proposed transaction and the consideration offered to minority stockholders in such a transaction, be filed with the Commission and disclosed to minority stockholders prior to consummation of the transaction. 13. DIVIDENDS AND DISTRIBUTIONS. As described above, the Merger Agreement provides that from April 27, 1999 until the Effective Time, without the prior written consent of Parent, neither the Company nor any of its Subsidiaries will (i) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock, except that a wholly-owned Subsidiary of the Company may declare and pay a dividend or make advances to its parent or the Company; (ii) issue, sell, transfer, pledge, dispose of or encumber any shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire any shares of, capital stock of any class or Voting Debt of the Company or any of its Subsidiaries, other than Shares reserved for issuances pursuant to the exercise of options outstanding on such date; (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Company; or (iv) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock or any instrument or security which consists of or includes a right to acquire such capital stock. 14. CONDITIONS TO THE OFFER. Notwithstanding any other provisions of the Offer, and in addition to (and not in limitation of) the Purchaser's rights to extend and amend the Offer at any time in its sole discretion (subject to the provisions of the Merger Agreement), the Purchaser is not required to accept for payment or, subject to any applicable rules and regulations of the Commission, including Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for, and may delay the acceptance for payment of or, subject to the restriction referred to above, the payment for, any tendered Shares, and may terminate the Offer as to any Shares not then paid for, if (i) any applicable waiting period under the HSR Act or any foreign antitrust or competition law or regulation has not expired or terminated, (ii) the Minimum Condition has not been satisfied, or (iii) at any time on or after the date of the Merger Agreement and before the time of payment for any such Shares, any of the following events shall occur or shall be determined by the Purchaser to have occurred: (a) there shall be threatened or pending any suit, action or proceeding by any Governmental Entity (i) seeking to prohibit or impose any material limitations on Parent's or the Purchaser's ownership or operation (or that of any of their respective Subsidiaries or affiliates) of all or a material portion of their or the Company's businesses or assets, or to compel Parent or the Purchaser or their respective Subsidiaries and affiliates to dispose of or hold separate any material portion of the business or assets of the Company or Parent and their respective Subsidiaries, in each case taken as a whole, (ii) challenging 27 30 the acquisition by Parent or the Purchaser of any Shares under the Offer or pursuant to the Stock Option Agreement, seeking to restrain or prohibit the making or consummation of the Offer or the Merger or the performance of any of the other transactions contemplated by this Agreement or the Stock Option Agreement, or seeking to obtain from the Company, Parent or the Purchaser any damages that are material in relation to the Company and its Subsidiaries taken as a whole, (iii) seeking to impose material limitations on the ability of the Purchaser, or rendering the Purchaser unable, to accept for payment, pay for or purchase some or all of the Shares pursuant to the Offer and the Merger, (iv) seeking to impose material limitations on the ability of the Purchaser or Parent effectively to exercise full rights of ownership of the Shares, including, without limitation, the right to vote the Shares purchased by it on all matters property presented to the Company's stockholders or (v) which otherwise is reasonably likely to have a Company Material Adverse Effect (as defined in the Merger Agreement); (b) there shall be any statute, rule, regulation, judgment, order or injunction enacted, entered, enforced, promulgated or deemed applicable to the Offer or the Merger, or any other action shall be taken by any Governmental Entity, other than the application to the Offer or the Merger of applicable waiting periods under the HSR Act or any foreign antitrust or competition law or regulation, that is reasonably likely to result, directly or indirectly, in any of the consequences referred to in clauses (i) through (v) of paragraph (a) above; (c) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on the NYSE for a period in excess of three hours (excluding suspensions or limitations resulting solely from physical damage or interference with such exchanges not related to market conditions), (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States (whether or not mandatory), (iii) a commencement of a war, armed hostilities or other international or national calamity directly or indirectly involving the United States, (iv) any limitation or proposed limitation (whether or not mandatory) by any United States governmental authority or agency that has a material adverse effect generally on the extension of credit by banks or other financial institutions, (v) any change in general financial, bank or capital market conditions which has a material adverse effect on the ability of financial institutions in the United States to extend credit or syndicate loans, (vi) any decline in either the Dow Jones Industrial Average or the Standard & Poor's Index of 500 Industrial Companies by an amount in excess of 20% measured from the close of business on the date of the Merger Agreement or (vii) in the case of any of the foregoing existing at the time of the commencement of the Offer, a material acceleration or worsening thereof; (d) any of the representations and warranties of the Company (without giving effect to any limitation as to "knowledge" set forth in the Merger Agreement) set forth in the Merger Agreement that are qualified as to materiality shall not be true and correct and any such representations and warranties that are not so qualified shall not be true and correct in any material respect, in each case as of the date of the Merger Agreement and as of the scheduled expiration of the Offer (except for those representations and warranties that address matters only as of a particular date or only with respect to a specific period of time, which need only be true and correct as of such date or with respect to such period); (e) the Company shall have breached or failed to perform any material obligation or to comply with any material agreement or covenant of the Company to be performed or complied with by it under the Merger Agreement; (f) there shall have occurred any events or changes which have had or which are reasonably likely to have or constitute, individually or in the aggregate, a Company Material Adverse Effect; (g) the Merger Agreement shall have been terminated in accordance with its terms; (h) (i) it shall have been publicly disclosed or Parent or the Purchaser shall have otherwise learned that any person, entity or "group" (as defined in Section 13(d)(3) of the Exchange Act), other than Parent or its affiliates or any group of which any of them is a member, shall have acquired beneficial ownership (determined pursuant to Rule 13d-3 promulgated under the Exchange Act) of more than 14.9% of any class or series of capital stock of the Company (including the Shares), through the 28 31 acquisition of stock, the formation of a group or otherwise, or shall have been granted an option, right or warrant, conditional or otherwise, to acquire beneficial ownership of more than 14.9% of any class or series of capital stock of the Company (including the Shares), other than acquisitions of stock in open market purchases by passive investors that prior to the date of the Merger Agreement beneficially owned 10% or more of any class or series of capital stock of the Company (including the Shares) provided that such acquisitions do not result in such passive investor beneficially owning more than 19.9% of such class or series of capital stock of the Company (including the Shares); or (ii) any person or group shall have entered into a definitive agreement or agreement in principle with the Company with respect to a merger, consolidation or other business combination with the Company; (i) the Company Board or any committee thereof (i) shall have withdrawn, or modified or changed in a manner adverse to Parent or the Purchaser (including by amendment of the Schedule 14D-9), its recommendation of the Offer, the Merger Agreement, or the Merger, (ii) shall have recommended another proposal or offer, (iii) shall have resolved to do any of the foregoing or (iv) shall have taken a neutral position or made no recommendation with respect to another proposal or offer (other than by Parent or the Purchaser) after a reasonable amount of time (and in no event more than ten business days following receipt thereof) has elapsed for the Company Board or any committee thereof to review and make a recommendation with respect thereto; or (j) the Company shall have breached the Stock Option Agreement, any of its representations, warranties or agreements set forth in the Stock Option Agreement or such Stock Option Agreement shall not be valid, binding and enforceable, except for such breaches or failures or failures to be valid, binding and enforceable that do not materially and adversely affect the benefits expected to be received by Parent and the Purchaser under the Merger Agreement or the Stock Option Agreement; which in the sole judgment of Parent or the Purchaser, in any such case, and regardless of the circumstances (including any action or inaction by Parent or the Purchaser giving rise to such condition) makes it inadvisable to proceed with the Offer or with such acceptance for payment or payments for Shares. The foregoing conditions are for the sole benefit of Parent and the Purchaser and may be waived by Parent or the Purchaser, in whole or in part, at any time and from time to time in the sole discretion of Parent or the Purchaser. The failure by Parent or the Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. 15. CERTAIN LEGAL MATTERS. General. Except as described in this Offer to Purchase, based on information provided by the Company, none of the Company, the Purchaser or Parent is aware of (i) any license or regulatory permit that appears to be material to the business of the Company and its Subsidiaries, taken as a whole, that might be adversely affected by the acquisition of Shares by Parent or the Purchaser pursuant to the Offer or the Merger or (ii) any approval or other action by any governmental, administrative or regulatory agency or authority, domestic or foreign, that would be required prior to the acquisition of Shares by the Purchaser pursuant to the Offer or the Merger. Should any such approval or other action be required, the Purchaser and Parent presently contemplate that such approval or other action would be sought. While, except as otherwise described in this Offer to Purchase, the Purchaser does not currently intend to delay the acceptance for payment of, or payment for, Shares tendered pursuant to the Offer pending the outcome of any such matter, there can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that failure to obtain any such approval or other action might not result in consequences adverse to the business of the Company or Parent or that certain parts of the businesses of the Company or Parent might not have to be disposed of, or other substantial conditions complied with, in the event that such approvals were not obtained or such other actions were not taken or in order to obtain any such approval or other action. If certain types of adverse actions are taken with respect to the matters discussed below, the Purchaser could decline to accept for payment, or pay for, any Shares tendered. See Section 14 for certain 29 32 conditions to the Offer, including conditions with respect to governmental actions. The Purchaser's obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions. See Section 14. Antitrust. The Offer and the Merger are subject to the HSR Act and the rules promulgated thereunder, which provide that certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division of the Department of Justice (the "Antitrust Division") and the Federal Trade Commission (the "FTC") and certain waiting period requirements have been satisfied. A Notification and Report Form with respect to the Offer is expected to be filed under the HSR Act on or about May 4, 1999. Under the provisions of the HSR Act applicable to the Offer, the purchase of Shares pursuant to the Offer may not be consummated until the expiration of a 15-calendar day waiting period following the filing by Parent, unless the Antitrust Division and the FTC terminate the waiting period prior thereto. Accordingly, if Parent makes such filing on May 4, 1999, the waiting period under the HSR Act applicable to the Offer will expire at 11:59 p.m., New York City time, on May 19, 1999, unless, prior to the expiration or termination of the waiting period, the FTC or the Antitrust Division extends the waiting period by requesting additional information or documentary material. If such a request is made, the waiting period will be extended and would expire at 11:59 p.m., New York City time, on the tenth calendar day after the date of substantial compliance by Parent with such request. Only one extension of the waiting period pursuant to a request for additional information is authorized by the HSR Act. Thereafter, such waiting period may be extended only by court order or with the consent of Parent. The Purchaser will not accept for payment Shares tendered pursuant to the Offer unless and until the waiting period requirements imposed by the HSR Act with respect to the Offer have been satisfied. See Section 14. The Merger may not be consummated until 30 calendar days after receipt by the Antitrust Division and the FTC of the Notification and Report Forms of both Parent and the Company unless the Purchaser acquires 50% or more of the outstanding Shares pursuant to the Offer or the 30-day period is earlier terminated by the Antitrust Division and the FTC. The FTC and the Antitrust Division frequently scrutinize the legality under the Antitrust Laws (as defined below) of transactions such as Purchaser's acquisition of Shares pursuant to the Offer and the Merger. At any time before or after Purchaser's acquisition of Shares, the Antitrust Division or the FTC could take such action under the Antitrust Laws as it deems necessary or desirable in the public interest, including seeking to enjoin the acquisition of Shares pursuant to the Offer or otherwise seeking divestiture of Shares acquired by Purchaser or divestiture of substantial assets of Parent, the Company or their respective affiliates. Private parties and state attorneys general may also bring legal action under the Antitrust Laws under certain circumstances. Based upon an examination of information provided by the Company relating to the businesses in which Parent and the Company are engaged, Parent and the Purchaser believe that the acquisition of Shares by the Purchaser pursuant to the Offer or the Merger will not violate the Antitrust Laws. Nevertheless, there can be no assurance that a challenge to the Offer or other acquisition of Shares by the Purchaser on antitrust grounds will not be made or, if such a challenge is made, what the result would be. As used in this Offer to Purchase, "Antitrust Laws" shall mean and include the Sherman Act, as amended, the Clayton Act, as amended, the HSR Act, the Federal Trade Commission Act, as amended, and all other Federal and state statutes, rules, regulations, orders, decrees, administrative and judicial doctrines, and other laws that are designed or intended to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade. Foreign Laws. Parent, the Company and certain of their subsidiaries conduct business in several foreign countries where regulatory filings or approvals may be required or desirable in connection with the consummation of the Offer. Certain of such filings or approvals, if required or desirable, may not be made or obtained prior to the currently scheduled Expiration Date. The Purchaser is seeking further information regarding the applicability of any such laws and currently intends to take such action as may be required or desirable. Pursuant to the Merger Agreement, if any such filings or approvals may not be made or obtained prior to the currently scheduled Expiration Date, the Purchaser has the right, in its sole discretion, to extend 30 33 the Offer until such time as all required or desirable filings and approvals may be made or obtained, provided that the Offer may not be extended beyond October 31, 1999. State Antitakeover Statutes. Section 203 of the DGCL, in general, prohibits a Delaware corporation that does not opt out of its provisions from engaging in a "Business Combination" (defined as a variety of transactions, including mergers) with an "Interested Stockholder" (defined generally as a person that is the beneficial owner of 15% or more of the outstanding voting stock of the subject corporation) for a period of three years following the date that such person became an Interested Stockholder unless (i) prior to such time, 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 which 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 for purposes of determining the number of shares outstanding those shares owned (a) by persons who are directors and officers and (b) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender offer or exchange offer; or (iii) at or subsequent to such time, the Business Combination is approved by the board of directors and authorized at an annual or special meeting of the stockholders, and not by written consent, by the affirmative vote of at least two-thirds ( 2/3) of the outstanding voting stock which is not owned by the Interested Stockholder. The Company has opted in its By-laws not to be governed by Section 203 of the DGCL, and as a result, the restrictions contained therein do not apply to transactions between the Company and any of its Interested Stockholders. Although the Company is organized under the laws of the State of Delaware, since the Company's executive offices and principal place of business are located in the State of Wisconsin, the Offer could be subject to Chapter 552 of the Wisconsin Statutes, the Wisconsin Corporate Take-Over Law ("Chapter 552"). Chapter 552 makes it unlawful, under certain circumstances, for any person to make a "take-over offer" involving a "target company" in Wisconsin which meets certain criteria, or to acquire any equity securities of such a target company pursuant to the take-over offer, unless a registration statement has been filed with the Division of Securities of the Wisconsin Department of Financial Institutions (the "Division") at least ten days prior to the commencement of the take-over offer and the Division does not delay the effectiveness of the take-over offer by order or request for a hearing. The Company has represented to Parent and the Purchaser in the Merger Agreement that it meets an exception to the registration provisions of Chapter 552 and, consequently, such provisions of Chapter 552 should be inapplicable to the Offer and the Merger. However, Chapter 552 also imposes certain reporting and filing requirements on persons making a take-over offer and makes unlawful certain fraudulent and deceptive practices in connection with a take-over offer. Parent and the Purchaser intend to comply with such requirements and prohibitions to the extent required by Chapter 552. The foregoing description of Chapter 552 is not necessarily complete and is qualified by reference to the provisions of Chapter 552 and the rules and regulations promulgated thereunder. A number of states have adopted laws and regulations that purport to apply to attempts to acquire securities of corporations that are incorporated in such states, or whose business operations have substantial economic effects in such states, or which have substantial assets, security holders, employees, principal executive offices or principal places of business in such states. In Edgar v. MITE Corp., the Supreme Court of the United States invalidated on constitutional grounds the Illinois Business Takeover statute, which, as a matter of state securities law, made certain corporate acquisitions more difficult. However, in 1987, in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of Indiana may, as a matter of corporate law and, in particular, with respect to those aspects of corporate law concerning corporate governance, constitutionally disqualify a potential acquiror from voting on the affairs of a target corporation without the prior approval of the remaining stockholders. The state law before the Supreme Court was by its terms applicable only to corporations that had a substantial number of stockholders in the state and were incorporated there. Other than as set forth above, Parent and the Purchaser do not believe that the antitakeover laws and regulations of any state will by their terms apply to the Offer and the Merger, and neither Parent nor the 31 34 Purchaser has attempted to comply with any state antitakeover statute or regulation. The Purchaser reserves the right to challenge the applicability or validity of any state law purportedly applicable to the Offer and nothing in this Offer to Purchase or any action taken in connection with the Offer is intended as a waiver of such right. If it is asserted that any state antitakeover statute is applicable to the Offer and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer, the Purchaser might be required to file certain information with, or to receive approvals from, the relevant state authorities, and the Purchaser might be unable to accept for payment or pay for Shares tendered pursuant to the Offer or may be delayed in consummating the Offer. In such case, the Purchaser may not be obligated to accept for payment, or pay for, any Shares tendered pursuant to the Offer. See Section 14. Environmental. The Company will be required to comply with the New Jersey Industrial Site Recovery Act ("ISRA") and the rules promulgated thereunder with respect to the Company's South Kearney, Plainfield and Newark, New Jersey facilities. To comply with ISRA, the Company will be required to apply for and obtain New Jersey Department of Environmental Protection ("NJDEP") approval of a remediation agreement with respect to the South Kearney and Plainfield facilities prior to the Purchaser's acquisition of Shares pursuant to the Offer or the Merger. With respect to the Newark facility, the Company intends to apply for a waiver of the ISRA requirements on the basis that the previous owner of the facility is in the process of an ISRA proceeding in connection with a previous sale of assets to the Company. NJDEP approval of the waiver application must be obtained prior to the Purchaser's acquisition of Shares pursuant to the Offer or the Merger. NJDEP approval of ISRA remediation agreements and waiver applications are typically issued within 14 business days after receipt of the relevant application and associated documentation. The Company intends to file the relevant applications and associated documentation with the NJDEP no later than May 21, 1999. 16. FEES AND EXPENSES. Merrill Lynch is acting as Dealer Manager in connection with the Offer and is providing certain financial advisory services to the Purchaser and Parent in connection with the Offer. Parent has agreed to pay Merrill Lynch a fee of approximately $3.1 million for such services, approximately 25% of which was payable upon the execution of the Merger Agreement and the remainder of which is payable upon consummation of the Merger. Parent has also agreed to reimburse Merrill Lynch for its out-of-pocket expenses, including the reasonable fees and expenses of its counsel and any other advisor retained by Merrill Lynch in connection with its engagement and to indemnify Merrill Lynch and certain related persons against certain liabilities and expenses, including certain liabilities and expenses under the federal securities laws. The Purchaser and Parent have retained Kissel Blake to serve as the Information Agent and ChaseMellon Shareholder Services, L.L.C. to serve as the Depositary in connection with the Offer. The Information Agent may contact holders of Shares by personal interview, mail, telephone, telex, telegraph and other methods of electronic communication and may request brokers, dealers, commercial banks, trust companies and other nominees to forward the Offer materials to beneficial holders. The Information Agent and the Depositary will each receive reasonable and customary compensation for their services, be reimbursed for certain reasonable out-of-pocket expenses and be indemnified against certain liabilities in connection with their services, including certain liabilities and expenses under the federal securities laws. Abernathy McGregor Frank will perform certain public relations consulting services for Parent in connection with the Offer, for which it will receive reasonable and customary compensation. Except as set forth above, neither Parent nor the Purchaser will pay any fees or commissions to any broker or dealer or other person or entity in connection with the solicitation of tenders of Shares pursuant to the Offer. Brokers, dealers, banks and trust companies will be reimbursed by the Purchaser for customary mailing and handling expenses incurred by them in forwarding the Offer materials to their customers. 17. MISCELLANEOUS. The Purchaser is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If the Purchaser becomes aware of any valid state statute 32 35 prohibiting the making of the Offer or the acceptance of the Shares pursuant thereto, the Purchaser will make a good faith effort to comply with such statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, the Purchaser cannot comply with such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by the Dealer Manager or one or more registered brokers or dealers which are licensed under the laws of such jurisdiction. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION ON BEHALF OF PARENT OR THE PURCHASER NOT CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. The Purchaser and Parent have filed with the Commission the Schedule 14D-1 pursuant to Rule 14d-3 under the Exchange Act, together with exhibits, furnishing certain additional information with respect to the Offer. In addition, the Company has filed with the Commission the Schedule 14D-9 pursuant to Rule 14d-9 under the Exchange Act, setting forth its recommendation with respect to the Offer and the reasons for its recommendation and furnishing certain additional related information. Such Schedules and any amendments thereto, including exhibits, should be available for inspection, and copies should be obtainable in the same manner set forth in Section 9 of this Offer to Purchase (except that such material will not be available at the regional offices of the Commission). LIPSTICK ACQUISITION CORP. May 4, 1999 33 36 SCHEDULE I INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER Directors and Executive Officers of Parent and the Purchaser. Set forth below is the name and present principal occupation or employment, and material occupations, positions, offices or employments for the past five years, of each director and executive officer of Parent and the Purchaser. Each such person is a citizen of the United States of America and, the business address of each such person is c/o Parent, 100 N. Eastman Road, Kingsport, Tennessee 37660. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to employment with Parent. Unless otherwise indicated, each such person has held his or her present occupation as set forth below, or has been an executive officer at Parent, or the organization indicated, for the past five years. Directors (and, in the case of Mr. Griffin, director-elect) of Parent or the Purchaser, as the case may be, are identified by an asterisk. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS ---- ------------------------------------------------------------ H. Jesse Arnelle* Mr. Arnelle is of counsel to the Winston-Salem, North Carolina-based law firm of Womble, Carlyle, Sandridge & Rice. He was a partner of the San Francisco-based law firm of Arnelle, Hastie, McGee, Willis & Greene or its predecessor from 1985 until 1997. Mr. Arnelle is Immediate Past Chairman of the Board of Trustees of Pennsylvania State University, is a director of the National Football Foundation and Collegiate Hall of Fame, and is a member of the boards of directors of Waste Management, Inc., FPL Group, Inc., Textron, Inc., Armstrong World Industries, Inc., and Union Pacific Resources, Inc. R. Wiley Bourne, Jr.* Mr. Bourne is Vice Chairman of the Board and Executive Vice President of Parent, responsible for all business organizations. He joined Parent in 1959 and was named Executive Vice President in 1989. Mr. Bourne also served as a Vice President of Eastman Kodak Company from 1986 through 1993. He is also a member of the board of directors of Unifi, Inc. Mr. Bourne also serves as a member of the Board of Trustees and Vice Chairman of the United States Council for International Business, on the regional advisory Board of First Tennessee Bank, as a director of the American Industrial Health Council, East Tennessee State University Foundation, and the Massachusetts Institute of Technology Society of Sloan Fellows, and on the Board of Trustees of Tennessee Wesleyan College, the Visiting Committee of the James H. Quillen College of Medicine, and the Board of Visitors of North Carolina A&T State University.
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PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS ---- ------------------------------------------------------------ Calvin A. Campbell, Mr. Campbell has been Chairman of the Board, President and Jr.* Chief Executive Officer of Goodman Equipment Corporation since 1971. Goodman Equipment designs, manufactures, and markets worldwide underground mining locomotives and personnel carriers and plastics blow molding machinery. He was also President and Chief Executive Officer of Cyprus Amax Minerals Company in 1992, Chairman of the Board in 1991 and 1992, and a director from 1985 through 1994. Mr. Campbell is a member of the board of directors of Mine Safety Appliances Company and of Bulley & Andrews Company. He also serves as Chairman of the National Association of Manufacturers, is a director of the National Mining Association, is a director and former Chairman of the Illinois Manufacturers Association, and serves as a trustee of the Illinois Institute of Technology. Earnest W. Deavenport, Mr. Deavenport is Chairman of the Board and Chief Executive Jr.* Officer of Parent. He joined Parent in 1960. Mr. Deavenport was named President of Parent in 1989. He also served as Group Vice President of Eastman Kodak Company from 1989 through 1993. Mr. Deavenport is a member of the boards of directors of First American Corporation and Milliken & Company. He also serves as a director of the Chemical Manufacturers Association, the American Plastics Council, and the National Association of Manufacturers, on the Board of Trustees of the Malcolm Baldridge National Quality Award Foundation, and on the policy committee of the Business Roundtable. Jerry E. Dempsey* Mr. Dempsey served as Chairman of the Board and Chief Executive Officer of PPG Industries, Inc. from 1993 until his retirement in 1997. From 1991 until he joined PPG, he was Senior Vice President of WMX Technologies, Inc., a waste treatment and disposal company, and Chairman of its publicly-traded, majority-owned subsidiary, Chemical Waste Management, Inc., having served as President and Chief Executive Officer of Chemical Waste Management, Inc. since 1985. Mr. Dempsey is also a member of the board of directors of Navistar International Corporation. John W. Donehower* Mr. Donehower is Senior Vice President and Chief Financial Officer of Kimberly-Clark Corporation. He joined Kimberly-Clark in 1974, and served in a series of management positions prior to election to his current position in 1993. Mr. Donehower is also a member of the board of directors of Allendale Mutual Insurance Company and Kimberly-Clark De Mexico S.A. de C.V. Donald W. Griffin* Mr. Griffin is Chairman of the Board, President, and Chief Executive Officer of Olin Corporation, a manufacturer of chemicals, metals, and ammunition. He joined Olin in 1961, and served in a series of marketing and management positions prior to election to the position of President and Chief Operating Officer in 1994 and to his current positions in 1996. Mr. Griffin is also a member of the boards of directors of A.C. Nielsen Corporation and Rayonier, Inc. He also serves as a director of the Chemical Manufacturers Association, the National Shooting Sports Foundation, the Wildlife Management Institute, and the Small Arms and Ammunition Manufacturers Institute, and as a trustee of the University of Evansville and the Buffalo Bill Historical Center. Mr. Griffin is not currently a director of the Company, but has been appointed to fill the vacancy to be created by Gerald B. Mitchell's retirement at Parent's Annual Meeting scheduled for May 6, 1999.
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PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS ---- ------------------------------------------------------------ Lee Liu* Mr. Liu is the Chairman of the Board of Interstate Energy Corporation, and was Chairman of the Board and Chief Executive Officer of IES Industries, Inc., predecessor of Interstate Energy Corporation, and of IES Utilities, the major subsidiary of IES Industries, from 1993 to 1998. Mr. Liu has been with Iowa Electric Light and Power Company, predecessor of IES Industries, since 1957. He is also a member of the boards of directors of Principal Financial Group and McLeod USA Incorporated. Marilyn R. Marks* Miss Marks is Chairman of the Board and Chief Executive Officer of Dorsey Trailers, Inc., positions she has held since 1987. She was also President of Dorsey Trailers, Inc. from 1987 to November 1997. Miss Marks is also a member of the board of directors of Dana Corporation, and also serves as a director of the American Trucking Associations Foundation. Gerald B. Mitchell* Mr. Mitchell retired from Dana Corporation, a vehicle parts supply company, in 1990, following 44 years of service. From 1980 until his retirement, Mr. Mitchell was the Chairman of the Board and Chief Executive Officer. Mr. Mitchell is a member of the boards of directors of WestPoint Stevens Inc., Worthington Industries, Inc., and George Weston Ltd. (Canada). Under Parent's Bylaw provision governing retirement age, Mr. Mitchell will resign from Parent's Board at Parent's Annual Meeting scheduled for May 6, 1999. Dr. John A. White* Dr. White is Chancellor of the University of Arkansas. From 1991 to 1997, he was Dean of the College of Engineering at the Georgia Institute of Technology. From July 1988 to September 1991, he was Assistant Director of the National Science Foundation in Washington, D.C., and served on the faculty of the Georgia Institute of Technology from 1975 to 1997. Dr. White is also a member of the National Science Board, a member of the National Academy of Engineering, and a member of the boards of directors of Motorola, Inc., Russell Corporation, J.B. Hunt Transport Services, Inc., and Logility, Inc. Dr. James L. Chitwood Dr. Chitwood is Senior Vice President of Parent, responsible for operations outside North America. Dr. Chitwood joined Parent in 1968, was named Senior Vice President of Parent in 1989, and Group Vice President, Specialty Business Group, in 1991. Dr. Chitwood was appointed Senior Vice President with responsibility for Parent business organizations in October 1994 and assumed his current responsibilities in 1996. He also served as a Vice President of Kodak from 1984 through 1993. Betty W. DeVinney Mrs. DeVinney is Vice President, Communications and Public Affairs of Parent. Mrs. DeVinney joined Parent in 1973. In 1991, she became Manager, Employment, was named Manager, Community Relations, in 1995 and was appointed Manager, Corporate Relations, in 1997. She assumed her current position in 1998. Harold L. Henderson Mr. Henderson joined Parent in 1997 as Senior Vice President and General Counsel. Mr. Henderson served previously as chief legal officer of The Firestone Tire & Rubber Company from 1980 to 1985 and of RJR Nabisco, Inc. from 1985 to 1989. He was a consultant, commercial real estate developer, and private investor from 1989 through 1996.
I-3 39
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS ---- ------------------------------------------------------------ Patrick R. Kinsey Mr. Kinsey is Vice President and Comptroller of Parent. Mr. Kinsey joined Parent in 1967, was named Director, Internal Auditing, in 1993 and became Director, Corporate Financial Reporting, in 1996. He assumed his current position in 1998. Roger K. Mowen, Jr. Mr. Mowen is Vice President, Customer Demand Chain, of Parent. Mr. Mowen joined Parent in 1971. He was named Vice President and General Manager, Polymer Modifiers, in 1991, was named Superintendent of the Polymers Division in 1994, and was appointed President, Carolina Eastman Division, in 1996. Mr. Mowen assumed his current position in 1998. B. Fielding Rolston Mr. Rolston is Vice President, Human Resources and Health, Safety, Environment, and Security, of Parent. Mr. Rolston joined Parent in 1964 and was appointed Vice President, Customer Service and Materials Management, of Parent in 1987. He assumed his current position in 1998. Allan R. Rothwell Mr. Rothwell is Senior Vice President and Chief Financial Officer of Parent. Mr. Rothwell joined Parent in 1969 and was appointed Business Director, Industrial Intermediates, in 1993. In 1994, he became Vice President and General Manager, Container Plastics, was appointed Vice President, Corporate Development and Strategy, in 1997, and assumed his current position in 1998. Darryl K. Williams Mr. Williams is Senior Vice President, Technology and Quality, of Parent. Mr. Williams joined Parent in 1965. He was appointed President of Eastman Chemical Japan Ltd., in 1992, was named Vice President, Asia Pacific Regional Support Services, in 1993, was appointed Vice President, Asia Pacific Sales, in 1994, and was named Senior Vice President, Technology, in 1996. He assumed his current position in 1998. Garland S. Williamson Mr. Williamson is Vice President, Worldwide Manufacturing of Parent. Mr. Williamson joined Parent in 1967. He was named Vice President, Asia Pacific Manufacturing, in 1992, and was appointed President, Texas Eastman Division, in 1996. Mr. Williamson assumed his current position in 1998.
DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS ---- ------------------------------------------------------------ Bruce E. Moore* Mr. Moore is Vice President and General Manager of Coatings, Inks & Resins of Parent. He joined Parent in 1962 as a sales trainee in the Chemicals Division, was named Director of Marketing in the International Division in 1984 and Director of Field Marketing in the Chemicals Division in 1986. In 1990, Mr. Moore became the Chemicals Division Director of Product Management, was named Vice President of Asia Pacific and Latin America Sales in 1991 and appointed to Director of Eastman Chemical Asia Pacific Pte. Ltd. He was appointed to his present position in 1998. Allan R. Rothwell* Mr. Rothwell is President of the Purchaser. Mr. Rothwell is also Senior Vice President and Chief Financial Officer of Parent. Mr. Rothwell joined Parent in 1969 and was appointed Business Director, Industrial Intermediates, in 1993. In 1994, he became Vice President and General Manager, Container Plastics, was appointed Vice President, Corporate Development and Strategy, in 1997, and assumed his current position in 1998.
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PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT; NAME MATERIAL POSITIONS HELD DURING THE PAST FIVE YEARS ---- ------------------------------------------------------------ Prentice McKibben Mr. McKibben is Treasurer and Secretary of the Purchaser. Mr. McKibben is also Director, Corporate and Business Development, of Parent. He joined Parent in 1974 and was appointed Business Ventures Director in 1996, and named Business Development Executive in 1997. He assumed his current position with Parent in 1998.
I-5 41 Facsimile copies of the Letter of Transmittal, properly completed and duly executed, will be accepted. The Letter of Transmittal, certificates for Shares and any other required documents should be sent or delivered by each stockholder of the Company or his or her broker, dealer, commercial bank, trust company or other nominee to the Depositary, at one of the addresses set forth below: The Depositary for the Offer is: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. By Mail: By Hand: By Overnight: Reorganization Department Reorganization Department Reorganization Department P. O. Box 3301 120 Broadway 85 Challenger Road, South Hackensack, NJ 07606 13th Floor Mail Drop-Reorg New York, NY 10271 Ridgefield Park, NJ 07660
By Facsimile Transmission: (For Eligible Institutions Only) (201) 296-4293 Confirm Facsimile Transmission By Telephone Only: (201) 296-4860 Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their telephone numbers and addresses set forth below. Additional copies of this Offer to Purchase, the Letter of Transmittal, the Notice of Guaranteed Delivery and all other tender offer materials may be obtained from the Information Agent. Stockholders may also contact their broker, dealer, commercial bank or trust company for assistance concerning the Offer. The Information Agent for the Offer is: KISSEL BLAKE A Division of Shareholder Communications Corporation 110 Wall Street New York, New York 10005 Banks and Brokers, Please Call: (212) 344-6733 All Others Call Toll-Free: (800) 554-7733 The Dealer Manager for the Offer is: MERRILL LYNCH & CO. World Financial Center North Tower New York, New York 10281-1314 (212) 449-8971 (Call Collect) EX-99.A2 3 LETTER OF TRANSMITTAL 1 Exhibit (a)(2) LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK OF LAWTER INTERNATIONAL, INC. PURSUANT TO THE OFFER TO PURCHASE DATED MAY 4, 1999 BY LIPSTICK ACQUISITION CORP., A WHOLLY OWNED SUBSIDIARY OF EASTMAN CHEMICAL COMPANY THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JUNE 1, 1999, UNLESS THE OFFER IS EXTENDED. The Depositary for the Offer is: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. By Overnight: By Mail: By Hand: Reorganization Department Reorganization Department Reorganization Department 85 Challenger Road, P.O. Box 3301 120 Broadway Mail Drop-Reorg South Hackensack, NJ 07606 13th Floor Ridgefield Park, NJ 07660 New York, NY 10271
By Facsimile Transmission: (For Eligible Institutions Only) (201) 296-4293 Confirm Facsimile Transmission By Telephone Only: (201) 296-4860 DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. THE INSTRUCTIONS CONTAINED WITHIN THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. - -------------------------------------------------------------------------------------------------------------------- Description of Shares Tendered - -------------------------------------------------------------------------------------------------------------------- Name(s) and Address(es) of Registered Holder(s) (Please Fill in, if Blank, Exactly as Name(s) Share Certificate(s) Tendered Appear(s) on Share Certificate(s)) (Attach Additional List if Necessary) - -------------------------------------------------------------------------------------------------------------------- Total Number of Shares Certificate Represented by Number of Shares Number(s)* Certificate(s) Tendered** ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ ------------------------------------------------------ Total Shares - -------------------------------------------------------------------------------------------------------------------- * Need not be completed by stockholders tendering by book-entry transfer. ** Unless otherwise indicated, it will be assumed that all Shares represented by Share certificates delivered to the Depositary are being tendered. See Instruction 4. - --------------------------------------------------------------------------------------------------------------------
2 This Letter of Transmittal is to be used by stockholders of Lawter International, Inc. either if certificates evidencing Shares (as defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in the Offer to Purchase, dated May 4, 1999 (the "Offer to Purchase")) is utilized, if delivery of Shares is to be made by book-entry transfer to the account maintained by ChaseMellon Shareholder Services, L.L.C. (the "Depositary") at The Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the procedures described in Section 3 of the Offer to Purchase. Stockholders whose certificates for Shares are not immediately available or who cannot deliver confirmation of the book-entry transfer of their Shares into the Depositary's account at the Book-Entry Transfer Facility (a "Book-Entry Confirmation") and all other documents required hereby to the Depositary on or prior to the Expiration Date (as defined in the Offer to Purchase) must tender their Shares pursuant to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY WILL NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. [ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER): Name of Tendering Institution: ------------------------------------------------- Account Number: ---------------------------------------------------------------- Transaction Code Number: ------------------------------------------------------- [ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Holder(s): ----------------------------------------------- Window Ticket Number (if any): ------------------------------------------------- Date of Execution of Notice of Guaranteed Delivery: ---------------------------- Name of Institution that Guaranteed Delivery: ---------------------------------- If Delivered by Book-Entry Transfer: Account Number: ---------------------------------------------------------------- Transaction Code Number: ------------------------------------------------------- The names and addresses of the registered holders should be printed, if not already printed above, exactly as they appear on the certificates representing Shares tendered hereby. The certificates and number of Shares that the undersigned wishes to tender should be indicated in the appropriate boxes. - 2 - 3 NOTE: SIGNATURES MUST BE PROVIDED BELOW. PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY. Ladies and Gentlemen: The undersigned hereby tenders to Lipstick Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Eastman Chemical Company, a Delaware corporation ("Parent"), the above-described shares of common stock, par value $1.00 per share (the "Shares"), of Lawter International, Inc., a Delaware corporation (the "Company"), pursuant to the Purchaser's offer to purchase all outstanding Shares at a price of $12.25 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 4, 1999 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this related Letter of Transmittal (which, each as amended or supplemented from time to time, together constitute the "Offer"). The undersigned understands that the Purchaser reserves the right to transfer or assign, in whole at any time, or in part from time to time, to one or more of its affiliates, the right to purchase all or any portion of the Shares tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering stockholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. Subject to, and effective upon, acceptance for payment of the Shares tendered herewith, in accordance with the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the undersigned hereby sells, assigns and transfers to, or upon the order of, the Purchaser all right, title and interest in and to all the Shares that are being tendered hereby (and any and all non-cash dividends, distributions, rights, other Shares or other securities issued or issuable in respect thereof or declared, paid or distributed in respect of such Shares on or after April 27, 1999, (collectively, "Distributions")), and irrevocably constitutes and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares and all Distributions, with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest), to (i) deliver certificates for such Shares (and any and all Distributions), or transfer ownership of such Shares (and any and all Distributions) on the account books maintained by the Book-Entry Transfer Facility, together, in any such case, with all accompanying evidences of transfer and authenticity to, or upon the order of, the Purchaser, (ii) present such Shares (and any and all Distributions) for transfer on the books of the Company and (iii) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares (and any and all Distributions), all in accordance with the terms of the Offer. By executing this Letter of Transmittal, the undersigned hereby irrevocably appoints Allan R. Rothwell, Bruce E. Moore and David A. Beanblossom and each of them, the attorneys-in-fact and proxies of the undersigned, each with full power of substitution, to the full extent of such stockholder's rights with respect to the Shares tendered hereby and accepted for payment by the Purchaser (and any and all Distributions), to vote in such manner as each such attorney and proxy or his substitute shall in his sole discretion deem proper, and otherwise act with respect to all the Shares tendered hereby which have been accepted for payment by the Purchaser prior to the time of such vote which the undersigned is entitled to vote at any meeting of stockholders (whether annual or special and whether or not an adjourned meeting) of the Company, or otherwise. This power of attorney and proxy is coupled with an interest in the Company and in the Shares and is irrevocable and is granted in consideration of, and is effective when, if and to the extent that the Purchaser accepts such Shares for payment pursuant to the Offer. Such acceptance for payment shall revoke, without further action, all prior powers of attorney and proxies granted by the undersigned at any time with respect to such Shares (and all Distributions) and no subsequent powers of attorney or proxies will be given (and if given will be deemed not to be effective) with respect thereto by the undersigned. The undersigned acknowledges that in order for Shares to be deemed validly tendered, immediately upon the acceptance for payment of such Shares, the Purchaser or the Purchaser's designee must be able to exercise full voting and all other rights which inure to a record and beneficial holder with respect to such Shares. - 3 - 4 The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares tendered hereby (and any and all Distributions), and that when the same are accepted for payment by the Purchaser, the Purchaser will acquire good, marketable and unencumbered title thereto and to all Distributions, free and clear of all liens, restrictions, charges and encumbrances, and the same will not be subject to any adverse claim. The undersigned, upon request, shall execute and deliver any additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete or confirm the sale, assignment and transfer of the Shares tendered hereby (and any and all Distributions). In addition, the undersigned shall remit and transfer promptly to the Depositary for the account of the Purchaser all Distributions in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer, and, pending such remittance and transfer or appropriate assurance thereof, the Purchaser shall be entitled to all rights and privileges as owner of each such Distribution and may withhold the entire purchase price of the Shares tendered hereby or deduct from such purchase price the amount or value of such Distribution as determined by the Purchaser in its sole discretion. All authority herein conferred or agreed to be conferred shall survive the death or incapacity of the undersigned, and any obligation of the undersigned hereunder shall be binding upon the heirs, executors, personal and legal representatives, administrators, trustees in bankruptcy, successors and assigns of the undersigned. Except as stated in the Offer to Purchase, this tender is irrevocable, provided that Shares tendered pursuant to the Offer may be withdrawn at any time prior to their acceptance for payment. The undersigned understands that tenders of Shares pursuant to any one of the procedures described in Section 3 of the Offer to Purchase and in the Instructions hereto will constitute a binding agreement between the undersigned and the Purchaser upon the terms and subject to the conditions of the Offer. The undersigned recognizes that under certain circumstances set forth in the Offer to Purchase, the Purchaser may not be required to accept for payment any of the Shares tendered hereby. Unless otherwise indicated herein in the box entitled "Special Payment Instructions," please issue the check for the purchase price and/or return any certificates for Shares not tendered or accepted for payment in the name(s) of the registered holder(s) appearing above under "Description of Shares Tendered." Similarly, unless otherwise indicated in the box entitled "Special Delivery Instructions," please mail the check for the purchase price and/or return any certificates evidencing Shares not tendered or accepted for payment (and any accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing above under "Description of Shares Tendered." In the event that the boxes entitled "Special Payment Instructions" and "Special Delivery Instructions" are both completed, please issue the check for the purchase price and/or return any certificates evidencing Shares not tendered or accepted for payment in the name(s) of, and mail such check and/or return such certificates to, the person(s) so indicated. Unless otherwise indicated herein in the box entitled "Special Payment Instructions," please credit any Shares tendered herewith by book-entry transfer that are not accepted for payment by crediting the account at the Book-Entry Transfer Facility designated above. The undersigned recognizes that the Purchaser has no obligation, pursuant to the "Special Payment Instructions," to transfer any Shares from the name of the registered holder thereof if the Purchaser does not accept for payment any of the Shares so tendered. - 4 - 5 SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7 OF THIS LETTER OF TRANSMITTAL) To be completed ONLY if the check for the purchase price of Shares accepted for payment or certificates evidencing Shares not tendered or not accepted for payment are to be issued in the name of someone other than the undersigned or if Shares tendered hereby and delivered by book-entry transfer that are not accepted for payment are to be returned by credit to an account maintained at the Book-Entry Transfer Facility other than the account indicated above. Issue check and/or Share certificates to: Name: - -------------------------------------------------------------------------------- (PLEASE PRINT) Address: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (INCLUDE ZIP CODE) - -------------------------------------------------------------------------------- (TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER) (ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW) CREDIT SHARES DELIVERED BY BOOK-ENTRY TRANSFER AND NOT PURCHASED TO THE BOOK-ENTRY TRANSFER FACILITY ACCOUNT. --------------------------- (ACCOUNT NUMBER) SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7 OF THIS LETTER OF TRANSMITTAL) To be completed ONLY if the check for the purchase price of Shares accepted for payment or certificates evidencing Shares not tendered or not accepted for payment are to be sent to someone other than the undersigned, or to the undersigned at an address other than that shown under "Description of Shares Tendered." Mail check and/or Share certificates to: Name: - -------------------------------------------------------------------------------- (PLEASE PRINT) Address: - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (INCLUDE ZIP CODE) - -------------------------------------------------------------------------------- (TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NUMBER) (ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW) - 5 - 6 SIGN HERE (ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- (SIGNATURE(S) OF HOLDER(S)) Dated: ________________ ____, 1999 (Must be signed by registered holder(s) exactly as name(s) appear(s) on Share certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, please provide the following information. See Instruction 5 of this Letter of Transmittal.) Name(s): ---------------------------------------------------------------------- - ------------------------------------------------------------------------------- (Please Print) Name of Firm: ----------------------------------------------------------------- Capacity (full title): -------------------------------------------------------- Address: ---------------------------------------------------------------------- - ------------------------------------------------------------------------------- (Include Zip Code) Area Code and Telephone Number: ----------------------------------------------- Tax Identification or Social Security Number: ---------------------------------- (Complete Substitute Form W-9 Below) GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5 OF THIS LETTER OF TRANSMITTAL) Authorized Signature: --------------------------------------------------------- Name(s): ---------------------------------------------------------------------- - ------------------------------------------------------------------------------- (Please Print) Title: ------------------------------------------------------------------------ Name of Firm: ----------------------------------------------------------------- Address: ---------------------------------------------------------------------- (Include Zip Code) Area Code and Telephone Number: ----------------------------------------------- Dated: ________________ ____, 1999 - 6 - 7 INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. Guarantee of Signatures. No signature guarantee is required on this Letter of Transmittal (a) if this Letter of Transmittal is signed by the registered holder(s) (which term, for purposes of this document, shall include any participant in the Book-Entry Transfer Facility's system whose name appears on a security position listing as the owner of Shares) of Shares tendered herewith, unless such holder(s) has completed either the box entitled "Special Delivery Instructions" or the box entitled "Special Payment Instructions" in this Letter of Transmittal or (b) if such Shares are tendered for the account of a financial institution that is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agent's Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (each, an "Eligible Institution"). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5. 2. Delivery of Letter of Transmittal and Certificates; Guaranteed Delivery Procedures. This Letter of Transmittal is to be completed by stockholders of the Company either if certificates for Shares are to be forwarded herewith or, unless an Agent's Message is utilized, if a tender of Shares is to be made pursuant to the procedures for delivery by book-entry transfer set forth in Section 3 of the Offer to Purchase. For Shares to be validly tendered pursuant to the Offer, (a) a properly completed and duly executed Letter of Transmittal (or facsimile thereof), with any required signature guarantees, or an Agent's Message in the case of a book-entry delivery, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of the Depositary's addresses set forth herein and either certificates or a timely Book-Entry Confirmation for tendered Shares must be received by the Depositary at one of such addresses, in each case prior to the Expiration Date (as defined in the Offer to Purchase), or (b) the tendering stockholder must comply with the guaranteed delivery procedures set forth below. If certificates are forwarded to the Depositary in multiple deliveries, a properly completed and duly executed Letter of Transmittal must accompany each such delivery. Stockholders whose certificates for Shares are not immediately available, who cannot deliver their certificates and all other required documents to the Depositary prior to the Expiration Date or who cannot complete the procedures for delivery by book-entry transfer on a timely basis may tender their Shares by properly completing and duly executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure described in Section 3 of the Offer to Purchase. Pursuant to such procedure: (a) such tender must be made by or through an Eligible Institution; (b) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by the Purchaser herewith (or a facsimile thereof), must be received by the Depositary prior to the Expiration Date; and (c) the certificates for all physically tendered Shares, in proper form for transfer, or a Book-Entry Confirmation with respect to all tendered Shares, together with this properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees, and any other documents required by this Letter of Transmittal, must be received by the Depositary within three New York Stock Exchange trading days after the date of execution of the Notice of Guaranteed Delivery, all as described in Section 3 of the Offer to Purchase. A "trading day" is any day on which the New York Stock Exchange is open for business. THE METHOD OF DELIVERY OF SHARES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY, IS AT THE SOLE ELECTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. All tendering stockholders, by execution of this Letter of Transmittal (or a manually signed facsimile hereof), waive any right to receive any notice of the acceptance of their Shares for payment. - 7 - 8 3. Inadequate Space. If the space provided herein under "Description of Shares Tendered" is inadequate, the certificate numbers and/or the number of Shares tendered should be listed on a separate signed schedule and attached hereto. 4. Partial Tenders. (Not applicable to stockholders who tender by book-entry transfer.) If fewer than all the Shares evidenced by any Share certificate delivered to the Depositary herewith are to be tendered hereby, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered." In such cases, new certificate(s) for the remainder of the Shares that were evidenced by the certificates delivered to the Depositary herewith will be sent to the person(s) signing this Letter of Transmittal, unless otherwise provided in the box entitled "Special Delivery Instructions," as soon as practicable after the Expiration Date. All Shares evidenced by certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signature(s) must correspond exactly to the name(s) as written on the face of the certificate(s) evidencing such Shares without alteration, enlargement or any other change whatsoever. If any Shares tendered hereby are owned of record by two or more persons, all such persons must sign this Letter of Transmittal. If any of the Shares tendered hereby are registered in the names of different holders on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of such certificates. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, no endorsement of certificates or separate stock powers is required, unless payment is to be made to, or certificates evidencing Shares not tendered or not purchased are to be issued in the name of, a person other than the registered holder(s), in which case, the certificate(s) evidencing the Shares tendered hereby must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on such certificate(s). Signatures on such certificate(s) and stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the Shares tendered hereby, the Share certificate(s) evidencing the Shares tendered hereby must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on such certificate(s). Signatures on such certificate(s) and stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal or any certificate(s) or stock powers are signed by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a corporation or other person acting in a fiduciary or representative capacity, such person should so indicate when signing, and proper evidence satisfactory to the Purchaser of such person's authority so to act must be submitted. 6. Stock Transfer Taxes. Except as otherwise provided in this Instruction 6, the Purchaser will pay or cause to be paid all stock transfer taxes with respect to the sale and transfer of any Shares to it or its order pursuant to the Offer. If, however, payment of the purchase price of any Shares purchased is to be made to, or certificate(s) evidencing Shares not tendered or not purchased are to be registered in the name of, a person other than the registered holder(s), or if tendered certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder(s), such other person or otherwise) payable on account of the transfer to such other person will be deducted from the purchase price of such Shares purchased, unless evidence satisfactory to the Purchaser of the payment of such taxes, or exemption therefrom, is submitted. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE(S) EVIDENCING THE SHARES TENDERED HEREBY. - 8 - 9 7. Special Payment and Delivery Instructions. If a check for the purchase price of any Shares tendered hereby is to be issued, or certificate(s) evidencing Shares not tendered or not purchased are to be issued, in the name of a person other than the person(s) signing this Letter of Transmittal or if such check or any such certificate is to be sent to someone other than the person(s) signing this Letter of Transmittal or to the person(s) signing this Letter of Transmittal but at an address other than that shown in the box entitled "Description of Shares Tendered," the appropriate boxes on this Letter of Transmittal must be completed. Any stockholder(s) delivering Shares by book-entry transfer may request that Shares not purchased be credited to such account maintained at the Book-Entry Transfer Facility as such stockholder(s) may designate in the box entitled "Special Payment Instructions." If no such instructions are given, any such Shares not purchased will be returned by crediting the account at the Book Entry Transfer Facility designated above as the account from which such Shares were delivered. 8. Requests for Assistance or Additional Copies. Questions and requests for assistance may be directed to the Dealer Manager or the Information Agent at the addresses and telephone numbers set forth on the back cover of this Letter of Transmittal. Additional copies of the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery and the Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 may be obtained from the Information Agent at the address set forth below or from brokers, dealers, commercial banks or trust companies. 9. Waiver of Conditions. Except as otherwise provided in the Offer to Purchase, the Purchaser reserves the absolute right in its sole discretion to waive, at any time or from time to time, any of the specified conditions of the Offer, in whole or in part, in the case of any Shares tendered. 10. Substitute Form W-9. Each tendering stockholder is required to provide the Depositary with a correct Taxpayer Identification Number ("TIN") on the Substitute Form W-9 which is provided under "Important Tax Information" below, and to certify, under penalties of perjury, that such number is correct and that such stockholder is not subject to backup withholding of federal income tax. If a tendering stockholder has been notified by the Internal Revenue Service that such stockholder is subject to backup withholding, such stockholder must cross out item (2) of the Certification box of the Substitute Form W-9, unless such stockholder has since been notified by the Internal Revenue Service that such stockholder is no longer subject to backup withholding. Failure to provide the information on the Substitute Form W-9 may subject the tendering stockholder to 31% federal income tax withholding with respect to any payments received pursuant to the Offer and the Merger (as defined in the Offer to Purchase). If the tendering stockholder has not been issued a TIN and has applied for one or intends to apply for one in the near future, such stockholder should write "Applied For" in the space provided for the TIN in Part I of the Substitute Form W-9, and sign and date the Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold 31% on all payments of the purchase price to such stockholder until a TIN is provided to the Depositary. 11. Lost, Destroyed or Stolen Certificates. If any certificate(s) representing Shares has been lost, destroyed or stolen, the stockholder should promptly notify the Transfer Agent, Harris Trust and Savings Bank, at (312) 360-5273. The stockholder will then be instructed as to the steps that must be taken in order to replace the certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed certificates have been followed. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY COMPLETED AND DULY EXECUTED, WITH ANY REQUIRED SIGNATURE GUARANTEES, OR, IN THE CASE OF A BOOK-ENTRY TRANSFER, AN AGENT'S MESSAGE, TOGETHER WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS, OR A PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY, MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE. IMPORTANT TAX INFORMATION Under the U.S. federal income tax law, a stockholder whose tendered Shares are accepted for payment is required by law to provide the Depositary (as payer) with such stockholder's correct TIN on Substitute - 9 - 10 Form W-9 below. If such stockholder is an individual, the TIN is such stockholder's social security number. If the Depositary is not provided with the correct TIN, the stockholder may be subject to a $50 penalty imposed by the Internal Revenue Service. In addition, payments that are made to such stockholder with respect to Shares purchased pursuant to the Offer may be subject to backup withholding of 31%. Certain stockholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, such individual must submit a Form W-8, signed under penalties of perjury, attesting to such individual's exempt status. A Form W-8 can be obtained from the Depositary. See the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional instructions. If backup withholding applies with respect to a stockholder, the Depositary is required to withhold 31% of any payments made to such stockholder. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. PURPOSE OF SUBSTITUTE FORM W-9 To prevent backup withholding on payments that are made to a stockholder with respect to Shares purchased pursuant to the Offer, the stockholder is required to notify the Depositary of such stockholder's correct TIN by completing the form below certifying (a) that the TIN provided on Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN), and (b) that such stockholder is not subject to backup withholding because (i) such stockholder has not been notified by the Internal Revenue Service that such stockholder is subject to backup withholding as a result of a failure to report all interest or dividends or (ii) the Internal Revenue Service has notified such stockholder that such stockholder is no longer subject to backup withholding. To prevent possible erroneous backup withholding, exempt stockholders (other than certain foreign individuals) should certify in accordance with the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 that such stockholder is exempt from backup withholding. WHAT NUMBER TO GIVE THE DEPOSITARY The stockholder is required to give the Depositary the social security number or employer identification number of the record holder of the Shares tendered hereby. If the Shares are in more than one name or are not in the name of the actual owner, consult the enclosed Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9 for additional guidance on which number to report. If the tendering stockholder has not been issued a TIN and has applied for a number or intends to apply for a number in the near future, the stockholder should write "Applied For" in the space provided for the TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For" is written in Part I and the Depositary is not provided with a TIN within 60 days, the Depositary will withhold 31% of all payments of the purchase price to such stockholder until a TIN is provided to the Depositary. - 10 - 11
- --------------------------------------------------------------------------------------------------------------------------- PAYER'S NAME: CHASEMELLON SHAREHOLDER SERVICES, L.L.C., AS DEPOSITARY - --------------------------------------------------------------------------------------------------------------------------- PART I--PLEASE PROVIDE YOUR TIN IN THE BOX AT RIGHT AND ---------------------------- SUBSTITUTE CERTIFY BY SIGNING AND DATING BELOW. SOCIAL SECURITY NUMBER FORM W-9 OR DEPARTMENT OF THE TREASURY INTERNAL REVENUE SERVICE ---------------------------- EMPLOYER IDENTIFICATION NUMBER (IF AWAITING TIN WRITE "APPLIED FOR") ------------------------------------------------------------------------------------------ PART II -- FOR PAYEES EXEMPT FROM BACKUP WITHHOLDING, SEE THE ENCLOSED GUIDELINES AND PAYER'S REQUEST FOR COMPLETE AS INSTRUCTED THEREIN. TAXPAYER IDENTIFICATION NUMBER (TIN) AND CERTIFICATION -- UNDER PENALTIES OF PERJURY, I CERTIFY THAT: CERTIFICATION FOR PAYEE EXEMPT FROM (1) THE NUMBER SHOWN ON THIS FORM IS MY CORRECT TAXPAYER IDENTIFICATION NUMBER (OR A BACKUP WITHHOLDING TAXPAYER IDENTIFICATION NUMBER HAS NOT BEEN ISSUED TO ME AND EITHER (a) I HAVE MAILED OR DELIVERED AN APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE INTERNAL REVENUE SERVICE ("IRS") OR SOCIAL SECURITY ADMINISTRATION OFFICE OR (b) I INTEND TO MAIL OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I UNDERSTAND THAT IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER WITHIN SIXTY (60) DAYS, 31% OF ALL REPORTABLE PAYMENTS MADE TO ME THEREAFTER WILL BE WITHHELD UNTIL I PROVIDE A NUMBER), AND (2) I AM NOT SUBJECT TO BACKUP WITHHOLDING BECAUSE (a) I AM EXEMPT FROM BACKUP WITHHOLDING, OR (b) I HAVE NOT BEEN NOTIFIED BY THE IRS THAT I AM SUBJECT TO BACKUP WITHHOLDING AS A RESULT OF FAILURE TO REPORT ALL INTEREST OR DIVIDENDS OR (c) THE IRS HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO BACKUP WITHHOLDING. ------------------------------------------------------------------------------------------ CERTIFICATE INSTRUCTIONS -- YOU MUST CROSS OUT ITEM (2) ABOVE IF YOU HAVE BEEN NOTIFIED BY THE IRS THAT YOU ARE SUBJECT TO BACKUP WITHHOLDING BECAUSE OF UNDERREPORTING INTEREST OR DIVIDENDS ON YOUR TAX RETURN. HOWEVER, IF AFTER BEING NOTIFIED BY THE IRS THAT YOU WERE SUBJECT TO BACKUP WITHHOLDING YOU RECEIVED ANOTHER NOTIFICATION FROM THE IRS STATING THAT YOU ARE NO LONGER SUBJECT TO BACKUP WITHHOLDING, DO NOT CROSS OUT ITEM (2). (ALSO SEE INSTRUCTIONS IN THE ENCLOSED GUIDELINES.) ------------------------------------------------------------------------------------------ SIGNATURE ____________________ DATE _____ , 1999 NAME ________________________ ADDRESS ______________________ - ---------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU WROTE "APPLIED FOR" IN THE SPACE PROVIDED FOR THE TIN IN PART I OF SUBSTITUTE FORM W-9. - ----------------------------------------------------------------------------------------------------------------------------- CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I CERTIFY UNDER PENALTIES OF PERJURY THAT A TAXPAYER IDENTIFICATION NUMBER HAS NOT BEEN ISSUED TO ME, AND EITHER (1) I HAVE MAILED OR DELIVERED AN APPLICATION TO RECEIVE A TAXPAYER IDENTIFICATION NUMBER TO THE APPROPRIATE INTERNAL REVENUE SERVICE CENTER OR SOCIAL SECURITY ADMINISTRATION OFFICE, OR (2) I INTEND TO MAIL OR DELIVER AN APPLICATION IN THE NEAR FUTURE. I UNDERSTAND THAT IF I DO NOT PROVIDE A TAXPAYER IDENTIFICATION NUMBER BY THE TIME OF PAYMENT, 31% OF ALL REPORTABLE PAYMENTS MADE TO ME WILL BE WITHHELD, BUT THAT SUCH AMOUNTS WILL BE REFUNDED TO ME IF I PROVIDE A CERTIFIED TAXPAYER IDENTIFICATION NUMBER TO THE DEPOSITARY WITHIN (60) DAYS. - ---------------------------------------------------------- --------------------------- , 1999 SIGNATURE DATE - -----------------------------------------------------------------------------------------------------------------------------
- 11 - 12 Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager as set forth below. Requests for copies of the Offer to Purchase, the Letter of Transmittal and other related materials may be directed to the Information Agent or to brokers, dealers, commercial banks or trust companies. The Information Agent for the Offer is: KISSEL BLAKE A Division of Shareholder Communications Corporation 110 Wall Street New York, New York 10005 Banks and Brokers, Please Call: (212) 344-6733 ALL OTHERS CALL TOLL-FREE (800) 554-7733 The Dealer Manager for the Offer is: MERRILL LYNCH & CO. World Financial Center North Tower New York, New York 10281-1314 (212) 449-8971 (Call Collect) EX-99.A3 4 NOTICE OF GUARANTEED DELIVERY. 1 Exhibit (a)(3) NOTICE OF GUARANTEED DELIVERY FOR TENDER OF SHARES OF COMMON STOCK OF LAWTER INTERNATIONAL, INC. TO LIPSTICK ACQUISITION CORP., A WHOLLY OWNED SUBSIDIARY OF EASTMAN CHEMICAL COMPANY (NOT TO BE USED FOR SIGNATURE GUARANTEES) THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JUNE 1, 1999, UNLESS THE OFFER IS EXTENDED. This Notice of Guaranteed Delivery, or one substantially in the form hereof, must be used to accept the Offer (as defined below) if (i) certificates ("Certificates") representing shares of common stock, par value $1.00 per share (the "Shares"), of Lawter International, Inc., a Delaware corporation (the "Company"), are not immediately available, (ii) time will not permit all required documents to reach ChaseMellon Shareholder Services, L.L.C. (the "Depositary") prior to the Expiration Date (as defined in the Offer to Purchase) or (iii) the procedures for book-entry transfer cannot be completed on a timely basis. This Notice of Guaranteed Delivery may be delivered by hand or mail or transmitted by telegram or facsimile to the Depositary. See Section 3 of the Offer to Purchase. The Depositary for the Offer is: CHASEMELLON SHAREHOLDER SERVICES, L.L.C. By Mail: By Hand: By Overnight: Reorganization Department Reorganization Department Reorganization Department P.O. Box 3301 120 Broadway 85 Challenger Road, South Hackensack, NJ 07606 13th Floor Mail Drop-Reorg New York, NY 10271 Ridgefield Park, NJ 07660 By Facsimile Transmission: (For Eligible Institutions Only) (201) 296-4293 Confirm Facsimile Transmission By Telephone Only: (201) 296-4860
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. THIS FORM IS NOT TO BE USED TO GUARANTEE SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE SIGNATURE BOX ON THE LETTER OF TRANSMITTAL. 2 LADIES AND GENTLEMEN: The undersigned hereby tenders to Lipstick Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Eastman Chemical Company, a Delaware corporation, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 4, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which, each as amended or supplemented from time to time, together constitute the "Offer"), receipt of each of which is hereby acknowledged, the number of Shares specified below pursuant to the guaranteed delivery procedures described in Section 3 of the Offer to Purchase. Number of Shares Tendered: ------------------------------------------------- Certificate Nos. (if available): - --------------------------------------------------------------------------- Check box if Shares will be tendered by book-entry transfer: [ ] Account Number at the Depository Trust Company: ------------------------------------------------------------------- Dated: ____________________________ , 1999 Names(s) of Record Holder(s): - --------------------------------------------------------------------------- - --------------------------------------------------------------------------- (Please Print) Address(es): --------------------------------------------------------------- - --------------------------------------------------------------------------- (Zip Code) Area Code and Telephone Number: - --------------------------------------------------------------------------- Signature(s): -------------------------------------------------------------- - --------------------------------------------------------------------------- GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a firm that is a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program hereby (a) represents that the tender of Shares effected hereby complies with Rule 14e-4 under the Securities Exchange Act of 1934, as amended and (b) guarantees delivery to the Depositary, at one of its addresses set forth above, of certificates representing the Shares tendered hereby in proper form for transfer, or confirmation of book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company, in each case with delivery of a properly completed and duly executed Letter of Transmittal (or facsimile thereof) with any required signature guarantees, or an Agent's Message (as defined in Section 3 of the Offer to Purchase), and any other documents required by the Letter of Transmittal, within three New York Stock Exchange trading days after the date of execution of this Notice of Guaranteed Delivery. The Eligible Institution that completes this form must communicate the guarantee to the Depositary and must deliver the Letter of Transmittal and certificates for Shares to the Depositary within the time period shown herein. Failure to do so could result in a financial loss to such Eligible Institution. Name of Firm: ----------------------------------------------------------------- (Authorized Signature) Address: ---------------------------------------------------------------------- (Include Zip Code) Area Code and Telephone Number: ------------------------------------------------------------- Name: ------------------------------------------------------------------------ (Please Type or Print) Title: ------------------------------------------------------------------------ Dated: ________________ __ , 1999 NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SUCH CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.A4 5 BROKER LETTER 1 Exhibit (a)(4) [MERRILL LYNCH LOGO] World Financial Center North Tower New York, New York 10281-1314 (212) 449-8971 (Call Collect) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF LAWTER INTERNATIONAL, INC. AT $12.25 NET PER SHARE IN CASH BY LIPSTICK ACQUISITION CORP., A WHOLLY OWNED SUBSIDIARY OF EASTMAN CHEMICAL COMPANY THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JUNE 1, 1999, UNLESS THE OFFER IS EXTENDED. May 4, 1999 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been engaged by Lipstick Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Eastman Chemical Company, a Delaware corporation ("Parent"), to act as Dealer Manager in connection with the Purchaser's offer to purchase all outstanding shares of common stock, par value $1.00 per share (the "Shares"), of Lawter International, Inc., a Delaware corporation (the "Company"), at a price of $12.25 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 4, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which, each as amended or supplemented from time to time, together constitute the "Offer") enclosed herewith. The Offer is being made in connection with the Agreement and Plan of Merger, dated as of April 27, 1999 (the "Merger Agreement"), by and among Parent, the Purchaser and the Company. All capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Offer to Purchase. Please furnish copies of the enclosed materials to those of your clients for whom you hold Shares registered in your name or in the name of your nominee. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE THAT NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT OR THE PURCHASER (IF ANY), REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT. THE OFFER IS ALSO SUBJECT TO OTHER CONDITIONS SET FORTH IN THE OFFER TO PURCHASE. SEE SECTION 14 OF THE OFFER TO PURCHASE. 2 For your information and for forwarding to your clients for whom you hold Shares registered in your name or in the name of your nominee, or who hold Shares registered in their own names, we are enclosing the following documents: 1. Offer to Purchase, dated May 4, 1999; 2. Letter of Transmittal to tender Shares for your use and for the information of your clients. Facsimile copies of the Letter of Transmittal (with manual signatures) may be used to tender Shares; 3. Notice of Guaranteed Delivery to be used to accept the Offer if the certificates for Shares are not immediately available or time will not permit all required documents to reach the Depositary prior to the Expiration Date or the procedures for book-entry transfer cannot be completed on a timely basis; 4. A printed form letter that may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer; 5. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9; and 6. Return envelope addressed to the Depositary. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will accept for payment and pay for all Shares which are validly tendered prior to the Expiration Date and not theretofore properly withdrawn when, as and if the Purchaser gives oral or written notice to the Depositary of the Purchaser's acceptance of such Shares for payment. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (i) the certificates evidencing such Shares or timely confirmation of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or facsimile thereof), properly completed and duly executed, or an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry transfer and (iii) all other documents required by the Letter of Transmittal. Neither Parent nor the Purchaser will pay any fees or commissions to any broker or dealer or any other person (other than the Dealer Manager and the Information Agent as described in "Fees and Expenses" of the Offer to Purchase) in connection with the solicitation of tenders of Shares pursuant to the Offer. The Purchaser will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding the enclosed materials to your clients. The Purchaser will pay or cause to be paid any stock transfer taxes incident to the transfer to it of validly tendered Shares, except as otherwise provided in Instruction 6 of the Letter of Transmittal. YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JUNE 1, 1999, UNLESS THE OFFER IS EXTENDED. In order to take advantage of the Offer, a duly executed and properly completed Letter of Transmittal (or facsimile thereof), with any required signature guarantees and any other required documents, should be sent to the Depositary, and certificates representing the tendered Shares should be delivered or such Shares should be tendered by book-entry transfer, all in accordance with the Instructions set forth in the Letter of Transmittal and the Offer to Purchase. If holders of Shares wish to tender, but it is impracticable for them to - 2 - 3 forward their certificates or other required documents prior to the Expiration Date, a tender may be effected by following the guaranteed delivery procedures specified under Section 3 of the Offer to Purchase. Any inquiries you may have with respect to the Offer should be addressed to the Dealer Manager or the Information Agent at their respective addresses and telephone numbers set forth on the back cover page of the Offer to Purchase. Additional copies of the enclosed materials may be obtained by calling the Information Agent, Kissel Blake, at (212) 344-6733 or toll free (800) 554-7733, or from brokers, dealers, commercial banks or trust companies. Very truly yours, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON AS AN AGENT OF THE PURCHASER, PARENT, THE DEPOSITARY, THE INFORMATION AGENT OR THE DEALER MANAGER, OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED AND THE STATEMENTS CONTAINED THEREIN. - 3 - EX-99.A5 6 CLIENT LETTER 1 EXHIBIT (a)(5) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF LAWTER INTERNATIONAL, INC. AT $12.25 NET PER SHARE IN CASH BY LIPSTICK ACQUISITION CORP., A WHOLLY OWNED SUBSIDIARY OF EASTMAN CHEMICAL COMPANY THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON TUESDAY, JUNE 1, 1999, UNLESS THE OFFER IS EXTENDED. May 4, 1999 To Our Clients: Enclosed for your consideration is the Offer to Purchase, dated May 4, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which, each as amended or supplemented from time to time, together constitute the "Offer") in connection with the offer by Lipstick Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Eastman Chemical Company, a Delaware corporation ("Parent"), to purchase all outstanding shares of common stock, par value $1.00 per share (the "Shares"), of Lawter International, Inc., a Delaware corporation (the "Company"), at a price of $12.25 per Share, net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer. The Offer is being made in connection with the Agreement and Plan of Merger, dated as of April 27, 1999, by and among Parent, the Purchaser and the Company (the "Merger Agreement"). Also enclosed is a Letter to Stockholders of the Company from John P. O'Mahoney, Chairman and Chief Executive Officer of the Company, together with a Solicitation/Recommendation Statement on Schedule 14D-9. If a stockholder desires to tender Shares pursuant to the Offer and such stockholder's certificates for Shares are not immediately available or time will not permit all required documents to reach the Depositary (as defined in the Offer to Purchase) prior to the Expiration Date (as defined in the Offer to Purchase) or the procedure for book-entry transfer cannot be completed on a timely basis, such Shares may nevertheless be tendered according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. See Instruction 2 of the Letter of Transmittal. Delivery of documents to the Book-Entry Transfer Facility (as defined in the Offer to Purchase) in accordance with the Book-Entry Transfer Facility's procedures does not constitute delivery to the Depositary. THE MATERIAL IS BEING SENT TO YOU AS THE BENEFICIAL OWNER OF SHARES HELD BY US FOR YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE ENCLOSED LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR ACCOUNT. Accordingly, we request instructions as to whether you wish to have us tender on your behalf any or all of the Shares held by us for your account, upon the terms and subject to the conditions set forth in the Offer. Your attention is invited to the following: 1. The tender price is $12.25 per Share, net to the seller in cash, without interest thereon. 2 2. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on Tuesday, June 1, 1999, unless the Offer is extended. 3. The Offer is being made for all outstanding Shares. 4. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER (AS DEFINED IN THE OFFER TO PURCHASE), AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES. 5. The Offer is conditioned upon, among other things, there being validly tendered and not withdrawn prior to the Expiration Date that number of Shares which, when added to the Shares beneficially owned by Parent or the Purchaser (if any), represents at least a majority of the Shares outstanding on a fully diluted basis on the date Shares are accepted for payment. The Offer is also subject to other conditions set forth in the Offer to Purchase. 6. Tendering stockholders of record who tender Shares directly will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares by the Purchaser pursuant to the Offer. The Offer is made solely by the Offer to Purchase and the related Letter of Transmittal and any supplements or amendments thereto. The Purchaser is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If the Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, the Purchaser will make a good faith effort to comply with such state statute. If, after such good faith effort, the Purchaser cannot comply with such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by the Dealer Manager (as defined in the Offer to Purchase) or one or more registered brokers or dealers which are licensed under the laws of such jurisdiction. If you wish to have us tender any or all of your Shares, please so instruct us by completing, executing and returning to us the instruction form contained in this letter. An envelope to return your instructions to us is enclosed. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified on the instruction form set forth in this letter. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER. - 2 - 3 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF LAWTER INTERNATIONAL, INC. The undersigned acknowledge(s) receipt of your letter and the enclosed Offer to Purchase, dated May 4, 1999, and the related Letter of Transmittal (which, each as amended or supplemented from time to time, together constitute the "Offer"), in connection with the offer by Lipstick Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Eastman Chemical Company, a Delaware corporation ("Parent"), to purchase all outstanding shares of common stock, par value $1.00 per share (the "Shares"), of Lawter International, Inc., a Delaware corporation (the "Company"). This will instruct you to tender to the Purchaser the number of Shares indicated below (or, if no number is indicated below, all Shares) held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer. NUMBER OF SHARES TO BE TENDERED:* - ------------------------------------------- Shares - --------------------------------------------------- Account Number Dated: ________ __, 1999 SIGN HERE - ---------------------------------------------------- Signature(s) - ---------------------------------------------------- Please Type or Print Name(s) - ---------------------------------------------------- Please Type or Print Address(es) Here - ---------------------------------------------------- Area Code and Telephone Number - ---------------------------------------------------- Taxpayer Identification or Social Security Number(s) - ------------------ * Unless otherwise indicated, it will be assumed that all Shares held by us for your account are to be tendered. - 3 - EX-99.A6 7 GUIDELINES FOR CERTIFICATION OF TAXPAYER ID 1 Exhibit (a)(6) GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER. -- Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer.
- --------------------------------------------------------- FOR THIS TYPE OF ACCOUNT GIVE THE SOCIAL SECURITY NUMBER OF -- - --------------------------------------------------------- 1. An individual's account The individual 2. Two or more individuals The actual owner of (joint account) the account or, if combined funds, any one of the individuals(1) 3. Husband and wife (joint The actual owner of account) the account or, if joint funds, either person(1) 4. Custodian account of a minor The minor(2) (Uniform Gift to Minors Act) 5. Adult and minor (joint The adult or, if the account) minor is the only contributor, the minor(1) 6. Account in the name of The ward, minor, or guardian or committee for a incompetent person(3) designated ward, minor, or incompetent person 7. a. A revocable savings trust The grantor- account (in which grantor trustee(1) is also trustee) b. Any "trust" account that The actual owner(1) is not a legal or valid trust under State Law 8. Sole proprietorship account The owner(4)
- --------------------------------------------------------- FOR THIS TYPE OF ACCOUNT: GIVE THE EMPLOYER IDENTIFICATION NUMBER OF -- - --------------------------------------------------------- 9. A valid trust, estate, or The legal entity (Do pension not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(5) 10. Corporate account The corporation 11. Religious, charitable, or The organization educational organization account 12. Partnership account held in The partnership the name of the business 13. Association, club, or other The organization tax-exempt organization 14. A broker or registered The broker or nominee nominee 15. Account with the Department The public entity of Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments
- --------------------------------------------------------- (1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. (5) List first and circle the name of the legal trust, estate, or pension trust. NOTE:If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. 2 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER OF SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you do not have a taxpayer identification number or you do not know your number, obtain Form SS-5, Application for a Social Security Number Card (for resident individuals), Form SS-4, Application for Employer Identification Number (for businesses and all other entities), or Form W-7 for International Taxpayer Identification Number (for alien individuals required to file U.S. tax returns), at an office of the Social Security Administration or the Internal Revenue Service. To complete the Substitute Form W-9, if you do not have a taxpayer identification number, write "Applied For" in the space for the taxpayer identification number in Part 1, sign and date the Form, and give it to the requester. Generally, you will then have 60 days to obtain a taxpayer identification number and furnish it to the requester. If the requester does not receive your taxpayer identification number within 60 days, backup withholding, if applicable, will begin and will continue until you furnish your taxpayer identification number to the requester. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: - A corporation. - A financial institution. - An organization exempt from tax under section 501(a), or an individual retirement plan, or a custodial account under section 403(b)(7). - The United States or any agency or instrumentality thereof. - A State, the District of Columbia, a possession of the United States, or any subdivision or instrumentality thereof. - A foreign government, or a political subdivision, agency or instrumentality thereof. - An international organization or any agency or instrumentality thereof. - A registered dealer in securities or commodities registered in the U.S. or a possession of the U.S. - A real estate investment trust. - A common trust fund operated by a bank under section 584(a). - An exempt charitable remainder trust, or a nonexempt trust described in section 4947(a)(1). - An entity registered at all times under the Investment Company Act of 1940. - A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: - Payments to nonresident aliens subject to withholding under section 1441. - Payments to partnerships not engaged in a trade or business in the U.S. and which have at least one nonresident partner. - Payments of patronage dividends where the amount received is not paid in money. - Payments made by certain foreign organizations. - Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: - Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. - Payments of tax-exempt interest (including exempt-interest dividends under section 852). - Payments described in section 6049(b)(5) to non-resident aliens. - Payments on tax-free covenant bonds under section 1451. - Payments made by certain foreign organizations. - Payments made to a nominee. Exempt payees described above should file a Substitute Form W-9 to avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO SIGN AND DATE THE FORM. Certain payments other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A. PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend, interest, or other payments to give taxpayer identification numbers to payers who must report the payments to the IRS. The IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividend, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS. -- If you fail to include any portion of an includible payment for interest, dividends, or patronage dividends in gross income, such failure will be treated as being due to negligence and will be subject to a penalty of 5% on any portion of an under-payment attributable to that failure unless there is clear and convincing evidence to the contrary. (3) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (4) CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE EX-99.A7 8 SUMMARY ADVERTISEMENT MAY 4, 1999 1 EXHIBIT (a)(7) This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares (as defined below). The Offer is made solely by the Offer to Purchase dated May 4, 1999 and the related Letter of Transmittal and is being made to all holders of Shares. Lipstick Acquisition Corp. is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If Lipstick Acquisition Corp. becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of the Shares pursuant thereto, Lipstick Acquisition Corp. will make a good faith effort to comply with such statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, Lipstick Acquisition Corp. cannot comply with such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) holders of Shares in any such state. In any jurisdiction where securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Lipstick Acquisition Corp. by Merrill Lynch, Pierce, Fenner & Smith Incorporated or one or more registered brokers or dealers licensed under the laws of such jurisdiction. NOTICE OF OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK OF LAWTER INTERNATIONAL, INC. AT $12.25 NET PER SHARE IN CASH BY LIPSTICK ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF EASTMAN CHEMICAL COMPANY Lipstick Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of Eastman Chemical Company, a Delaware corporation ("Parent"), is offering to purchase all outstanding shares of common stock, par value $1.00 per share (the "Shares"), of Lawter International, Inc., a Delaware corporation (the "Company"), at a price of $12.25 per Share, net to the seller in cash, without interest thereon (the "Offer Price"), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated May 4, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which, together with any amendments or supplements thereto, collectively constitute the "Offer"). 2 - ------------------------------------------------------------------------------- | THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, | | NEW YORK CITY TIME, ON TUESDAY, JUNE 1, 1999, | | UNLESS THE OFFER IS EXTENDED. | - ------------------------------------------------------------------------------- The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of April 27, 1999 (the "Merger Agreement"), by and among Parent, the Purchaser and the Company. Pursuant to the Merger Agreement and the Delaware General Corporation Law, as amended (the "DGCL"), as soon as practicable after the completion of the Offer and satisfaction or waiver, if permissible, of all conditions set forth in the Merger Agreement, including the purchase of Shares pursuant to the Offer and the approval and adoption of the Merger Agreement by the stockholders of the Company (if required by applicable law), the Purchaser will be merged with and into the Company (the "Merger") and each Share then outstanding, other than Shares held by (i) the Company or any of its subsidiaries, (ii) Parent or any of its subsidiaries, including the Purchaser and (iii) stockholders who properly perfect their dissenters' rights under the DGCL, will be converted into the right to receive $12.25 in cash or any higher price per Share paid in the Offer (the "Merger Consideration"), without interest thereon. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE COMPANY'S STOCKHOLDERS, AND UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE) THAT NUMBER OF SHARES WHICH, WHEN ADDED TO THE SHARES BENEFICIALLY OWNED BY PARENT OR THE PURCHASER (IF ANY), REPRESENTS AT LEAST A MAJORITY OF THE SHARES OUTSTANDING ON A FULLY DILUTED BASIS ON THE DATE SHARES ARE ACCEPTED FOR PAYMENT PURSUANT TO THE OFFER. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment, and thereby purchased, tendered Shares if, as and when the Purchaser gives oral or written notice to ChaseMellon Shareholder Services, L.L.C. (the "Depositary") of the Purchaser's acceptance of such Shares for payment. Upon the terms and subject to the conditions set forth in the Offer, payment for Shares accepted pursuant to the Offer will be made by deposit of the aggregate purchase price therefor with the Depositary, which will act as agent for tendering stockholders for the purpose of receiving payment from the Purchaser and transmitting payment to such tendering stockholders. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID BY THE PURCHASER BY REASON OF ANY DELAY IN MAKING SUCH PAYMENT. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i)(A) certificates evidencing such Shares ("Share Certificates") or (B) a timely book-entry confirmation of the book-entry transfer of such Shares into the Depositary's account at the Book-Entry Transfer Facility (as defined in the Offer to Purchase), pursuant to Section 3 of the Offer to Purchase, (ii)(A) the Letter of Transmittal (or facsimile thereof) properly completed and duly executed or (B) an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry transfer and (iii) any other documents required by the Letter of Transmittal. 3 Except as otherwise provided in Section 4 of the Offer to Purchase, tenders of Shares made pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after July 2, 1999. For a withdrawal to be effective, a written or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and (if Share Certificates have been tendered) the name of the registered holder, if different from that of the person who tendered such Shares. If Share Certificates evidencing Shares to be withdrawn have been delivered or otherwise identified to the Depositary, then prior to the release of such Share Certificates, the serial numbers shown on the particular certificates evidencing the Shares to be withdrawn must be submitted to the Depositary, and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in the Offer to Purchase), unless such Shares have been tendered for the account of an Eligible Institution. If Shares have been tendered pursuant to the procedure for book-entry transfer as set forth in Section 3 of the Offer to Purchase, any notice of withdrawal must also specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares, in which case a notice of withdrawal will be effective if delivered to the Depositary by any method of delivery described in Section 4 of the Offer to Purchase. Withdrawals of Shares may not be rescinded and any Shares properly withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. However, withdrawn Shares may be retendered by again following one of the procedures described in Section 3 of the Offer to Purchase at any time prior to the Expiration Date. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by the Purchaser in its sole discretion, which determination will be final and binding. The term "Expiration Date" shall mean 12:00 Midnight, New York City time, on Tuesday, June 1, 1999, unless and until the Purchaser, in accordance with the terms of the Merger Agreement, shall have extended the period of time for which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. Any such extension will be followed as promptly as practicable by a public announcement thereof not later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date of the Offer. Subject to the terms of the Merger Agreement and the applicable regulations of the Securities and Exchange Commission, the Purchaser expressly reserves the right, in its sole discretion, at any time or from time to time, to extend the period of time during which the Offer is open and thereby delay acceptance for payment of, and the payment for, any Shares by giving oral or written notice of such extension to the Depositary. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the rights of a tendering stockholder to withdraw such Shares. The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General Rules and Regulations under the Exchange Act is contained in the Offer to Purchase and is incorporated herein by reference. The Company has provided the Purchaser with the Company's stockholder lists and security position listings for the purpose of disseminating the Offer to holders of Shares. The Offer to Purchase, the related Letter of Transmittal and other relevant materials will be mailed to record holders of Shares and will be furnished to brokers, dealers, banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the stockholder lists, or, if applicable, who are listed as participants in a clearing agency's security position listing, for subsequent transmittal to beneficial owners of Shares. 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. 4 Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers set forth below. Requests for copies of the Offer to Purchase, the Letter of Transmittal and other related materials may be directed to the Information Agent or to brokers, dealers, commercial banks or trust companies. No fees or commissions will be payable by the Purchaser to any broker, dealer or other person (other than the Information Agent and the Dealer Manager) for soliciting tenders of Shares pursuant to the Offer. The Information Agent for the Offer is: KISSEL BLAKE & CO. A Division of Shareholder Communications Corporation 110 Wall Street New York, New York 10005 Banks and Brokers, Please Call: (212) 344-6733 ALL OTHERS CALL TOLL-FREE (800) 554-7733 The Dealer Manager for the Offer is: MERRILL LYNCH & CO. World Financial Center North Tower New York, New York 10281-1314 (212) 449-8971 (Call Collect) May 4, 1999 EX-99.A9 9 TEXT OF PRESS RELEASE DATED MAY 4,1999 1 Exhibit (a)(9) For Immediate Release Tuesday, May 4, 1999 EASTMAN CHEMICAL COMPANY: Rod Irvin, APR Director, Corporate Communications PHONE: (423) 229-4008 EMAIL: rodirvin@eastman.com EASTMAN CHEMICAL COMMENCES $12.25 PER SHARE TENDER OFFER FOR ALL OUTSTANDING SHARES OF LAWTER INTERNATIONAL, INC. KINGSPORT, Tenn. -- May 4, 1999 -- Eastman Chemical Company (NYSE: EMN) announced today that its wholly-owned subsidiary, Lipstick Acquisition Corp., has commenced a cash tender offer for all the outstanding shares of Lawter International, Inc. (NYSE: LAW) common stock at a price of $12.25 per Lawter share. The tender offer is scheduled to expire at 12:00 midnight, New York City time, on Tuesday, June 1, 1999, unless extended. Following the completion of the tender offer, Eastman intends to consummate a second step merger in which all remaining Lawter stockholders will also receive the same cash price paid in the tender offer. As previously announced, on April 27, 1999, Eastman, Lipstick and Lawter signed a definitive merger agreement for the acquisition of Lawter for $12.25 per share in cash. Lawter's Board of Directors has unanimously approved the tender offer and the merger and determined that the tender offer and the merger are in the best interests of Lawter's stockholders. The Lawter Board unanimously recommended that Lawter stockholders accept the Eastman offer and tender their shares. Lawter will mail its formal recommendation to stockholders at the same time Eastman mails its tender offer materials. The tender offer is conditioned upon, among other things, (1) there being validly tendered and not withdrawn before the expiration date, a number of shares, which when added to the number of shares beneficially owned by Eastman and Lipstick, will represent a majority of the total number of outstanding shares of Lawter on a fully diluted basis at the time the shares are accepted for payment pursuant to the offer; and (2) expiration or termination of any applicable waiting period under the 2 Hart-Scott-Rodino Antitrust Improvements Act of 1976 and any foreign antitrust or competition laws or regulations. The complete terms and conditions of the tender offer are set forth in the offering documents being filed today with the Securities and Exchange Commission. Merrill Lynch & Co. is acting as Dealer Manager for Eastman's offer and Kissel Blake is acting as Information Agent. Copies of Eastman's tender offer materials can be obtained from the Information Agent by calling (212) 344-6733. Headquartered in Kingsport, Tenn., Eastman manufactures and markets plastics, chemicals and fibers. The company employs 16,000 people in more than 30 countries and had 1998 sales of US$4.48 billion # # # 2 EX-99.C3 10 LAWTER INTERNATIONAL INC CONFIDENTIALITY AGREEMENT 1 Exhibit (c)(3) PERSONAL AND CONFIDENTIAL LAWTER INTERNATIONAL, INC. CONFIDENTIALITY AGREEMENT Dear Mr. Rothwell: In connection with our consideration of a possible negotiated transaction between Lawter International, Inc. ("Lawter") and Eastman Chemical Company, (a "Transaction"), each of us, and our respective advisors and agents is prepared to make available to the other certain information which is non-public, confidential or proprietary in nature. By execution of this letter agreement (the "Agreement"), we agree to treat confidentially all such information whether written or oral (the "Evaluation Material"), and to observe the terms and conditions set forth herein. We further agree to be responsible for any breach of this Agreement by any of our directors, officers, employees, partners, affiliates, agents, advisors or representatives (hereinafter, "Representatives") having access to any of the Evaluation Material. For the purposes of this Agreement, Evaluation Material shall include, without limitation, all information, data, reports, analyses, compilations, studies, interpretations, projections, forecasts, records, and other materials (whether prepared by Lawter or Eastman as the case may be, or otherwise and in whatever form maintained, whether documentary, computerized or otherwise), regardless of the form of communications, that contain or otherwise reflect information concerning Lawter or Eastman as the case may be, that we or our Representatives may be provided by or on behalf of Lawter or Eastman, as the case may be, in the course of our evaluation of a possible Transaction. The term "Evaluation Material" shall also include all information, data, reports, analyses, computations, studies, interpretations, projections, forecasts, records, notes, memoranda, summaries or other materials in whatever form maintained, whether documentary, computerized or otherwise, whether prepared by us or our Representatives or others, that contain or otherwise reflect or are based upon, in whole or in part, any such Evaluation Material or that reflect our review of, or interest in, all or any portion of Lawter or Eastman, as the case may be, (the "Notes"). This Agreement shall be inoperative as to those particular portions of the Evaluation Material that (i) have been generally available to the public, or become generally available to the public other than as result of a disclosure by you or any of your Representatives, (ii) were available to us on a non-confidential basis prior to the disclosure of such Evaluation Material to us pursuant to this Agreement, provided that 2 the source of such information was not known by us or any of our Representatives, after reasonable investigation, to be bound by a confidentiality agreement with other contractual, legal or fiduciary obligation of confidentiality to Lawter or Eastman, as the case may be, or any of its affiliates with respect to such material or (iii) become available to us on a non-confidential basis from a source other than Lawter or Eastman as the case may be, or its agents, advisors or Representatives provided that the source of such information was not known by us or any of our Representatives, after reasonable investigation, to be bound by a confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to Lawter or Eastman as the case may be, or any of its affiliates with respect to such material. We agree that we will not use the Evaluation Material for any purpose other than determining whether we wish to enter into a Transaction. We agree not to disclose or allow disclosure to others of any Evaluation Material; provided that, subject to the second paragraph of this agreement, we may disclose Evaluation Material to our employees or Representatives to the extent necessary to permit such employees or Representatives to assist us in making the determination referred to in the prior sentence. We shall take all reasonable measures (including but not limited to court proceedings), at each of our sole expense, to restrain our Representatives from prohibited or unauthorized disclosure or using the Evaluation Material in any way directly or indirectly detrimental to the other party. In particular we agree that for a period of 24 months from the date of the signing of this Agreement we and our affiliates will not knowingly, as a result of knowledge or information obtained from the Evaluation Material in connection with a possible Transaction: (i) divert or attempt to divert any business or customer of the other party or any of its affiliates; nor (ii) employ or attempt to employ or divert an employee of the other party. It is understood the preceding sentence is not intended to apply to activities undertaken by either of us in the ordinary course of business without relying on the Evaluation Material. In addition, we agree that we will not make any disclosure (i) that we are having or have had discussions, or that we have received Evaluation Material from the other party concerning a Transaction, (ii) that we are considering a possible Transaction or (iii) concerning any discussions related to a possible Transaction, including the status thereof, any termination thereof, any decision on our part to no longer consider any such Transaction or any of the terms, conditions or other facts with respect thereto; provided that such disclosure must be made by us in order that we not commit a violation of law and, prior to such disclosure, each of us promptly advises and consults the other party and its legal counsel concerning the information Lawter or Eastman, as the case may be, proposes to disclose. The term "person" as used in this letter shall be broadly interpreted to include, without limitation, the media and any corporation, partnership, group, individual or other entity. Although we have endeavored to include in the Evaluation Material information known to us which we believe to be relevant for the purpose of this investigation, we 2 3 understand and agree that none of Lawter or Eastman as the case may be, or any of our Representatives or affiliates, agents, advisors or representatives (i) has made or makes any representation or warranty, expressed or implied, as to the accuracy or completeness of the Evaluation Material or (ii) shall have any liability whatsoever to the other party or its Representatives relating to or resulting from the use of the Evaluation material or any errors therein or omissions therefrom. Without limiting the generality of the immediately preceding paragraph, the Evaluation Material may include certain statements, estimates and projections provided by a party with respect to the anticipated future performance of the business. Such statements, estimates and projections reflect various assumptions made by such party concerning anticipated results, which assumptions may or may not prove to be correct. No representations are made as to the accuracy of such assumptions, statements, estimates or projections, including the budget. The only information that will have any legal effect will be specifically represented in a definitive purchase or merger agreement, in no event will such definitive agreement contain any representation as to the projections. In the event that either of us or anyone to whom we transmit any Evaluation Material in accordance with this Agreement is requested or required (by deposition, interrogatories, requests for information or documents in legal proceedings, subpoenas, civil investigative demand or similar process), in connection with any proceeding, to disclose any Evaluation Material, we will give the other party prompt written notice of such request or requirement so that the other party may seek an appropriate protective order or other remedy and/or waive compliance with the provisions of this Agreement, and we will cooperate with the other party to obtain such protective order. In the event that such protective order or other remedy is not obtained or Lawter or as the case may be, waives compliance with the relevant provisions of this Agreement, we (or such other persons to whom such request is directed) will furnish only that portion of the Evaluation Material which, in the opinion of our counsel, is legally required to be disclosed. It is further agreed that, if in the absence of a protective order we (or such other persons to whom such request is directed) are nonetheless legally compelled to disclose such information, we may make such disclosure without liability hereunder, provided that we give the other party notice of the information to be disclosed as far in advance of its disclosure as is practicable and, upon the other party's request, use our reasonable efforts to obtain assurances that confidential treatment will be accorded to such information and, provided further, that such disclosure was not caused by and did not result from a previous disclosure by Lawter or Eastman as the case may be, or any of its Representatives not permitted hereunder. If we decide that we do not wish to proceed with a Transaction, we will promptly notify the other party of that decision. In that case, or if either of us shall elect at any time to terminate further access by the other party to the Evaluation Material for any reason, we will promptly redeliver to the other party or destroy all copies of the Evaluation Material in the possession of us or our affiliates or our Representatives and will destroy all Notes. 3 4 Notwithstanding, the return or destruction of Evaluation Material and Notes, we and our Representatives will continue to be bound by our obligations of confidentiality and other obligations hereunder. We understand that (i) each of us shall conduct this process for a possible Transaction as each of us in our sole discretion shall determine (including, without limitation, negotiating with any prospective third party and entering into definitive agreements without prior notice to the other party or any other person), (ii) any procedures relating to such Transaction may be changed at any time without notice to the other party or any other person, (iii) each of us shall have the right to reject or accept any potential buyer, proposal or offer, for any reason whatsoever, in our sole discretion, and (iv) neither Lawter nor Eastman as the case may be, nor any of its Representatives shall have any claims whatsoever against the other party or its Representatives or any of their respective directors, officers, stockholders, owners, affiliates or agents arising out of our relating to the Transaction (other than under this agreement and other than those against the parties to a definitive agreement with Lawter or Eastman as the case may be, in accordance with the terms thereof). We agree that unless and until a definitive agreement between us with respect to any Transaction has been executed and delivered, neither of us will be under any legal obligation of any kind whatsoever with respect to such Transaction. We agree that money damages would not be sufficient remedy for any breach of this Agreement by either of us or our Representatives, that in addition to all other remedies we shall be entitled to specific performance and injunctive or other equitable relief as a remedy for any such breach, and we further agree to waive, and to use our best efforts to cause our Representatives to waive, any requirement for the securing or posting of any bond in connection with such remedy. In the event of litigation relating to this letter agreement, if a court of competent jurisdiction determines that Lawter or Eastman as the case may be, or any of its Representatives has breached this letter agreement, such party shall be liable and pay to the other party the reasonable legal fees incurred by the other party in connection with such litigation, including any appeal therefrom. Each of us reserves the right to assign its rights, powers and privileges under this letter agreement (including, without limitation, the right to enforce the terms of this letter agreement) to any person who enters into a Transaction with such party. Each of us hereby acknowledges that we are aware and that we have advised such of our employees or Representatives who are informed as to the matters which are the subject of this agreement, that the United States securities laws prohibit any person who has received from an issuer material, non-public information from purchasing or selling securities of such issuer or from communicating such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase or sell such securities. 4 5 In addition, each of us, upon the receipt of proprietary, non-public, confidential information from the other party, hereby agrees that we will not propose to the other company or any other person any transaction between us and the other company and/or its security holders or involving any of its securities or security holders unless the other company has requested in writing that we make such a proposal, and that we will not acquire, or assist, advise or encourage any other persons in acquiring, directly or indirectly, control of the other company or any of the other company's securities, businesses or assets for a period of two years from the date of this Agreement unless the other company shall have consented in advance in writing to such acquisition. All modifications of, waivers of and amendments of this Agreement or any part hereof must be in writing signed on behalf of each of us. We acknowledge that the other party is intended to be benefited by this Agreement and that each of us shall be entitled, either alone or together with our representatives or advisors, to enforce this Agreement and to obtain for itself the benefit of any remedies that may be available for the breach hereof. It is further understood and agreed that no failure to delay by either of us in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise of any right, power or privilege hereunder. We hereby irrevocably and unconditionally submit to the exclusive jurisdiction of any State or Federal court sitting in New York over any suit, action or proceeding arising out of or relating to this letter. We hereby agree that service of any process, summons, notice or document by U.S. registered mail addressed to us shall be effective service of process for any action, suit or proceeding brought against us in any such court. We hereby irrevocably and unconditionally waive any objection to the laying of venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. We agree that a final judgment in any such suit, action or proceeding brought in any such court shall be conclusive and binding upon us and may be enforced in any other courts to whose jurisdiction we are or may be subject, by suit upon such judgment. In the event that any provision or portion of this letter is determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this letter shall be unaffected thereby and shall remain in full force and effect to the fullest extent permitted by applicable law. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of New York. The obligation to hold the evaluation material confidential shall expire two years from the date of this agreement. 5 6 We have indicated our agreement with the foregoing by signing, dating, and exchanging a copy of this Agreement, which constitutes our agreement with respect to the matters set forth herein. LAWTER INTERNATIONAL, INC. EASTMAN CHEMICAL COMPANY /s/ JOHN P. O'MAHONEY /s/ BRUCE E. MOORE - ------------------------------ ------------------------------------------ (signature) (signature) Chairman and CFO V.P. and General Manager (Inks & Resins Business) November 3, 1998 October 30, 1998 - ---------------- ---------------- (Date) (Date) 6 EX-99.C4 11 EMPLOYMENT AGREEMENT 1 Exhibit (c)(4) CONFORMED COPY EMPLOYMENT AGREEMENT THIS AGREEMENT, dated as of April 27, 1999, between Eastman Chemical Company, a Delaware corporation ("Company"), Lawter International, Inc., a Delaware corporation ("Lawter"), and John P. O'Mahoney (hereinafter referred to as the "Employee"), WITNESSETH: WHEREAS, the Employee currently serves as the Chairman and Chief Executive Officer of Lawter, and in such connection Lawter and the Employee have executed an Employment Agreement between such parties dated October 24, 1996 (the "Prior Employment Agreement"); and WHEREAS, the Company has commenced certain actions which may lead to the acquisition of a majority of issued and outstanding common stock of Lawter by the Company (with the date the majority of such issued and outstanding stock is acquired by the Company being referred to herein as the "Acquisition Date", provided that the Acquisition Date shall not be later than October 31, 1999); and WHEREAS, because of Employee's extensive experience and his familiarity with the affairs of Lawter, and because of the significant challenges in consumating the acquisition of Lawter and in integrating the business of Lawter with the Company's business, the Company wishes to assure that it will continue to have the Employee available to perform duties for the Company; and WHEREAS, the Employee is willing to commit to (i) the performance of his services for the Company under the terms and conditions set forth herein, and (ii) refraining from competition with the Company or disclosing confidential information of the Company for 18 months following his termination of employment with the Company; NOW, THEREFORE, in consideration of the mutual promises herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto as follows: 1. Employment. The parties hereto agree that, as of the Acquisition Date (as defined in the Recitals to this Agreement), and provided that the Employee is serving as an employee of Lawter at that time, (a) the Company will employ the Employee and the Employee hereby accepts such employment on the terms and conditions set forth herein; and (b) the Employee as of such date releases and waives in their entirety any and all rights he or any person or entity claiming through him may have under the Prior Employment Agreement. It is understood that the Prior Employment Agreement will remain in effect pursuant to its terms until the Acquisition Date. 2 2. Term of Employment. (a) Subject to the provisions for termination set forth herein, the term of the Employee's employment hereunder shall commence on the Acquisition Date and shall extend until the second anniversary of the Acquisition Date. This period shall be known as the "Employment Period". (b) At the conclusion of the Employment Period and at on each anniversary thereof, this Agreement shall automatically be extended for one additional year unless the Company gives to the Employee (or vice versa) notice of nonrenewal of the Agreement at least sixty (60) days prior to the date such contract extension would begin. 3. Position and Duties (a) The Employee's initial position shall be the highest ranking Employee of Lawter, operating as a wholly owned direct or indirect subsidiary of the Company. (b) The Employee shall devote his best efforts to the business and affairs of the Company, to carrying out the responsibilities assigned to him from time to time under this Agreement, and shall diligently follow and implement all management policies and decisions of the Company. 4. Compensation The Employee shall receive a beginning salary at an annual rate of $350,000 (the "Base Salary"). The Base Salary may be increased from time to time at the discretion of the Company. In addition, the Employee shall be eligible to participate in any long-term or short term cash incentive programs which from time to time are made available to Lawter's officers and key employees. 5. Working Facilities and Fringe Benefits; Expenses. The Employee shall be finished with office space, secretarial assistance and such other facilities and services as are appropriate to his position and adequate for the performance of his duties. The Company also shall provide or cause Lawter to provide to the Employee during the Employment Period fringe benefits and perquisites at least equal to those provided to the Employee immediately prior to the date thereof and neither the Company nor Lawter shall discriminate against the Employee with respect to any vacation or holiday plan, medical, hospital, life and disability insurance programs, savings programs and other similar welfare benefit programs from time to time made available to Lawter's officers and key employees. The Company or Lawter shall pay or reimburse Employee for all reasonable expenses actually incurred or paid by him in the performance of services rendered by him pursuant to this Agreement. Such expenses shall be supported by the documentary evidence required to substantiate them as income tax deductions. 2 3 6. Special Signing Bonus and Restricted Stock Grants. (a) Signing Bonus. On the Acquisition Date, the Company shall pay the Employee a signing bonus of $100,000 in cash. (b) Initial Grant of Restricted Stock. On the Acquisition Date, the Company shall grant to the Employee a special grant of Company common stock under the Company's restricted stock program, the number of such restricted shares to be determined by dividing $300,000 by the closing price of the Company's common stock on the New York Stock Exchange on the last regular trading day immediately prior to the Acquisition Date. All restrictions on such stock shall lapse on the day following the first anniversary of the Acquisition Date if the Employee is still then employed by the Company or as otherwise provided under Section 3 of this Agreement (c) Second Grant of Restricted Stock. If the Employee is still employed by the Company on day following the first anniversary of the Acquisition Date, then as of such date the Company shall grant to the Employee a second special grant of Company common stock under the Company's restricted stock program, the number of such restricted shares to be determined by dividing $300,000 by the closing price of the Company's common stock on the New York Stock Exchange on the last regular trading day immediately prior to the date of such second grant. All restrictions on such second grant shall lapse on the day following the second anniversary of the Acquisition Date if the Employee is still then employed by the Company or as otherwise provided under Section 8 of this Agreement. (d) The payments and grants described in this Section 6 shall be in lieu of any other long-term or short-term equity incentive programs during the Employment Period, provided, however, that this shall not restrict the Employee from participating in any long-term or short-term cash incentive programs which from time to time are made available to Lawter's officers and key employees. . Any grant of options of the Company's common stock, any additional grant of Company restricted stock, or any declaration of eligibility to participate in any other long-term or short-term cash or equity incentive program maintained by the Company during the Employment Period for employees other than Lawter employees shall be made in the sole and uncontrolled discretion of the Compensation Committee of the Company's Board of Directors (the "Board"). 7. Termination of Employment. (a) Death. The Employee's employment shall terminate upon his death. (b) Disability. The Company may terminate the employment of the Employee if, in the reasonable judgment of the Board, he becomes unable to satisfactorily perform his duties and responsibilities hereunder during the term of his employment because of mental or physical disability. 3 4 (c) Cause. The Company may terminate the Employee's employment for "Cause". For purposes of this Agreement, "Cause" is defined as (i) a material breach by Employee of the terms of this Agreement, (ii) the conviction of Employee of any criminal act that the Board shall in its sole and absolute discretion, deem to be or have the potential of being a material risk in any manner to the Company or its reputation, or (iii) conduct by Employee in his office with the Company that is grossly inappropriate and demonstrably likely to lead to material injury to the Company, as determined by the Board acting reasonably and in good faith; provided, however, that in the case of (iii) above, such conduct shall not constitute Cause unless the Board shall have delivered to Employee notice setting forth with specificity (x) the conduct deemed to qualify as Cause, (y) reasonable action that would remedy such objection, and (z) a reasonable time (not less than thirty (30) days) within which Employee may take such remedial action, and Employee shall not have taken such specified remedial action within such specified reasonable time. (d) Termination by the Company without Cause. Notwithstanding the foregoing provisions, the Company may terminate the Employee's employment without Cause at any time, subject to the provisions of subsection 8(d) hereof. (e) Date of Termination. "Date of Termination" shall mean (i) if the Employee's employment is terminated by death pursuant to subsection 7(a), the date of the Employee's death; (ii) if the Employee's employment is terminated by the Company as a result of the Employee's disability pursuant to subsection 7(b), the date of such termination, (iii) if the Employee's employment is terminated by the Company for Cause pursuant to subsection 7(c), the date that the Notice of Termination is communicated to the Employee, after the expiration of the right to take remedial action in the case of paragraph 7(c)(iii), and (iv) if the employment is terminated by the Company without Cause pursuant to subsection 7(d), the date the Notice of Termination is communicated to the Employee. 8. Compensation and Other Rights of Employee Upon Termination. (a) If the Employee's employment shall be terminated due to death pursuant to subsection 7(a), then (i) Company shall make, until the second anniversary of the Acquisition Date, payments of Base Salary at a rate equal to the Base Salary annual rate on the date of death, (ii) all of the Company's common stock owned by the Employee subject to conditions, restrictions, or limitations which lapse over time or upon a subsequent event shall immediately be free of all such conditions, restrictions and limitations, but neither the Employee's estate nor any other person or entity shall be entitled to any other grant of restricted stock, and (iii) all other rights of the Employee and his estate, guardian, legal representatives and heirs under the incentive, savings and welfare plans described in Sections 4 and 5 shall be determined by the terms and conditions of such plans as in effect on the date of Employee's death and Lawter's applicable program and practices as in effect on the date of Employee's death, as applicable. 4 5 (b) Disability. If the Employee's employment shall be terminated due to disability pursuant to subsection 7(b), then (i) Company shall make, until the second anniversary of the Acquisition Date, payments to Employee of his Base Salary at a rate equal to the Base Salary annual rate on the date of disability, (ii) all of the Company's common stock owned by the Employee subject to conditions, restrictions, or limitations which lapse over time or upon a subsequent event shall immediately be free of all such conditions, restrictions and limitations, but Employee shall not be entitled to any further grants of restricted stock, and (iii) all other rights of the Employee and his estate, guardian, legal representatives and heirs under the incentive, savings and welfare plans described in Sections 4 and 5 shall be determined by the terms and conditions of such plans as in effect on the date of Employee's disability and Lawter's applicable program and practices as in effect on the date of Employee's disability. (c) Termination by the Company for Cause or Termination by Employee for any reason other than Death or Disability. If the Employee's employment shall be terminated by (i) the Company for Cause pursuant to subsection 7(c), or (ii) by the Employee for any reason other than death or disability, the Company shall pay the Employee all Base Salary and payments owed to him up to the Date of Termination. Any rights that Employee may have under the incentive, savings, and welfare plans described in Sections 4 and 5 shall be determined by the terms and conditions of such plans as in effect on the Date of Termination and Lawter's applicable programs and practices as in effect on the Date of Termination, and all other rights under this Agreement shall be terminated. (d) Termination by the Company without Cause. If the Employee's employment shall be terminated by the Company without Cause pursuant to subsection 7(d), then the Company shall pay to the Employee all Base Salary and payments owed to him up to the Date of Termination. In addition, (i) within thirty (30) days following the Date of Termination, the Company shall pay to Employee a lump sum cash payment equal to the aggregate amount of Base Salary that would have been payable to the Employee between the Date of Termination and the second anniversary of the Acquisition Date, computed at the Employee's Base Salary date in effect on the Date of Termination; (ii) if the Date of Termination occurs on or before the first anniversary of the Acquisition Date, then (A) as of the Date of Termination all of the Company's common stock owned by the Employee subject to conditions, restrictions, or limitations which lapse over time or upon a subsequent event shall immediately be free of all such conditions, restrictions and limitations; and (B) in lieu of the grant of restricted stock described in Section 6(c), within thirty (30) days following the Date of Termination the Company shall pay the Employee a lump sum cash payment of $300,000; 5 6 (iii) if the Date of Termination occurs after the day following the first anniversary of the Acquisition Date but before the second anniversary of the Acquisition Date, then all of the Company,'s common stock owned by the Employee subject to conditions, restrictions, or limitations which lapse over time, or upon a subsequent event shall immediately be free of all such conditions, restrictions and limitations; (iv) except as expressly provided in this Agreement, any rights that Employee may have under the incentive, savings and welfare plans described in Sections 4 and 5 shall be determined by the terms and conditions of such plans as in effect on the Date of Termination and Lawter's applicable programs and practices as in effect on the Date of Termination, and all other rights under this Agreement shall be terminated; and (v) through the second anniversary of the Acquisition Date, the Company shall allow Employee and his Emily members to participate in all Lawter welfare plans described in Section 5 on the same terms and conditions and at the same cost as to which they were entitled to participate immediately prior to the Date of Termination. If the Employee or his family members shall be ineligible to participate in any of such welfare plans as a result of Employee's ceasing to be an employee of the Company or Lawter, then the Company shall arrange to provide the Employee and his family members with substantially equivalent benefits as if Employee remained employed by Lawter throughout the Employment Period. (e) Employee understands that during the term of this Agreement the Company may determine, in its sole discretion, that it is in the best interest of the Company to make changes in the operations, management structure, corporate form or reporting relationship of Lawter, and acknowledges that any change in Employee's position or responsibilities set forth in Section 3(a) or change in geographic location of his employment resulting from any such change will not constitute a breach of this Agreement by the Company. 9. Covenant Restricting Competition; Nondisclosure of Confidential Information. (a) The Employee acknowledges that his services are special and unique, and of an unusual and extraordinary character which gives them peculiar value, the loss of which cannot adequately be compensated in damages. Therefore, the Employee agrees that he will not, except with the written consent of the Company, for a continuous period of eighteen (18) months commencing immediately following termination of the Employee's employment hereunder, directly or indirectly engage or become interested in, as a partner, director, officer, principal, agent or employee, any business which competes with products produced, marketed or in development by the Company or Lawter at the time of such termination. 6 7 (b) The Employee acknowledges that in his employment he is or will be making use of, acquiring or adding to, confidential information of the Company and Lawter, and is or will be familiar with the Company's and Lawter's business, activities, employees, customers and suppliers. Therefore, in order to protect the Company's and Lawter's confidential information and to protect other employees who depend upon the Company for regular employment, Employee agrees that, except in connection with his employment by the Company, or with the, consent of the Company, he will not during or after the term of his employment hereunder in any way utilize any of said confidential information and he will not copy, reproduce, or take with him the original or any copies of said confidential information and will not disclose any of said confidential information to anyone. In the event of a breach of the covenants contained in this Section 9, The Company shall be entitled to an injunction restraining such breach in addition to any other remedies provided by law. If any provision of this Section 9 is adjudged by a court to be invalid or unenforceable, the same will in no way affect any other provision of this Section 9 or any other part of this Agreement, the application of such provision in any other circumstances or the validity or enforceability of this Agreement. If any such provision, or any part thereof, is held to be unenforceable because of the duration of such provision or the area covered thereby, the parties agree that the court making such determination will have the power to reduce the duration and/or area of such provision, and/or to delete specific words or phrases, and in its reduced form such provision will then be enforceable and will be enforced. 10. Reimbursement of Certain Taxes. (a) Anything in this Agreement to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution by the Company to or for the benefit of the Employee (whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, but determined without regard to any additional payments required under this Section 10) (a "Payment") would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Employee with respect to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the "Excise Tax"), then the Employee shall be entitled to receive an additional payment (a "Gross-Up Payment") in an amount such that after payment by the Employee of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Employee retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments. (b) Subject to the provisions of Section 10(c), all determinations required to be made wider this Section 10, including whether and when a Gross-Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in 7 8 arriving at such determination, shall be made by a certified public accounting firm as may be designated by the Company (the "Accounting Firm") which shall provide detailed supporting calculations both to the Company and the Employee within 15 business days of the receipt of notice from the Employee that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to this Section 10, shall be paid by the Company to the Employee within five days of the receipt of the Accounting Firm's determination. Any determination by the Accounting Firm shall be binding upon the Company and the Employee. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments which will not have been made by the Company should have been made ("Underpayment"), consistent with the calculations required to be made hereunder. In the event that the Company exhausts its remedies pursuant to Section 10(c) and the Employee thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit of the Employee. (c) The Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no later than ten business days after the Employee is informed in writing of such claim and shall apprise the Company of the nature of such claim and the date on which such claim is requested to be paid. The Employee shall not pay such claim prior to the expiration of the 30-day period following the date on which it gives such notice to the Company (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Company notifies the Employee in writing prior to the expiration of such period that it desires to contest such claim, the Employee shall: (i) give the Company any information reasonably requested by the Company relating to such claim, (ii) take such action in connection with contesting such claim as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in order effectively to contest such claim, and (iv) permit the Company to participate in any proceedings relating to such claim; provided, however, that the Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Employee harmless, on an after-tax basis, for any Excise 8 9 Tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation of the foregoing provisions of this Section 10(c), the Company shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Employee to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Employee agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Company shall determine; provided, however, that if the Company directs the Employee to pay such claim and sue for a refund, the Company shall advance the amount of such payment to the Employee, on an interest-free basis and shall indemnify and hold the Employee harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties with respect thereto) imposed with respect to such advance or with respect to any imputed income with respect to such advance; and further provided that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company's control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and the Employee shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. (d) If after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), the Employee becomes entitled to receive any refund with respect to such claim, the Employee shall (subject to the Company's complying with the requirements of Section 10(c)) promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by the Employee of an amount advanced by the Company pursuant to Section 10(c), a determination is made that the Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Employee in writing of its intent to contest such denial of refund prior to the expiration of 30 days after such determination, then such advance shall be forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the extent thereof, the amount of Gross-Up Payment required to be paid. 11. Assignment. This Agreement is binding upon and shall be for the benefit of the successors and assigns of the Company, including any corporation or any other form of business organization with which the Company may merge or consolidate, or to which it may transfer substantially all of its assets. Employee shall not assign his interest in this Agreement or any pan thereof 9 10 12. Consent of the Company. Any act, request, approval, consent or opinion of the Company under this Agreement must be in writing and may be authorized, given or expressed only by resolution of the Board or by the Chief Executive Officer of the Company. 13. Notice For the purposes of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows: If to the Company: Chief Executive Officer Eastman Chemical Company 100 North Eastman Road Kingsport, Tennessee 37660 If to the Employee: John P. O'Mahoney 545 Somerset Lane Northfield, Illinois 60093 or to such other address as either party may have furnished to the other in writing. 14. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Tennessee applicable to contracts made and to be performed therein. 15. Enforcement Expenses and Arbitration. The Company agrees to reimburse the Employee for all costs and expenses incurred by him (including the reasonable fees of his counsel) in successfully enforcing any of his rights under this Agreement or any claim arising out of the breach thereof. In addition, the parties acknowledge the relative economic power of the Company versus the Employee, and the ability of the Company to resist the conclusion of litigation should the Employee institute legal proceedings enforce this Agreement or to recover damages for the breach thereof. In recognition of this, any controversy or claim arising out of or relating to this Agreement shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association, at the sole election of the Employee; provided, however, that an action by the Company to enforce 10 11 its rights under Section 9 hereof shall be excluded from the arbitration provisions of this Section. Any such election by Employee shall be made by written notice given to the Company any time after such controversy or claim arises, and in the event Employee is served with process relating to any court proceeding concerning any such claim or controversy commenced by the Company, such election, to be effective, shall be made by written notice within 15 days of the time Employee is served with such process. Commencement of court proceedings by Employee shall be deemed an election not to arbitrate. In the event the Company commences court proceedings (other than an action by the Company solely to enforce its rights under Section 9 hereof) and is given notice of the election to arbitrate by the Employee within the time period set forth above, the Company agrees to promptly dismiss such court proceedings and submit to arbitration. In the event of such arbitration, judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. 16. Miscellaneous Anything in this Agreement to the contrary notwithstanding, all payments required to be made by the Company hereunder to the employee, his estate or legal representatives shall be subject to the withholding of such amounts relating to taxes as the Company may reasonably determine it should withhold pursuant to any applicable law or regulation. IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the. date and year first above written. EASTMAN CHEMICAL COMPANY By: /s/ HAROLD L. HENDERSON ----------------------- Name: Harold L. Henderson ------------------- Its: Senior Vice President, General Counsel ---------------------------------------- LAWTER INTERNATIONAL, INC. By:/s/ MARK JOSLIN ---------------------------------------- Name: Mark Joslin --------------------------------- Its: Chief Financial Officer & Treasurer ---------------------------------------- EMPLOYEE /s/ JOHN P. O'MAHONEY ---------------------------------- John P. O'Mahoney 11 EX-99.C5 12 STOCK OPTION AGREEMENT WITH JOHN O'MAHONEY 1 EXHIBIT (c)(5) [Eastman Chemical Company Letterhead] April 27, 1999 John P. O'Mahoney Lawter International, Inc. Re: Grant of Stock Options Dear John: This will confirm our agreement that, effective upon the date Eastman Chemical Company becomes the owner of a majority of the issued and outstanding stock of Lawter International, Inc. (provided that such date is not later than October 31, 1999), Eastman Chemical Company shall grant to you an option to buy 5,000 shares of common stock of Eastman Chemical Company. In accordance with its standard practices, such options shall (i) be non-qualified options (rather than incentive stock options), (ii) be exercisable at a price equal to the closing price of Eastman Chemical Company common stock on the New York Stock Exchange on the last regular trading day immediately prior to the date such options are granted; (iii) provide that one-half of such options shall vest and become exercisable on the first anniversary of the date of grant, and the other hald shall vest and become exercisable on the second anniversary of the of grant; and (iv) contain such other terms as are customary for grants of options to senior executives of Eastman Chemical Company. This grant of options is in addition to and not in lieu of any compensation and benefits provided for under the Employment Agreement of even date herewith between you, Lawter International, Inc. and Eastman Chemical Company. Very truly yours, /s/ HAROLD L. HENDERSON Harold L. Henderson Senior Vice President and General Counsel -----END PRIVACY-ENHANCED MESSAGE-----