-----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, M4I4uhNRCTPKZxHTtsHPF1i9DlLq9I/wFhnE3OmUljlYCjlvDgAnO4WcRD6bX/u6 rXkrjPy0X+BwGgrTIJWcXA== 0000950130-99-003892.txt : 19990702 0000950130-99-003892.hdr.sgml : 19990702 ACCESSION NUMBER: 0000950130-99-003892 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 19990701 GROUP MEMBERS: H2O ACQUISITION CO GROUP MEMBERS: SUEZ LYONNAISE DES EAUX SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NALCO CHEMICAL CO CENTRAL INDEX KEY: 0000069598 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS CHEMICAL PRODUCTS [2890] IRS NUMBER: 361520480 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: SEC FILE NUMBER: 005-13004 FILM NUMBER: 99658042 BUSINESS ADDRESS: STREET 1: ONE NALCO CTR CITY: NAPERVILLE STATE: IL ZIP: 60563 BUSINESS PHONE: 7083051000 MAIL ADDRESS: STREET 1: ONE NALCO CENTER CITY: NAPERVILLE STATE: IL ZIP: 60563-1198 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: H2O ACQUISITION CO CENTRAL INDEX KEY: 0001089765 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: C/O SUEZ LYONNAISE DES EAUX STREET 2: 1 REE D'ASTONG CITY: PARIS FRANCE SC 14D1 1 SCHEDULE 14D-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 NALCO CHEMICAL COMPANY (Name of Subject Company) ---------------- SUEZ LYONNAISE DES EAUX H2O ACQUISITION CO. (Bidders) ---------------- Common Stock, par value $0.1875 per share (including the Associated Preferred Stock Purchase Rights) Series B ESOP Convertible Preferred Stock, par value $1.00 per share (Title of Class of Securities) ---------------- Common Stock: 629853102 Series B ESOP Convertible Preferred Stock: None (CUSIP Number of Class of Securities) ---------------- Patrice Herbet Suez Lyonnaise des Eaux 1, rue d'Astorg 75008 Paris France 011-33-1-40-06-64-00 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidders) ---------------- Copy to: Kevin Keogh White & Case LLP 1155 Avenue of the Americas New York, New York 10036 (212) 819-8200 CALCULATION OF FILING FEE - ------------------------------------------------------ - ------------------------------------------------------
Transaction Valuation* Amount of Filing Fee** - ------------------------------------------------------ $4,091,040,111.37 $818,208.02 - ------------------------------------------------------ - ------------------------------------------------------
* Estimated solely for the purpose of determining the registration fee. Based on the offer to purchase 77,189,936 shares of Common Stock (including 10,888,271 exercisable options with a weighted average strike price of $34.27) and 353,908.409 shares of Series B ESOP Convertible Preferred Stock, at a price of (i) $53.00 per share of Common Share and (ii) $1,060.00 per share of Series B ESOP Convertible Preferred Stock, net to the seller in cash, without interest thereon. ** The amount of the filing fee, calculated in accordance with Rule 0-11 under the Securities Exchange Act of 1934, as amended, equals 1/50 of one percent of the aggregate of the cash offered by the bidder. [_]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:________________ Filing Party:________________________ Form or Registration No.:______________ Date Filed:__________________________ - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- SCHEDULE 14D-1 Item 1. Security and Subject Company. (a) This statement relates to the securities of Nalco Chemical Company, a Delaware corporation (the "Company"). The principal executive offices of the Company are located at One Nalco Center, Naperville, Illinois 60563-1198. (b) This statement relates to (i) the shares of common stock, par value $0.1875 per share, of the Company, including the associated preferred stock purchase rights (the "Common Stock") and (ii) the shares of Series B ESOP Convertible Preferred Stock, par value $1.00 per share, of the Company (the "ESOP Preferred Stock"). The Common Stock and the ESOP Preferred Stock are referred to herein collectively as the "Shares." The information regarding the number of each class of Shares outstanding, the exact amount of each class of Shares being sought and the consideration being offered therefor is set forth in the Introduction to the Offer to Purchase, dated July 1, 1999 (the "Offer to Purchase"), and is incorporated herein by reference. (c) The information concerning the principal markets in which the Common Stock are traded and the sales prices for the Common Stock for each quarterly period during the past two years is set forth in the Offer to Purchase under Section 6 ("Price Range; Dividends") and is incorporated herein by reference. Item 2. Identity and Background. (a)-(d),(g) H2O Acquisition Co., a Delaware corporation ("Purchaser"), is a wholly owned subsidiary of Suez Lyonnaise des Eaux, a societe anonyme organized and existing under the laws of the Republic of France ("Parent"). The information set forth in the Offer to Purchase under Section 8 ("Certain Information Concerning Purchaser and Parent") is incorporated herein by reference. The name, business address, present principal occupation or employment and material occupations, positions, offices or employment during the last five years and citizenship of the directors and executive officers of Purchaser and Parent are set forth in Schedule I to the Offer to Purchase and are incorporated herein by reference. (e), (f) During the last five years, none of Purchaser or Parent, or, to the best of their knowledge, any of the persons listed in Schedule I to the Offer to Purchase has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or 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 law. Item 3. Past Contacts, Transactions or Negotiations with the Subject Company. (a)-(b) The information set forth in the Offer to Purchase under the Introduction, Section 10 ("Background of the Offer") and Section 11 ("Purpose of the Offer; Plans for the Company; Certain Agreements") is incorporated herein by reference. Item 4. Source and Amount of Funds or Other Consideration. (a)-(c) The information set forth in the Offer to Purchase under Section 9 ("Source and Amount of Funds") is incorporated herein by reference. Item 5. Purpose of the Tender Offer and Plans or Proposals of the Bidders. (a)-(g) The information set forth in the Offer to Purchase under the Introduction, Section 11 ("Purpose of the Offer; Plans for the Company; Certain Agreements") and Section 13 ("Effect of the Offer on the Market for the Common Stock; Exchange Act Registration") is incorporated herein by reference. 2 Item 6. Interest in Securities of the Subject Company. (a)-(b) The information set forth in the Offer to Purchase under the Introduction, Section 8 ("Certain Information Concerning Purchaser and Parent"), Section 10 ("Background of the Offer") and Schedule I 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 Offer to Purchase under the Introduction, Section 10 ("Background of the Offer"), Section 11 ("Purpose of the Offer; Plans for the Company; Certain Agreements") and Section 15 ("Certain Legal Matters; Regulatory Approvals") is incorporated herein by reference. Item 8. Persons Retained, Employed or to be Compensated. The information set forth in the Offer to Purchase under Section 16 ("Fees and Expenses") is incorporated by reference. Item 9. Financial Statements of Certain Bidders. Not applicable. Item 10. Additional Information. (a) The information set forth in the Offer to Purchase under Section 11 ("Purpose of the Offer; Plans for the Company; Certain Agreements") is incorporated herein by reference. (b)-(c) The information set forth in the Offer to Purchase under Section 15 ("Certain Legal Matters; Regulatory Approvals") is incorporated herein by reference. (d) The information set forth in the Offer to Purchase under Section 13 ("Effect of the Offer on the Market for the Common Stock; Exchange Act Registration") is incorporated herein by reference. (e) Not applicable. (f) The information set forth in the entire text of each of (i) the Offer to Purchase, (ii) the Letter of Transmittal to Tender Shares of Common Stock and/or Series B ESOP Convertible Preferred Stock and (iii) the Agreement and Plan of Merger, dated as of June 27, 1999, among Parent, Purchaser and the Company, copies of which are attached hereto as Exhibits (a)(1), (a)(2) and (c)(1) respectively, is incorporated herein by reference. 3 Item 11. Material to be Filed as Exhibits.
Exhibit No. Description ----------- ----------- Exhibit (a)(1) Offer to Purchase. Exhibit (a)(2) Letter of Transmittal to Tender Shares of Common Stock and/or Series B ESOP Convertible Preferred Stock. Exhibit (a)(3) Form of letter to brokers, dealers, commercial banks, trust companies and other nominees. Exhibit (a)(4) Form of letter to be used by brokers, dealers, commercial banks, trust companies and nominees to their clients. Exhibit (a)(5) Press Release, dated June 28, 1999, announcing the tender offer. Exhibit (a)(6) Form of newspaper advertisement, dated July 1, 1999, published in The Wall Street Journal. Exhibit (a)(7) Notice of Guaranteed Delivery. Exhibit (a)(8) Guidelines for Substitute Form W-9. Exhibit (c)(1) The Agreement and Plan of Merger dated as of June 27, 1999 among Suez Lyonnaise des Eaux, H2O Acquisition Co. and Nalco Chemical Company. Exhibit (c)(2) Confidentiality Agreement dated April 13, 1999 between Degremont, a wholly owned subsidiary of Suez Lyonnaise des Eaux, and Goldman, Sachs & Co., on behalf of Nalco Chemical Company. Exhibit (c)(3) Form of Agreement as to Terms of Employment.
4 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. Suez Lyonnaise des Eaux /s/ Philippe Brongniart Dated: July 1, 1999 By:__________________________________ Name: Philippe Brongniart Title: Member of the Executive Board H2O Acquisition Co. Dated: July 1, 1999 /s/ Philippe Brongniart By:__________________________________ Name: Philippe Brongniart Title: Director 5 EX-99.(A)(1) 2 OFFER TO PURCHASE. Exhibit (a)(1) OFFER TO PURCHASE FOR CASH All of the Outstanding Shares of Common Stock (Including the Associated Preferred Stock Purchase Rights) and All of the Outstanding Shares of Series B ESOP Convertible Preferred Stock of NALCO CHEMICAL COMPANY at $53.00 Net Per Share of Common Stock and $1,060.00 Net Per Share of Series B ESOP Convertible Preferred Stock by H2O ACQUISITION CO. A Wholly Owned Subsidiary of SUEZ LYONNAISE DES EAUX THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 30, 1999, UNLESS THE OFFER IS EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $0.1875 PER SHARE (THE "COMMON STOCK"), AND SHARES OF SERIES B ESOP CONVERTIBLE PREFERRED STOCK (THE "ESOP PREFERRED STOCK", AND, TOGETHER WITH THE COMMON STOCK, THE "SHARES") OF NALCO CHEMICAL COMPANY WHICH, WHEN ADDED TO ANY SHARES OF COMMON STOCK ALREADY OWNED BY SUEZ LYONNAISE DES EAUX OR H2O ACQUISITION CO., REPRESENTS AT LEAST A MAJORITY OF ALL THE ISSUED AND OUTSTANDING SHARES OF COMMON STOCK, ON A FULLY DILUTED BASIS, (II) THE EXPIRATION OR TERMINATION OF ANY APPLICABLE WAITING PERIOD (AND ANY EXTENSION THEREOF) UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, AND (III) IF REQUIRED BY APPLICABLE LAW, THE RECEIPT PRIOR TO THE EXPIRATION OF THE OFFER OF A DECISION OF THE COMMISSION OF THE EUROPEAN COMMUNITY THAT THE PURCHASE OF THE SHARES PURSUANT TO THE OFFER AND THE MERGER (AS DEFINED HEREIN) ARE COMPATIBLE WITH THE COMMON MARKET. THE OFFER IS ALSO CONDITIONED UPON THE SATISFACTION OF CERTAIN OTHER TERMS AND CONDITIONS DESCRIBED IN SECTION 14--"CONDITIONS OF THE OFFER". THE OFFER IS BEING MADE PURSUANT TO THE AGREEMENT AND PLAN OF MERGER, DATED AS OF JUNE 27, 1999 (THE "MERGER AGREEMENT"), AMONG SUEZ LYONNAISE DES EAUX, H2O ACQUISITION CO. AND THE COMPANY. SEE SECTION 11--"PURPOSE OF THE OFFER; PLANS FOR NALCO CHEMICAL COMPANY; CERTAIN AGREEMENTS". ---------------- The Dealer Manager for the Offer is: J.P. Morgan & Co. ---------------- The date of this Offer to Purchase is July 1, 1999. ON JUNE 27, 1999 THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY (I) DETERMINED THAT THE MERGER IS ADVISABLE AND THAT THE MERGER AGREEMENT (AS DEFINED HEREIN) AND THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, ARE FAIR TO AND IN THE BEST INTERESTS OF THE HOLDERS OF SHARES, (II) APPROVED AND ADOPTED THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, (III) RECOMMENDED THAT THE STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER, APPROVE THE MERGER, AND APPROVE AND ADOPT THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, AND (IV) APPROVED THE TAKING OF ALL OTHER APPLICABLE ACTION NECESSARY TO RENDER SECTION 203 OF THE DGCL (AS DEFINED HEREIN) AND OTHER STATE TAKEOVER STATUTES AND THE RIGHTS AGREEMENT (AS DEFINED HEREIN) INAPPLICABLE TO THE OFFER AND THE MERGER. ---------------- IMPORTANT Any holder of Shares (a "Holder") desiring to tender all or any portion of the Shares owned by such Holder should either (i) complete and sign the Letter of Transmittal or a copy thereof in accordance with the instructions in such Letter of Transmittal and mail or deliver it, together with the certificate(s) evidencing tendered Shares, and any other required documents, to the Depositary, (ii) where applicable, cause such Holder's broker, dealer, commercial bank, trust company or custodian to tender such Shares pursuant to the procedures for book-entry transfer of Shares or (iii) comply with the guaranteed delivery procedures, in each case, upon the terms set forth in Section 3--"Procedures for Tendering Shares". Any Holder 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 custodian if such Holder desires to tender such Shares. See Section 3-- "Procedures for Tendering Shares". Any Holder who desires to tender Shares and whose certificate(s) evidencing such Shares are not immediately available, or who cannot comply with the procedures for book-entry transfer described in this Offer to Purchase on a timely basis, may tender such Shares by following the procedures for guaranteed delivery set forth in Section 3--"Procedures for Tendering Shares". 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. Additional copies of this Offer to Purchase, the Letter of Transmittal or other related tender offer materials may be obtained from the Information Agent or from brokers, dealers, commercial banks or trust companies. TABLE OF CONTENTS INTRODUCTION.............................................................. 1 1. Terms of the Offer.................................................... 2 2. Acceptance for Payment and Payment for Shares......................... 4 3. Procedures for Tendering Shares....................................... 6 4. Withdrawal Rights..................................................... 8 5. Certain United States Federal Income Tax Consequences................. 9 6. Price Range; Dividends................................................ 9 7. Certain Information Concerning the Company............................ 11 8. Certain Information Concerning Purchaser and Parent................... 14 9. Source and Amount of Funds............................................ 15 10. Background of the Offer............................................... 15 11. Purpose of the Offer; Plans for the Company; Certain Agreements....... 16 12. Dividends and Distributions........................................... 35 13. Effect of the Offer on the Market for the Common Stock; Exchange Act Registration............................................................. 35 14. Conditions of the Offer............................................... 36 15. Certain Legal Matters; Regulatory Approvals........................... 37 16. Fees and Expenses..................................................... 41 17. Miscellaneous......................................................... 41
SCHEDULE I Information Concerning the Directors and Executive Officers of Suez Lyonnaise des Eaux and H2O Acquisition Co. To the Holders of Common Stock and Series B ESOP Convertible Preferred Stock of Nalco Chemical Company: INTRODUCTION H2O Acquisition Co., a Delaware corporation ("Purchaser") and a wholly owned subsidiary of Suez Lyonnaise des Eaux, a societe anonyme organized and existing under the laws of the Republic of France ("Parent"), hereby offers to purchase (i) all of the issued and outstanding shares of common stock, par value $0.1875 per share (the "Common Stock"), of Nalco Chemical Company, a Delaware corporation (the "Company"), at a price of $53.00 per share of Common Stock, net to the seller in cash, without interest thereon (the "Common Stock Offer Price"), and (ii) all of the issued and outstanding shares of Series B ESOP Convertible Preferred Stock (the "ESOP Preferred Stock") of the Company, at a price of $1,060.00 per share of ESOP Preferred Stock, net to the seller in cash, without interest thereon (the "ESOP Preferred Stock Offer Price", and, together with the Common Stock Offer Price, 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 they may be amended and supplemented from time to time, together constitute the "Offer"). Unless the context indicates otherwise, as used herein, "Shares" shall mean the shares of Common Stock and the shares of ESOP Preferred Stock. Unless the context indicates otherwise, all references to Common Stock shall include the associated preferred stock purchase rights (the "Rights") issued pursuant to the Rights Agreement, dated as of June 20, 1996 (the "Rights Agreement"), by and between the Company and First Chicago Trust Company of New York ("First Chicago") as Rights Agent. Holders of Shares ("Holders") whose Shares are registered in their own name and who tender directly to First Chicago, as Depositary (the "Depositary") 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 pursuant to the Offer. Purchaser will pay all charges and expenses of J.P. Morgan Securities Inc., as Dealer Manager (the "Dealer Manager" or "J.P. Morgan"), the Depositary and Morrow & Co., Inc., as Information Agent (the "Information Agent"), in each case incurred in connection with the Offer. See Section 16--"Fees and Expenses". The Offer is conditioned upon, among other things, (i) there being validly tendered and not withdrawn prior to the expiration of the Offer at least such number of Shares which, when added to any shares of Common Stock already owned by Parent, constitute a majority of the then outstanding shares of Common Stock on a fully diluted basis (including, without limitation, all shares of Common Stock issuable upon the conversion of the ESOP Preferred Stock or any other convertible securities or upon the exercise of any options, warrants or rights) (the "Minimum Condition"), (ii) the satisfaction of the HSR Condition (as defined herein), and (iii) the satisfaction of the EC Condition (as defined herein). The Offer is also conditioned upon the satisfaction of certain other terms and conditions described in Section 14--"Conditions of the Offer". The board of directors of the Company (the "Board of Directors") has duly adopted resolutions that (i) determined that the Merger (as defined herein) is advisable and that the Merger Agreement (as defined herein) and the transactions contemplated thereby, including the Offer and the Merger, are fair to and in the best interests of the Holders, (ii) approved and adopted the Merger Agreement and the transactions contemplated thereby, (iii) recommended the acceptance of the Offer, the approval of the Merger and the approval and adoption of the Merger Agreement by the stockholders of the Company, and (iv) approved the taking of all other applicable action necessary to render Section 203 of the Delaware General Corporations Law (the "DGCL") and other state takeover statutes and the Rights Agreement inapplicable to the Offer and the Merger. The Company has advised Parent that Goldman, Sachs & Co. ("Goldman Sachs"), the financial advisor to the Company, has delivered to the Board of Directors its written opinion dated June 28, 1999, to the effect that as of such date, the Common Stock Offer Price to be received by the holders of Common Stock pursuant to the Offer and the Merger is fair to such holders of Common Stock from a financial point of view. A copy of the opinion of Goldman Sachs, which sets forth the assumptions and qualifications made, factors considered and scope of review undertaken by Goldman Sachs, is contained in the Company's Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D- 9"), which is being mailed to the Holders concurrently herewith. Holders are urged to read the full text of that opinion. The Offer is being made pursuant to the Agreement and Plan of Merger, dated as of June 27, 1999 (the "Merger Agreement"), among Parent, Purchaser and the Company. The Merger Agreement provides that, as promptly as practicable after consummation of the Offer, Purchaser will be merged with and into the Company (the "Merger"). At the effective time of the Merger (the "Effective Time"), except for (a) Shares which are held by any subsidiary of the Company or in the treasury of the Company, or which are held, directly or indirectly, by Parent or any direct or indirect subsidiary of Parent (including Purchaser), all of which shall cease to be outstanding, and shall be canceled and retired and none of which shall receive any payment with respect thereto and (b) Shares held by holders exercising their rights to dissent in accordance with Delaware law, (i) each share of Common Stock (including all Rights) issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, forthwith be canceled and shall be converted automatically into the right to receive an amount in cash equal to $53.00, without interest; and (ii) each share of ESOP Preferred Stock issued and outstanding immediately prior to the Effective Time shall be canceled and shall be converted automatically into the right to receive an amount in cash equal to $1,060.00, without interest. The Merger Agreement is more fully described in Section 11--"Purpose of the Offer; Plans for the Company; Certain Agreements". The Company has informed Purchaser that, as of June 24, 1999, there were (x) 66,263,894 shares of Common Stock issued and outstanding, (y) stock options issued under the Company's Stock Option Plans (as defined herein) covering not more than 10,888,271 shares of Common Stock (with an exercise price less than $53.00), and (z) 353,908.409 shares of ESOP Preferred Stock issued and outstanding. As a result, as of such date, the Minimum Condition would be satisfied if at least 42,115,167 shares of Common Stock are validly tendered and not properly withdrawn prior to the Expiration Date (as defined herein). The Company has advised Parent that each of its directors and executive officers intends to tender pursuant to the Offer all Shares owned of record and beneficially by him or her, except to the extent that such tender would violate applicable securities laws. "HSR Condition" means the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (and any extension thereof) . "EC Condition" shall mean, if required by applicable law, the receipt prior to the Expiration Date of a decision of the Commission of the European Community that the purchase of the Common Stock pursuant to the Offer and the Merger are compatible with the Common Market. "Regulatory Condition" shall mean the HSR Condition and the EC Condition, collectively. See Section 14--"Conditions of the Offer" for a complete description of the conditions of the Offer. This Offer to Purchase and the Letter of Transmittal contain important information which should be read carefully before any decision is made with respect to the Offer. THE TENDER OFFER 1. Terms of the Offer. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any extension or amendment), Purchaser will accept for payment and pay for all Shares validly tendered prior to the Expiration Date and not withdrawn in accordance with Section 4--"Withdrawal Rights". The term "Expiration Date" means 12:00 Midnight, New York City time, on Friday, July 30, 1999, unless and until Purchaser, in its sole discretion (but subject to the terms of the Merger Agreement), shall have extended the period of time during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by Purchaser, shall expire. 2 The Offer is conditioned upon, among other things, satisfaction of (i) the Minimum Condition, (ii) the HSR Condition, and (iii) the EC Condition. The Offer is also subject to certain other conditions set forth in Section 14-- "Conditions of the Offer". If these or any of the other conditions referred to in Section 14--"Conditions of the Offer" are not satisfied or any of the events specified in Section 14--"Conditions of the Offer" have occurred or are determined by Purchaser to have occurred prior to the Expiration Date, Purchaser, subject to the terms of the Merger Agreement, expressly reserves the right (but is not obligated) to (i) decline to purchase any of the Shares tendered in the Offer and terminate the Offer, and return all tendered Shares to the tendering Holders, (ii) waive or amend any or all conditions to the Offer and, to the extent permitted by applicable law and applicable rules and regulations of the Securities and Exchange Commission (the "Commission") purchase all Shares validly tendered or (iii) subject to the limitations described below, extend the Offer and, subject to the right of a tendering Holder to withdraw its Shares until the Expiration Date, retain the Shares which have been tendered during the period or periods for which the Offer is extended, provided, however, that, subject to the terms of the Merger Agreement, without the prior written consent of the Company, Purchaser will not (i) waive the Minimum Condition, (ii) decrease the price per Share payable in the Offer, (iii) reduce the maximum number of Shares to be purchased in the Offer, (iv) amend or add to the conditions to the Offer set forth in Section 14--"Conditions of the Offer", (v) extend the Offer, (vi) change the form of consideration payable in the Offer, or (vii) amend, add to or waive any other term of the Offer in any manner which would be adverse to the Company or the Holders. Notwithstanding the foregoing, Purchaser may, without the consent of the Company, extend the Offer (i) if, on the scheduled expiration date of the Offer, any of the conditions to Purchaser's obligation to accept for payment and pay for the Shares shall not have been satisfied or waived, until the fifth Business Day after the date Purchaser reasonably believes to be the earliest date on which such conditions will be satisfied, (ii) for any period required by any rule, regulation, interpretation or position of the SEC or its staff applicable to the Offer, or (iii) from time to time for an aggregate period of not more than 10 business days (for all such extensions) beyond the latest expiration date that would be permitted under clause (i) or (ii) of this sentence. Parent and Purchaser have agreed that if immediately prior to any scheduled expiration date of the Offer, the Regulatory Condition has not been satisfied or a temporary restraining order prohibiting the purchase of the Shares shall have been issued by a court of competent jurisdiction in any country in which the Company or its Subsidiaries have operations material to the Company and its Subsidiaries, taken as whole, Purchaser shall extend the Offer from time to time until five business days after the Regulatory Condition has been satisfied or the lifting of such temporary restraining order subject to the right of Parent, Purchaser or the Company to terminate the Merger Agreement pursuant to the terms thereof. Subject to the terms of the Merger Agreement and the applicable rules and regulations of the Commission and to applicable law, Purchaser expressly reserves the right, in its sole discretion, at any time and from time to time, to extend for any reason the period of time during which the Offer is open, including upon the occurrence of any of the events specified in Section 14-- "Conditions of the Offer", by giving notice of such extension to the Depositary and by making a public announcement thereof. There can be no assurance that Purchaser will exercise its right to extend the Offer. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the rights of a tendering Holder to withdraw its Shares. See Section 4--"Withdrawal Rights". Subject to the applicable rules and regulations of the Commission and to applicable law, Purchaser also expressly reserves the right, in its sole discretion (subject to the terms of the Merger Agreement), at any time and from time to time (i) to delay acceptance for payment of, or, regardless of whether such Shares were theretofore accepted for payment, payment for any Shares (a) if the HSR Condition has not been satisfied, (b) the EC Condition has not been satisfied or (c) in order to comply in whole or in part with any other applicable law, (ii) to terminate the Offer and not accept for payment any Shares if any of the conditions referred to in Section 14--"Conditions of the Offer" are not satisfied or any of the events specified in Section 14-- "Conditions of the Offer" have occurred and (iii) subject to the terms of the Merger Agreement, to waive any condition or otherwise amend the Offer in any respect by giving oral or written notice of such delay, termination, waiver or amendment to the Depositary and by making a public announcement thereof, provided however, that, 3 subject to the terms of the Merger Agreement, without the prior written consent of the Company, Purchaser will not (i) waive the Minimum Condition, (ii) decrease the price per Share payable in the Offer, (iii) reduce the maximum number of Shares to be purchased in the Offer, (iv) amend or add to the conditions to the Offer set forth in Section 14--"Conditions of the Offer", (v) extend the Offer, (vi) change the form of consideration payable in the Offer, or (vii) amend, add to or waive any other term of the Offer in any manner which would be adverse to the Company or the Holders. Purchaser acknowledges that (i) Rule 14e-1(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires Purchaser to pay the consideration offered or return the Shares tendered promptly after the termination or withdrawal of the Offer and (ii) Purchaser may not delay acceptance for payment of, or payment for (except as provided in clause (i) of the preceding paragraph), any Shares upon the occurrence of any of the conditions specified in Section 14--"Conditions of the Offer" without extending the period of time during which the Offer is open. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the right of a tendering Holder to withdraw its Shares. Any such extension, delay, termination, waiver or amendment will be followed, as promptly as practicable, by public announcement thereof, with such announcement in the case of an extension to be made no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled expiration date. Subject to applicable law (including Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act, which require that material changes be promptly disseminated to Holders in a manner reasonably designed to inform them of such changes) and without limiting the manner in which Purchaser may choose to make any public announcement, Purchaser will have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a press release to the Dow Jones News Service or as otherwise may be required by applicable law. If Purchaser makes a material change in the terms of the Offer or the information concerning the Offer, or if it waives a material condition of the Offer, Purchaser will extend the Offer to the extent required by Rules 14d- 4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during which an 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. With respect to a change in price or a change in the percentage of securities sought, a minimum period of ten business days is generally required to allow for adequate dissemination to Holders and investor response. The Company has provided Purchaser with the Company's shareholder lists and security position listings in respect of the Shares for the purpose of disseminating the Offer to Purchase, the Letter of Transmittal and other relevant materials to Holders. This Offer to Purchase, the Letter of Transmittal and other relevant materials will be mailed to record holders of Shares whose names appear on the Company's list of Holders and will be furnished, for subsequent transmittal to beneficial owners of Shares, to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the Company's list of Holders or, where applicable, who are listed as participants in the security position listing of The Depository Trust Company ("DTC"). 2. Acceptance for Payment and Payment for Shares. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), Purchaser will purchase, by accepting for payment, and will pay for, all Shares validly tendered prior to the Expiration Date (and not properly withdrawn in accordance with Section 4--"Withdrawal Rights") as promptly as practicable after the later to occur of (i) the Expiration Date or (ii) the satisfaction or waiver of the conditions set forth in Section 14--"Conditions of the Offer." Subject to applicable rules of the Commission and the terms of the Merger Agreement, Purchaser expressly reserves the right, in its discretion, to delay acceptance for payment of, or payment for, Shares in order to comply, in whole or in part, with any applicable 4 law, including, but not limited to, the receipt of the regulatory approvals specified in Section 15--"Certain Legal Matters; Regulatory Approvals." If, following acceptance for payment of Shares, Purchaser asserts such regulatory approvals as a condition and does not promptly pay for Shares tendered, Purchaser will promptly return such Shares. Notwithstanding the fact that Purchaser reserves the right to assert the non-occurrence of a condition set forth in Section 14--"Conditions of the Offer" following acceptance for payment of Shares but prior to payment for Shares, in order to delay payment or cancel its obligation to pay for properly tendered Shares, Purchaser understands that all conditions to the Offer other than receipt of necessary regulatory approvals, must be satisfied or waived prior to the Expiration Date. In all cases, payment for Shares purchased pursuant to the Offer will be made only after timely receipt by the Depositary of (i) the certificates evidencing such Shares (the "Certificates") or timely confirmation of a book- entry transfer (a "Book-Entry Confirmation") of such Shares into the Depositary's account at DTC (the "Book-Entry Transfer Facility"), pursuant to the procedures set forth in Section 3--"Procedures for Tendering Shares", (ii) the Letter of Transmittal (or a copy thereof), properly completed and duly executed with any required signature guarantees, or an Agent's Message (as defined below) in connection with a book-entry transfer and (iii) any other documents required to be included with the Letter of Transmittal under the terms and subject to the conditions thereof and to this Offer to Purchase. The term "Agent's Message" means a message, transmitted by the Book-Entry Transfer Facility to, and received by, the Depositary forming a part of a Book-Entry Confirmation system, which states that the Book-Entry Transfer Facility has received an express acknowledgment from a participant in the Book-Entry Transfer Facility tendering the Shares that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that Purchaser may enforce such agreement against such participant. For purposes of the Offer, Purchaser will be deemed to have accepted for payment (and thereby purchased) Shares validly tendered and not properly withdrawn if, as and when Purchaser gives oral or written notice to the Depositary of Purchaser's acceptance for payment of such Shares. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering Holders for the purpose of receiving payments from Purchaser and transmitting payments to such tendering Holders whose Shares have been accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID BY PURCHASER, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT OR EXTENSION OF THE EXPIRATION DATE. Upon the deposit of funds with the Depositary for the purpose of making payments to tendering Holders, Purchaser's obligation to make such payment shall be satisfied, and tendering Holders must thereafter look solely to the Depositary for payment of amounts owed to them by reason of the acceptance for payment of Shares pursuant to the Offer. If any tendered Shares are not accepted for payment for any reason pursuant to the terms and conditions of the Offer, or if Certificates are submitted evidencing more Shares than are tendered, certificates evidencing Shares not purchased will be returned, without expense to the tendering Holder (or, in the case of Shares tendered by book-entry transfer into the Depositary's account at the Book-Entry Transfer Facility pursuant to the procedure set forth in Section 3--"Procedures for Tendering Shares", such Shares will be credited to an account maintained at the Book-Entry Transfer Facility), as promptly as practicable following the expiration or termination of the Offer. If, prior to the Expiration Date, Purchaser increases the consideration to be paid per Share pursuant to the Offer, Purchaser will pay such increased consideration for all such Shares purchased pursuant to the Offer, whether or not such Shares were tendered prior to such increase in consideration. Purchaser reserves the right to assign to Parent, or to any other direct or indirect wholly owned subsidiary of Parent, the right to purchase all or any portion of the Shares tendered pursuant to the Offer, but any such 5 assignment will not relieve Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering Holders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 3. Procedures for Tendering Shares. Valid Tender of Shares. In order for Shares to be validly tendered pursuant to the Offer, a Holder must, prior to the Expiration Date, either (i) deliver to the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase (a) a properly completed and duly executed Letter of Transmittal (or a copy thereof) with any required signature guarantees, (b) the certificates representing Shares to be tendered and (c) any other documents required to be included with the Letter of Transmittal under the terms and subject to the conditions thereof and of this Offer to Purchase, (ii) cause such Holder's broker, dealer, commercial bank or trust company to tender applicable Shares pursuant to the procedures for book-entry transfer described below or (iii) comply with the guaranteed delivery procedures described below. The method of delivery of Certificates, the Letter of Transmittal and all other required documents, including delivery through the Book-Entry Transfer Facility, is at the option and risk of the tendering Holder, and the delivery will be deemed made only when actually received by the Depositary. If delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to ensure timely delivery. Book-Entry Transfer. The Depositary will establish an account with respect to the Common Stock at the Book-Entry Transfer Facility for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the Book-Entry Transfer Facility's system may make book-entry delivery of Shares by (i) causing such securities to be transferred in accordance with the Book-Entry Transfer Facility's procedures into the Depositary's account and (ii) causing the Letter of Transmittal to be delivered to the Depositary by means of an Agent's Message. Although delivery of Shares may be effected through book-entry transfer, either the Letter of Transmittal (or a manually signed facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in lieu of the Letter of Transmittal, and any other required documents, must, in any case, be transmitted to and received by the Depositary prior to the Expiration Date at one of its addresses set forth on the back cover of this Offer to Purchase, or the tendering Holder must comply with the guaranteed delivery procedures described below. Delivery of documents or instructions to the Book-Entry Transfer Facility in accordance with the Book-Entry Transfer Facility's procedures does not constitute delivery to the Depositary. Signature Guarantee. All signatures on a Letter of Transmittal must be guaranteed by a financial institution (including most banks, savings and loan associations and brokerage houses) that is a participant in the Security Transfer Agents Medallion Program, the New York Stock Exchange Medallion Signature Guarantee Program or the Stock Exchange Medallion Program (an "Eligible Institution"), unless the Shares tendered thereby are tendered (i) by the registered holder of Shares who has not completed the box entitled "Special Payment Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. See Instruction 1 to the Letter of Transmittal. If a Certificate is registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made, or a Certificate not accepted for payment or not tendered is to be returned to a person other than the registered holder(s), then the Certificate must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear(s) on the Certificate, with the signature(s) on such certificate or stock powers guaranteed as described above. See Instructions 1, 5 and 7 to the Letter of Transmittal. Guaranteed Delivery. If a Holder desires to tender Shares pursuant to the Offer and such Holder's Certificates are not immediately available or time will not permit all required documents to reach the Depositary prior to the Expiration Date or the procedure for book-entry transfer cannot be completed on a timely basis, such Shares may nevertheless be tendered if all the following conditions are satisfied: (i) such tender is made by or through an Eligible Institution; 6 (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by Purchaser, is received by the Depositary as provided below prior to the Expiration Date; and (iii) the certificates for all tendered Shares in proper form for transfer, together with a properly completed and duly executed Letter of Transmittal (or a copy thereof) with any required signature guarantee (or, in the case of a book-entry transfer, a Book-Entry Confirmation along with an Agent's Message) and any other documents required by such Letter of Transmittal, are received by the Depositary within three Trading Days after the date of execution of the Notice of Guaranteed Delivery. A "Trading Day" is any day on which the New York Stock Exchange is open for business. Any Notice of Guaranteed Delivery may be delivered by hand to the Depositary or transmitted by facsimile transmission, or by mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in the Notice of Guaranteed Delivery. In the case of Shares held through the Book-Entry Transfer Facility, the Notice of Guaranteed Delivery must be delivered to the Depositary by a participant by means of the confirmation system of the Book-Entry Transfer Facility. Other Requirements. Notwithstanding any other provision hereof, payment for Shares accepted for payment pursuant to the Offer will, in all cases, be made only after timely receipt by the Depositary of (i) certificates evidencing such Shares or a Book-Entry Confirmation of the delivery of such Shares (unless Purchaser elects, in its sole discretion, to make payment for such Shares pending receipt of the certificates or a Book-Entry Confirmation, if available, with respect to such certificates), (ii) a properly completed and duly executed Letter of Transmittal or a copy thereof with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message) and (iii) any other documents required by the Letter of Transmittal. Accordingly, tendering Holders may be paid at different times depending upon when certificates for Shares or Book-Entry Confirmations with respect to Shares are actually received by the Depositary. Under no circumstances will interest be paid on the purchase price of the Shares to be paid by Purchaser, regardless of any extension of the Offer or any delay in making such payment. Tender Constitutes an Agreement. The valid tender of Shares pursuant to one of the procedures described above will constitute a binding agreement between the tendering Holder and Purchaser on the terms and subject to the conditions of the Offer. Determination of Validity. All questions as to the validity, form, eligibility (including, but not limited to, time of receipt) and acceptance for payment of any tendered Shares pursuant to any of the procedures described above will be determined by Purchaser, in its sole discretion, whose determination will be final and binding on all parties. Purchaser reserves the absolute right to reject any or all tenders of any Shares determined by it not to be in proper form or if the acceptance for payment of, or payment for, such Shares may, in the opinion of Purchaser's counsel, be unlawful. Purchaser also reserves the absolute right, in its sole discretion, to waive any of the conditions of the Offer (subject to the terms of the Merger Agreement) or any defect or irregularity in any tender with respect to Shares of any particular Holder, whether or not similar defects or irregularities are waived in the case of other Holders. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived. Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding. Appointment as Proxy. By executing a Letter of Transmittal (or delivering an Agent's Message) as set forth above, a tendering Holder irrevocably appoints each designee of Purchaser as such Holder's attorney-in-fact and proxy, with full power of substitution, to vote in such manner as such attorney-in-fact and proxy (or any substitute thereof) shall deem proper in its sole discretion, and to otherwise act (including pursuant to written consent) to the full extent of such Holder's rights with respect to the Shares tendered by such Holder and accepted for payment by Purchaser (and any and all dividends, distributions, rights or other securities issued or issuable in respect of such Shares on or after June 27, 1999). All such proxies shall be considered coupled with 7 an interest in the tendered Shares and shall be irrevocable. This appointment will be effective if, when, and only to the extent that, Purchaser accepts such Shares for payment pursuant to the Offer. Upon such acceptance for payment, all prior proxies given by such Holder with respect to such Shares and other securities will, without further action, be revoked, and no subsequent proxies may be given (and, if given, will not be deemed effective). The designees of Purchaser will, with respect to the Shares and other securities for which the appointment is effective, be empowered to exercise all voting and other rights of such Holder as they in their sole discretion may deem proper at any annual, special, adjourned or postponed meeting of the Company's stockholders, by written consent in lieu of any such meeting or otherwise. Purchaser reserves the right to require that, in order for Shares to be deemed validly tendered, immediately upon Purchaser's acceptance for payment of such Shares, Purchaser must be able to exercise all rights (including, without limitation, all voting rights) with respect to such Shares and receive all dividends and distributions. Backup Withholding. Under United States federal income tax law, the amount of any payments made by the Depositary to Holders (other than corporate and certain other exempt Holders) pursuant to the Offer may be subject to backup withholding tax at a rate of 31%. To avoid such backup withholding tax with respect to payments made pursuant to the Offer, a non-exempt, tendering U.S. Holder (as defined in Section 5--"Certain United States Federal Income Tax Consequences") must provide the Depositary with such Holder's correct taxpayer identification number and certify under penalties of perjury that such Holder is not subject to backup withholding tax by completing the Substitute Form W-9 included as part of the Letter of Transmittal. If backup withholding applies with respect to a Holder or if a Holder fails to deliver a completed Substitute Form W-9 to the Depositary or otherwise establish an exemption, the Depositary is required to withhold 31% of any payments made to such Holder. See Section 5--"Certain United States Federal Income Tax Consequences" of this Offer to Purchase and the information set forth under the heading "Important Tax Information" contained in the Letter of Transmittal. 4. Withdrawal Rights. Tenders of Shares made pursuant to the Offer are irrevocable except that such Shares may be withdrawn at any time prior to the Expiration Date and, unless theretofore accepted for payment by Purchaser pursuant to the Offer, may also be withdrawn at any time after August 30, 1999, or at such later time as may apply if the Offer is extended. If Purchaser extends the Offer, is delayed in its acceptance for payment of Shares or is unable to accept Shares for payment pursuant to the Offer for any reason, then, without prejudice to Purchaser's rights under the Offer, the Depositary may, nevertheless, on behalf of Purchaser, retain tendered Shares, and such Shares may not be withdrawn except to the extent that tendering Holders are entitled to withdrawal rights as described in this Section 4-- "Withdrawal Rights". Any such delay will be an extension of the Offer to the extent required by law. 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 this Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn, and the name of the registered holder of such Shares, if different from that of the person who tendered such Shares. If 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 the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution, unless such Shares have been tendered for the account of an Eligible Institution. Shares tendered pursuant to the procedure for book-entry transfer as set forth in Section 3--"Procedures for Tendering Shares", may be withdrawn only by means of the withdrawal procedures made available by the Book-Entry Transfer Facility, must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares and must otherwise comply with the Book-Entry Transfer Facility's procedures. Withdrawals of tendered Shares may not be rescinded without Purchaser's consent and any Shares properly withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. All questions as to the form 8 and validity (including time of receipt) of notices of withdrawal will be determined by Purchaser, in its sole discretion, which determination will be final and binding. None of Parent, Purchaser, the Depositary, the Information Agent, the Dealer Manager or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. Any Shares properly withdrawn may be re-tendered at any time prior to the Expiration Date by following any of the procedures described in Section 3-- "Procedures for Tendering Shares". 5. Certain United States Federal Income Tax Consequences. The receipt of cash for Shares pursuant to the Offer or the Merger by a U.S. Holder (defined below) will be a taxable transaction for United States federal income tax purposes and may also be a taxable transaction under applicable state, local or foreign tax laws. For purposes of this discussion, a "U.S. Holder" is a beneficial owner of Shares who for United States federal income tax purposes is (i) a citizen or resident of the United States; (ii) a corporation or partnership organized in or under the laws of the United States or any State thereof (including the District of Columbia); (iii) an estate the income of which is subject to United States federal income taxation regardless of its source; or (iv) a trust if such trust has validly elected to be treated as a United States person for United States federal income tax purposes or a trust (a) the administration over which a United States court can exercise primary supervision and (b) all of the substantial decisions of which one or more United States persons have the authority to control. In general, a U.S. Holder will recognize gain or loss for United States federal income tax purposes equal to the difference, if any, between the amount realized from the sale of Shares and such U.S. Holder's adjusted tax basis in such Shares. Assuming that the Shares constitute a capital asset in the hands of the U.S. Holder, such gain or loss will be capital gain or loss. In the case of a noncorporate U.S. Holder, the maximum marginal United States federal income tax rate applicable to such gain will be lower than the maximum marginal United States federal income tax rate applicable to ordinary income if such U.S. Holder's holding period for such Shares exceeds one year. The foregoing discussion may not be applicable to certain types of Holders, including Holders who acquired Shares pursuant to the exercise of stock options or otherwise as compensation, Holders that are not U.S. Holders and Holders that are otherwise subject to special tax rules, such as financial institutions, insurance companies, dealers or traders in securities or currencies, tax-exempt entities, persons that hold Shares as a position in a "straddle" or as part of a "hedging" or "conversion" transaction for tax purposes and persons that have a "functional currency" other than the United States dollar. Backup Withholding Tax. As noted in Section 3--"Procedures for Tendering Shares", a Holder (other than an "exempt recipient", including a corporation, a non-U.S. Holder that provides appropriate certification and certain other persons (if the payor does not have actual knowledge that such certificate is false)) that receives cash in exchange for Shares may be subject to United States federal backup withholding tax at a rate equal to 31%, unless such Holder provides its taxpayer identification number and certifies that such Holder is not subject to backup withholding tax by submitting a completed Substitute Form W-9 to the Depositary. Accordingly, each U.S. Holder should complete, sign and submit the Substitute Form W-9 included as part of the Letter of Transmittal in order to avoid the imposition of such backup withholding tax. The United States federal income tax discussion set forth above is included for general information and is based upon income tax laws, regulations, rulings and decisions now in effect, all of which are subject to change (possibly retroactively). Holders are urged to consult their tax advisors with respect to the specific tax consequences of the Offer to them, including the application and effect of the alternative minimum tax and state, local and foreign tax laws. 6. Price Range; Dividends. Common Stock. The primary market for the Common Stock is the New York Stock Exchange. In addition, the Common Stock is listed and traded on the Chicago Stock Exchange. The ticker symbol for the 9 Common Stock is "NLC". The following table sets forth, for the periods indicated, the high and low sales prices per share of Common Stock on the New York Stock Exchange as reported by the Dow Jones News Service:
High Low --------- --------- 1997: Quarter ended 9/30/97................................. $41 5/8 $38 15/16 Quarter ended 12/31/97................................ 42 7/16 37 13/16 1998: Quarter ended 3/31/98................................. 40 5/8 37 1/2 Quarter ended 6/30/98................................. 40 7/8 34 7/16 Quarter ended 9/30/98................................. 36 1/8 28 1/16 Quarter ended 12/31/98................................ 34 5/16 28 3/8 1999: Quarter ended 3/31/99................................. 30 15/16 26 Quarter ended 6/30/99................................. 26 3/4 51 7/8
On June 23, 1999, the day before the Company announced that it was in talks about a possible business combination transaction, the reported closing sales price of the Common Stock on the New York Stock Exchange was $37 1/4 per share of Common Stock. On June 25, 1999, the last full trading day prior to the public announcement of the Offer, the reported closing sales price of the Common Stock on the New York Stock Exchange was $42 1/2 per share of Common Stock. On June 30, 1999, the last full trading day prior to the date of this Offer to Purchase, the last reported sales price of the Common Stock on the New York Stock Exchange was $51 7/8 per share. Holders of Common Stock are urged to obtain current market quotations for the Common Stock. The following table sets forth the aggregate per share of Common Stock amount of dividends paid on the Common Stock during the periods indicated:
Dividend Amount --------------- 1996: Quarter ended 9/30/96..................................... $0.25 Quarter ended 12/31/96.................................... $0.25 1997: Quarter ended 3/31/97..................................... $0.25 Quarter ended 6/30/97..................................... $0.25 Quarter ended 9/30/97..................................... $0.25 Quarter ended 12/31/97.................................... $0.25 1998: Quarter ended 3/31/98..................................... $0.25 Quarter ended 6/30/98..................................... $0.25 Quarter ended 9/30/98..................................... $0.25 Quarter ended 12/31/98.................................... $0.25 1999: Quarter ended 3/31/99..................................... $0.25 Quarter ended 6/30/99..................................... $0.25
The Merger Agreement prohibits the Company from declaring or paying any dividends until the effective date of the Merger, except for the regular quarterly dividend previously declared. 10 ESOP Preferred Stock. The ESOP Preferred Stock is not listed on any exchange or traded on the Nasdaq National Market. No price quotations are available for the ESOP Preferred Stock. 7. Certain Information Concerning the Company. The Company. The information concerning the Company contained in this Offer to Purchase, including financial information, has been taken from or is based upon publicly available documents and records on file with the Commission and other public sources. Neither Parent nor Purchaser assumes any responsibility for the accuracy or completeness of the information concerning the Company contained in such documents and records or for any failure by the Company to disclose events which may have occurred or may affect the significance or accuracy of any such information but which are unknown to Parent or Purchaser. The Company manufactures and markets specialty water treatment and process chemicals and services worldwide. The Company serves customers in steelmaking, pulp and papermaking, mining and mineral processing, automotive, metalmaking, oil refining and petroleum, power generation, food and beverage, light industrial, hospitals, and office buildings in more than 120 countries. The Company is a Delaware corporation. The address of the Company's principal executive offices is One Nalco Center, Naperville, Illinois 60563. The telephone number of the Company at such offices is (630) 305-1000. Financial Information. Set forth below is certain selected consolidated financial information relating to the Company and its subsidiaries which has been excerpted or derived from the financial statements contained in the Company's Annual Reports on Form 10-K for the fiscal years ended December 31, 1998, 1997 and 1996 and the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1999. More comprehensive financial information is included in these reports and other documents filed by the Company with the Commission. The financial information that follows is qualified in its entirety by reference to these reports and other documents, including the financial statements and related notes contained therein. These reports and other documents may be inspected at, and copies may be obtained from, the same places and in the manner set forth below under "--Available Information". 11 Nalco Chemical Company SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA ($ in millions except per share data)
Three Months Year Ended December 31, Ended March 31, ---------------------------- ----------------- 1996 1997 1998 1998 1999 -------- -------- -------- -------- ------- (unaudited) Statement of Operations: Revenues...................... $1,303.5 $1,433.7 $1,573.5 $ 367.1 $ 410.2 Operating costs and expenses: Cost of products sold....... 568.6 629.6 714.1 164.9 184.8 Selling, administrative and research................... 518.2 561.4 618.0 145.9 152.2 Cost reduction program...... -- 180.0 -- -- -------- -------- -------- -------- ------- Total operating costs and expenses................. 1,086.8 1,191.0 1,512.1 310.8 337.0 Operating income (loss)....... 216.7 242.7 61.4 56.3 73.2 Interest and investment income..................... 2.6 0.7 2.4 1.0 1.2 Interest expense............ (14.4) (15.3) (26.5) (4.9) (8.2) Equity in earnings of partnership................ 24.5 28.2 22.6 7.3 4.6 Earnings from Continuing Operations Before Income Taxes........................ 229.4 256.3 59.9 59.7 70.8 Income tax (expense)/benefit.. 83.5 92.9 22.0 21.7 25.5 -------- -------- -------- -------- ------- Earnings from Continuing Operations................... 145.9 163.4 37.9 -- -- Earnings from Discontinued Operations................... 8.6 -- -- -- -- Cumulative Effect of Change in Accounting for Business Process Reengineering Costs.. -- (4.5) -- -- -- -------- -------- -------- -------- ------- Net of Taxes................ Net Earnings................ $ 154.5 $ 158.9 $ 37.9 $ 38.0 $ 45.3 ======== ======== ======== ======== ======= Per Share of Common Stock Earnings from Continuing Operations--Diluted......... $1.86 $2.10 $0.40 $0.49 $0.60 Discontinued Operations....... .11 -- -- -- -- Accounting Change............. -- (.06) -- -- -- -------- -------- -------- -------- ------- Net Earnings.................. 1.97 2.04 .40 0.53 0.65 ======== ======== ======== ======== ======= Cash Dividends Paid........... 1.00 1.00 1.00 0.25 0.25 Consolidated Balance Sheet Data: Working Capital............. $ 95.5 $ 153.4 $ 126.3 $ 163.1 $ 226.4 Property, plant and equipment, net............. 522.0 492.5 517.3 498.9 496.7 Total assets................ 1,394.5 1,440.9 1,650.7 1,505.3 1661.6 Long-term Debt.............. 252.6 335.3 496.2 364.8 569.3 Deferred Income Taxes....... 42.9 37.2 15.6 34.7 29.0 Total Shareholders' Equity.. 654.5 652.7 585.9 677.1 605.9
12 Certain Projected Financial Data of the Company. Prior to entering into the Merger Agreement, Parent conducted a due diligence review of the Company and in connection with such review received certain non-public information provided by the Company, including certain projected financial data (the "Projections") for the year ending December 31, 1999. The Company does not in the ordinary course publicly disclose projections and the Projections were not prepared with a view to public disclosure. The Company has advised Parent and Purchaser that the Projections were prepared by the Company's management based on numerous assumptions including, among others, assumptions regarding various matters that could affect the amount and timing of the Company's future revenues, operating income, benefits and other expenses, depreciation and amortization and capital expenditure. The Projections do not give effect to the Offer, expenditure requirements or the potential combined operations of Parent and the Company. The Projections are set forth below in this Offer to Purchase for the limited purpose of giving Holders access to financial projections prepared by the Company's management that were made available to Parent and Purchaser in connection with the Merger Agreement and the Offer. Nalco Chemical Company Selected 1999 Projected Financial Data (In Millions of Dollars Except Per Share Data)
Second Third Fourth Total Qtr Qtr Qtr Year ------ ----- ------ ------- Net Sales.......................................... 408.8 423.0 418.7 1,645.7 Cost of Products Sold.............................. 184.3 192.7 190.7 747.7 ----- ----- ----- ------- Gross Earnings..................................... 224.5 230.3 228.0 898.0 ----- ----- ----- ------- Total Operating Expenses........................... 133.4 135.9 137.5 535.6 ----- ----- ----- ------- Operating Earnings................................. 68.5 69.5 64.6 267.4 ----- ----- ----- ------- Earnings Before Taxes.............................. 64.6 65.6 61.8 253.1 Income Taxes...................................... 23.1 23.5 22.1 90.6 ----- ----- ----- ------- Net Earnings....................................... 41.5 42.1 39.7 162.5 ===== ===== ===== ======= Earnings Per Share................................. $0.55 $0.56 $0.52 $ 2.15
Cautionary Statements Concerning Forward-Looking Statements Certain matters discussed herein, including, but not limited to the Projections, are forward-looking statements that involve risks and uncertainties. Forward-looking statements include the information set forth above in "Certain Projected Financial Data of the Company". While presented with numerical specificity, the Projections are necessarily based upon a variety of estimates and hypothetical assumptions which may not be accurate, may not be realized, and are also inherently subject to significant business, economic and competitive uncertainties and contingencies, all of which are difficult to predict, and many of which are beyond the control of the Company. Accordingly, there can be no assurance that the Projections will be realized and the actual results for the fiscal year ending December 31, 1999 may vary materially from those shown above. None of Parent, Purchaser or the Company is under any obligation or has any intention to update the Projections at any future time. In addition, the Projections were not prepared in accordance with generally accepted accounting principles, and neither the Company's nor Parent's independent accountants have examined or compiled the Projections or expressed any conclusion or provided any other form of assurance with respect to the Projections and accordingly assume no responsibility for the Projections. The Projections were not prepared with a view to public disclosure or compliance with the published guidelines of the Commission or the guidelines established by the American Institute of Certified Public Accountants regarding projections, which would require a more complete 13 presentation of data than as shown above. The inclusion of the Projections herein should not be regarded as a representation by Parent, Purchaser, the Company or any other person that the projected results will be achieved. The Projections should be read in conjunction with the historical financial information of the Company included above. Neither Parent nor Purchaser assumes any responsibility for the accuracy, reasonableness, reliability or validity of the foregoing Projections nor has the Company made any representations to Parent or Purchaser regarding such Projections. Available Information. The Company is subject to the information and reporting requirements of the Exchange Act and is required to file reports and other information with the Commission relating to its business, financial condition and other matters. Information, as of particular dates, concerning the Company's directors and officers, their remuneration, stock options granted to them, the principal holders of the Company's securities, any material interests of such persons in transactions with the Company and other matters is required to be disclosed in reports filed with the Commission. These reports and other information should be available for inspection at the public reference facilities of the Commission located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and also should be available for inspection and copying at prescribed rates at regional offices of the Commission located at Seven World Trade Center, New York, New York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this material may also be obtained by mail, upon payment of the Commission's customary fees, from the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. Electronic filings filed through the Commission's Electronic Data Gathering, Analysis and Retrieval system ("EDGAR"), including those made by or in respect of the Company, are publicly available through the Commission's home page on the Internet at http://www.sec.gov. 8. Certain Information Concerning Purchaser and Parent. Purchaser. Purchaser, a newly incorporated Delaware corporation, has not conducted any business other than in connection with the Offer and the Merger Agreement. All of the issued and outstanding shares of capital stock of Purchaser are beneficially owned by Parent. The principal address of Purchaser is c/o Suez Lyonnaise des Eaux, 1, rue d'Astorg, 75008 Paris, France. The telephone number is 011-33-1-40-06-64-00. Parent. Parent, a societe anonyme organized and existing under the laws of the Republic of France, operates private infrastructure services in more than 120 countries, providing electricity and natural gas, waste treatment, communications services, and water services and maintains interests in construction, retail finance, real estate holdings, capital investments, metals extraction, foam products, electronics, and steel. Suez Lyonnaise des Eaux was formed from the 1997 merger of Compagnie de Suez (builder of the Suez Canal) and Lyonnaise des Eaux. The principal executive offices of Parent are located at 1, rue d'Astorg, 75008 Paris, France. The telephone number is 011- 33-1-40-06-64-00. During the last five years, none of Parent, Purchaser or, to the best of their knowledge, any of the persons listed in Schedule I hereto (i) has been convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. Except as described in this Offer to Purchase (i) none of Parent, Purchaser or, to the best of their knowledge, any of the persons listed in Schedule I to this Offer to Purchase, or any associate or majority-owned subsidiary of Parent or Purchaser, beneficially owns or has any right to acquire, directly or indirectly, any equity securities of the Company and (ii) none of Parent, Purchaser, or to the best of their knowledge, any of the persons or entities referred to above or any director, executive officer or subsidiary of any of the foregoing has effected any transaction in such equity securities during the past 60 days. Purchaser and Parent disclaim beneficial ownership of any Common Stock owned by any pension plans of Parent or Purchaser or any affiliate of Parent or Purchaser. Except as described in this Offer to Purchase, none of Parent, Purchaser or, to the best of their knowledge, any of the persons listed in Schedule I to this Offer to Purchase has any contract, arrangement, understanding or 14 relationship with any other person with respect to any securities of the Company, including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or voting of such securities, joint ventures, loan or option arrangements, puts or calls, guaranties of loans, guaranties against loss or the giving or withholding of proxies. Except as set forth in this Offer to Purchase, since January 1, 1996, none of Parent, Purchaser or to the best of their knowledge, any of the persons listed on Schedule I hereto has had any business relationship or transaction with the Company or any of its executive officers, directors or affiliates that is required to be reported under the rules and regulations of the Commission applicable to the Offer. Except as set forth in this Offer to Purchase, since January 1, 1996, there have been no contacts, negotiations or transactions between any of Parent, Purchaser or any of their subsidiaries or, to the best knowledge of Parent or Purchaser, any of the persons listed in Schedule I to this Offer to Purchase, on the one hand, and the Company or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, tender offer or other acquisition of securities, an election of directors or a sale or other transfer of a material amount of assets. Available Information. Parent is not subject to the informational reporting requirements of the Exchange Act and is not required to file reports and other information with the Commission relating to its businesses, financial condition or other matters. 9. Source and Amount of Funds. The Offer is not conditioned upon any financing arrangements. The amount of funds required by Purchaser to purchase all of the outstanding Common Stock pursuant to the Offer and to pay related fees and expenses is expected to be approximately $4.1 billion. Purchaser will obtain such funds from Parent. Parent anticipates that it will obtain such funds from existing cash, marketable securities and available credit lines. The margin regulations promulgated by the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") place restrictions on the amount of credit that may be extended for the purposes of purchasing margin stock, including if such credit is secured directly or indirectly by margin stock. Purchaser believes that the financing of the acquisition of the Shares will be in full compliance with, or not subject to, the margin regulations. 10. Background of the Offer. On April 9, 1999, a representative of Goldman Sachs, the Company's financial advisor, contacted Christian Maurin, Chairman and Chief Executive Officer of Degremont, a wholly owned subsidiary of Parent, to inform Mr. Maurin that the Company was looking for strategic options which could include a role for Degremont. The following week, a meeting was held in Paris, France, attended by W. Steven Weeber, Vice Chairman and Executive Vice President of the Company, Christian Maurin, Pascal Remy, Executive Vice President of Degremont, Charles Dupont, Chief Executive Officer of Degremont and representatives of Goldman. At this meeting, Mr. Weeber confirmed that the Company was considering various strategic options, including a possible sale of the Company. The parties discussed Degremont's potential suitability as a strategic partner with the Company. Degremont entered into a confidentiality agreement with the Company, dated as of April 13, 1999, and was subsequently provided with background information relating to the Company and its operations. On April 21, 1999, representatives of Degremont and the Company met in Chicago. The Company made a general presentation, describing its plans to Patrick Buffet, Executive Vice President of Parent, Gerard Sussmann, Vice President of Parent, Messrs. Maurin and Remy. E.J. Mooney, Chairman and Chief Executive Officer of the Company, Mr. Weeber, William Buchholz, Chief Financial Officer of the Company, James Lambe, Senior Vice President for Human Resources of the Company, William Parry, General Counsel of the Company, Goldman Sachs and other representatives of the Company answered questions presented by Parent, Degremont and J.P. Morgan, financial advisor to Parent and Degremont. From April 27 through May 31, 1999, there was on-going contact between Degremont and the Company. Throughout such conversations, Degremont expressed its interest in acquiring the Company in a cash transaction, funded from the Parent's assets. Various meetings and discussions were held by and among the following members of the management teams of both Degremont and Parent, on the one hand, and the Company, on the 15 other hand: Messrs. Maurin, Remy and Dupont from Degremont, Buffet and Sussmann, from Parent, and Mooney, Weeber, Parry and Buchholz, from the Company. At a meeting held in Paris, on May 17-18, 1999, Gerard Mestrallet, Chairman and Chief Executive Officer of Parent, Philippe Brongniart and Francois Jaclot, Members of the Managing Board of Parent, met with Mr. Mooney. At these meetings, the parties exchanged views on growth drivers and the potential for synergies stemming from the proposed combination of the two companies. Representatives from the financial advisors of the Company, Goldman Sachs, and of Degremont and Parent, J.P. Morgan, participated in some of these discussions. On June 9, 1999, Messrs. Maurin and Mooney reached an understanding on exclusive negotiations at an indicated price level of $54.00 per share of Common Stock, subject to the outcome of due diligence reviews. On June 11, 1999, a data room was established at the offices of PricewaterhouseCoopers ("PWC"), the Company's accountants, in Rosemont, Illinois. Additionally, on June 11, Messrs. Maurin, Buffet and Sussmann met with Messrs. Mooney, Buchholz, Weeber and Lambe. The Company was represented in this meeting and the due diligence review by Goldman Sachs and Shearman & Sterling, its legal advisor. Representatives of White & Case, Parent's legal advisor, J.P. Morgan and Arthur Andersen, Parent's accountants, conducted due diligence reviews of the Company, based on documents provided by the Company and PWC, through June 15, 1999. This review continued through the next two weeks, with additional documents requested and provided directly or through an ancillary data room at PWC's New York office. During the weeks of June 13, and June 20, 1999, representatives of Degremont, Parent and the Company continued discussions regarding the acquisition. In particular, the parties discussed the employee and management benefits packages, the 1998 accounts and the Company's growth assumptions and business climate. On June 24, 1999, four Division Managers of the Company: George Brannon, III, John T. Burns, William Roe and Michael E. Kahler met with Parent and Degremont to discuss their employment arrangements. Representatives of Parent and Degremont also met with the Company's senior management regarding the terms of their continued employment with the Company after its acquisition by Parent. At the end of that week, the parties agreed upon an offer price of $53.00 per share of Common Stock. On June 27, 1999, Parent was informed that the Board of Directors had met and approved Parent's offer, the Merger and the Merger Agreement. Later that evening, the Merger Agreement was executed by Parent, Purchaser and the Company. Contemporaneously with the execution of the Merger Agreement, agreements setting forth terms of continued employment were executed by Messrs. Brannon, Burns, Roe, Keller, Weeber, Mooney, Buchholz, Lambe and Newlin. 11. Purpose of the Offer; Plans for the Company; Certain Agreements. Purpose of the Offer. The purpose of the Offer is to enable Parent to acquire as many outstanding Shares as possible as a first step in acquiring the entire equity interest in the Company. The purpose of the Merger is for Parent to acquire all Shares not purchased pursuant to the Offer. Upon consummation of the Merger, the Company will become a direct wholly owned subsidiary of Parent. The Offer is being made pursuant to the Merger Agreement. Under the DGCL, the approval of the Company's Board of Directors and the affirmative vote of the holders of a majority of the outstanding Common Stock is required to approve and adopt the Merger Agreement and the transactions contemplated thereby, including the Merger. In addition, the Company's Certificate of Incorporation provides that the affirmative vote of 60% of the Holders that are not a Control Person (as defined in the Certificate of Incorporation of the Company) is required to approve and adopt the Merger Agreement and the transactions contemplated thereby, including the Merger unless (a) the company into which the Company would be merged is a subsidiary of the Company, or (b) each of (x) the cash or fair market value of the property, securities or other consideration to be received per share in the business combination by holders of the Common Stock is not less than the higher of (i) the highest price per share (including brokerage commissions, soliciting dealers' fees and dealer-management compensation) paid by such Control Person in acquiring any of its holdings of the Common Stock, or (ii) the highest per share market price of Common Stock during the three-month period 16 immediately preceding the date of the proxy statement; and (y) a proxy statement responsive to the requirements of the Exchange Act, whether or not the Company is then subject to such requirements, shall be mailed to the public stockholders of the Company for the purpose of soliciting stockholder approval of such business combination, shall be true (subparagraphs (x) and (y) are collectively referred to herein as the "Fair Price Provision"). The Company's Board of Directors has duly adopted resolutions that (i) determined that the Merger is advisable and that the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, are fair to and in the best interests of the Holders; (ii) approved and adopted the Merger Agreement and the transactions contemplated thereby, and (iii) recommended the acceptance of the Offer, the approval of the Merger and the approval and adoption of the Merger Agreement by the stockholders of the Company. The only remaining required corporate action of the Company is the approval and adoption of the Merger Agreement and the transactions contemplated thereby by the affirmative vote of the Holders, in accordance with the Fair Price Provision. In the Merger Agreement, the Company has agreed to take all action necessary to convene a meeting of its stockholders as soon as practicable after the consummation of the Offer for the purpose of considering and taking action on the Merger Agreement and the transactions contemplated thereby if such action is required by the DGCL. If Purchaser purchases Shares pursuant to the Offer, the Merger Agreement provides that Purchaser will be entitled to designate representatives to serve on the Board of Directors of the Company in proportion to Purchaser's ownership of Common Stock following such purchase. Purchaser expects that such representation would permit Purchaser to exert substantial influence over the Company's conduct of its business and operations. Plans for the Company. Subject to certain matters described below, it is currently expected that, initially following the Merger, the business and operations of the Company will generally continue as they are currently being conducted. Parent currently intends to cause the Company's operations to continue to be run and managed by, amongst others, the Company's existing executive officers. Parent will continue to evaluate all aspects of the business, operations, capitalization and management of the Company during the pendency of the Offer and after the consummation of the Offer and the Merger and will take such further actions as it deems appropriate under the circumstances then existing. Parent intends to seek additional information about the Company during this period. Thereafter, Parent intends to review such information as part of a comprehensive review of the Company's business, operations, capitalization and management. As a result of the Offer, the interest of Parent in the Company's net book value and net earnings will be in proportion to the number of Shares acquired in the Offer. If the Merger is consummated, Parent's interest in such items and in the Company's equity generally will equal 100% and Parent and its subsidiaries will be entitled to all benefits resulting from such interest, including all income generated by the Company's operations and any future increase in the Company's value. Similarly, Parent will also bear the risk of losses generated by the Company's operations and any future decrease in the value of the Company after the Merger. Subsequent to the Merger, current stockholders of the Company will cease to have any equity interest in the Company, will not have the opportunity to participate in the earnings and growth of the Company after the Merger and will not have any right to vote on corporate matters. Similarly, stockholders will not face the risk of losses generated by the Company's operations or decline in the value of the Company after the Merger. Shares of Common Stock are currently traded on the New York Stock Exchange and the Chicago Stock Exchange. Following the consummation of the Merger, the Common Stock will no longer be quoted on the New York Stock Exchange or the Chicago Stock Exchange and the registration of the Common Stock under the Exchange Act will be terminated. Accordingly, after the Merger there will be no publicly traded equity securities of the Company outstanding and the Company will no longer be required to file periodic reports with the Commission. See Item 13--"Effect of the Offer on the Market for the Common Stock; Exchange Act Registration". It is expected that, if Shares are not accepted for payment by Purchaser pursuant to the Offer and 17 the Merger is not consummated, the Company's current management, under the general direction of the Board of Directors, will continue to manage the Company as an ongoing business. Except as otherwise discussed in this Offer to Purchase, Parent has no present plans or proposals that would result in any extraordinary corporate transaction, such as a merger, reorganization, liquidation involving the Company or any of its subsidiaries, or sale or transfer of a material amount of assets of the Company or any of its subsidiaries or in any other material changes to the Company's capitalization, dividend policy, corporate structure, business or composition of the Board of Directors or the management of the Company except that Parent intends to review the composition of the boards of directors (or similar governing bodies) of the Company and its subsidiaries and to cause the election to such boards of directors (or similar governing bodies) of certain of its representatives. Merger Agreement The following is a summary of the material terms of the Merger Agreement. The summary is qualified in its entirety by reference to the Merger Agreement which is incorporated herein by reference and a copy of which has been filed with the Commission as an exhibit to the Schedule 14D-1. The Merger Agreement may be inspected at, and copies may be obtained from, the same places and in the manner set forth in Section 7--"Certain Information Concerning the Company". The Offer. The Merger Agreement provides that Purchaser will commence the Offer and that the obligation of Purchaser to consummate the Offer and to accept for payment and to pay for any Common Stock and any ESOP Preferred Stock tendered pursuant to the Offer shall be subject to only those conditions set forth therein. The obligations of Purchaser to accept for payment and to pay for any Shares tendered shall be subject only to those conditions set forth in Section 14--"Conditions of the Offer". Purchaser expressly reserves the right to waive any such conditions, to increase the Offer Price and to make any other changes in the terms and conditions of the Offer; provided, however, that without the prior written consent of the Company, Parent and Purchaser shall not (i) waive the Minimum Condition, (ii) decrease the Offer Price, (iii) reduce the maximum number of Shares to be purchased in the Offer, (iv) amend or add to the conditions to the Offer set forth in Section 14-- "Conditions of the Offer", (v) extend the Offer, (vi) change the form of consideration payable in the Offer, or (vii) amend, add to or waive any other term of the Offer in any manner which would be adverse to the Company or the Holders. Notwithstanding the foregoing, Purchaser may, without the consent of the Company, extend the Offer: (i) if, on the scheduled expiration date of the Offer any of the conditions to Purchaser's obligation to accept for payment and pay for the Shares have not been satisfied or waived, until the fifth business day after the day Purchaser reasonably believes to be the earliest date on which such conditions will be satisfied; (ii) for any period required by any rule, regulation, interpretation or position of the Commission or its staff applicable to the Offer; or (iii) from time to time, for an aggregate period of not more than 10 business days (for all such extensions) beyond the latest expiration date that would be permitted under the foregoing clauses (i) and (ii). In addition, if, on the scheduled expiration date of the Offer, (i) the Regulatory Condition has not been satisfied or waived or (ii) a temporary restraining order prohibiting the purchase of the Shares shall have been issued by a court of competent jurisdiction in any country in which the Company or its Subsidiaries have operations material to the Company and its Subsidiaries, taken as a whole, Purchaser shall extend the Offer from time to time until five business days after the satisfaction or waiver of the Regulatory Condition or the lifting of such temporary restraining order, subject to the right of Parent, Purchaser or the Company to terminate the Merger Agreement pursuant to the terms thereof. The Offer Price shall be net to the seller in cash, upon the terms and subject to the conditions of the Offer. Subject to the conditions of the Offer, Purchaser shall, and Parent shall cause Purchaser to, pay, as promptly as practicable after expiration of the Offer, for all Shares which are validly tendered and not withdrawn. Pursuant to the terms of the Merger Agreement, the Company has approved of and consented to the Offer and has represented that (a) its Board of Directors, at a meeting duly called and held on June 27, 1999, has duly adopted resolutions that (i) determined that the Merger is advisable and that the Merger Agreement and the transactions contemplated thereby, including the Merger and the Offer, are fair to and in the best interests of the 18 Holders, (ii) approved and adopted the Merger Agreement and the transactions contemplated thereby, (iii) recommended the acceptance of the Offer, the approval of the Merger and the approval and adoption of the Merger Agreement by the stockholders of the Company and (iv) approved the taking of all other applicable action necessary to render Section 203 of the DGCL and other state takeover statutes and the Rights Agreement inapplicable to the Offer and the Merger; and (b) Goldman Sachs has delivered to the Board of Directors of the Company its written opinion, as of the date of the Merger Agreement, that the consideration to be received by the Holders of shares of Common Stock pursuant to each of the Offer and the Merger is fair to the Holders of shares of Common Stock from a financial point of view. The Merger. The Merger Agreement provides that, subject to the terms and conditions thereof, and in accordance with the DGCL, Purchaser shall be merged with and into the Company on the date the Merger Agreement or a certificate of merger or a certificate of ownership and merger (in either case, the "Certificate of Merger") is filed (such date, the "Effective Time") with the Secretary of State of the State of Delaware. The filing of the Certificate of Merger shall be made as promptly as practicable after the satisfaction or, if permissible, waiver of the conditions to the Merger. Following the Merger, the separate corporate existence of Purchaser shall thereupon cease and the Company shall continue as the surviving corporation of the Merger (the "Surviving Corporation") and shall continue its corporate existence as a Subsidiary of Parent and shall continue to be governed by the laws of the State of Delaware. At the Effective Time by virtue of the Merger and without any action by Parent, Purchaser, the Company or the holders thereof, (a) each share of Common Stock issued and outstanding immediately prior to the Effective Time (other than any shares of Common Stock held by any wholly owned subsidiary of the Company or in the treasury of the Company, or which are held, directly or indirectly by Parent, Purchaser or any direct or indirect subsidiary of Parent or the Company, which shares of Common Stock will be canceled without any conversion thereof and none of which shall receive any payment or distribution with respect thereto, and other than shares of Common Stock, if any, held by Holders who perfect their appraisal rights under the DGCL) will be canceled and converted into the right to receive $53.00 in cash payable to the Holder thereof, without interest thereon, equal to the price paid for each share of common stock pursuant to the Offer, and (b) each share of ESOP Preferred Stock issued and outstanding immediately prior to the Effective Time (other than shares of ESOP Preferred Stock held by any wholly owned subsidiary of the Company or in the treasury of the Company, or which are held, directly or indirectly by Parent, Purchaser or any direct or indirect subsidiary of Parent or the Company, which shares of ESOP Preferred Stock will be canceled without any conversion thereof and none of which shall receive any payment or distribution with respect thereto and other than shares of ESOP Preferred Stock, if any, held by Holders who perfect their appraisal rights under the DGCL) shall be canceled and shall be converted automatically into the right to receive $1,060.00 payable, without interest, to the holder of such share of ESOP Preferred Stock ((a) and (b) together, the "Merger Consideration"). In addition, at the Effective Time, each share of the capital stock of Purchaser issued and outstanding immediately prior to the Effective Time will be converted into, and exchanged for, one validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation. The Merger Agreement provides that the respective obligations of Parent and Purchaser, on the one hand, and the Company, on the other hand, to effect the Merger are subject to the fulfillment, at or prior to the Effective Time, of each of the following conditions: (i) to the extent required by Delaware law and the Restated Certificate of Incorporation of the Company, the Merger Agreement and the transactions contemplated thereby shall have been approved and adopted by the affirmative vote of the stockholders of the Company; (ii) no United States federal or state or Republic of France governmental authority or other agency or commission or court of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any law, rule, regulation, executive order, decree, injunction or other order (whether temporary, preliminary or permanent) which is then in effect and has the effect of prohibiting consummation of the Merger; (iii) Purchaser or its permitted assignee shall have purchased all Shares validly tendered and not withdrawn pursuant to the Offer; (iv) any waiting period (and any extension thereof) applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated and the Commission of the European Union shall have approved the transactions under 19 Regulation (EC) 4064/89, as amended, of the Council of the European Union; and (v) any review or approval required by governmental authorities in countries in which the Company or its subsidiaries have operations material to the Company and the Subsidiaries (as defined in the Merger Agreement), taken as a whole, shall have been completed or obtained. Certificate of Incorporation and By-laws; Directors and Officers of the Surviving Corporation. The Merger Agreement provides that, at the Effective Time, the directors of Purchaser immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation until their successors have been duly elected or appointed and qualified in accordance with the Surviving Corporation's Certificate of Incorporation and By-laws. The officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation until their respective successors are duly elected or appointed and qualified. In addition, at the Effective Time, the Restated Certificate of Incorporation of the Company shall be restated in a form acceptable to Purchaser and shall be the Certificate of Incorporation of the Surviving Corporation until thereafter amended as provided by law and such Certificate of Incorporation; provided, however, the Certificate of Incorporation shall be in accordance with the indemnification provisions of the Merger Agreement. The by-laws of Purchaser, as in effect immediately prior to the Effective Time, shall be the by-laws of the Surviving Corporation until thereafter amended as provided by law, the Certificate of Incorporation of the Surviving Corporation and such by-laws. Company Stockholders' Meeting. Pursuant to the Merger Agreement, promptly following the purchase of Shares pursuant to the Offer, if required by the DGCL in order to consummate the Merger, the Company, acting through its Board of Directors, shall, in accordance with applicable law and the Company's Restated Certificate of Incorporation and By-laws, duly call, give notice of, convene and hold an annual or special meeting of its stockholders (the "Company Stockholders' Meeting") for the purpose of considering and taking action on the Merger Agreement and the transactions contemplated thereby and, subject to the fiduciary duties of the Board under applicable law as determined by the Board in good faith after receiving the advice of experienced, independent counsel, include in the Proxy Statement the recommendation of the Board that the stockholders of the Company approve and adopt the Merger Agreement and the transactions contemplated thereby and use all reasonable efforts to obtain such approval and adoption. Parent and Purchaser have also agreed to cause all Shares then owned by them and their subsidiaries to be voted in favor of the approval and adoption of the Merger Agreement and the transactions contemplated thereby. The record date for the Company Stockholders' Meeting shall be a date subsequent to the date Parent or Purchaser becomes a record holder of Shares purchased pursuant to the Offer. The Company has agreed that, if stockholder approval of the Merger is required by applicable law, the Company will, as soon as practicable following the consummation of the Offer, prepare and file the Proxy Statement (as defined in the Merger Agreement) with the Commission and will use all reasonable efforts to cause the Proxy Statement to be cleared by the Commission. Parent, Purchaser and the Company have agreed to cooperate with each other in the preparation of the Proxy Statement. The Company has agreed to notify Parent of the receipt of any comments of the Commission with respect to the Proxy Statement and of any requests by the Commission for any amendment or supplement thereto or for additional information and to provide to Parent promptly copies of all correspondence between the Company, or any representative of the Company, and the Commission or its staff. The Company also agreed to give Parent and its counsel the opportunity to review the Proxy Statement prior to its being filed with the Commission and to give Parent and its counsel the opportunity to review the Proxy Statement prior to its being filed with the Commission and to give Parent and its counsel the opportunity to review all amendments and supplements to the Proxy Statement and all responses to requests for additional information and replies to comments prior to their being filed with, or sent to, the Commission. The Company, Parent and Purchaser shall, pursuant to the Merger Agreement, use all reasonable efforts, after consultation with the other parties thereto, to respond promptly to all such comments of and requests by the Commission and to cause the Proxy Statement and all required amendments and supplements thereto to be mailed to the Holders entitled to vote at the Stockholders' Meeting at the earliest practicable time. 20 Board Representation. The Merger Agreement provides that promptly upon the purchase by Purchaser of Shares pursuant to the Offer, and from time to time thereafter, Purchaser shall be entitled to designate up to such number of directors, rounded up to the next whole number, on the Board as shall give Purchaser representation on the Board equal to the product of the total number of directors on the Board (giving effect to the directors elected pursuant to this sentence) multiplied by the percentage that the aggregate number of shares of Common Stock beneficially owned by Purchaser or any affiliate of Purchaser following such purchase bears to the total number of shares of Common Stock then outstanding. The Company shall, at such time, promptly take all actions necessary to cause Purchaser's designees to be elected as directors of the Company, including increasing the size of the Board or securing the resignations of incumbent directors or both. At such times, the Company shall use all reasonable efforts to cause persons designated by Purchaser to constitute the same percentage of each committee of the Board as persons designated by Purchaser to constitute the Board to the extent permitted by applicable law. The Company shall promptly take all actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its obligations described in the previous paragraph and shall include in its Schedule 14D-9 such information with respect to the Company and its officers and directors as is required under Section 14(f) and Rule 14f-1 to fulfill such obligations. Parent or Purchaser shall supply to the Company and be solely responsible for any information with respect to either of them and their nominees, officers, directors and affiliates required by such Section 14(f) and Rule 14f-1. Interim Operations. The Merger Agreement provides that except as described in the Company's disclosure statement (the "Company Disclosure Statement") delivered concurrently with the delivery of the Merger Agreement, during the period from the date of the Merger Agreement to the Effective Time, the Company shall, and shall cause each of its Subsidiaries to, conduct its business only in the ordinary course and shall use all reasonable efforts to preserve substantially intact the business organizations of the Company and the Subsidiaries, to keep available the service of its current officers and employees, and to preserve the current relationships of the Company and the Subsidiaries with customers, suppliers and other persons with which the Company or any Subsidiary has significant business relations. As amplification of the foregoing, except as contemplated by the Merger Agreement or the Company Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of the Merger Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parent: (a) amend or otherwise change its Certificate of Incorporation or By-laws or equivalent organizational documents; (b) issue, deliver, sell, pledge, dispose of, grant, encumber, or authorize the issuance, delivery, sale, pledge, disposition, grant or encumbrance of (i) any shares of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of Shares issuable pursuant to stock options outstanding on the date of the Merger Agreement) or (ii) any assets of the Company or any Subsidiary for consideration in excess of $25,000,000 in the aggregate; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except for regular quarterly dividends on the Shares declared and paid at times consistent with past practices; (d) reclassify, combine, split, subdivide, or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or redeem, purchase or otherwise acquire, directly or indirectly, any shares of the capital stock of the Company or any of the Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities; (e) (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any corporation, partnership, other business organization or any division thereof for consideration in excess of $10,000,000 in the aggregate; (ii) except for borrowings under existing credit facilities not to exceed $30,000,000 in the aggregate and excepting transactions between the Company and any Subsidiary, 21 incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person; (iii) except for transactions between the Company and any Subsidiary, make any loans, advances, or capital contributions to, or investments in, any person, for an amount in excess of $10,000,000 in the aggregate; (iv) authorize capital expenditures which are, in the aggregate, in excess of $25,000,000 for the Company and the Subsidiaries; (v) acquire any assets for consideration in excess of $10,000,000 in the aggregate; or (vi) enter into or amend any contract, agreement, commitment or arrangement with respect to any of the foregoing; (f) except as provided in the Company Disclosure Schedule, as contemplated by the Merger Agreement or in the ordinary course of business consistent with past practices (i) increase the compensation payable or to become payable to its officers or employees, (ii) other than in accordance with existing policies and arrangements, grant any severance pay or (iii) establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, except as contemplated by the Merger Agreement or to the extent required by applicable law or the terms of a collective bargaining agreement or a contractual obligation existing on the date hereof; (g) other than as required by generally accepted accounting principles, make any change to its accounting policies or procedures; (h) agree to the settlement of any claim or litigation which would have a Material Adverse Effect (as such term is defined in the Merger Agreement); (i) make, change or rescind any material tax election (other than (i) recurring elections that customarily are made in connection with the filing of any tax return, provided that any such elections are consistent with the past practices of the Company or the Subsidiaries, as the case may be; (ii) gain recognition agreements under Section 367 of the Code and Treasury regulations thereunder with respect to transactions occurring in the 1998 fiscal year of the Company; and (iii) elections with respect to Subsidiaries purchased by the Company under Section 338(h)(10) of the Code or, solely in the case of non-U.S. Subsidiaries purchased by the Company, Section 338(g) of the Code) or settle or compromise any material tax liability that is the subject of an audit, claim for delinquent Taxes, examination, action, suit, proceeding or investigation by any taxing authority; (j) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of the Merger Agreement or as contemplated by the Merger Agreement, accelerate the payment, right to payment or vesting of any bonus, severance, profit sharing, retirement, deferred compensation, stock option, insurance or other compensation or benefits; (k) pay, discharge or satisfy any material claims, material liabilities or material obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction (A) of any such material claims, material liabilities or material obligations in the ordinary course of business and consistent with past practice or (B) of material claims, material liabilities or material obligations reflected or reserved against in, or contemplated by, the consolidated financial statements (or the notes thereto) contained in the Company reports to the Commission; (l) enter into any agreement, understanding or commitment that restrains, limits or impedes the Company's or any of the Subsidiaries' ability to compete with or conduct any business or line of business, including, but not limited to, geographic limitations on the Company's or any of the Subsidiaries' activities; (m) materially modify, amend or terminate any material contract to which it is a party or waive any of its material rights or claims except in the ordinary course of business consistent with past practice; or (n) agree or enter into, in writing or otherwise, or amend any contract, agreement, commitment or arrangement with respect to any of the actions set forth in the foregoing. 22 No Solicitation. The Company has agreed that it shall, and shall direct and use all reasonable efforts to cause its officers, directors, employees and agents (including accountants, counsel, financial advisors and other representatives) to, immediately cease any discussions or negotiations with any parties that may be ongoing with respect to any Acquisition Proposal (as defined below). The Company shall not, nor shall it permit any of the Subsidiaries to, nor shall it authorize or permit any officer, director or employee of, or any agent (including accountants, counsel, financial advisors and other representatives) of, the Company or any of the Subsidiaries to, directly or indirectly, (i) solicit, facilitate or initiate, or knowingly encourage the submission of, any Acquisition Proposal (including, without limitation, the taking of any action which would make Section 203 of the DGCL inapplicable to the Acquisition Proposal) or (ii) participate in any discussions or negotiations regarding, or furnish or disclose to any person or legal entity (other than Parent or Purchaser) any information with respect to, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, an Acquisition Proposal; provided, however, that if, prior to the acceptance for payment of Shares pursuant to the Offer, the Board of Directors determines in good faith that it is necessary to do so in accordance with its fiduciary duties to the Company's stockholders under applicable law as advised by experienced, independent counsel, the Company may, in response to an unsolicited Acquisition Proposal, and subject to compliance with the notice provision described below, (x) furnish or disclose information with respect to the Company and the Subsidiaries to any third party pursuant to a customary confidentiality agreement on terms no less favorable to the Company nor more favorable to such third party than those contained in the Confidentiality Agreement and (y) participate in negotiations regarding such Acquisition Proposal. For purposes of the Merger Agreement, "Acquisition Proposal" means any bona fide inquiry, proposal or offer from any third party relating to any direct or indirect acquisition or purchase of all or a substantial part of the assets of the Company or of over 20% of the voting securities of the Company, any tender offer or exchange offer that if consummated would result in any person beneficially owning 20% or more of the voting securities of the Company, any merger, consolidation, business combination, sale of substantially all the assets, recapitalization, liquidation, dissolution or similar transaction involving the Company, other than the transactions contemplated by the Merger Agreement, or any other transaction the consummation of which could reasonably be expected to impede, interfere with, prevent or materially delay the Offer or the Merger or which could reasonably be expected to dilute materially the benefits to Parent of the transactions contemplated by the Merger Agreement. (b) Except as described below, neither the Board of Directors nor any committee thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to Parent or Purchaser, the approval or recommendation by the Board of Directors or any such committee of the Offer, the Merger Agreement or the Merger, (ii) approve or recommend, or propose to approve or recommend, any Acquisition Proposal or (iii) cause the Company to enter into any agreement with respect to any Acquisition Proposal or any letter of intent, agreement in principle, or other similar understanding or arrangement with respect to an Acquisition Proposal or any understanding, arrangement or agreements requiring or incentivizing the Company to abandon, terminate or fail to consummate the Merger or any of the transactions contemplated thereby. Notwithstanding the foregoing, in the event prior to the time of acceptance for payment of Shares pursuant to the Offer the Board of Directors determines in good faith that it is necessary to do so in accordance with its fiduciary duties to the Company's stockholders under applicable law as advised by experienced, independent counsel, the Board of Directors may recommend to its stockholders an Acquisition Proposal and in connection therewith withdraw or adversely modify its approval or recommendation of the Offer or the Merger if (i) a third party makes a Superior Proposal, and (ii)(A) five Business Days have elapsed following delivery to Parent of a written notice of the determination by the Board of Directors to take such action and during such five Business Day period the Company has fully cooperated with Parent, with the intent of enabling Parent and Purchaser, on the one hand, and the Company, on the other hand, to agree to a modification of this Agreement and (B) at the end of such five Business Day period, the Acquisition Proposal continues to constitute a Superior Proposal, and concurrently therewith or afterwards the Board of Directors may terminate the Merger Agreement pursuant to its terms in order to permit the Company to enter into any agreement with respect to any such Superior Proposal; provided, that any agreement with a third party with respect to a Superior Proposal shall provide an opportunity for Parent (and any other 23 person) to make an additional final bid for the Company and, if such bid would constitute a Superior Proposal, for the Company to accept such bid. For purposes of the Merger Agreement, a "Superior Proposal" means any bona fide proposal made by a third party to acquire, directly or indirectly, for consideration consisting of cash and/or securities, all outstanding Shares pursuant to a tender offer or a merger or purchase of all of the assets of the Company (i) on terms which the Board of Directors determines in good faith (based on the written advice of a financial advisor of nationally recognized reputation) to be more favorable to the Company and its stockholders than the transactions contemplated by the Merger Agreement, as proposed to be modified by Parent in accordance with the provisions of the preceding paragraph, (ii) for which financing, to the extent required, is then available (it being understood that financing evidenced by highly confident letters and similar letters shall not be considered "available"), and (iii) which is not subject to any financing or due diligence condition. In addition to the above obligations, immediately after receipt thereof, the Company shall advise Parent in writing of any request for information regarding an Acquisition Proposal, or any inquiry or proposal with respect to an Acquisition Proposal. The Company shall keep Parent informed of the status of any such request or Acquisition Proposal. The Company shall promptly provide to Parent any non-public information concerning the Company provided to any other person in connection with any Acquisition Proposal which was not previously provided to Parent. Notwithstanding the above, nothing shall prohibit the Company from taking and disclosing to its stockholders a position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making any disclosure to the Company's stockholders if the Board determines in good faith that it is necessary to do so in accordance with its fiduciary duties to the Company's stockholders under applicable law as advised by experienced, independent counsel. The Company shall not release any third party from, or waive any provision of, any confidentiality or standstill agreement to which the Company is a party. The Company has requested each person or entity which has heretofore executed a confidentiality agreement in connection with its consideration of acquiring the Company or any portion thereof to return all confidential information heretofore furnished to such person or entity by or on behalf of the Company. Directors' and Officers' Indemnification. The Merger Agreement provides that the certificate of incorporation and by-laws of the Surviving Corporation shall contain provisions (collectively, "Indemnification Provisions") no less favorable with respect to indemnification than are set forth in the Restated Certificate of Incorporation and By-laws of the Company, which provisions shall not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would affect adversely the rights thereunder of individuals who at the Effective Time were directors, officers, employees, fiduciaries or agents of the Company, unless such modification shall be required by law. In addition, the Surviving Corporation shall maintain in effect for six years from the Effective Time, if available, the current directors' and officers' liability insurance policies maintained by the Company (provided that Parent and the Surviving Corporation may substitute therefor policies of at least the same coverage containing terms and conditions which are not materially less favorable) with respect to matters occurring prior to the Effective Time. Notwithstanding the foregoing, in no event shall Parent or the Surviving Corporation be required to expend more than an amount per year equal to 200% of current annual premiums paid by the Company for such insurance (which the Company represents to be $476,525.00 for the 12 month period ended October 1, 1999) with respect to its obligations described in the preceding sentence; provided, further that, in the event of an expiration, termination or cancellation of such current policies, Parent or the Surviving Corporation shall be required to obtain as much coverage as is possible under substantially similar policies for such 200% amount. Prior the Effective Time, the Company shall, to the fullest extent permitted under applicable law and regardless of whether the Merger becomes effective, indemnify and hold harmless, and, after the Effective Time, 24 the Surviving Corporation shall, to the fullest extent permitted under applicable law, indemnify and hold harmless, each present and former director, officer or employee of the Company and each Subsidiary (collectively, the "Indemnified Parties") against all costs and expenses (including attorneys' fees), judgments, fines, losses, claims, damages, liabilities and settlement amounts paid in connection with any claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), whether civil, criminal, administrative or investigative, arising out of or pertaining to any action or omission in their capacity as an officer, director or employee whether occurring before or after the Effective Time (including, without limitation, the transactions contemplated by the Merger Agreement), for a period of six years after the date hereof. Without limiting the foregoing, in the event of any such claim, action, suit, proceeding or investigation, (i) the Company or the Surviving Corporation, as the case may be, shall pay as incurred, each Indemnified Party's legal and other expenses (including costs of investigation and preparation), including the fees and expenses of counsel selected by the Indemnified Party, promptly after statements therefor are received and (ii) the Company and the Surviving Corporation shall cooperate in the defense of any such matter; provided, however, that neither the Company nor the Surviving Corporation shall be liable for any settlement effected without its written consent (which consent shall not be unreasonably withheld); and provided, further that, in the event that any claim for indemnification is asserted or made within such six-year period, all rights to indemnification in respect of such claim shall continue until the disposition of such claim. The parties intend, to the extent not prohibited by applicable law, that this indemnification shall apply without limitation to negligent acts or omissions of any Indemnified Party. Any determination to be made as to whether any Indemnified Party has met any standard of conduct imposed by law shall be made by legal counsel reasonably acceptable to such Indemnified Party and the Surviving Corporation, retained at the Surviving Corporation's expense. The Company or the Surviving Corporation also have agreed to pay all expenses, including counsel fees and expenses, that any Indemnified Party may incur in enforcing the indemnity and other obligations provided for above. The Merger Agreement provides that in the event the Company, the Surviving Corporation or Parent or any of their respective successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any person, then and in each such case, proper provision shall be made so that the successors and assigns of the Company, the Surviving Corporation or Parent, as the case may be, shall assume the obligations of this indemnification as set forth in the Merger Agreement. The indemnification in the Merger Agreement is intended to benefit the Indemnified Parties and their respective heirs, executors and personal representatives, may be enforced by them and shall be binding on the successors and assigns of Parent, the Company and the Surviving Corporation. The Merger Agreement provides that its indemnification provisions shall not limit or otherwise adversely affect any rights any Indemnified Party may have under any agreement with the Company or any Subsidiary or the Company's or any Subsidiary's Articles of Incorporation or By-laws. Options. The Company has agreed, immediately prior to the Effective Time, to (i) terminate the Company Stock Option Plans (as defined below) and any other plan, program or arrangement providing for the issuance, grant or purchase of any other interest in respect of the capital stock of the Company or any of the Subsidiaries without prejudice to the holders of Options (as defined below), and (ii) amend the provisions of any other Company Benefit Plan (as defined in the Merger Agreement), or related trust or funding vehicle, providing for the issuance, holding, transfer or grant of any Shares, or any interest in respect of any Shares (collectively the "Company Stock Plans"), to provide no continuing rights to acquire, hold, transfer, or grant any shares or any interest in any Shares. Prior to the Effective Time, the Company shall cause all amounts currently held as cash in participant accounts under the Company's Employee Stock Purchase Program to be returned to the applicable participants and all previously purchased shares of Common Stock held in such accounts to be distributed to the applicable participants. (b) Parent and the Company have agreed to take all action necessary to (i) provide that each option to purchase shares of Common Stock (an "Option") pursuant to the Non-Employee Directors Stock Option Plan, the Company's Employee Stock Compensation Plan, the 1990 Stock Option Plan and the 1982 Stock Option 25 Plan or any stock option agreement to which the Company is a party (the "Company Stock Option Plans"), which is outstanding immediately prior to the acceptance of the Shares by Purchaser pursuant to the Offer, shall become fully exercisable and vested, whether or not previously exercisable or vested, as of the time of such acceptance and (ii) provide that, with respect to each such Option, the holder thereof shall be entitled to receive from the Company, at the time payment is made for the Shares tendered pursuant to the Offer, an amount in cash in cancellation of such Option equal to the difference between the Merger Consideration and the per share exercise price of such Option, multiplied by the number of shares of Common Stock to which such Option remains unexercised, less any income or employment tax withholding required under the Code or any provision of state or local law. Prior to the acceptance of the Shares by Purchaser pursuant to the Offer, the Company shall make all amendments to the Company Stock Plans necessary, and take all actions necessary, to effect the transactions contemplated by the Merger Agreement. The Company and Parent shall cooperate, and take all reasonable steps to share in advance information, to effect the transactions. Certain Employee Benefits. Pursuant to the Merger Agreement, Parent and the Company have agreed to the following with respect to the compensation and benefits programs of Parent, the Company and the Subsidiaries: (a) For a period of one year following the Effective Time, Parent, the Company and the Subsidiaries shall continue and maintain the employee benefit plans and programs of the Company and the Subsidiaries for active and retired employees and former directors of the Company and the Subsidiaries as in effect immediately prior to the Effective Time; provided that Parent, the Company and the Subsidiaries shall not be obligated to continue the Supplemental Management Incentive Plan, the Performance Share Plan, the Company Stock Option Plans, the 1984 Restricted Stock Plan, the Employee Stock Ownership Plan, the Company Common Stock investment option contained in the Profit Sharing, Investment and Pay Deferral Plan (each as defined in the Merger Agreement), or any other plan or program providing for compensation, in the form of, or based on the value of the stock of Parent, the Company or the Subsidiaries, or to provide any other incentive plan or benefits in lieu thereof. Notwithstanding the foregoing, during the aforesaid period of one year following the Effective Time, Parent, the Company and the Subsidiaries shall give due consideration to providing a reasonable level of equity based compensation. From and after the Effective Time, Parent shall honor, and shall cause the Company and the Subsidiaries to honor, in accordance with their terms, all contracts, arrangements, policies, plans and commitments of the Company and the Subsidiaries in accordance with such terms that are applicable to any current or former employees or directors of the Company or the Subsidiaries and that have been disclosed or made available to Parent pursuant to the Merger Agreement. Parent and the Company acknowledge and agree that the transactions contemplated by the Agreement shall constitute, as of the Effective Time, a "Change of Control" as such term is defined in the Company Change of Control Arrangements (as defined in the Merger Agreement). (b) To the extent that service is relevant for purposes of eligibility, participation or vesting under any employee benefit plan, program or arrangement established or maintained by Parent, the Company or any of their respective subsidiaries, employees of the Company and the Subsidiaries shall be credited with service accrued prior to the Effective Time with the Company or any of the Subsidiaries, as the case may be. Employees of the Company and the Subsidiaries shall be credited with service accrued prior to the Effective Time to the extent service is relevant for purposes of benefit accrual (i) with respect to plans, programs or arrangements established or maintained by Parent, the Company or the Subsidiaries covering predominantly employees employed in the United States, and (ii) with respect to plans, programs, or arrangements maintained by the Company or the Subsidiaries (and not by Parent or its Affiliates other than the Company and the Subsidiaries) covering predominantly persons employed outside the United States. Notwithstanding the foregoing, the crediting of any service described above shall not operate to duplicate any benefit. (c) With respect to the payment of bonuses under the Company's Management Incentive Plan (the "MIP") for the fiscal year ending December 31, 1999 (the "1999 Fiscal Year"), the Company has agreed to pay participants in the MIP whose employment is terminated by Parent, the Company or any of the Subsidiaries without Cause (as defined below) on or after the Effective Time and prior to January 1, 2000 a 26 bonus under the MIP equal to the pro rata portion of the bonus such participant would have earned under the MIP for the 1999 Fiscal Year had such participant remained employed through the end of the 1999 Fiscal Year. Any payment described in the immediately preceding sentence shall be made following the end of the 1999 Fiscal Year, at the same time as such payment would have been made had such person remained employed by the Company. Notwithstanding the above, any person covered by a Key Executive Agreement which remains in effect on the date of such person's termination of employment (without Cause) shall receive the payment provided under the Key Executive Agreement with respect to any bonus under the MIP in lieu of the pro rata payment provided for above. The MIP shall be administered by the Company with respect to the 1999 Fiscal Year in accordance with past practice. (d) (i) Prior to the acceptance of the Shares by Purchaser pursuant to the Offer, each restricted stock unit award under the Company's 1984 Restricted Stock Plan or the Employee Stock Compensation Plan and each performance award assigned in 1995 under the Company's Performance Share Plan (including restricted stock awarded in the 1995 to 1998 performance cycle) (collectively the "Current Stock Awards") shall become fully and immediately payable or distributable and the restrictions thereon shall lapse. At the Effective Time, each holder of a Current Stock Award shall be paid in full satisfaction of such Current Stock Award a cash payment in an amount in respect thereof equal to the product of (i) the Merger Consideration and (ii) the number of shares of Common Stock subject to such Current Stock Award, less any income or employment tax withholding required under the Code or any provision of state or local law. (ii) Each performance award assigned in the 1997 to 1999 performance cycle or the 1998 to 2000 performance cycle under the Company's Performance Share Plan (collectively the "Deferred Performance Awards") shall be awarded assuming a performance level of 100% of the target award and shall vest and become payable on the following date (referred to herein as the "Vesting Date"): (A) on the third anniversary of the Effective Time, provided the executive to whom such award was made has been continuously employed, including any leaves of absence authorized by the Company, by the Company or an Affiliate of the Company from the Effective Time until such date or (B) upon the death or Disability or Retirement of the executive, the termination of the executive's employment by the Company and its Affiliates without Cause or the termination by the executive of his or her employment with the Company and its Affiliates for Good Reason, provided such death, Disability, Retirement or termination occurs on or after the Effective Time and prior to the third anniversary of the Effective Time. On the Vesting Date, each holder of a Deferred Performance Award shall be paid in full satisfaction of such Deferred Performance Award a cash payment in an amount in respect thereof equal to the product of (x) the Merger Consideration and (y) the number of shares of Common Stock subject to such Deferred Performance Award. For purposes of the Merger Agreement, "Disability", "Cause" and "Good Reason" shall have the following meanings: (i) "Disability" shall mean the executive's physical or mental incapacity which (A) would entitle the executive to disability benefits under the Company's or Affiliate's long-term disability plan by which the executive is covered or (B) as a result of which, in the judgment of a physician appointed by the Company, the executive is unable to perform the duties of his or her position with the Company and its Affiliates for 180 days during any continuous period of 365 days. (ii) "Cause" shall mean (A) the executive's conviction of, plea of nolo contendere to, or written admission of his commission of, a felony, (B) any act by the Executive involving moral turpitude, fraud or misrepresentation with respect to his duties for the Company or its Affiliates; or (C) gross negligence or willful misconduct on the part of the executive in the performance of his or her duties to the Company or its Affiliates. (iii) "Good Reason" means (A) any termination of employment of the executive with the Company and its Affiliates or any resignation from employment with the Company and its Affiliates by the executive following a reduction in his or her base salary in effect on the Effective Time or 27 following the Company's material breach of any of its agreements set forth in this Section or (B) any other termination of employment of the executive with the Company and its Affiliates which is approved in writing by the Company. (iv) "Retirement" means an executive's termination of employment on or after the date he or she attained age 62. (iii) At the Effective Time, each restricted stock unit award under the SAP letter agreements shall be converted to a right to receive cash equal to the product of (i) the Merger Consideration and (ii) the number of shares of Common Stock subject to such restricted stock unit award. The foregoing amount of cash shall be paid out pursuant to the terms of the SAP letter agreement, to the extent that, and at the same time as, such restricted stock unit would otherwise, in the absence of the transactions contemplated by this Agreement, have been vested and paid out. (iv) The above provisions shall not operate to duplicate any amounts payable to the executive under his or her Key Executive Agreement. (e) Prior to the acceptance of the Shares by Purchaser pursuant to the Offer, all stock units, share units or stock equivalent units held under the Company's deferred compensation plan for directors or held under the Agreement to Restore Benefits Reduced by ERISA-Related Limits (the "Company Deferred Compensation Plans") (each a "Company Stock Unit") shall be converted into an obligation to pay cash with a value equal to the product of (i) the Merger Consideration and (ii) the number of shares of Common Stock subject to such Company Stock Unit. With respect to the obligation to pay cash in respect of the conversion of Company Stock Units under the Company Deferred Compensation Plans, the obligation shall be payable or distributable in accordance with the terms of the plan or arrangement relating to the Company Stock Unit. (f) For purposes of calculating the pension benefits payable under the Company's 1993 retirement policy for non-employee directors (the "Directors' Retirement Policy"), each non-employee director who is serving as a member of the Board as of the Effective Date and who has less than five years of service as a member of the Board, shall be credited with five years of service; provided, however, that each non-employee director as of the Effective Date who has at least five years of service as a member of the Board, but has less than ten years of service, shall be credited with ten years of service. In addition, Parent, the Company and the Subsidiaries shall either (i) continue and maintain the Directors' Retirement Policy as in effect on the Effective Date until each non-employee director entitled to receive a pension benefit calculated thereunder (whether active or retired) has received his or her pension benefit, or (ii) purchase or cause to be purchased an annuity contract for each such non-employee director that provides for the payment of such pension benefit. (g) Prior to the acceptance of the Shares by Purchaser pursuant to the Offer: (i) The Company shall amend or cause to be amended its Employee Stock Ownership Plan (the "ESOP") and the trust agreement establishing the trust under the ESOP to provide that the net proceeds in the Suspense Account (as defined in the ESOP) resulting from the disposition of the Shares held in such trust and repayment of the ESOP Loans (as defined in the ESOP) will be immediately allocated to Participants' Accounts (as defined in the ESOP) using the ratio of the balance of each such Participant's Account to the Accounts of all Participants. (ii) The Company shall amend or cause to be amended its Profit Sharing, Investment and Pay Deferral Plan and the trust agreement establishing the trust under such plan to substantially provide that, subject to applicable law, (1) the trustee of such trust shall vote shares of Common Stock allocated to a participant's account under such plan in accordance with the written instructions given by such participant; (2) any such shares held in such trust for which the trustee receives no such voting instructions shall be voted by the trustee in the same ratio as the shares held in the trust for which the trustee receives voting instructions; (3) in the event of a tender offer or exchange offer for the shares of Common Stock held in such trust, the trustee shall tender or exchange the shares of Common Stock held in such trust which are allocated to a plan participant's account in accordance with written 28 instructions given by such participant; and (4) any such shares held in such trust for which the trustee receives no such tender or exchange instructions shall be tendered or exchanged by the trustee in the same ratio as the shares held in the trust for which the trustee receives such tender or exchange instructions. (iii) The Company shall amend its Retirement Income Plan for Eligible Employees to delete Article 20 thereof in its entirety. (iv) The Company shall adopt such other amendments to the plans referenced above, and any related agreements or instruments, or obtain any consents, as are necessary or appropriate to effectuate the transactions contemplated by the Merger Agreement. The Company and Parent have agreed to cooperate and take all reasonable steps to share in advance information to effect the transactions described above. Agreement to Use Reasonable Best Efforts. Pursuant to the Merger Agreement and subject to the terms and conditions thereof, the Company, Parent and Purchaser shall, and shall use their reasonable best efforts to cause their respective subsidiaries, as applicable, to: (i) make promptly all respective filings and thereafter make any other required submissions, under the HSR Act and under Council Regulation (EC) No. 4064/89, as amended, with respect to the Merger and the transactions contemplated thereby, (ii) use its reasonable best efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated by the Merger Agreement, including, without limitation, using all reasonable efforts to obtain all licenses, permits, consents, waivers, approvals, authorizations, qualifications and orders of governmental authorities and parties to contracts with the Company and the Subsidiaries as are necessary for the consummation of the transactions contemplated by the Merger Agreement and to fulfill the conditions to the Offer and the Merger and (iii) not take action (including effecting or agreeing to effect or announcing an intention or proposal to effect any acquisition, business combination or other transaction) which could reasonably be expected to impede, interfere with, prevent, impair or delay the ability of the parties to consummate the Merger. The parties shall consult and cooperate with each other in connection with the making of all such filings or submissions, including providing copies of all such documents to the non-filing or non-submitting party and its advisors prior to filing or submitting. In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of each party to the Merger Agreement shall use their reasonable best efforts to take all such action. Each of Parent and Purchaser shall use its best efforts to defend through litigation on the merits any claim asserted in court by any party in order to avoid the entry of, or to have vacated or terminated, any decree, order, or judgment that would restrain or prevent the consummation of the Offer by December 31, 1999. Representations and Warranties. In the Merger Agreement, the Company has made customary representations and warranties to Parent and Purchaser with respect to, among other things, its organization, corporate authority, capital structure, financial statements, public filings, litigation, net debt of its two principal joint ventures, compliance with applicable laws, consent and approvals, employee benefit plans, brokers' or finders' fees, state takeover statutes, voting requirements, taxes, intellectual property, Year 2000 compliance and the absence of any material adverse changes in the Company since March 31, 1999. Termination. The Merger Agreement may be terminated and the Merger and other transactions contemplated thereby may be abandoned at any time prior to the Effective Time, notwithstanding any requisite approval or adoption by the stockholders of the Company: (a) by mutual written consent duly authorized by the boards of directors of Parent, Purchaser and the Company; or (b) by either Parent, Purchaser, or the Company if (i) the Offer is not completed on or before December 31, 1999; provided, however, that the right to terminate the Merger Agreement hereunder (i) shall not be available to any party whose failure to fulfill any obligation under the Merger Agreement has been the cause of, or resulted in, the failure to complete the Offer on or before such date; or (ii) any United States federal or state court of competent jurisdiction or court of the Republic of France of competent jurisdiction or other United States federal or state governmental authority or other governmental 29 authority of the Republic of France shall have issued an order, decree, ruling or taken any other action restraining, enjoining or otherwise prohibiting the Merger and such order, decree, ruling or other action shall have become final and non-appealable; or (c) by Parent, prior to the acceptance of Shares pursuant to the Offer, if (i) due to an occurrence or circumstance that would result in a failure to satisfy any condition set forth Section 14--"Conditions of the Offer", Purchaser shall have (A) terminated the Offer without having accepted any Shares for payment thereunder or (B) failed to pay for Shares pursuant to the Offer by December 31, 1999, unless such failure to accept Shares for payment or to pay for Shares shall have been caused by or resulted from the failure of Parent or Purchaser to perform any covenant or agreement of either of them contained in the Merger Agreement or the breach by Parent or Purchaser of any representation or warranty of either of them contained in the Merger Agreement; or (ii) prior to the purchase of Shares pursuant to the Offer, the Board of Directors or any committee thereof shall have withdrawn or modified in a manner adverse to Purchaser or Parent its approval or recommendation of the Offer, the Merger Agreement, the Merger or any other of the transactions contemplated thereby in order to approve or recommend any other Acquisition Proposal; by the Company, upon approval of the Board, if Purchaser shall have (A) failed to commence the Offer within five Business Days following the date of the Merger Agreement, (B) terminated the Offer without having accepted any shares for payment thereunder or (C) failed to pay for Shares pursuant to the Offer by December 31, 1999, unless such failure to accept Shares for payment or to pay for Shares shall have been caused by or resulted from the failure of the conditions specified in paragraphs (c) or (d) of Section 14--"Conditions of the Offer; or (e) by the Company, upon approval of the Board of Directors, if, prior to the acceptance of Shares by Purchaser pursuant to the Offer, the Board of Directors shall determine that it is necessary to do so in accordance with its fiduciary duties to the Company's stockholders under applicable law as advised by experienced, independent counsel in order to accept a Superior Proposal; provided, that the Company may not terminate the Merger Agreement unless and until (i) five Business Days have elapsed following delivery to Parent of written notice of such determination of the Company, and during such five Business Day period the Company has fully cooperated with Parent, with the intent of enabling both parties to agree to a modification of the terms and conditions of the Merger Agreement so that the transactions contemplated thereby may be effected, (ii) at the end of such five Business Day period the Acquisition Proposal continues to constitute a Superior Proposal and the Board of Directors shall determine that it is necessary to terminate the Merger Agreement and accept such Superior Proposal in order to comply with its fiduciary duties to the Company's stockholders under applicable law as advised by experienced, independent counsel, and (iii)(x) prior to such termination, Parent has received the amount described below and (y) concurrently with such termination the Company enters into a definitive acquisition, merger or similar agreement to effect the Superior Proposal which agreement with respect to a Superior Proposal shall provide an opportunity for Parent (and any other person) to make an additional final bid for the Company and, if such bid would constitute a Superior Proposal, for the Company to accept such bid. Payment of Certain Fees and Expenses Upon Termination. In the event that (i) Parent terminates the Merger Agreement because prior to the purchase of Shares pursuant to the Offer, the Board of Directors or any committee thereof shall have withdrawn or modified in a manner adverse to Purchaser or Parent its approval or recommendation of the Offer, the Merger Agreement or any of the transactions contemplated thereby in order to approve or recommend any other Acquisition Proposal, and (ii) at the time of such termination a third party shall have publicly made an Acquisition Proposal (whether or not such Acquisition Proposal shall have been subsequently withdrawn), and (iii) such Acquisition Proposal is consummated within 12 months after the date of such termination, then the Company shall pay Parent promptly (but in no event later than two Business Days after the consummation of the Acquisition Proposal referred to in clause (ii) above) a fee of $125,000,000 (the "Fee"), which amount shall be payable in immediately available funds. In the event that (i) Parent terminates the Merger Agreement due to the failure of a condition described in paragraph (c) or (d) of Section 14-- "Conditions of the Offer", (ii) at the time of such termination a third party shall have publicly made an Acquisition Proposal (whether or not such Acquisition Proposal shall have been subsequently withdrawn), and (iii) such Acquisition Proposal is consummated within 12 months after the date of such termination, then the Company shall pay Parent promptly (but in no event later than two Business Days after the consummation of the Acquisition Proposal refereed to in clause (ii) above) the Fee, which shall be paid in immediately available funds. 30 Subject to the immediately preceding paragraph, in the event that Parent terminates the Merger Agreement because of a failure to satisfy the conditions specified in paragraphs (c) or (d) of Section 14--"Conditions of the Offer", then the Company shall pay to Parent promptly after being invoiced by Parent therefor (but in no event later than two Business Days after receiving such invoice) an amount equal to Parent's Expenses, which shall be paid in immediately available funds. In the event that the Company terminates the Merger Agreement under the conditions described in paragraph (e) under the heading "--Merger Agreement-- Termination", then, simultaneously with such termination by the Company, the Company shall pay to Parent the Fee, which shall be paid in immediately available funds. In the event that the Company terminates the Merger Agreement under the conditions described in paragraph (d) under the heading "--Merger Agreement-- Termination" and Parent or Purchaser shall have failed to perform or comply with, in any material respect, any material agreement or covenant of Parent or Purchaser under the Merger Agreement, then Parent shall pay to the Company promptly after being invoiced by the Company therefor (but in no event later than two Business Days after receiving such invoice) an amount equal to the Company's Expenses, which shall be paid in immediately available funds. In the event that any party shall fail to pay the Fee or Expenses when due, such party, without being relieved of any obligation to pay the Fee or Expenses as the case may be in full, shall reimburse the other party for the Expenses actually incurred or accrued by such other party in connection with the collection under and enforcement of the above obligations, together with interest on such unpaid Fee or Expenses, commencing on the date that the Fee or Expenses became due, at a rate equal to the rate of interest publicly announced by Citibank, N.A., from time to time, in the City of New York, as such bank's Base Rate. "Expenses" shall mean documented and reasonable out-of-pocket fees and expenses incurred or paid by or on behalf of the party incurring such fees and expenses in connection with the Offer, Merger or the consummation of the transactions contemplated by the Merger Agreement, including, but not limited to, all filing fees, printing fees and reasonable fees and expenses of law firms, commercial banks, investment banking firms, accountants, experts and consultants to such party. Confidentiality Agreement The following is a summary of the Confidentiality Agreement, dated as of April 13, 1999 between Degremont S.A., a wholly owned subsidiary of Parent ("Degremont") and Goldman Sachs, on behalf of the Company (the "Confidentiality Agreement"). This summary is qualified in its entirety by reference to the Confidentiality Agreement, a copy of which has been filed with the Commission as an exhibit to the Schedule 14D-1. The Confidentiality Agreement can be inspected at, and copies may be obtained from, the same places and in the manner set forth in Section 7--"Certain Information Concerning the Company". Pursuant to the Confidentiality Agreement, Degremont has agreed, among other things, (i) to use Evaluation Material (as defined herein) solely for the purpose of evaluating a possible transaction between Degremont and the Company and to keep confidential such Evaluation Materials between Degremont and its advisors, and (ii) not to, and to direct such directors, officers, employees and representatives of Degremont not to, disclose to any person either the fact that discussions or negotiations are taking place concerning a possible transaction between the Company and Degremont or any of the terms, conditions or other facts with respect to any such possible transaction, including the status thereof. "Evaluation Material" is any information concerning the Company (whether prepared by the Company, its advisors or otherwise) furnished to Degremont by or on behalf of the Company; provided, however that Evaluation Material does not include information which (i) is already in Degremont's possession, provided that such information is not known by Degremont to be subject to another confidentiality agreement with or other obligation of secrecy to the Company or another party, or (ii) becomes generally available to the public other than as a result of a disclosure by Degremont or Degremont's directors, officers, employees, agents or advisors, or (iii) becomes available to Degremont on a non-confidential basis from a source other than the Company or its advisors, provided that such source is not known by Degremont to be bound by a confidentiality agreement with or other obligation of secrecy to the Company or another party. 31 Degremont has also agreed that for a period of three years from the date of the Confidentiality Agreement, it will not acquire, or assist, advise or encourage any other persons in acquiring or attempting to acquire, directly or indirectly, control of the Company (including by way of election of any directors of the Company) or any of the Company's securities, businesses or assets unless the Company shall have consented in advance in writing to such acquisition or attempted acquisition. Rights Agreement The following is a summary description of the Rights Agreement. The summary is qualified in its entirety by reference to the Rights Agreement and the amendments thereto which are incorporated herein by reference and copies of which have been filed with the Commission. The Rights Agreement may be inspected at, and copies may be obtained from, the same places and in the manner set forth in Section 7--"Certain Information Concerning the Company". On June 20, 1996, the Board of Directors declared a dividend of one preferred stock purchase right for each outstanding share of Common Stock of the Company. The dividend was paid to holders of record of the Common Stock on September 1, 1996, the effective date of the Company's initial public offering registration statement (the "Record Date"). Each Right entitles the holder thereof (except as described below) to purchase from the Company one one- thousandth of a share of the Series C Junior Participating Preferred Stock, $0.1875 par value (the "Series C Preferred Stock"), of the Company at a price (the "Purchase Price") of $125.00 per one one-thousandth of a share of Series C Preferred Stock, subject to adjustment. The terms of the Rights are set forth in the Stockholders Rights Agreement dated as of June 20, 1996, as amended (the "Rights Agreement") between the Company and First Chicago, as Rights Agent (the "Rights Agent"). The Company has amended the Rights Agreement to render the Rights Agreement inapplicable with respect to the Offer, the Merger and the other transactions contemplated by the Merger Agreement. All undefined capitalized terms used in the discussion below are used as defined in the Rights Agreement. The Rights associated with the Common Stock outstanding as of the Record Date currently are evidenced solely by the stock certificates for such Common Stock. The Rights will separate from the Common Stock upon the earlier to occur of (i) 10 days following a public announcement that a person or group of affiliated or associated persons (an "Acquiring Person") has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares of Common Stock (the "Shares Acquisition Date") or (ii) 15 business days (or such later date as may be determined by action of the Board of Directors prior to the time that any person becomes an Acquiring Person) following the commencement of (or a public announcement of an intention to make) a tender or exchange offer if, upon consummation thereof, such person or group would be the beneficial owner of 15% or more of such outstanding shares of Common Stock (the earlier of such dates being called the "Distribution Date"), the Rights will be evidenced by the Common Stock certificates, together with a copy of the Summary of Rights Plan filed with the Commission on Form 8-A (the "Summary of Rights Plan") and not by separate certificates. The Rights Agreement also provides that, until the Distribution Date, the Rights will be transferred with and only with the Common Stock. Until the Distribution Date (or earlier redemption, expiration or termination of the Rights), the transfer of any certificates for Common Stock, with or without a copy of the Summary of Rights Plan, will also constitute the transfer of the Rights associated with the Common Stock represented by such certificates. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights ("Right Certificates") will be mailed to holders of record of the Common Stock as of the close of business on the Distribution Date and, thereafter, such separate Right Certificates alone will evidence the Rights. The Rights are not exercisable until the Distribution Date and will expire at the earliest of (i) August 31, 2006 (the "Final Expiration Date"), (ii) the redemption of the Rights by the Company as described below and (iii) the exchange of all Rights for Common Stock as described below. 32 In the event that any person (other than the Company, its affiliates or any person receiving newly-issued shares of Common Stock directly from the Company) becomes the beneficial owner of 15% or more of the then-outstanding shares of Common Stock, each holder of a Right will thereafter have the right to receive, upon exercise at the then-current Exercise Price of the Right, Common Stock (or, in certain circumstances, cash, property or other securities of the Company) having a value equal to two times the exercise price of the Right. The Rights Agreement contains an exemption for any issuance of Common Stock by the Company directly to any person (for example, in a private placement or an acquisition by the Company in which Common Stock is used as consideration), even if that person would become the beneficial owner of 15% or more of the Common Stock, provided that such person does not acquire any additional shares of Common Stock. In the event that, at any time following the Shares Acquisition Date, the Company is acquired in a merger or other business combination transaction or 50% or more of the Company's assets or earning power are sold, proper provision will be made so that each holder of a Right will thereafter have the right to receive, upon exercise at the then-current Exercise Price of the Right, common stock of the acquiring or surviving company having a value equal to two times the exercise price of the Right. Notwithstanding the foregoing, following the occurrence of any of the events set forth in the preceding two paragraphs (the "Triggering Events"), any Rights that are, or (under certain circumstances specified in the Rights Agreement) were, beneficially owned by any Acquiring Person will immediately become null and void. The Exercise Price payable, and the number of shares of Series C Preferred Stock or other securities or property issuable, upon exercise of the Rights, are subject to adjustment from time to time to prevent dilution, among other circumstances, in the event of a stock dividend on, or a subdivision, split, combination, consolidation or reclassification of, the Series C Preferred Stock or the Common Stock, or a reverse split of the outstanding shares of Series C Preferred Stock or the Common Stock. At any time after the acquisition by a person or group of affiliated or associated persons of beneficial ownership of 15% or more of the outstanding Common Stock and prior to the acquisition by such person or group of 50% or more of the outstanding Common Stock, the Board of Directors may exchange the Rights (other than Rights owned by such person or group, which have become void), in whole or in part, at an exchange ratio of one share of Common Stock per Right (subject to adjustment). With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment of at least 1% in the Purchase Price. The Company will not be required to issue fractional shares of Series C Preferred Stock or Common Stock (other than fractions in multiples of one one-thousandth of a share of Series C Preferred Stock) and, in lieu thereof, an adjustment in cash may be made based on the market price of the Series C Preferred Stock or Common Stock on the last trading date prior to the date of exercise. At any time after the date of the Rights Agreement until the time that a person becomes an Acquiring Person, the Board of Directors may redeem the Rights in whole, but not in part, at a price of $0.01 per Right (the "Redemption Price"), which may (at the option of the Company) be paid in cash, shares of Common Stock or other consideration deemed appropriate by the Board of Directors. Upon the effectiveness of any action of the Board of Directors ordering redemption of the Rights, the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price. Until a Right is exercised, the holder thereof, as such, will have no rights as a shareholder of the Company, including, without limitation, the right to vote or to receive dividends. The provisions of the Rights Agreement may be amended by the Company, except that any amendment adopted after the time that a person becomes an Acquiring Person may not adversely affect the interests of holders of Rights. As of May 31, 1996, there were 66,209,193 shares of Common Stock outstanding. In addition, 200,000 shares of Series C Preferred Stock are reserved for issuance in the event of an exercise of the Rights. 33 The Rights have certain anti-takeover effects. The Rights will cause substantial dilution to a person or group that attempts to acquire the Company without conditioning the offer on the Rights being redeemed or a substantial number of Rights being acquired, and under certain circumstances the Rights beneficially owned by such a person or group may become void. The Rights should not interfere with the Merger because the Board of Directors has taken all action necessary to redeem all of the then-outstanding Rights at the Redemption Price and to exclude Parent and Purchaser from the definition of "Acquiring Person" in the Rights Plan so that the Merger and the related Transactions will not constitute a Triggering Event. Employment Agreements The following is a summary description of the Employment Letters executed by the respective Executive. The summary is qualified in its entirety by reference to the Form of Agreement as to Terms of Employment which is incorporated herein by reference and a copy of which has been filed with the Commission as an exhibit to the Schedule 14D-1. The Form of Agreement as to Terms of Employment may be inspected at, and copies may be obtained from, the same places as set forth in Section 7--"Certain Information Concerning the Company". In connection with the Merger Agreement, Degremont, a wholly owned subsidiary of Parent, Purchaser and each of Messrs. George M. Brannon, III, William E. Buchholz, John T. Burns, Michael E. Kahler, James F. Lambe, Edward J. Mooney, Stephen D. Newlin, William J. Roe, and W. Steven Weeber (each an "Executive") entered into a letter agreement (each an "Employment Letter") relating to the terms of their employment following the consummation of the Merger. The Employment Letters contain identical terms, except as noted below. The Employment Letters provide for the Company to offer the Executive employment with the Company, and each Executive to accept such employment on the terms and conditions described below. The offer of employment is conditioned upon the completion of the Merger and shall become effective at the Effective Time. The parties have agreed to enter into definitive employment agreements, and it is anticipated that such agreements will be between each Executive and the Company. Each Employment Letter: (i) provides a three year employment period, with a one-year evergreen after the three year period and a six-month notice provision for non-renewal; and (ii) includes a retention payment ("Retention Payment") equal to two times the Executive's salary plus regular target bonus (as of June 22, 1999) payable in cash, if the Executive is employed by the Company for three years from the date of the change of control. Each of the Employment Letters provides for various severance payments, depending on the circumstances under which an Executive's employment is terminated. Executives will receive higher severance payments if their employment is terminated "without cause" by the Company or for "good reason" by the Executive. Each Employment Letter also provides for a full golden parachute excise tax gross-up (excluding the Retention Payment) for future changes in control, but only in the event of termination "without cause" by the Company or resignation for "good reason" by the Executive. Each Employment Letter also includes a provision for (i) non-competition with the Company and non-solicitation of customers and employees during employment and for two years thereafter and (ii) a perpetual agreement for non-disclosure, non-disparagement and availability for litigation support. Each Employment Letter also provides for a settlement of existing key executives agreements with each Executive through: (i) a payment of three times the sum of the Executive's current base salary and regular management incentive program ("MIP") bonus, to be paid at the Effective Time, (ii) three times a supplemental MIP bonus and, in addition, the outstanding 1997 and 1998 Performance Share Awards to be paid at the end of three years, with interest, if the Executive is still employed by the Company or in the event of the Executive's prior death, disability, or termination by the Company without "cause" or by the Executive for "good reason" or retirement on or after age 62, assuming in each case a performance level of 100% of the target award; (iii) payments of outstanding restricted stock awards including the outstanding Performance Share Plan awards, stock options, and payment to be paid at the Effective Time with respect to the change in control payments (except for the Retention Bonus) made by reason of the Merger Agreement. 34 12. Dividends and Distributions. As described above, the Merger Agreement provides that the Company shall not, and shall not permit any of its Subsidiaries to, without the prior written consent of Parent: (i) declare, set aside or pay any dividends on, or make any other actual, constructive or deemed distributions in respect of, any of its capital stock, or otherwise make any payments to stockholders of the Company in their capacity as such, other than dividends payable to the Company declared by any of the Company's subsidiaries, (ii) split, combine, subdivide or reclassify any of its capital stock or make any other actual, constructive or deemed distribution in respect of any shares of its capital stock or (iii) redeem, purchase or otherwise acquire any of its outstanding securities, other than pursuant to existing agreements requiring the Company to repurchase or acquire any shares of its capital stock (provided that such repurchase or acquisition is in accordance with the terms of the Merger Agreement as in effect on June 27, 1999). Pursuant to the terms of the Merger Agreement, the Company is prohibited from taking any of the actions described in the preceding paragraphs except as permitted, required or specifically contemplated by the Merger Agreement and nothing herein shall constitute a waiver by Parent or Purchaser of any of its rights under the Merger Agreement or a limitation of remedies available to Parent or Purchaser for any breach of the Merger Agreement, including termination thereof. 13. Effect of the Offer on the Market for the Common Stock; Exchange Act Registration. Market for Shares. The purchase of Shares pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and could adversely affect the liquidity and market value of the remaining Shares held by the public. Stock Quotation. The Common Stock is traded primarily on the New York Stock Exchange. According to published guidelines of the New York Stock Exchange, the Common Stock might no longer be eligible for quotation on the New York Stock Exchange if, among other things, the number of Shares publicly held was less than 1,100,000, there were fewer than 2,000 holders of round lots, the aggregate market value of the publicly held Shares was less than $40,000,000, net tangible assets were less than $40,000,000 and there were fewer than two registered and active market makers for the Common Stock. Common Stock held directly or indirectly by directors, officers or beneficial owners of more than 10 percent of the Common Stock are not considered as being publicly held for this purpose. According to the Company, as of June 30, 1999, there were 4,614 Holders of record of Common Stock (not including beneficial holders of Common Stock in street name), and as of June 25, 1999, there were 66,263,894 shares of Common Stock outstanding. If the Common Stock were to cease to be quoted on the New York Stock Exchange, the market for the Common Stock could be adversely affected. It is possible that the Common Stock would be traded or quoted on other securities exchanges or in the over-the-counter market, and that price quotations would be reported by such exchanges, or through Nasdaq or other sources. The extent of the public market for the Common Stock and the availability of such quotations would, however, depend upon the number of stockholders and/or the aggregate market value of the Common Stock remaining at such time, the interest in maintaining a market in the Common Stock on the part of securities firms, the possible termination of registration of the shares under the Exchange Act and other factors. Exchange Act Registration. The Common Stock is currently registered under the Exchange Act. Such registration under the Exchange Act may be terminated upon application of the Company to the Commission if the Common Stock is neither listed on a national securities exchange nor held by 300 or more holders of record. Termination of registration 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) of the Exchange Act, the requirement of furnishing a proxy statement pursuant to Section 14(a) of the Exchange Act in connection with stockholders' meetings, 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" 35 of the Company to dispose of such securities pursuant to Rule 144 promulgated under the Securities Act of 1933, as amended, may be impaired or eliminated. Purchaser intends to seek to cause the Company to apply for termination of registration of the Common Stock under the Exchange Act as soon after the completion of the Offer as the requirements for such termination are met. If registration of the Common Stock is not terminated prior to the Merger, then the Common Stock will be delisted from all stock exchanges and the registration of the Common Stock under the Exchange Act will be terminated following the consummation of the Merger. Margin Regulations. The Shares are currently "margin securities," as such term is defined under the regulations of the Federal Reserve Board, which has the effect, among other things, of allowing brokers to extend credit on the collateral of the Common Stock. Depending upon factors similar to those described above regarding listing and market quotations, it is possible that, following the Offer, the Common Stock 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 any event, the Common Stock will cease to be "margin securities" if registration of the Common Stock under the Exchange Act is terminated. 14. Conditions of the Offer. Notwithstanding any other provision of the Offer, Purchaser shall not be required to accept for payment or pay for any Shares tendered pursuant to the Offer, and on or after the initial scheduled expiration date of the Offer may amend the Offer and may postpone the acceptance of and payment for Shares tendered, if (i) the Minimum Condition shall not have been satisfied, (ii) any applicable waiting period under the HSR Act shall not have expired or been terminated prior to the expiration of the Offer, (iii) the Commission of the European Union shall not have approved the Transactions under Regulation (EC) No. 4064/89, as amended, of the Council of the European Union. In addition, notwithstanding any other term of the Offer, Purchaser shall not be required to accept for payment or pay for any Shares tendered pursuant to the Offer, and, at any time on or after the date of the Merger Agreement and prior to the acceptance of Shares for payment, may terminate or amend the Offer and may postpone the acceptance for payment of and payment for Shares tendered if any of the following conditions shall exist: (a) there shall be instituted or pending any action or proceeding by any United States federal or state court or Republic of France court or United States or Republic of France governmental, administrative or regulatory authority or agency, in each case of competent jurisdiction over the Company or a Material Subsidiary (as defined in the Merger Agreement) (i) challenging or seeking to make illegal or otherwise directly or indirectly restrain, prohibit or make materially more costly the Offer or the Merger, (ii) seeking to prohibit or materially limit the ownership or operation by Parent of all or any material portion of the business or assets of the Company and its subsidiaries taken as a whole or to compel Parent to dispose of or hold separately all or any material portion of the business or assets of Parent and its subsidiaries taken as a whole or the Company and its Subsidiaries taken as a whole or seeking to impose any material limitations on the ability of Parent or the Company to conduct its business or own any material parties of the business or assets of Parent and its subsidiaries taken as a whole or the Company and its Subsidiaries taken as a whole in each case as a result of the transactions contemplated by the Merger Agreement, (iii) seeking to impose limitations on the ability of Parent or Purchaser to exercise effectively full rights of ownership of any shares, including, without limitation, the right to vote any such Shares acquired or owned by Purchaser or Parent on all matters properly presented to the Company's stockholders, including without limitation, the approval and adoption of the Merger Agreement and the transactions contemplated thereby, or (iv) seeking to require divestiture by Parent or Purchaser of any Shares; (b) there shall be any action taken or any statute, rule, regulation, legislation, judgment, order or injunction, enacted, enforced, promulgated, amended or issued and applicable to (i) Parent, Purchaser, the Company or any subsidiary of any of them or (ii) the Offer or the Merger, by any United States federal or state or Republic of France legislative body, court, government or governmental, administrative or regulatory authority or agency, other than the routine application of the waiting period provisions of the HSR Act to the Offer or to the Merger, which would reasonably be expected to directly or indirectly, result in any of the consequences referred to in clauses (i) through (iv) in the immediately preceding paragraph; 36 (c) any representation or warranty of the Company in the Merger Agreement shall not be true and correct so as to have a Material Adverse Effect (as defined in the Merger Agreement), in each case as if such representation or warranty was made as of such time on or after the date of the Merger Agreement (except for representations and warranties made as of a specific date which shall be true and correct as of such date so as not to have a Material Adverse Effect); provided, however, that for purposes of this paragraph (c), if any representation or warranty of the Company in the Merger Agreement is qualified in any respect by materiality or the words "Material Adverse Effect", such materiality or Material Adverse Effect qualification shall be ignored for purposes of this paragraph (c); (d) the Company shall have failed to perform, or comply with, any agreement or covenant of the Company to be performed or complied with by it under the Merger Agreement, which failure has a Material Adverse Effect; (e) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on the New York Stock Exchange, Inc. and such suspension shall continue for six consecutive Business Days (excluding any coordinated trading halt triggered solely as a result of a specified decrease in a market index), (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or France and such moratorium shall continue for six consecutive Business Days, (iii) any material limitation (whether or not mandatory) by any United States federal or French governmental authority or agency on the extension of credit by banks or other lending institutions and such limitations shall continue for six consecutive Business Days; (f) the Merger Agreement shall have been terminated in accordance with its terms; or (g) Purchaser and the Company shall have agreed that Purchaser shall terminate the Offer or postpone the acceptance for payment of or payment for Shares thereunder; provided that, with respect to paragraphs (a), (b), (c) and (d) above, Purchaser shall give the Company advance written notice of any intention by Purchaser to assert the nonsatisfaction of any of the conditions set forth in such paragraphs (a), (b), (c) or (d),which notice shall describe in reasonable detail the basis for the belief that any such condition has not been satisfied; and, provided further that (i) in the event of any action, proceeding, judgment, order or injunction contemplated by such paragraphs (a) or (b), Purchaser shall not terminate the Offer under such paragraphs (a) or (b), nor exercise any related rights to terminate this Agreement, unless and until such action, proceeding, judgment, order or injunction shall have become final and nonappealable and (ii) if any breach or failure to perform contemplated by any of such paragraphs (c) and (d) is capable of being cured through the exercise by the Company of its reasonable best efforts and for so long as the Company continues to use such reasonable best efforts to cure such breach of failure to perform, Purchaser shall not terminate the Offer under such paragraphs (c) or (d) or exercise any related right to terminate this Agreement, in either case for a period not to exceed 10 Business Days. The foregoing conditions are for the benefit of Parent and Purchaser and may be asserted by Purchaser or Parent regardless of the circumstances giving rise to any such condition or, subject to the terms of the Merger Agreement, may be waived by Purchaser or Parent, in whole or in part, at any time and from time to time in their discretion. The failure by Parent or Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right; the waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts and circumstances, and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. 15. Certain Legal Matters; Regulatory Approvals. General. Except as otherwise disclosed herein, neither Parent nor Purchaser is aware of (i) any license or regulatory permit that appears to be material to the business of the Company and its subsidiaries, taken as a whole, that might be adversely affected by the acquisition of Shares by Purchaser pursuant to the Offer, Merger or otherwise or (ii) any approval or other action by any governmental, administrative or regulatory agency or authority, domestic or foreign, that would be required for the acquisition or ownership of Shares by Purchaser as 37 contemplated herein. Should any such approval or other action be required, Purchaser currently contemplates that it would seek such approval or action. Purchaser's obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions. See Section 14--"Conditions of the Offer". While, except as described in this Offer to Purchase, Purchaser does not currently intend to delay the acceptance for payment of Shares tendered pursuant to the Offer pending the outcome of any such matter, there can be no assurance that any such approval or action, if needed, would be obtained or would be obtained without substantial conditions or that adverse consequences might not result to the business of the Company, Parent or Purchaser or that certain parts of the businesses of the Company, Parent or Purchaser might not have to be disposed of in the event that such approvals were not obtained or any other actions were not taken. State Takeover Laws. The Company is incorporated under the laws of the State of Delaware. In general, Section 203 of the DGCL prevents an "interested stockholder" (generally a person who owns or has the right to acquire 15% or more of a corporation's outstanding voting stock, or an affiliate or associate thereof) from engaging in a "business combination" (defined to include mergers and certain other transactions) with a Delaware corporation for a period of three years following the date such person became an interested stockholder unless, among other things, prior to the date the interested stockholder became an interested stockholder, the board of directors of the corporation approved either the business combination or the transaction in which the interested stockholder became an interested stockholder. The Company has represented to Parent and Purchaser in the Merger Agreement that the Board of Directors of the Company has taken all action (including appropriate approvals of the Board of Directors of the Company) necessary to exempt Parent, its subsidiaries, their affiliates, the Merger, the Merger Agreement and the transactions contemplated thereby from Section 203 of the DGCL. A number of other states have adopted laws and regulations applicable to attempts to acquire securities of corporations which are incorporated, or have substantial assets, stockholders, principal executive offices or principal places of business, or whose business operations otherwise have substantial economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of the United States invalidated on constitutional grounds the Illinois Business Takeover Statute, which, as a matter of state securities law, made takeovers of corporations meeting certain requirements more difficult. However, in 1987 in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the State of Indiana may, as a matter of corporate law and, in particular, with respect to those aspects of corporate law concerning corporate governance, constitutionally disqualify a potential acquirer 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 holders in the state and were incorporated there. The Company, directly or through subsidiaries, conducts business in a number of states throughout the United States, some of which have enacted takeover laws. Based on representations made by the Company in the Merger Agreement, Purchaser does not believe that any state takeover statutes apply to the Offer. Neither Parent nor Purchaser has currently complied with any state takeover statute or regulation. Purchaser reserves the right to challenge the applicability or validity of any state law purportedly applicable to the Offer or the Merger and nothing in this Offer to Purchase or any action taken in connection with the Offer or the Merger is intended as a waiver of such right. In the event it is asserted that one or more state takeover laws is applicable to the Offer or the Merger, and an appropriate court does not determine that it is inapplicable or invalid as applied to the Offer or the Merger, Purchaser might be required to file certain information with, or receive approvals from, the relevant state authorities. In addition, if enjoined, Purchaser might be unable to accept for payment any Shares tendered pursuant to the Offer or be delayed in continuing or consummating the Offer and the Merger. In such case, Purchaser may not be obligated to accept for payment any Common Stock tendered. See Section 14--"Conditions of the Offer". Appraisal Rights. No appraisal rights are available to Holders in connection with the Offer. However, if the Merger is consummated, a Holder will have certain rights under Section 262 of the DGCL to dissent and demand appraisal of, and payment in cash for the fair value of, such Holder's Shares. Those rights, if the statutory procedures are complied with, could lead to a judicial determination of the fair value (excluding 38 any value arising from the Merger) required to be paid in cash to dissenting stockholders for their Shares. Any judicial determination of the fair value of the Shares could be based upon considerations other than or in addition to the Offer Price and the market value of the Shares, including asset values and the investment value of such Shares. The value so determined could be more or less than the Offer Price. Failure to follow the steps required by Section 262 of the DGCL for perfecting appraisal rights may result in the loss of those rights. If a Holder who demands appraisal under Section 262 of the DGCL fails to perfect, or effectively withdraws or loses, its right to appraisal, as provided in the DGCL, the Shares of that Holder will be converted into the Merger Consideration in accordance with the Merger Agreement. A Holder may withdraw his demand for appraisal by delivering to Purchaser a written notice withdrawing such demand for appraisal and accepting of the Merger. The foregoing summary of the rights of objecting Holders does not purport to be a complete statement of the procedures to be followed by Holders desiring to exercise any available appraisal rights. The preservation and exercise of appraisal rights require strict adherence to the applicable provisions of Delaware law. The provisions of Section 262 of the DGCL are complex and technical in nature. Holders desiring to exercise their appraisal rights may wish to consult counsel, since the failure to comply strictly with these provisions will result in the loss of their appraisal rights. Going Private Transactions. Rule 13e-3 under the Exchange Act is applicable to certain "going private" transactions. Purchaser does not believe that Rule 13e-3 will be applicable to the Merger, unless, among other things, the Merger is completed more than one year after termination of the Offer. If applicable, Rule 13e-3 would require, among other things, that certain financial information regarding the Company and certain information regarding the fairness of the Merger and the consideration offered to stockholders of the Company therein be filed with the Commission and disclosed to stockholders of the Company prior to consummation of the Merger. Regulatory Approvals. (a) Antitrust--US. Under the HSR Act and the rules that have been promulgated thereunder by the Federal Trade Commission ("FTC"), certain mergers and acquisitions may not be consummated unless certain information has been furnished to the Antitrust Division of the Department of Justice (the "Antitrust Division") and the FTC and certain waiting period requirements have been satisfied. The acquisition of Shares by Purchaser pursuant to the Offer is subject to the HSR Act requirements. Under the provisions of the HSR Act applicable to the purchase of Shares pursuant to the Offer, such purchase may not be made until the expiration of a 15-calendar day waiting period following the required filing of a Notification and Report Form under the HSR Act by Parent, which Parent will submit as soon as reasonably possible. Accordingly, the waiting period under the HSR Act will expire at 11:59 P.M., New York City time, on the fifteenth calendar day following filing of the Notification and Report Form by Parent, unless early termination of the waiting period is granted or Parent receives a request for additional information or documentary material prior thereto. If either the FTC or the Antitrust Division were to request additional information or documentary material from Parent prior to the expiration of the 15-day waiting period, the waiting period would 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. Thereafter, the waiting period could be extended only by court order or by consent of Parent. If the acquisition of Shares is delayed pursuant to a request by the FTC or the Antitrust Division for additional information or documentary material pursuant to the HSR Act, the purchase of and payment for Shares pursuant to the Offer will be deferred until 10 days after the request is substantially complied with unless the waiting period is terminated sooner by the FTC or the Antitrust Division (and assuming all of the other conditions to the Offer have been satisfied or waived). See Section 2--"Acceptance for Payment and Payment for Shares". Only one extension of such waiting period pursuant to a request for additional information or documentary material is authorized by the rules promulgated under the HSR Act, except by court order or by 39 consent. Although the Company is required to file certain information and documentary material with the Antitrust Division and the FTC in connection with the Offer, neither the Company's failure to make such filings nor a request to the Company from the Antitrust Division or the FTC for additional information or documentary material will extend the waiting period. However, if the Antitrust Division or the FTC raises substantive issues in connection with a proposed transaction, the parties frequently engage in negotiations with the relevant governmental agency concerning possible means of addressing these issues and may agree to delay consummation of the transaction while such negotiations continue. The Antitrust Division and the FTC frequently scrutinize the legality under the antitrust laws of transactions such as the proposed acquisition of Shares by Purchaser pursuant to the Offer. At any time before or after Purchaser's purchase of Shares, either the Antitrust Division or the FTC could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the acquisition of Shares pursuant to the Offer or seeking divestiture of Shares acquired by Purchaser or divestiture of substantial assets of Parent, the Company or any of their respective subsidiaries. State attorneys general may also bring legal action under the antitrust laws, and private parties may bring such action under certain circumstances. Parent and Purchaser believe that the acquisition of Shares by Purchaser will not violate the antitrust laws. Nevertheless, there can be no assurance that a challenge to the Offer on antitrust grounds will not be made or, if a challenge is made, what the result will be. See Section 14--"Conditions of the Offer" for certain conditions to the Offer, including conditions with respect to litigation and certain governmental actions. (b) Antitrust--EC. The EC Merger Regulation (Council Regulation No. 4064/89 of December 21, 1989, as amended) requires notification to the European Commission, within seven days of the conclusion of an agreement or commencement of an offer to acquire a controlling interest or the commencement of a cash tender offer therefor, of all concentrations between companies which are deemed to have a "Community dimension" because they exceed certain global and European turnover thresholds. Such concentrations may not be consummated until the European Commission, acting within fixed deadlines, approves them as being "compatible with the Common Market". A concentration is compatible with the Common Market if it does not create or strengthen a dominant position as a result of which effective competition would be significantly impeded in the European Economic Area (the "EEA"), or in a substantial part of it. The European Commission has exclusive competence for approving or prohibiting concentrations with a Community dimension--however, it may, upon request, refer the case to the national antitrust authority of a particular member state if the concentration has a specific effect on the territory of the requesting member state. The notification involves the disclosure to the European Commission of detailed information, especially regarding the structure of the relevant markets and the parties' competitive position. Upon receipt of a notification, the European Commission conducts a preliminary review with a maximum duration of one month from notification, which may be extended to six weeks in certain circumstances. This preliminary review concludes with a decision either to approve the notified concentration (with or without conditions) or to initiate an in-depth investigation if the concentration raises serious doubts as to its compatibility with the Common Market. Such an in-depth investigation has a maximum duration of four months, and must end with a European Commission decision either approving the concentration (with or without conditions) or prohibiting it. If the European Commission raises substantive issues in connection with the proposed concentration, the parties may negotiate with the European Commission to find a solution, which may take the form of an undertaking to make structural modifications to the entity resulting from the concentration on conditions, and within a timeframe, agreed with the European Commission. Parent and the Company, including their respective affiliates, each conducts substantial operations within the EEA and satisfies the applicable turnover thresholds, with the result that the acquisition of Common Stock will amount to a concentration with a Community dimension and, therefore, be subject to the requirement of notification to, and approval by, the European Commission. Parent and Purchaser believe that the concentration effected by the acquisition of the Common Stock by Purchaser will be considered to be compatible with the Common Market, and approved by the European Commission during the preliminary review phase. However, it cannot be ruled out that the European Commission 40 might seek to require structural undertakings as a condition to its approval, and/or to open a second phase investigation to examine serious doubts regarding the concentration's compatibility with the Common Market. 16. Fees and Expenses. Except as set forth below, neither Parent nor Purchaser will pay any fees or commissions to any broker, dealer or other person for soliciting tenders of Shares pursuant to the Offer. Parent and Purchaser have engaged J.P. Morgan as the Dealer Manager in connection with the Offer, and as financial advisor in connection with Parent's proposed acquisition of the Company. Parent and Degremont have agreed to pay J.P. Morgan an engagement fee of $100,000, a retainer fee of $50,000 per month, an announcement fee of $1,000,000 and, upon consummation of the Offer, a success fee of $10,500,000 (less any amount of the engagement, retainer or announcement fees previously paid). Parent and Degremont have also agreed to reimburse J.P. Morgan for all reasonable expenses, and to indemnify J.P. Morgan and certain other persons against certain liabilities in connection with the Offer, including certain liabilities under the federal securities laws. Purchaser and Parent have also retained First Chicago as the Depositary. The Depositary has not been retained to make solicitations or recommendations in its role as Depositary. The Depositary will receive reasonable and customary compensation for its services, will be reimbursed for certain reasonable out- of-pocket expenses and will be indemnified against certain liabilities and expenses in connection therewith, including certain liabilities under the United States federal securities laws. In addition, Purchaser and Parent have retained Morrow & Co., Inc. to act as the Information Agent in connection with the Offer. The Information Agent will receive reasonable and customary compensation for its services, will be reimbursed for certain reasonable out-of-pocket expenses and will be indemnified against certain liabilities and expenses in connection therewith, including certain liabilities under the United States federal securities laws. Brokers, dealers, commercial banks and trust companies will be reimbursed by Purchaser for customary mailing and handling expenses incurred by them in forwarding offering material to their customers. 17. Miscellaneous. Purchaser is not aware of any jurisdiction where the making of the Offer is prohibited by any administrative or judicial action pursuant to any valid state statute. If Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good faith effort to comply with such state statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, Purchaser cannot comply with any such state statute, the Offer will not be made to (and tenders will not be accepted from or on behalf of) the Holders in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by the Dealer Manager or 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 make any representation on behalf of Parent or Purchaser not contained in this Offer to Purchase or in the Letter of Transmittal and, if given or made, such information or representation must not be relied upon as having been authorized. Parent and Purchaser have filed with the Commission the Schedule 14D-1, together with exhibits, pursuant to Section 14(d)(1) of the Exchange Act and Rule 14d-3 promulgated thereunder, furnishing certain additional information with respect to the Offer, and may file amendments thereto. The Schedule 14D-1 and any amendments thereto, including exhibits, may be inspected at, and copies may be obtained from, the same places and in the manner set forth in Section 7--"Certain Information Concerning the Company" (except that they will not be available at the regional offices of the Commission). H2O Acquisition Co. July 1, 1999 41 SCHEDULE I INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF SUEZ LYONNAISE DES EAUX AND H2O ACQUISITION CO. 1. SUPERVISORY BOARD AND EXECUTIVE OFFICERS OF SUEZ LYONNAISE DES EAUX Set forth below is the name, present principal occupation or employment and material occupations, positions, offices or employments for the past five years of each member of the Supervisory Board and each executive officer of Suez Lyonnaise des Eaux ("Parent"). The principal address of Parent and, unless indicated below, the current business address for each individual listed below is c/o Suez Lyonnaise des Eaux, 1, rue d'Astorg, 75008 Paris, France. Telephone: 011-33-1-40-06-64-00. Each such person is, unless indicated below, a citizen of France.
Name and Current Present Principal Occupation or Employment; Business Address Age Material Positions Held During the Past Five Years - ---------------- --- -------------------------------------------------- Jerome Monod............ 68 Chairman of the Board, Lyonnaise des Eaux (1980- 1997); Chairman of the Supervisory Board, Suez Lyonnaise des Eaux (1997-2001). Jean Guy Gandois........ 69 Vice Chairman of the Supervisory Board, Suez Lyonnaise des Eaux (1997-2001); Chairman and CEO, Pechiney (1986-1996); Chairman and CEO, Cockerill Sambre (1987-1999); President, French National Council of Employers (1996-1997). Gerhard Cromme.......... 56 Chairman of the Executive Board, Fried. Krupp AG Hoesch-Krupp (1989-1999); Chairman of the Executive Board, Thyssen Krupp AG (1999-present); Member of the Supervisory Board, Suez Lyonnaise des Eaux (1997-2001). German Citizen. Etienne Davignon........ 67 Chairman, Societe Generale de Belgique (1985- present); Member of the Supervisory Board, Suez Lyonnaise des Eaux (1997-2001). Belgian Citizen. Paul Desmarais, Jr. .... 44 Chairman of the Board and Co-Chief Executive, Power Corporation of Canada (1998-2001); Director, Power Corporation of Canada (Canada); Member of the Supervisory Board, Suez Lyonnaise des Eaux (1998- 2001); Director, PetroFina S.A. (Belgium); Director, Tractebel S.A. (Belgium); Director, Electrafina S.A. (Belgium); Director, GWL Properties Inc. (U.S.A.); Director, First Great-West Life & Annuity Insurance Company (U.S.A.); Director, Great-West Lifeco Inc. (Canada); Director, Gold Circle Insurance Company (Canada); Director, Gesca Ltd. (Canada); Director, La Presse Ltd. (Canada); Director, Les Journaux Trans-Canada (1996) Inc. (Canada); Director and Member of the International Council, INSEAD; Chairman, Canadian Foundation for International Management for INSEAD; Chairman, McGill University Faculty of Management International Advisory Board; Chairman, HEC International Advisory Committee. Canadian Citizen. Reto Domeniconi......... 62 Member of the Supervisory Board, Suez Lyonnaise des Eaux (1997-2001); Directeur General, Nestle SA (1983-1996). Swiss Citizen. Lucien Douroux.......... 65 Chairman of the Supervisory Board, Credit Agricole Indosuez (1999-present); Member of the Supervisory Board, Suez Lyonnaise des Eaux (1997-2001); Chief Executive Officer, Caisse Nationale de Credit Agricole (1993-1999).
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Name and Current Present Principal Occupation or Employment; Business Address Age Material Positions Held During the Past Five Years - ---------------- --- -------------------------------------------------- Pierre Faurre........... 57 Chairman and Chief Executive Officer, SAGEM (1987- present); Member of the Supervisory Board, Suez Lyonnaise des Eaux (1997-2001). Ricardo Fornesa Ribo.... 67 Chief Executive Officer, Sociedad General de Aguas de Barcelona, S.A. (1979-present); Board Secretary and Assistant to the President, Caixa d'Estalvis i Pensions de Barcelona (1979-present); Member of the Supervisory Board, Suez Lyonnaise des Eaux (1998- 2001); Director, Inmobiliara Colonial (1992- present); Director, E. Nacional Hidroelectrica del Ribagorzana (ENHER) Electricity (1994-present); Director, Cia. de Seguros Adeslas, S.A. (1994-1998); Director, Cia de Telecomunicaciones de Chile (1997- present). Spanish Citizen. Albert Frere............ 73 Chairman of the Board, Groupe Bruxelles Lambert S.A. (1988-present); Chairman of the Board, Petrofina S.A. (1990-present); Chairman of the Board, Electrafina S.A. (1982-present); Chairman of the Board, Frere-Bourgeois S.A. (1970-present); Chairman of the Board, Erbe S.A. (1975-present); Deputy Chairman, Managing Director, and Member of the Executive Committee, Pargesa Holding S.A. (1981- present); Deputy Chairman, Compagnie Benelux Paribas S.A. (1973-present); Deputy Chairman, Total Fina S.A. (1999-present); Member of the Supervisory Board, Suez Lyonnaise des Eaux (1997-present); Director, Coparex S.A. (1978-present); Director, Television Francaise 1, S.A. (1996-present); Director, L.V.M.H. S.A. (1997-present); Director, Audiofina S.A. (1992-present); Director, CLT/UFA (1987-present); Honorary Member of the Council of Regents, Banque Nationale de Belgique S.A. (1995- present). Belgian Citizen. Frederick Holliday...... 63 Chairman, Northumbrian Water Group (1993-present); Chairman, The Go-Ahead Group Plc (as of 1997); Board Member, Brewin Dolphin Plc (as of 1996); Chairman, Northern Venture Capital Fund (1985); Member of the Supervisory Board, Suez Lyonnaise des Eaux (1997- 2001); Board Member, Shell UK Limited (1980-1998); Board Member, Union Railways (1993-1996); Board Member, British Rail (1990-1993); Vice Chancellor, Durham University (1980-1990); Chairman, Northern Regional Board, Lloyds Bank (1986-1989); President of the Freshwater Biological Association; President, British Trust for Ornithology; former Council Member for WaterAid; former Chairman of the Nature Conservancy Council; Past President of the Scottish Marine Biological Association. British Citizen. Philippe Jaffre......... 53 Chairman and Chief Executive Officer, Elf Aquitaine (1993-present); Member of the Supervisory Board, Suez Lyonnaise des Eaux (1997-2001). Jacques Lagarde......... 61 Executive Vice President, the Gillette Company (1993-1998); Member of the Supervisory Board, Suez Lyonnaise des Eaux (1997-2001). American Citizen.
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Name and Current Present Principal Occupation or Employment; Business Address Age Material Positions Held During the Past Five Years - ---------------- --- -------------------------------------------------- Jean Peyrelevade........ 59 Chairman, Credit Lyonnais (1993-present); Member of the Supervisory Board, Suez Lyonnaise des Eaux (1997-2001). Claude Pierre- 71 Chairman, Caisse de Refinancement Hypothecaire Brossolette............ (1995-present); Chairman, Banque Eurofin (1995- 1996); Member of the Supervisory Board, Suez Lyonnaise des Eaux (1997-2000); Director, Credit Lyonnais (1994-present); Director, Compagnie des Signaux (1996-present). Jean Syrota............. 62 Chairman and Chief Executive, Compagnie Generale des Matieres Nucleaires (COGEMA) (1988-present); Director, TOTAL S.A. (1993-present); Director, Framatome (1989-present); Permanent Representative of COGEMA, Usinor (1995-present); Director, SAGEM (1996-present); Director, CEA-Industrie (1993- present); Board Member, CFC (1989-present); Board Member, FBFC (1989-present); Member of the Supervisory Board, Suez Lyonnaise des Eaux (1997- 2001); Director, ERAP (1998-present); Permanent representative of COGEMA, EURODIF (1989-1997). Gerard Mestrallet....... 50 President of the Executive Board and Chief Executive Officer, Suez Lyonnaise des Eaux (1997-present); Chairman and Chief Executive Officer, Compagnie de Suez (1995-1997); Chief Executive Officer and Chairman of the Management Committee, Societe Generale de Belgique (1991-1995); Senior executive vice-president, Compagnie de Suez (1991-1995). Philippe Brongniart..... 60 Member of the Executive Board, Suez Lyonnaise des Eaux (1997-present); Director, H2O Acquisition Co. (1999-present); Executive Vice President, Lyonnaise des Eaux (1993-1997). Francois Jaclot......... 50 Executive Vice President and Member of the Executive Board, Suez Lyonnaise des Eaux (1997-present); Senior Executive Vice President; Compagnie de Suez (1996-1997); Managing Partner, Demachy Worms & Compagnie (1994-1995); Director, Societe Generale de Belgique (1996-present); Director, GTM (1998- present); Director, Sita (1998-present); Director, Elyo (1998-present); Director, TPS (1998-present); Director, Banque Sofinco (1996-present); Director, Suez Industrie (1996-present); Director, M6 (1998- present); Director, Lyonnaise Communications (1998- present). Patrick Buffet.......... 45 Executive Vice President, Suez Lyonnaise des Eaux (1998-present); Director, H2O Acquisition Co. (1999- present); Director of International Holdings, Societe Generale de Belgique (1994-1998).
2. DIRECTORS AND EXECUTIVE OFFICERS OF H2O ACQUISITION CO. Set forth below is the name, present principal occupation or employment and material occupations, positions, offices or employment for the past five years of each director and executive officer of H2O Acquisition Co. ("Purchaser"). Each person identified below has held his position since the formation of Purchaser on June 24, 1999. The principal address of Purchaser and, unless indicated below, the current business address for I-3 each individual listed below c/o Suez Lyonnaise des Eaux, 1, rue d'Astorg, 75008 Paris, France. Telephone: 011-33-1-40-06-64-00. Each such person is, unless indicated below, a citizen of France. Directors are identified by an asterisk.
Name and Current Present Principal Occupation or Employment; Business Address Age Material Positions Held During the Past Five Years - ---------------- --- -------------------------------------------------- Philippe Brongniart*.... 60 Member of the Executive Board, Suez Lyonnaise des Eaux (1997-present); Director, H2O Acquisition Co. (1999-present); Executive Vice President, Lyonnaise des Eaux (1993-1997). Patrick Buffet*......... 45 Executive Vice President, Suez Lyonnaise des Eaux (1998-present); Director, H2O Acquisition Co. (1999- present); Director of International Holdings, Societe Generale de Belgique (1994-1998). Christian Maurin........ 52 Chairman and Chief Executive Officer, Degremont (1999-present); Chairman and Chief Executive Officer, Banque Indosuez (1996-1998); President, H2O Acquisition Co. (1999-present); Chairman and Chief Executive Officer, Banque Sofinco (1993-1996).
3. OWNERSHIP OF SHARES BY DIRECTORS AND EXECUTIVE OFFICERS To the best knowledge of Parent and Purchaser, none of the persons listed on this Schedule I beneficially owns or has a right to acquire directly or indirectly any Shares, and none of the persons listed on this Schedule I has effected any transactions in the Shares during the past 60 days. I-4 Copies of the Letters of Transmittal, properly completed and duly signed, will be accepted. The Letter of Transmittal, certificates and any other required documents should be sent by each Holder or such Holder's 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: FIRST CHICAGO TRUST COMPANY OF NEW YORK By Hand: By Mail: By Overnight Courier: First Chicago Trust First Chicago Trust First Chicago Trust Company of New York Company of New York Company of New York c/o Securities Transfer Corporate Actions Corporate Actions and Reporting Services Suite 4660 Suite 4680 Inc. P.O. Box 2569 14 Wall Street, 8th Floor Attn: Corporate Actions Jersey City, NJ 07303- New York, NY 10005 100 William Street, 2569 Galleria New York, NY 10038 Questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective addresses and telephone numbers as set forth below. Additional copies of this Offer to Purchase, the Letter of Transmittal, or other related tender offer materials may be obtained from the Information Agent or from brokers, dealers, commercial banks or trust companies. The Information Agent for the Offer is: MORROW & CO., INC. 445 Park Avenue, 5th Floor New York, New York 10022 Collect Call: (212) 754-8000 Banks and Brokerage Firms, please call: (800) 662-5200 Shareholders Please Call: (800) 566-9061 The Dealer Manager for the Offer is: J.P. Morgan & Co. 60 Wall Street New York, New York 10260 Toll Free: (877) 219-8026 EX-99.(A)(2) 3 LETTER OF TRANSMITTAL Exhibit (a)(2) LETTER OF TRANSMITTAL To Tender Shares of Common Stock (Including the Associated Preferred Stock Purchase Rights) and Shares of Series B ESOP Convertible Preferred Stock of NALCO CHEMICAL COMPANY Pursuant to the Offer to Purchase Dated July 1, 1999 by H2O ACQUISITION CO., a wholly owned subsidiary of SUEZ LYONNAISE DES EAUX THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 30, 1999, UNLESS THE OFFER IS EXTENDED. The Depositary for the Offer is: First Chicago Trust Company of New York By Hand: By Mail: By Overnight Courier: First Chicago Trust First Chicago Trust Company of Company of First Chicago Trust Company New York of New York Corporate Actions New York c/o Securities Transfer Suite 4660 Corporate Actions and P.O. Box 2569 Suite 4680 Reporting Services Inc. 14 Wall Street, 8th Floor Jersey City, NJ 07303-2569 Attn: Corporate Actions New York, NY 10005 100 William Street, Galleria New York, NY 10038 DESCRIPTION OF SHARES TENDERED - --------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s) (Please fill in, if blank, exactly as name(s) appear(s) Shares Tendered on the certificate(s)) (Attach additional list if necessary) - ------------------------------------------------------------------------------------------------------------------------------ Total Number of Shares Number Certificate Evidenced by of Shares Number(s)* Certificate(s)* Tendered:** --------------------------------------- ------------------------------- ------------------------------- ------------------------------- - -------------------------------------------------- ------------------------------- -------------------------------
Total Shares Tendered... - ------------------------------------------------------------------------------- * Need not be completed by Book-Entry Holders. ** Unless otherwise indicated, it will be assumed that all Shares evidenced by any Share Certificate(s) delivered to the Depositary are being tendered. See Instruction 4. DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY TO THE DEPOSITARY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be completed by holders of certificates representing (i) shares of common stock, par value $0.1875 per share, including the associated preferred stock purchase rights (the "Common Stock") or (ii) shares of Series B ESOP Convertible Preferred stock (the "ESOP Preferred Stock" and together with the Common Stock, the "Shares") (such holders of Shares, collectively, the "Holders"). If you hold Shares in book- entry form, you may tender your Shares by book-entry transfer to the account maintained by the Depositary at The Depository Trust Company ("DTC") (the "Book-Entry Transfer Facility"), along with an Agent's Message (as defined in the Offer to Purchase), pursuant to the procedures set forth in Section 3-- "Procedures for Tendering Shares" of the Offer to Purchase. Holders who tender Shares by book-entry transfer are referred to herein as "Book-Entry Holders" and other Holders are referred to herein as "Certificate Holders." Holders whose certificates evidencing Shares (the "Certificates") are not immediately available or who cannot deliver their Certificates and all other documents required hereby to the Depositary on or prior to the Expiration Date (as defined in Section 1--"Terms of the Offer" of the Offer to Purchase), or who cannot comply with the book-entry transfer procedures on a timely basis, may nevertheless tender their Shares according to the guaranteed delivery procedure set forth in Section 3--"Procedures for Tendering Shares" of the Offer to Purchase. See Instruction 2 of this Letter of Transmittal. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Holder(s) _______________________________________________ Window Ticket Number (if any) _________________________________________________ Date of Execution of Notice of Guaranteed Delivery ____________________________ Name of Institution which Guaranteed Delivery _________________________________ DTC Account Number (if delivered by Book-Entry Transfer) ______________________ Transaction Code Number _______________________________________________________ CHECK HERE IF TENDER IS BEING MADE IN RESPECT OF LOST OR MUTILATED SECURITIES. SEE INSTRUCTION 9. NOTE: SIGNATURES MUST BE PROVIDED BELOW 2 PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: The undersigned hereby tenders to H2O Acquisition Co. ("Purchaser"), a Delaware corporation and a wholly owned subsidiary of Suez Lyonnaise des Eaux, a societe anonyme organized and existing under the laws of the Republic of France ("Parent"), the above-described shares of common stock, par value $0.1875 per share, including the associated preferred stock purchase rights (the "Common Stock") and the shares of Series B ESOP Convertible Preferred Stock (the "ESOP Preferred Stock" and together with the Common Stock, the "Shares") of Nalco Chemical Company, a Delaware corporation (the "Company") upon the terms and subject to the conditions set forth in the Offer to Purchase dated July 1, 1999 (the "Offer to Purchase"), receipt of which is hereby acknowledged, and in this Letter of Transmittal (which, together with the Offer to Purchase, as they may be amended and supplemented from time to time, constitute the "Offer"). The undersigned understands that Purchaser reserves the right to assign to an affiliate of Parent the right to purchase all or any portion of the Shares tendered pursuant to the Offer, but the undersigned further understands that any such assignment will not relieve Purchaser of its obligations under the Offer and that any such assignment will in no way prejudice the rights of tendering Holders to receive payment for the Shares validly tendered and accepted for payment pursuant to the Offer. Subject to, and effective upon acceptance for payment of, and payment for, the Shares tendered herewith in accordance with the terms of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), the undersigned hereby sells, assigns and transfers to, or upon the order of, Purchaser, all right, title and interest in and to all of the Shares that are being tendered hereby and any and all dividends, distributions, rights, or other securities issued or issuable in respect of such Shares on or after June 27, 1999 (collectively, "Distributions"), and irrevocably appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares and all Distributions with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) to (a) transfer ownership of such Shares and all Distributions, together with all accompanying evidences of transfers and authenticity, to or upon the order of Purchaser, (b) present such Shares and all Distributions for transfer on the books of the Company and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares and all Distributions, all in accordance with the terms and subject to the conditions of the Offer as set forth in the Offer to Purchase. The undersigned hereby irrevocably appoints each designee of Purchaser as such attorney-in-fact and proxy of the undersigned, with full power of substitution, to vote in such manner as each such attorney-in-fact and proxy (or any substitute thereof) shall deem proper in its sole discretion, and to otherwise act (including pursuant to written consent) to the full extent of the undersigned's rights with respect to the Shares and all Distributions tendered hereby and accepted for payment by Purchaser prior to the time of such vote or action. All such proxies shall be considered coupled with an interest in the tendered Shares and shall be irrevocable and are granted in consideration of, and are effective upon, the acceptance for payment of such Shares and all Distributions by Purchaser in accordance with the terms of the Offer. Such acceptance for payment by Purchaser shall revoke, without further action, any other proxy or power of attorney granted by the undersigned at any time with respect to such Shares and all Distributions and no subsequent proxies or powers of attorney will be given (or, if given, will not be deemed effective) with respect thereto by the undersigned. The designees of Purchaser will, with respect to the Shares for which the appointment is effective, be empowered to exercise all voting and other rights as they in their sole discretion may deem proper at any annual, special, adjourned or postponed meeting of the Company's stockholders, by written consent or otherwise, and Purchaser reserves the right to require that, in order for Shares or any Distributions to be deemed validly tendered, immediately upon Purchaser's acceptance for payment of such Shares, Purchaser must be able to exercise all rights (including, without limitation, all voting rights and rights of conversion) with respect to such Shares and receive all Distributions. The undersigned hereby represents and warrants that the undersigned has full power and authority to tender, sell, assign and transfer the Shares and all Distributions tendered hereby and that, when the same are accepted for payment by Purchaser, Purchaser will acquire good, marketable and unencumbered title thereto, free and clear 3 of all liens, restrictions, charges and encumbrances, and the same will not be subject to any adverse claim. The undersigned will, upon request, execute and deliver any additional documents deemed by the Depositary or Purchaser to be necessary or desirable to complete the sale, assignment, and transfer of the Shares and all Distributions tendered hereby. In addition, the undersigned shall promptly remit and transfer to the Depositary for the account of Purchaser any and all Distributions in respect of the Shares tendered hereby, accompanied by appropriate documentation of transfer and, pending such remittance or appropriate assurance thereof, Purchaser shall be entitled to all rights and privileges as owner of any such Distributions and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by Purchaser in its sole discretion. No authority herein conferred or agreed to be conferred shall be affected by, and all such authority shall survive, the death or incapacity of the undersigned. All obligations of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Subject to the withdrawal rights set forth in Section 4-- "Withdrawal Rights" of the Offer to Purchase, the tender of the Shares and related Distributions hereby made is irrevocable. The undersigned understands that tenders of Shares pursuant to any of the procedures described in Section 3--"Procedures for Tendering Shares" of the Offer to Purchase and in the instructions hereto will constitute the undersigned's acceptance of the terms and conditions of the Offer. Purchaser's acceptance for payment of such Shares will constitute a binding agreement between the undersigned and Purchaser upon the terms and subject to the conditions set forth in the Offer. The undersigned recognizes that under certain circumstances set forth in the Offer to Purchase, Purchaser may not be required to accept for payment any of the Shares tendered hereby. Unless otherwise indicated herein under "Special Payment Instructions," please issue the check for the purchase price and/or return any Common Stock Certificates and ESOP Preferred Stock Certificates not tendered or not accepted for payment in the name(s) of the registered holder(s) appearing under "Description of Shares Tendered." Similarly, unless otherwise indicated under "Special Delivery Instructions," please mail the check for the purchase price and/or return any Certificates not tendered or not accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing under "Description of Shares Tendered." In the event that both the Special Delivery Instructions and the Special Payment Instructions are completed, please issue the check for the purchase price and/or issue any Certificates not so tendered or accepted for payment in the name of, and deliver said check and/or return such certificates to, the person or persons so indicated. The undersigned recognizes that Purchaser has no obligation, pursuant to the Special Payment Instructions, to transfer any Shares from the name of the registered holder thereof if Purchaser does not accept for payment any of the Shares so tendered. 4 SPECIAL PAYMENT INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS (See Instructions 1, 5, 6 and 7) (See Instructions 1, 5, 6 and 7) To be completed ONLY if To be completed ONLY if Certificate(s) not tendered or not Certificate(s) not tendered or not purchased and/or the check for the purchased and/or the check for the purchase price of Shares purchased purchase price of Shares purchased are to be issued in the name of are to be sent to someone other someone other than the than the undersigned, or to the undersigned. undersigned at an address other than that shown above. Issue check and Certificate(s) to: Mail check and Certificate(s) to: Name: _____________________________ Name: _____________________________ Please Type or Print Please Type or Print Address: __________________________ Address: __________________________ ___________________________________ ___________________________________ (Include Zip Code) (Include Zip Code) __________________________________* ___________________________________ (Tax Identification or Social (Tax Identification or Social Security No.) Security No.) (See Substitute Form W-9 Included (See Substitute Form W-9 Included Herewith) Herewith) - -------- * Signature Guarantee required 5 IMPORTANT HOLDER(S) SIGN HERE (See Instructions 1 and 5) (Please Complete Substitute Form W-9 Contained Herein) Signature(s) of Holder(s): __________________________________________________ Date: _________________________________________________________________, 1999 (Must be signed by registered holder(s) exactly as name(s) appear(s) on Certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificate(s) and documents transmitted with this Letter of Transmittal. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or other person acting in a fiduciary or representative capacity, please provide the following information and see Instruction 5.) Name(s): ____________________________________________________________________ (Please Print) Capacity (Full Title): ______________________________________________________ Address: ____________________________________________________________________ _____________________________________________________________________________ (Include Zip Code) ____________________________ (Daytime Area Code and Telephone No.) ____________________________ (Tax Identification and Social Security No.) Guarantee of Signature(s) (See Instructions 1 and 5) FOR USE BY FINANCIAL INSTITUTIONS ONLY. FINANCIAL INSTITUTIONS: PLACE MEDALLION GUARANTEE IN SPACE BELOW 6 INSTRUCTIONS Forming Part of the Terms and Conditions of the Offer 1. Guarantee of Signatures. Except as otherwise provided below, all signatures on this Letter of Transmittal must be guaranteed by a financial institution (including most banks, savings and loan associations and brokerage houses) which is a participant in the Security Transfer Agents Medallion Program (an "Eligible Institution"). Signatures on this Letter of Transmittal need not be guaranteed (a) if this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered herewith and such holder(s) have not completed the box entitled either "Special Payment Instructions" or "Special Delivery Instructions" on this Letter of Transmittal or (b) if such Shares are tendered for the account of an Eligible Institution. See Instruction 5 of this Letter of Transmittal. 2. Delivery of Letter of Transmittal and Share Certificates or Book-Entry Confirmations. This Letter of Transmittal is to be used if Certificates are to be forwarded herewith. Certificates evidencing all physically tendered Shares along with this Letter of Transmittal or a copy thereof, properly completed and duly executed with any required signature guarantees, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth herein on or prior to the Expiration Date (as defined in Section 1--"Terms of the Offer" of the Offer to Purchase). Shares held through DTC must be tendered to the Depositary by means of delivery of an Agent's Message (as more fully described in the Offer to Purchase). Holders whose Certificates are not immediately available or who cannot deliver their Certificates and all other required documents to the Depositary on or prior to the Expiration Date or who cannot complete the procedures for book-entry transfer on a timely basis may nevertheless tender their Shares by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth in Section 3-- "Procedures for Tendering Shares" of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form provided by Purchaser, must be received by the Depositary on or prior to the Expiration Date; and (iii) Certificates, as well as a Letter of Transmittal, properly completed and duly executed with any required signature guarantees, and all other documents required by this Letter of Transmittal must be received by the Depositary within three New York Stock Exchange trading days after the date of execution of such Notice of Guaranteed Delivery. If Certificates are forwarded to the Depositary in multiple deliveries, a properly completed and duly executed Letter of Transmittal (or copy thereof) must accompany each such delivery. The method of delivery of this Letter of Transmittal, Shares, Certificates and all other required documents, including delivery through the Book-Entry Transfer Facility, is at the risk of the tendering Holder and the delivery will be deemed made only when actually received by the Depositary. If such delivery is by mail, registered mail with return receipt requested, properly insured, is recommended. In all cases, sufficient time should be allowed to assure timely delivery. No alternative, conditional or contingent tenders will be accepted and no fractional Shares will be purchased. All tendering Holders, by execution of this Letter of Transmittal or a copy hereof, waive any right to receive any notice of the acceptance of their Shares for payment. 3. Inadequate Space. If the space provided under "Description of Shares Tendered" is inadequate, the Share Certificate numbers and/or the number of Shares should be listed on a separate schedule and attached hereto. 4. Partial Tenders (Applicable to Holders of Share Certificates Only). If fewer than all the Shares evidenced by any Certificate submitted are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered." In such cases, new Certificate(s) evidencing the remainder of 7 the Shares that were evidenced by Certificate(s) delivered to the Depositary will be sent to the person signing this Letter of Transmittal, unless otherwise provided in the box entitled "Special Delivery Instructions" on this Letter of Transmittal, as soon as practicable after the Expiration Date. All Shares represented by Certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. Signatures on Letter of Transmittal; Stock Powers and Endorsements. If this Letter of Transmittal is signed by the registered holder(s) of the Shares tendered hereby, the signatures must correspond with the names as written on the face of the Certificates without alteration, enlargement or any change whatsoever. If any of the Shares tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any of the tendered Shares are registered in different names on several Certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of the Shares. If this Letter of Transmittal or any Certificate or stock power is signed by a trustee, executor, administrator, 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 evidence satisfactory to the Depositary and Purchaser of such person's authority so to act must be submitted. If this Letter of Transmittal is signed by the registered holder(s) of the Shares transmitted hereby, no endorsements of Certificates or separate stock powers are required unless payment is to be made to, or Certificates evidencing the Shares not tendered or purchased are to be issued in the name of, a person other than the registered holder(s). Signatures on such Certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder of the Shares tendered hereby, the Certificate(s) must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name or names of the registered holder or holders appear(s) on such Certificate(s). Signatures on such Certificates or stock powers must be guaranteed by an Eligible Institution. 6. Transfer Taxes. Except as otherwise provided in this Instruction 6, Purchaser will pay or cause to be paid any transfer taxes with respect to the transfer and sale of purchased 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, in the circumstances permitted hereby, if Certificates for the Shares not tendered or purchased are to be registered in the name of, any person other than the registered holder, 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 transfer taxes (whether imposed on the registered holder or such person) payable on account of the transfer to such person will be deducted from the purchase price if satisfactory evidence of the payment of such taxes, or exemption therefrom, is not submitted. Except as provided in this Instruction 6, it will not be necessary for transfer tax stamps to be affixed to the Certificates listed in this Letter of Transmittal. 7. Special Payment and Delivery Instructions. If a check for the purchase price is to be issued in the name of, and/or Certificates for the Shares not tendered or not accepted for payment are to be issued in the name of a person other than the signer of this Letter of Transmittal or if a check and/or such Share are to be mailed to someone other than the signer of this Letter of Transmittal or to an address other than that shown above, the appropriate boxes on this Letter of Transmittal should be completed. 8. Requests for Assistance or Additional Copies. Questions or requests for assistance may be directed to, or additional copies of the Offer to Purchase, this Letter of Transmittal, the Notice of Guaranteed Delivery 8 and other tender offer materials may be obtained from, the Information Agent or the Dealer Manager at their respective addresses set forth on the back cover of the Offer to Purchase or from your broker, dealer, commercial bank or trust company. 9. Lost or Destroyed Certificates. If any Certificates have been lost or destroyed, the Holder should promptly notify the Company's transfer agent, First Chicago Trust Company of New York. The Holder will then be instructed as to the procedure to be followed in order to replace the relevant Certificates. This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed Certificates have been followed. IMPORTANT TAX INFORMATION Under United States federal income tax law, a tendering Holder may be subject to backup withholding tax at a rate of 31% with respect to payments by the Depositary pursuant to the Offer unless such Holder (i) is a corporation or other exempt recipient and, if required, establishes its exemption from backup withholding, (ii) provides its correct taxpayer identification number ("TIN"), certifies that it is not currently subject to backup withholding and otherwise complies with applicable requirements of the backup withholding rules, or (iii) certifies as to its non-United States status. Completion of a Substitute Form W-9, in the case of a U.S. Holder, provided in this Letter of Transmittal should be used for this purpose. Failure to provide such Holder's TIN on the Substitute Form W-9, if applicable, may subject the tendering Holder (or other payee) to a $50 penalty imposed by the Internal Revenue Service ("IRS"). More serious penalties may be imposed for providing false information which, if willfully done, may result in fines and/or imprisonment. The box in part 3 of the Substitute Form W-9 may be checked if the tendering Holder (or other payee) is required to submit a Substitute Form W-9 and has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is so checked and the Depositary is not provided with a TIN by the time of payment, the Depositary will withhold 31% on all such payments of the Offer Price until a TIN is provided to the Depositary. In order for a foreign Holder to qualify as an exempt recipient, that Holder should submit an IRS Form W-8 or a Substitute Form W-8, signed under penalties of perjury, attesting to that Holder's exempt status. Such forms can be obtained from the Depositary. Failure to provide the information on the form may subject tendering Holders to 31% United States federal income tax withholding on the payment of the purchase price of cash pursuant to the Offer. IMPORTANT: THIS LETTER OF TRANSMITTAL OR A COPY HEREOF TOGETHER WITH CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE. 9 TO BE COMPLETED BY ALL TENDERING U.S. HOLDERS (See "Important Tax Information" on the preceding page) PAYER'S NAME: First Chicago Trust Company of New York - ------------------------------------------------------------------------------- Part 1-PLEASE PROVIDE Social Security Number SUBSTITUTE YOUR TIN IN THE BOX AT or Form W-9 RIGHT AND CERTIFY BY Employer Identification SIGNING AND DATING Number: Department of BELOW _________________________ the Treasury ----------------------------------------------------- Internal Revenue Service Part 2-If you are exempt Part 3-If you are from backup withholding, awaiting a TIN, please check this box: [_] please check this box: [_] Payer's Request for ----------------------------------------------------- Taxpayer Identification Part 4-Certification-Under penalties of perjury, I Number ("TIN") and certify that: Certification (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me), and (2) I am not subject to backup withholding because (i) I am exempt from backup withholding, (ii) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (iii) the IRS has notified me that I am no longer subject to backup withholding. Certification Instructions-You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of under-reporting interest or dividends on your tax return. ----------------------------------------------------- SIGNATURE _______________________________DATE NAME (Please Print) _______________________________ ADDRESS ___________________________________________ CITY, STATE AND ZIP CODE __________________________ 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. NOTE: YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF THE 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 cash payments made to me thereafter will be withheld until I provide a taxpayer identification number. Signature: _____________________________________ Date: ______________________ 10 The Information Agent for the Offer is: MORROW & CO., INC. 445 Park Avenue, 5th Floor New York, New York 10022 Collect Call: (212) 754-8000 Banks and Brokerage Firms, please call: (800) 662-5200 Shareholders Please Call: (800) 566-9061 The Dealer Manager for the Offer is: J.P. Morgan & Co. 60 Wall Street New York, NY 10260 Toll Free: (877) 219-8026 11 EX-99.(A)(3) 4 FORM OF LETTER TO BROKERS, DEALERS, COMMERCIAL BANKS Exhibit (a)(3) OFFER TO PURCHASE FOR CASH All of the Outstanding Shares of Common Stock (Including the Associated Preferred Stock Purchase Rights) and All of the Outstanding Shares of Series B ESOP Convertible Preferred Stock of NALCO CHEMICAL COMPANY at $53.00 Net Per Share of Common Stock and $1,060.00 Net Per Share of Series B ESOP Convertible Preferred Stock by H2O ACQUISITION CO., A Wholly Owned Subsidiary of SUEZ LYONNAISE DES EAUX THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 30, 1999 UNLESS THE OFFER IS EXTENDED. July 1, 1999 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by H2O Acquisition Co., a Delaware corporation ("Purchaser") and a wholly owned subsidiary of Suez Lyonnaise des Eaux, a societe anonyme organized and existing under the laws of the Republic of France ("Parent"), to act as Dealer Manager in connection with Purchaser's offer to purchase all of the issued and outstanding shares of common stock, par value $0.1875 per share, including the associated preferred stock purchase rights (the "Common Stock") and the Series B ESOP Convertible Preferred Stock (the "ESOP Preferred Stock" and, together with the Common Stock, the "Shares"), of Nalco Chemical Company, a Delaware corporation (the "Company"), at a price of $53.00 per share of Common Stock and $1,060.00 per share of ESOP Preferred Stock, 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 and in the related Letter of Transmittal (which, as they may be amended and supplemented from time to time, together constitute the "Offer"), copies of which are enclosed herewith. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares in your name or in the name of your nominee. Enclosed herewith for your information and forwarding to your clients are copies of the following documents: 1. The Offer to Purchase dated July 1, 1999. 2. The Letter of Transmittal to tender Shares for your use and for the information of your clients. Copies of the Letter of Transmittal may be used to tender Shares. 3. A letter to stockholders of the Company from E.J. Mooney, Chairman of the Board and Chief Executive Officer of the Company and Stephen D. Newlin, President of the Company, together with a Solicitation/Recommendation Statement on Schedule 14D-9 filed with the Securities and Exchange Commission by the Company and mailed to stockholders of the Company. 4. The Notice of Guaranteed Delivery for Shares to be used to accept the Offer if the procedures for tendering Shares set forth in the Offer to Purchase cannot be completed on a timely basis. 5. A printed form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer. 6. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9. 7. A return envelope addressed to First Chicago Trust Company of New York, the Depositary. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 30, 1999 UNLESS THE OFFER IS EXTENDED. Please note the following: 1. The Offer Price is $53.00 per share of Common Stock and $1,060.00 per share of ESOP Preferred Stock, net to the seller in cash, without interest thereon, as set forth in the Introduction to the Offer to Purchase. 2. The Offer is conditioned upon, among other things, (i) there being validly tendered and not properly withdrawn prior to the expiration of the Offer a number of Shares which, when added to any shares of Common Stock already owned by Parent and Purchaser, constitute a majority of the then outstanding shares of Common Stock on a fully diluted basis (including, without limitation, all shares of Common Stock issuable upon the conversion of the ESOP Preferred Stock or any other convertible securities or upon the exercise of any options, warrants or rights) (the "Minimum Condition"), (ii) the satisfaction of the HSR Condition (as defined in the Offer to Purchase) and (iii) the satisfaction of the EC Condition (as defined in the Offer to Purchase). The Offer is also conditioned upon the satisfaction of certain other terms and conditions described in the Offer to Purchase. See the Introduction and Section 1-- "Terms of the Offer" and Section 14--"Conditions of the Offer" of the Offer to Purchase. 3. The Offer is being made for all of the issued and outstanding Shares. 4. Tendering holders whose Shares are registered in their own name and who tender directly to First Chicago Trust Company of New York, as Depositary (the "Depositary"), will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Shares by Purchaser pursuant to the Offer. However, federal backup withholding tax at a rate of 31% may be required, unless an exemption is available or unless the required tax identification information is provided. See the "Important Tax Information" Section contained in the Letter of Transmittal. 5. The Offer and withdrawal rights will expire at 12:00 midnight, New York City time, on Friday, July 30, 1999, unless the Offer is extended. 6. On June 27, 1999, the Board of Directors of the Company unanimously (i) determined that the Merger is advisable and that the Merger Agreement and the transactions contemplated thereby, including the Offer, the Merger (as each defined herein) are fair to and in the best interests of the holders of Shares (the "Holders"), (ii) approved and adopted the Merger Agreement and the transactions contemplated thereby, (iii) recommended that the stockholders of the Company accept the Offer, approve the Merger, and approve and adopt the Merger Agreement and the transactions contemplated thereby, and (iv) approved the taking of all other applicable action necessary to render Section 203 of the Delaware General Corporate Law and other state takeover statutes and the Rights Agreement (as defined in the Offer to Purchase) inapplicable to the Offer and the Merger (as defined in the Offer to Purchase). 2 The Offer is being made pursuant to the Agreement and Plan of Merger, dated as of June 27, 1999 (the "Merger Agreement"), among Parent, Purchaser and the Company. The Merger Agreement provides that, as promptly as practicable after consummation of the Offer, Purchaser will be merged with and into the Company (the "Merger"). 7. Notwithstanding any other provision of the Offer, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (i) certificates evidencing such Shares (the "Certificates"), along with a properly completed and duly executed Letter of Transmittal (or a copy thereof), including any required signature guarantees, or (ii) if such Shares are held in book-entry form, timely confirmation of a book-entry transfer (a "Book-Entry Confirmation") of such Shares into the Depositary's account at The Depository Trust Company along with an Agent's Message (as defined in the Offer to Purchase), pursuant to the procedures set forth in Section 3--"Procedures for Tendering Shares" of the Offer to Purchase and (iii) any other documents required by the Letter of Transmittal. Accordingly, payment may not be made to all tendering holders at the same time depending upon when the Certificates are actually received by the Depositary. In order to take advantage of the Offer (i) a duly executed and properly completed Letter of Transmittal (and any required signature guarantee or other required documents) or an Agent's Message in the case of Shares held in book- entry form should be sent to the Depositary and (ii) Certificates representing the tendered Shares or a timely Book-Entry Confirmation should be delivered to the Depositary in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. If a Holder wishes to tender, but it is impracticable for such Holder to forward such Holder's Certificates or other required documents or complete the procedures for book-entry transfer prior to the Expiration Date, a tender may be effected by following the guaranteed delivery procedures specified in Section 3--"Procedures for Tendering Shares" of the Offer to Purchase. Neither Parent nor Purchaser will pay any fees or commissions to any broker, dealer or other person for soliciting tenders of Shares pursuant to the Offer (other than the Dealer Manager, the Depositary and the Information Agent, as described in the Offer to Purchase). Purchaser will, however, upon request, reimburse you for customary mailing and handling expenses incurred by you in forwarding any of the enclosed materials to your clients. Purchaser will pay or cause to be paid any transfer taxes payable on the transfer of Shares to it, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Any inquiries you may have with respect to the Offer should be addressed to J.P. Morgan Securities Inc., the Dealer Manager for the Offer, at 60 Wall Street, New York, New York 10260, telephone number (877) 219-8026 or to Morrow & Co., Inc., the Information Agent for the Offer, at 445 Park Avenue, 5th Floor, New York, New York 10022, telephone number (212) 754-8000 (call collect) or (800) 662-5200. Requests for copies of the enclosed materials may also be directed to the Dealer Manager or to the Information Agent at the above addresses and telephone numbers. Very truly yours, J.P. MORGAN SECURITIES INC. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF PURCHASER, PARENT, THE COMPANY, THE DEALER MANAGER, THE DEPOSITARY, THE INFORMATION AGENT OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. 3 EX-99.(A)(4) 5 FORM OF LETTER TO BE USED BY BROKERS, DEALERS, COMMERCIAL BANKS Exhibit (a)(4) OFFER TO PURCHASE FOR CASH All of the Outstanding Shares of Common Stock (Including the Associated Preferred Stock Purchase Rights) and All of the Outstanding Shares of Series B ESOP Convertible Preferred Stock of NALCO CHEMICAL COMPANY at $53.00 Net Per Share of Common Stock and $1,060.00 Net Per Share of Series B ESOP Convertible Preferred Stock by H2O ACQUISITION CO., A Wholly Owned Subsidiary of SUEZ LYONNAISE DES EAUX THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 30, 1999 UNLESS THE OFFER IS EXTENDED. July 1, 1999 To Our Clients: Enclosed for your consideration are the Offer to Purchase, dated July 1, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which, as they may be amended and supplemented from time to time, together constitute the "Offer") relating to the offer by H2O Acquisition Co., a Delaware corporation ("Purchaser") and a wholly owned subsidiary of Suez Lyonnaise des Eaux, a societe anonyme organized and existing under the laws of the Republic of France ("Parent"), to purchase all of the issued and outstanding shares of common stock, par value $0.1875 per share, including the associated preferred stock purchase rights (the "Common Stock") and all of the issued and outstanding shares of Series B ESOP Convertible Preferred Stock (the "ESOP Preferred Stock" and together with the Common Stock, the "Shares"), of Nalco Chemical Company, a Delaware corporation (the "Company"), at a price of $53.00 per share of Common Stock and $1,060.00 per share of ESOP Preferred Stock, 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 and in the related Letter of Transmittal. We are (or our nominee is) 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 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 instruction as to whether you wish to have us tender on your behalf any or all of the Shares held by us for your account pursuant to the terms and conditions set forth in the Offer. Please note the following: 1. The Offer Price is $53.00 per share of Common Stock and $1,060.00 per share of ESOP Preferred Stock, net to the seller in cash, without interest thereon, as set forth in the Introduction to the Offer to Purchase. 2. The Offer is conditioned upon, among other things, (i) there being validly tendered and not properly withdrawn prior to the expiration of the Offer a number of Shares which, when added to any shares of Common Stock already owned by Parent, constitute a majority of the then-outstanding shares of Common Stock on a fully diluted basis (including, without limitation, all shares of Common Stock issuable upon the conversion of the ESOP Preferred Stock or any other convertible securities or upon the exercise of any options, warrants or rights), (ii) the satisfaction of the HSR Condition (as defined in the Offer to Purchase) and (iii) the satisfaction of the EC Condition (as defined in the Offer to Purchase). The Offer is also conditioned upon the satisfaction of certain other terms and conditions described in the Offer to Purchase. See the Introduction, Section 1--"Terms of the Offer" and Section 14--"Conditions of the Offer" of the Offer to Purchase. 3. The Offer is being made for all of the issued and outstanding Shares. 4. Tendering Holders whose Shares are registered in their own name and who tender directly to First Chicago Trust Company of New York, as Depositary (the "Depositary"), will not be obligated to pay brokerage fees or commissions or, except as otherwise provided in Instruction 6 of the Letter of Transmittal, transfer taxes on the purchase of Shares by Purchaser pursuant to the Offer. However, United States federal backup withholding tax at a rate of 31% may be withheld, unless an exemption is available or unless the required tax identification information is provided. See the "Important Tax Information" section contained in the Letter of Transmittal. 5. The Offer and withdrawal rights will expire at 12:00 MIDNIGHT, NEW YORK CITY TIME, on FRIDAY, JULY 30, 1999, unless the Offer is extended. 6. On June 27, 1999 the Board of Directors of the Company unanimously (i) determined that the Merger (as defined herein) is advisable and that the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger are fair to and in the best interests of the holders of Shares (the "Holders"), (ii) approved and adopted the Merger Agreement and the transactions contemplated thereby, (iii) recommended that the stockholders of the Company accept the Offer, approve the Merger, and approve and adopt the Merger Agreement and the transactions contemplated thereby and (iv) approved the taking of all other applicable action necessary to render Section 203 of the Delaware General Corporation Law and other state takeover statutes and the Rights Agreement (as defined in the Offer to Purchase) inapplicable to the Offer and the Merger (as defined herein). The Offer is being made pursuant to the Agreement and Plan of Merger, dated as of June 27, 1999 (the "Merger Agreement"), among Parent, Purchaser and the Company. The Merger Agreement provides that, as promptly as practicable after consummation of the Offering, Purchaser will be merged with and into the Company (the "Merger"). 7. Notwithstanding any other provision of the Offer, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of (i) certificates evidencing such Shares (the "Certificates"), along with a properly completed and duly executed Letter of Transmittal (or a copy thereof), including any required signature guarantees, or (ii) if such Shares are held in book-entry form, timely confirmation of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company, along with an Agent's Message (as defined in the Offer to Purchase) pursuant to the procedures set forth in Section 3--"Procedures for Tendering Shares" of the Offer to Purchase, and (iii) any other documents required by the Letter of Transmittal. Accordingly, payment may not be made to all tendering holders at the same time depending upon when the Certificates are actually received by the Depositary. If you wish to have us tender any or all of the Shares held by us for your account please so instruct us by completing, executing, detaching and returning to us the instruction form set forth herein. If you authorize the tender of your Shares, all such Shares will be tendered unless otherwise specified below. An envelope to return your instructions to us is enclosed. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf prior to the expiration date. 2 Purchaser is not aware of any state in the United States where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good faith effort to comply with such state statute or seek to have such statute declared inapplicable to the Offer. If, after such good faith effort, Purchaser cannot comply with such state statute, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the Holders in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by J.P. Morgan Securities Inc. or one or more registered brokers or dealers which are licensed under the laws of such jurisdiction. 3 INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH All of the Outstanding Shares of Common Stock (Including the Associated Preferred Stock Purchase Rights) and Series B ESOP Preferred Convertible Stock of Nalco Chemical Company The undersigned acknowledge(s) receipt of your letter, the Offer to Purchase, dated July 1, 1999, and the related Letter of Transmittal (which, as they may be amended and supplemented from time to time, together constitute the "Offer") in connection with the offer by H2O Acquisition Co., a Delaware corporation ("Purchaser") and a wholly owned subsidiary of Suez Lyonnaise des Eaux, a societe anonyme organized and existing under the laws of the Republic of France, to purchase all of the issued and outstanding shares of Common Stock, par value $0.1875 per share, including the associated preferred stock purchase rights (the "Common Stock"), and Series B ESOP Convertible Preferred Stock (the "ESOP Preferred Stock" and, together with the Common Stock, the "Shares"), of Nalco Chemical Company, a Delaware corporation, at a price of $53.00 per share of Common Stock and $1,060.00 per share of ESOP Preferred Stock, net to the seller in cash, without interest thereon. The undersigned hereby instructs you to tender to Purchaser the number of Shares indicated below (or if no number is indicated below, all Shares) which are 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*: ___________________ Date: _______________________________________________ SIGN HERE Signature(s): _______________________________________ Print Name(s): ______________________________________ _____________________________________________________ Print Address(es): __________________________________ _____________________________________________________ Area Code and Telephone Number(s): __________________ Taxpayer Identification or Social Security Number(s): __________________________________________ This form must be returned to the brokerage firm maintaining your account. - -------- * Unless otherwise indicated, it will be assumed that all of your Shares held by us for your account are to be tendered. 4 EX-99.(A)(5) 6 PRESS RELEASE DATED JUNE 28, 1999 Exhibit (a)(5) FOR IMMEDIATE RELEASE SUEZ LYONNAISE DES EAUX TO ACQUIRE NALCO CHEMICAL COMPANY FOR $4.1 BILLION IN CASH TO BECOME WORLD'S LARGEST WATER TREATMENT COMPANY - - Increases Suez Lyonnaise des Eaux' Water-Related Revenues to Over $7.4 Billion - - Accretive and value creative PARIS, FRANCE AND NAPERVILLE, ILLINOIS - June 28, 1999 - Suez Lyonnaise des Eaux (LY: Paris Bourse), a world leader in private infrastructure services and Nalco Chemical Company (NYSE: NLC), the world's largest provider of water treatment services and products, announced a definitive agreement for Nalco to be acquired by Suez Lyonnaise des Eaux in an all-cash transaction of approximately $4.1 billion, or $53 per share. Under the terms of the agreement, which has been unanimously approved by the Boards of Directors of both companies, Suez Lyonnaise des Eaux will seek to acquire all of the outstanding common shares of Nalco Chemical Company through a tender offer that will commence within five business days. This acquisition follows Suez Lyonnaise des Eaux' June 15, 1999 announcement of a definitive agreement to acquire Calgon, a Pittsburgh-based water treatment company with annual revenues of close to $300 million. Nalco Chemical Company, the world's largest water treatment company provides on- site services to over 50,000 industrial and commercial customers in more than 120 countries. For 1999, Nalco Chemical Company expects its revenues, including affiliates, to be approximately $1.94 billion. Commenting on this transaction, Gerard Mestrallet, Suez Lyonnaise des Eaux' Chief Executive Officer and President of the Executive Board, said, "The acquisition of Nalco Chemical Company fits perfectly into our strategic plan, which emphasizes the international expansion and the integration of our core businesses. As a result of this transaction, Suez Lyonnaise des Eaux' total water-related revenues will exceed $7.4 billion and, the combined company will be in a strong position to serve industrial, middle-market, institutional and process customers that are increasingly requiring comprehensive solutions." Mr. Mestrallet continued, "Globally, the acquisition of Nalco Chemical Company is another step in our strategy of providing our customers around the world with integrated services in the water, energy and waste sectors. As a global multi- service group, we partner with our customers, enabling them to focus on their core operations. After carefully reviewing the market landscape, we are confident that the people of Nalco Chemical Company share this vision and that our business model will result in an accelerated growth rate for Suez Lyonnaise des Eaux' water treatment business." Suez Lyonnaise des Eaux expects this transaction to be value creating and immediately accretive to cash flow in the first year and to be accretive to earnings beginning in the second year. The Company expects to realize more than $100 million in cost savings as a result of economies of scale, revenue enhancement and development synergies, and to take full advantage of important cross-selling opportunities. Edward J. Mooney, Chairman and Chief Executive Officer of Nalco Chemical Company, noted, "We are very pleased with this agreement, which provides substantial value for our shareholders as well as key growth opportunities and benefits for our company and its customers. Our goal at Nalco Chemical Company has been to use our on-site expertise, technical innovation and global presence to improve the profitability of our customers' dynamic and changing operations. As part of the Suez Lyonnaise des Eaux Group, we dramatically increase our ability to provide an expanded array of value-added products and services to our customers." "We expect the combination of our worldwide market positions, R&D and technical- knowhow to give us a meaningful competitive advantage in the marketplace," Mr. Mooney added. Suez Lyonnaise des Eaux will base its worldwide water treatment operating center in Naperville, under the direction of Mr. Mooney. The transaction is subject to customary regulatory approvals in the United States and Europe and is expected to be completed during the third quarter of 1999. Suez Lyonnaise des Eaux stated that it expects to fund 50% of the all-cash transaction internally, with the remaining 50% financed by a bridge loan that is already in place. With annual revenues $32.5 billion, Suez Lyonnaise des Eaux is a world leader in private infrastructure services, with operations in more than 120 countries. The Company is a market leader in the water sector supplying drinking water to 77 million people and providing wastewater services to 52 million people. The Group's three international core business sectors are: energy, water, and waste services. Headquartered in Naperville, Illinois, outside of Chicago, Nalco Chemical Company employs 7000 people of which about 3600 are engineers and technicians with direct customer contact and 300 are researchers located in 5 R & D centers. -2- EX-99.(A)(6) 7 FORM OF NEWSPAPER ADVERTISEMENT, DATED JULY 1, 1999 EXHIBIT (a)(6) This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares. The Offer is made solely by the Offer to Purchase dated July 1, 1999, and the related Letter of Transmittal and is being made to all holders of Shares. Purchaser is not aware of any state where the making of the Offer or the acceptance of Shares is prohibited by any applicable law. If Purchaser becomes aware of any jurisdiction where the making of the Offer or the acceptance of Shares is not in compliance with any applicable law, Purchaser will make a good faith effort to comply with such law. If, after such good faith effort, Purchaser cannot comply with such law, the Offer will not be made to (nor will tenders be accepted from or on behalf of) the holders of Shares in such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of Purchaser by J.P. Morgan Securities Inc. as the Dealer Manager of the Offer or one or more registered brokers or dealers licensed under the laws of such jurisdiction. Notice of Offer to Purchase for Cash All of the Outstanding Shares of Common Stock (Including the Associated Preferred Stock Purchase Rights) and All of the Outstanding Shares of Series B ESOP Convertible Preferred Stock of Nalco Chemical Company at $53.00 Net Per Share of Common Stock and $1,060.00 Net Per Share of Series B ESOP Convertible Preferred Stock by H2O Acquisition Co. A Wholly Owned Subsidiary of Suez Lyonnaise des Eaux H2O Acquisition Co., a Delaware corporation ("Purchaser"), and a wholly owned subsidiary of Suez Lyonnaise des Eaux, a societe anonyme organized and existing under the laws of the Republic of France ("Parent"), is offering to purchase (i) all of the issued and outstanding shares of common stock, par value $0.1875 per share, including the associated preferred stock purchase rights (the "Common Stock"), at a price of $53.00 per share of Common Stock of Nalco Chemical Company, a Delaware corporation (the "Company"), net to the seller in cash, without interest thereon, (the "Common Stock Offer Price"), and (ii) all of the issued and outstanding shares of Series B ESOP Convertible Preferred Stock (the "ESOP Preferred Stock") of the Company at a price of $1,060.00 per share of ESOP Preferred Stock, net to the seller in cash, without interest thereon (the "ESOP Preferred Stock Offer Price", and, together with the Common Stock Offer Price, the "Offer Price"), upon the terms and subject to the conditions set forth in the Offer to Purchase, dated July 1, 1999 (the "Offer to Purchase"), and in the related Letter of Transmittal (which, as they may be amended and supplemented from time to time, together constitute the "Offer"). "Shares" shall include both the shares of Common Stock and the shares of ESOP Preferred Stock. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON FRIDAY, JULY 30, 1999, UNLESS THE OFFER IS EXTENDED. The Offer is conditioned upon, among other things, (i) there being validly tendered and not withdrawn prior to the expiration of the Offer at least such number of Shares which, when added to any shares of Common Stock already owned by Parent, constitute a majority of the then outstanding shares of Common Stock on a fully diluted basis (including, without limitation, all shares of Common Stock issuable upon the conversion of the ESOP Preferred Stock or any other convertible securities or upon the exercise of any options, warrants or rights) (the "Minimum Condition"), (ii) the satisfaction of the HSR Condition(as defined herein) and (iii) the satisfaction of the EC Condition (as defined herein). The Offer is also conditioned upon the satisfaction of certain other terms and conditions described in Section 14 of the Offer to Purchase. The Company has informed Purchaser that, as of June 24, 1999, there were (x) 66,263,894 shares of Common Stock issued and outstanding, (y) stock options issued under the Company's stock option plans covering not more than 10,888,271 shares of Common Stock (with an exercise price less than $53.00 per Share), and (z) 353,908.409 shares of ESOP Preferred Stock issued and outstanding. As a result, as of such date, the Minimum Condition would be satisfied if at least 42,115,167 shares of Common Stock were validly tendered and not properly withdrawn prior to the Expiration Date (as defined herein). The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of June 27, 1999 (the "Merger Agreement"), among Parent, Purchaser and the Company. The Merger Agreement provides that, as promptly as practicable after consummation of the Offer, Purchaser will be merged with and into the Company (the "Merger"). At the effective time of the Merger (the "Effective Time"), except for (a) Shares which are held by any subsidiary of the Company or in the treasury of the Company, or which are held, directly or indirectly, by Parent or any direct or indirect subsidiary of Parent (including Purchaser), all of which shall be canceled without any conversion thereof and no payment or distribution shall be made with respect thereto and (b) Shares held by holders exercising their rights to dissent in accordance with Delaware law, (i) each share of Common Stock (including all associated Preferred Stock purchase rights) issued and outstanding immediately prior to the Effective Time shall be canceled and shall be converted automatically into the right to receive an amount in cash equal to $53.00, without interest; and (ii) each share of ESOP Preferred Stock issued and outstanding immediately prior to the Effective Time shall be canceled and shall be converted automatically into the right to receive an amount in cash equal to $1,060.00, without interest. The Merger Agreement is more fully described in Section 11 of the Offer to Purchase. The Board of Directors of the Company has duly adopted resolutions that (i) determined that the Merger is advisable and that the Merger Agreement and the transactions contemplated thereby, including the Offer and the Merger, are fair to and in the best interests of the holders of Shares (the "Holders"), (ii) approved and adopted the Merger Agreement and the transactions contemplated thereby, and (iii) recommended the acceptance of the Offer, and if required by applicable law or otherwise, the approval of the Merger and the approval and adoption of the Merger Agreement by the stockholders of the Company. Tendering Holders whose Shares are registered in their own name and who tender directly to First Chicago Trust Company of New York, as Depositary (the "Depositary"), 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 pursuant to the Offer. For purposes of the Offer, Purchaser will be deemed to have accepted for payment (and thereby purchased) Shares validly tendered and not properly withdrawn if, as and when Purchaser gives oral or written notice to the Depositary of Purchaser's acceptance for payment of such Shares. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering Holders for the purpose of receiving payments from Purchaser and transmitting payments to such tendering Holders whose Shares have been accepted 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 Book-Entry Transfer Facility (as defined in Section 2 of the Offer to Purchase), pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or a copy thereof), properly completed and duly executed with any required signature guarantees, or an Agent's Message (as defined in Section 2 of the Offer to Purchase) in connection with a book-entry transfer and (iii) any other documents required to be included with the Letter of Transmittal under the terms and subject to the conditions thereof and to the Offer to Purchase. Under no circumstances will interest on the purchase price for Shares be paid by Purchaser, regardless of any delay in making such payment or extension of the Expiration Date. The term "Expiration Date" means 12:00 midnight, New York City time, on Friday, July 30, 1999, unless and until Purchaser, in its sole discretion (but subject to the terms of the Merger Agreement), shall have extended the period of time during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. Subject to the terms of the Merger Agreement and to the applicable rules and regulations of the Securities and Exchange Commission (the "Commission") and to applicable law, Purchaser expressly reserves the right, in its sole discretion, at any time or from time to time, to extend for any reason the period of time during which the Offer is open, including upon the occurrence of any of the events specified in Section 14 of the Offer to Purchase, by giving notice of such extension to the Depositary and by making a public announcement thereof. Subject to the terms of the Merger Agreement and the applicable rules and regulations of the Commission and to applicable law, Purchaser expressly reserves the right, in its sole discretion, at any time and from time to time, to extend for any reason the period of time during which the Offer is open, including upon the occurrence of any of the events specified in Section14 of the Offer to Purchase, by giving notice of such extension to the Depositary and by making a public announcement thereof. There can be no assurance that Purchaser will exercise its right to extend the Offer. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the rights of a tendering Holder to withdraw its Shares. Subject to the applicable rules and regulations of the Commission and to applicable law, Purchaser also expressly reserves the right, in its sole discretion (subject to the terms of the Merger Agreement), at any time and from time to time (i) to delay acceptance for payment of, or, regardless of whether such Shares were theretofore accepted for payment, payment for any Shares (a) if the HSR Condition has not been satisfied, (b) the EC Condition has not been satisfied or (c) in order to comply in whole or in part with any other applicable law, (ii) to terminate the Offer and not accept for payment any Shares if any of the conditions referred to in Section 14 of the Offer to Purchase are not satisfied or any of the events specified in Section 14 of the Offer to Purchase have occurred and (iii) subject to the terms of the Merger Agreement, to waive any condition or otherwise amend the Offer in any respect by giving oral or written notice of such delay, termination, waiver or amendment to the Depositary and by making a public announcement thereof, provided however, that, subject to the terms of the Merger Agreement, without the prior written consent of the Company, Purchaser will not (i) waive the Minimum Condition, (ii) decrease the price per Share payable in the Offer, (iii) reduce the maximum number of Shares to be purchased in the Offer, (iv) amend or add to the conditions to the Offer set forth in Section 14 of the Offer, (v) extend the Offer, (vi) change the form of consideration payable in the Offer, or (vii) amend, add to or waive any other terms of the Offer in any manner which would be adverse to the company or the Holders. "HSR Condition" means the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and any extension thereof. "EC Condition" means, if required by applicable law, the receipt prior to the Expiration Date of a decision of the Commission of the European Community that the purchase of the Common Stock pursuant to the Offer and the Merger are compatible with the Common Market. During any such extension, all Shares previously tendered and not withdrawn will remain subject to the Offer, subject to the right of a tendering Holder to withdraw its Shares. Any such extension, delay, termination, waiver or amendment will be followed, as promptly as practicable, by public announcement thereof by no later than 9:00 a.m., New York City time, on the next business day after the previously scheduled Expiration Date. Subject to applicable law (including Rules 14d-4(c),14d-6(d) and 14e-l under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which require that material changes be promptly disseminated to Holders in a manner reasonably designed to inform them of such changes) and without limiting the manner in which Purchaser may choose to make any public announcement, Purchaser will have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a press release to the Dow Jones News Service or as otherwise may be required by applicable law. Except as otherwise provided below, 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 Purchaser pursuant to the Offer, may also be withdrawn at any time after August 30, 1999, or at such later time as may apply if the Offer is extended. 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 below. Any such notice of withdrawal must specify the name of the person who tendered the Shares to be withdrawn, the number of Shares to be withdrawn and the name of the registered holder of such Shares, if different from that of the person who tendered such Shares. If 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 the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in Section 3 of the Offer to Purchase), unless such Shares have been tendered for the account of an Eligible Institution. Shares tendered pursuant to the procedure for book-entry transfer as set forth in Section 3 of the Offer to Purchase may be withdrawn only by means of the withdrawal procedures made available by the Book-Entry Transfer Facility, must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares and must otherwise comply with the Book-Entry Transfer Facility's procedures. Withdrawals of tendered Shares may not be rescinded without Purchaser's consent and any Shares properly withdrawn will thereafter be deemed not validly tendered for purposes of the Offer. All questions as to the form and validity (including time of receipt) of notices of withdrawal will be determined by Purchaser, in its sole discretion, which determination will be final and binding. None of Parent, Purchaser, the Depositary, the Information Agent, the Dealer Manager or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. Any Shares properly withdrawn may be re-tendered at any time prior to the Expiration Date by following any of the procedures described in Section 3 of the Offer to Purchase. The Company has provided Purchaser with the Company's shareholder lists and security position listings in respect of the Shares for the purpose of disseminating the Offer to Purchase, the Letter of Transmittal and other relevant materials to the Holders. The Offer to Purchase, the Letter of Transmittal and any other relevant materials will be mailed to record holders of Shares whose names appear on the Company's list of Holders and will be furnished, for subsequent transmittal to beneficial owners of Shares, to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the Company's list of Holders, or, where applicable,who are listed as participants in the security position listing of the Depository Trust Company. The information required to be disclosed by paragraph (e)(l)(vii) of Rule 14d-6 under the Exchange Act is contained in the Offer to Purchase and is incorporated herein by reference. The Offer to Purchase and the related Letter of Transmittal contain important information that should be read carefully before any decision is made with respect to the Offer. Requests for copies of the Offer to Purchase, the related Letter of Transmittal and other tender offer materials may be directed to the Information Agent as set forth below, and copies will be furnished promptly at Purchaser's expense. Questions or requests for assistance may be directed to the Information Agent or the Dealer Manager as set forth below. The Information Agent for the Offer is: MORROW & CO., INC. 445 Park Avenue, 5th Floor New York, New York 10022 Banks and Brokerage Firms Call: (800) 662-5200 Shareholders Please Call: (800) 566-9061 The Dealer Manager for the Offer is: J.P. Morgan & Co. 60 Wall Street New York, New York 10260 (877) 219-8026 (Toll Free) July 1, 1999 EX-99.(A)(7) 8 NOTICE OF GUARANTEED DELIVERY. Exhibit (a)(7) THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to the action to be taken, you should seek your own financial advice immediately from your own appropriately authorized independent financial advisor. If you have sold or transferred all of your registered holdings of Shares (as defined below), please forward this document and all accompanying documents to the stockbroker, bank or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee. NOTICE OF GUARANTEED DELIVERY (Not to be used for Signature Guarantees) FOR TENDER OF SHARES OF COMMON STOCK (Including the Associated Preferred Stock Purchase Rights) and SHARES OF SERIES B ESOP CONVERTIBLE PREFERRED STOCK of NALCO CHEMICAL COMPANY Pursuant to the Offer to Purchase dated July 1, 1999 by H2O ACQUISITION CO., A Wholly Owned Subsidiary of SUEZ LYONNAISE DES EAUX As set forth under Section 3--"Procedures for Tendering Shares" in the Offer to Purchase dated July 1, 1999, and any supplements or amendments thereto (the "Offer to Purchase"), this form (or a copy hereof) must be used to accept the Offer (as defined in the Offer to Purchase) if (i) certificates representing shares of either (a) common stock, par value $0.1875 per share, including the associated preferred stock purchase rights (the "Common Stock"), or (b) Series B ESOP Convertible Preferred Stock (the "ESOP Preferred Stock" and, together with the Common Stock, the "Shares" and certificates evidencing such Shares, the "Certificates") of Nalco Chemical Company, a Delaware corporation (the "Company"), are not immediately available, (ii) if the procedures for book- entry transfer cannot be completed on a timely basis, or (iii) time will not permit Certificates and all other required documents to reach First Chicago Trust Company of New York (the "Depositary") prior to the Expiration Date (as defined in Section 1--"Terms of the Offer" of the Offer to Purchase). This Notice of Guaranteed Delivery may be delivered by hand, by mail or by overnight courier to the Depositary and must include a signature guarantee by an Eligible Institution (as defined in Section 3--"Procedures for Tendering Shares" of the Offer to Purchase) in the form set forth herein. See the guaranteed delivery procedures described in the Offer to Purchase under Section 3--"Procedures for Tendering Shares". The Depositary for the Offer is: First Chicago Trust Company of New York By Hand: By Mail: By Overnight Courier: First Chicago Trust First Chicago Trust First Chicago Trust Company of New York Company of New York Company of New York c/o Securities Transfer Corporate Actions Corporate Actions and Suite 4660 Suite 4680 Reporting Services Inc. P.O. Box 2569 14 Wall Street, 8th Attn: Corporate Actions Jersey City, NJ 07303- Floor 100 William Street, 2569 New York, NY 10005 Galleria New York, NY 10038 For Information: Fax: (201) 222-4720 or (201) 222-4721 Confirmation of Fax: (201) 222-4707 DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS SET FORTH DOES NOT CONSTITUTE A VALID DELIVERY. This Notice of Guaranteed Delivery is not to be used to guarantee a signature. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box on the Letter of Transmittal. Ladies and Gentlemen: The undersigned hereby tenders to H2O Acquisition Co., a Delaware corporation and a wholly owned subsidiary of Suez Lyonnaise des Eaux, a societe anonyme organized and existing under the laws of the Republic of France, under the terms and subject to the conditions set forth in the Offer to Purchase and the related Letter of Transmittal, receipt of each of which is hereby acknowledged, the number of Shares indicated below pursuant to the Guaranteed Delivery Procedures described in the Offer to Purchase under Section 3--"Procedures for Tendering Shares". Name of Record Holder(s): ___________________________________________________ _____________________________________________________________________________ Address(es): ________________________________________________________________ _____________________________________________________________________________ Area Code(s) and Tel. No(s).: _______________________________________________ Signature(s): _______________________________________________________________ Date: _______________________________________________________________________ Number of Shares: ___________________________________________________________ Certificate Number(s) if available: _________________________________________ If Shares will be tendered by book-entry transfer check box: [_] The Depository Trust Company Account Number: ________________________________________________________ 2 THE GUARANTEE BELOW MUST BE COMPLETED GUARANTEE (Not to be used for signature guarantee) The undersigned, an Eligible Institution, hereby guarantees that the undersigned will deliver to the Depositary, at one of its addresses set forth above, the Certificates representing the Shares tendered hereby, in proper form for transfer, together with a properly completed and duly executed Letter of Transmittal or with any required signature guarantees and any other required documents, all within three New York Stock Exchange Trading Days (as defined in Section 3--"Procedures for Tendering Shares" of the Offer to Purchase) after the date hereof. Name of Firm: Authorized Signature: _____________________________________ Name: _______________________________ _____________________________________ Title: ______________________________ _____________________________________ Date: _______________________________ Address: ____________________________ _____________________________________ (Zip Code) Area Code and Tel. No.: _____________ NOTE: DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE OF GUARANTEED DELIVERY; SHARE CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. 3 EX-99.(A)(8) 9 GUIDELINES FOR SUBSTITUTE FORM W-9 Exhibit (a)(8) 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. - ----------------------------------- -----------------------------------
Give the SOCIAL SECURITY For this type of account: number of-- - -------------------------------------------- 1. An individual's account The individual 2. Two or more individuals The actual owner (joint account) of the account or, if combined funds, the first individual on the account(1) 3. Husband and wife (joint The actual owner account) of the account or, if joint funds, either person(1) 4. Custodian account of a The minor(2) minor (Uniform Gift to Minors Act) 5. Adult and minor (joint The adult or, if account) the minor is the only contributor, the minor(1) 6. Account in the name of The ward, minor, guardian or committee or incompetent for a designated ward, person(3) minor, or incompetent person 7.a The usual revocable The grantor- savings trust account trustee(1) (grantor is also trustee) b So-called trust account The actual that is not a legal or owner(1) valid trust under State law 8. Sole proprietorship The owner(4) account - --------------------------------------------
Give the EMPLOYER IDENTIFICATION For this type of account: number of-- --- 9. A valid trust, estate, The legal entity or pension trust (Do not furnish the identifying number of the personal representative or trustee unless the legal entity itself is not designated in the account title.)(5) 10. Corporate account The corporation 11. Religious, charitable, The organization or educational organization account 12. Partnership account The partnership held in the name of the business 13. Association, club, or The organization other tax-exempt organization 14. A broker or registered The broker or nominee nominee 15. Account with the The public Department of entity Agriculture in the name of a public entity (such as a State or local government, school district, or prison) that receives agricultural program payments ---
(1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) 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. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 Page 2 Obtaining a Number If you don't have a taxpayer identification number or you don't know your number, obtain Form SS-5, Application for a Social Security Number Card, or Form SS-4, Application for Employer Identification Number, at the local office of the Social Security Administration or the Internal Revenue Service and apply for a number. 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. . 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, a political subdivision of a foreign government, or any 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 non-exempt 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 nonresident 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 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 IRS. IRS uses the numbers for identification purposes. Payers must be given the numbers whether or not recipients are required to file tax returns. Beginning January 1, 1984, 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.(C)(1) 10 THE AGREEMENT AND PLAN OF MERGER DATED AS OF JUNE 27, 1999 EXHIBIT (c)(1) ================================================================================ AGREEMENT AND PLAN OF MERGER Among SUEZ LYONNAISE DES EAUX H2O ACQUISITION CO. and NALCO CHEMICAL COMPANY Dated as of June 27, 1999 ================================================================================ Glossary of Defined Terms (Not Part of this Agreement) ---------------------------- Defined Term Location of Definition - ------------ ---------------------- Affiliate..................................... (S) 9.03(a) Agreement..................................... Preamble Acquisition Proposal.......................... (S) 6.05(a) Beneficial Owner.............................. (S) 9.03(b) Blue Sky Laws................................. (S) 3.05(b) Board......................................... Recitals Business Day.................................. (S) 9.03(c) Certificate of Merger......................... (S) 2.02 Certificates.................................. (S) 2.09(b) Code.......................................... (S) 3.10(a) Common Stock.................................. Recitals Company....................................... Preamble Company Benefit Plans......................... (S) 3.10(a) Company Change of Control Agreement........... (S) 3.10(d) Company Preferred Stock....................... (S) 3.03 Company Stock Option Plans.................... (S) 2.07 Confidentiality Agreement..................... (S) 6.04(c) Control....................................... (S) 9.03(d) Delaware Law.................................. Recitals Disclosure Schedule........................... Introduction to Article III Dissenting Shares............................. (S) 2.08 Effective Time................................ (S) 2.02 Environmental Laws............................ (S) 9.03(e) ERISA......................................... (S) 3.10(a) ESOP Preferred Stock.......................... Recitals Exchange Act.................................. (S) 1.02(b) Goldman....................................... (S) 1.02(a) Governmental Antitrust Authority.............. (S) 6.08(b) Governmental Order............................ (S) 7.01(c) Hazardous Substances.......................... (S) 9.03(f) HSR Act....................................... (S) 3.05(b) Holders....................................... Recitals Indemnified Parties........................... (S) 6.07(c) Indemnification Provisions.................... (S) 6.07(a) IRS........................................... (S) 3.10(a) Junior A Preferred Stock...................... (S) 3.03(a) Junior C Preferred Stock...................... (S) 2.06(a) knowledge..................................... (S) 9.03(g) 2 known......................................... (S) 9.03(g) Material Adverse Effect....................... (S) 9.03(h) Material Subsidiary........................... (S) 9.03(i) Merger........................................ Recitals Merger Consideration.......................... (S) 2.06(b) Minimum Condition............................. (S) 1.01(a) Offer......................................... Recitals Offer Documents............................... (S) 1.01(b) Offer to Purchase............................. (S) 1.01(b) Option........................................ (S) 2.07 Parent........................................ Preamble Paying Agent.................................. (S) 2.09(a) Payment Fund.................................. (S) 2.09(a) Permitted Liens............................... (S) 3.14(b) Per Common Share Amount....................... Recitals Per Preferred Share Amount.................... Recitals Person........................................ (S) 9.03(j) Proxy Statement............................... (S) 3.12 Purchaser..................................... Preamble Rights Agreement.............................. (S) 3.14 Schedule 14D-9................................ (S) 1.02(b) Schedule 14D-1................................ (S) 1.01(b) SEC........................................... (S) 9.03(k) SEC Rules..................................... (S) 9.03(l) SEC Reports................................... (S) 3.07(a) Securities Act................................ (S) 3.07(a) Shares........................................ Recitals Stockholders' Meeting......................... (S) 6.01(a) Subsidiary.................................... (S) 9.03(m) Superior Proposal............................. (S) 6.05(b) Surviving Corporation......................... (S) 2.01 Transactions.................................. (S) 3.04 TABLE OF CONTENTS Page ARTICLE I THE OFFER SECTION 1.01. The Offer............................................... 2 SECTION 1.02. Company Action.......................................... 3 ARTICLE II THE MERGER SECTION 2.01. The Merger.............................................. 5 SECTION 2.02. Effective Time; Closing................................. 5 SECTION 2.03. Effect of the Merger.................................... 5 SECTION 2.04. Certificate of Incorporation; By-laws................... 5 SECTION 2.05. Directors and Officers.................................. 5 SECTION 2.06. Conversion of Securities................................ 6 SECTION 2.07. Employee and Director Stock Options..................... 6 SECTION 2.08. Dissenting Shares....................................... 7 SECTION 2.09. Surrender of Shares; Stock Transfer Books............... 8 SECTION 2.10. Merger Without Meeting of Stockholders.................. 9 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY SECTION 3.01. Organization and Qualification; Material Subsidiaries... 10 SECTION 3.02. Certificate of Incorporation and By-laws................ 10 SECTION 3.03. Capitalization.......................................... 10 SECTION 3.04. Authority Relative to this Agreement.................... 11 SECTION 3.05. No Conflict; Required Filings and Consents.............. 11 SECTION 3.06. Compliance.............................................. 12 SECTION 3.07. SEC Filings; Financial Statements....................... 12 SECTION 3.08. Absence of Certain Changes or Events.................... 13 SECTION 3.09. Absence of Litigation; Joint Ventures................... 14 SECTION 3.10. Employee Benefit Plans.................................. 14 SECTION 3.11. Labor Matters........................................... 15 SECTION 3.12. Offer Documents; Schedule 14D-9; Proxy Statement........ 16 SECTION 3.13. Taxes................................................... 16 SECTION 3.14. Rights Agreement........................................ 19 ii SECTION 3.15. Trademarks, Patents and Copyrights...................... 19 SECTION 3.16. Environmental Matters................................... 19 SECTION 3.17. Brokers................................................. 20 SECTION 3.18. Year 2000............................................... 20 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER SECTION 4.01. Corporate Organization.................................. 20 SECTION 4.02. Authority Relative to this Agreement.................... 20 SECTION 4.03. No Conflict; Required Filings and Consents.............. 21 SECTION 4.04. Financing............................................... 21 SECTION 4.05. Offer Documents; Proxy Statement........................ 21 SECTION 4.06. Brokers................................................. 22 SECTION 4.07. Absence of Litigation................................... 22 SECTION 4.08. No Prior Activities..................................... 22 SECTION 4.09. Parent Not an Affiliated Shareholder.................... 22 ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER SECTION 5.01. Conduct of Business by the Company Pending the Merger... 23 SECTION 5.02. Third Party Standstill Agreements and Confidentiality Agreements.............................................. 25 ARTICLE VI ADDITIONAL AGREEMENTS SECTION 6.01. Stockholders' Meeting................................... 26 SECTION 6.02. Proxy Statement......................................... 26 SECTION 6.03. Company Board Representation; Section 14(f)............. 26 SECTION 6.04. Access to Information; Confidentiality.................. 27 SECTION 6.05. No Solicitation......................................... 28 SECTION 6.06. Employee Benefits Matters............................... 30 SECTION 6.07. Directors' and Officers' Indemnification and Insurance.. 30 SECTION 6.08. Further Action; Reasonable Best Efforts................. 32 SECTION 6.09. Public Announcements.................................... 32 SECTION 6.10. Confidentiality Agreement............................... 32 iii ARTICLE VII CONDITIONS TO THE MERGER SECTION 7.01. Conditions to the Merger................................ 33 ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER SECTION 8.01. Termination............................................. 33 SECTION 8.02. Effect of Termination................................... 35 SECTION 8.03. Fee..................................................... 35 SECTION 8.04. Amendment............................................... 36 SECTION 8.05. Waiver.................................................. 37 ARTICLE IX GENERAL PROVISIONS SECTION 9.01. Non-Survival of Representations, Warranties and Agreements.......................................... 37 SECTION 9.02. Notices................................................. 37 SECTION 9.03. Certain Definitions..................................... 38 SECTION 9.04. Severability............................................ 40 SECTION 9.05. Entire Agreement; Assignment............................ 40 SECTION 9.06. Parties in Interest..................................... 40 SECTION 9.07. Governing Law........................................... 41 SECTION 9.08. Headings................................................ 41 SECTION 9.09. Counterparts............................................ 41 SECTION 9.10. Waiver of Jury Trial.................................... 41 ANNEX A Conditions to the Offer ANNEX B Employee Benefit Matters AGREEMENT AND PLAN OF MERGER dated as of June 27, 1999 (this "Agreement") among SUEZ LYONNAISE DES EAUX, a societe anonyme organized under - ---------- the laws of the Republic of France ("Parent"), H2O ACQUISITION CO., a Delaware ------ corporation and a wholly owned subsidiary of Parent ("Purchaser"), and NALCO --------- CHEMICAL COMPANY, a Delaware corporation (the "Company"). ------- WHEREAS, the Boards of Directors of Parent, Purchaser and the Company have each determined that it is in the best interests of their respective stockholders for Parent to acquire the Company upon the terms and subject to the conditions set forth herein; and WHEREAS, in furtherance of such acquisition, it is proposed that Purchaser shall make a cash tender offer (the "Offer") to acquire all the issued ----- and outstanding shares of (i) the Company's Common Stock, par value $0.1875 per share (the "Common Stock"), for $53 per share of Common Stock (such amount, or ------------ any greater amount per share of Common Stock paid pursuant to the Offer, being hereinafter referred to as the "Per Common Share Amount") and (ii) the Company's ----------------------- Series B ESOP Convertible Preferred Stock, par value $1.00 per share (the "ESOP ---- Preferred Stock"), for $1060 per share of ESOP Preferred Stock (such amount, or - --------------- any greater amount per share of ESOP Preferred Stock paid pursuant to the Offer, being hereinafter referred to as the "Per Preferred Share Amount"), in each case -------------------------- net to the seller in cash, upon the terms and subject to the conditions of this Agreement and the Offer (shares of Common Stock and shares of ESOP Preferred Stock are hereinafter collectively referred to as "Shares"); and ------ WHEREAS, the Board of Directors of the Company (the "Board") has ----- adopted resolutions determining that the Offer and the Merger are fair to and in the best interests of the holders of the Shares (the "Holders") and recommending ------- that the Holders approve the Merger, this Agreement and the other transactions contemplated hereby and adopt this Agreement and tender their Shares pursuant to the Offer; and WHEREAS, also in furtherance of such acquisition, the Boards of Directors of Parent, Purchaser and the Company have each approved the merger (the "Merger") of Purchaser with and into the Company in accordance with the ------ General Corporation Law of the State of Delaware ("Delaware Law") following the ------------ consummation of the Offer and upon the terms and subject to the conditions set forth herein; NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, Parent, Purchaser and the Company hereby agree as follows: 2 ARTICLE I THE OFFER --------- SECTION 1.01. The Offer. (a) Upon the terms and subject to the --------- conditions of this Agreement, Purchaser shall commence the Offer as promptly as reasonably practicable after the date hereof, but in no event later than five Business Days after the initial public announcement of Purchaser's intention to commence the Offer. The initial scheduled expiration date for the Offer shall be 20 Business Days following the commencement of the Offer. The obligation of Purchaser to accept for payment and pay for Shares tendered pursuant to the Offer shall be subject to the condition (the "Minimum Condition") that there ----------------- shall have been validly tendered and not withdrawn prior to the expiration of the Offer at least such number of Shares which, when added to any shares of Common Stock already owned by Parent, shall constitute a majority of the then outstanding shares of Common Stock on a fully diluted basis (including, without limitation, all shares of Common Stock issuable upon the conversion of the ESOP Preferred Stock and any convertible securities or upon the exercise of any options, warrants or rights) and also shall be subject to the satisfaction of the other conditions set forth in Annex A hereto. The conditions to the Offer set forth in Annex A hereto are for the benefit of Parent and Purchaser regardless of the circumstances giving rise to such conditions or, except as expressly set forth herein, may be waived by Parent and Purchaser in whole or in part. Purchaser expressly reserves the right to waive any such condition, to increase the price per Share payable in the Offer, and to make any other changes in the terms and conditions of the Offer; provided, however, that without the -------- ------- prior written consent of the Company, Parent and Purchaser shall not (i) waive the Minimum Condition, (ii) decrease the price per Share payable in the Offer, (iii) reduce the maximum number of Shares to be purchased in the Offer, (iv) amend or add to the conditions to the Offer set forth in Annex A hereto, (v) extend the Offer, (vi) change the form of consideration payable in the Offer, or (vii) amend, add to or waive any other term of the Offer in any manner which would be adverse to the Company or the Holders. Notwithstanding the foregoing, Purchaser may, without the consent of the Company, extend the Offer: (i) if, on the scheduled expiration date of the Offer, any of the conditions to Purchaser's obligation to accept for payment and pay for the Shares shall not have been satisfied or waived, until the fifth Business Day after the date Purchaser reasonably believes to be the earliest date on which such conditions will be satisfied; (ii) for any period required by any rule, regulation, interpretation or position of the SEC or its staff applicable to the Offer; or (iii) from time to time, for an aggregate period of not more than 10 Business Days (for all such extensions) beyond the latest expiration date that would be permitted under clause (i) or (ii) of this sentence. In addition, if, on the scheduled expiration date of the Offer, (i) the waiting period under the HSR Act shall not have expired or been terminated, (ii) the Commission of the European Union shall not have approved the Transactions under Regulation (EC) No. 4064/89, as amended, of the Council of the European Union or (iii) a temporary restraining order prohibiting the purchase of the Shares shall have been issued by a court of competent jurisdiction in any country in which the Company or its Subsidiaries have operations material to the Company and its Subsidiaries, taken as a whole, the 3 Purchaser shall extend the Offer from time to time until five Business Days after the expiration or termination of the waiting period under the HSR Act, such approval of the Commission of the European Union or the lifting of such temporary restraining order, subject to the right of Parent, Purchaser or the Company to terminate this Agreement pursuant to the terms hereof. The Per Common Share Amount and the Per Preferred Share Amount shall be net to the seller in cash, upon the terms and subject to the conditions of the Offer. Subject to the terms and conditions of the Offer, Purchaser shall, and Parent shall cause Purchaser to, pay, as promptly as practicable after expiration of the Offer, for all Shares validly tendered and not withdrawn. (b) As promptly as reasonably practicable on the date of commencement of the Offer, Purchaser shall file with the SEC (i) a Tender Offer Statement on Schedule 14D-1 (together with all amendments and supplements thereto, the "Schedule 14D-1") with respect to the Offer. The Schedule 14D-1 shall contain - --------------- or shall incorporate by reference an offer to purchase (the "Offer to Purchase") ----------------- and forms of the related letter of transmittal and any related summary advertisement (the Schedule 14D-1, the Offer to Purchase and such other documents, together with all supplements and amendments thereto, being referred to herein collectively as the "Offer Documents"). The Company and its counsel --------------- shall be given a reasonable opportunity to review and comment on the Offer Documents prior to the filing thereof with the SEC. Parent, Purchaser and the Company agree to correct promptly any information provided by any of them for use in the Offer Documents which shall have become false or misleading, and Parent and Purchaser further agree to take all steps necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the other Offer Documents as so corrected to be disseminated to Holders, in each case as and to the extent required by applicable federal securities laws. Parent and Purchaser agree to provide the Company and its counsel with copies of any written comments Parent, Purchaser or their counsel may receive from the SEC or its staff with respect to the Offer Documents promptly after receipt of such comments. SECTION 1.02. Company Action. (a) The Company hereby approves of -------------- and consents to the Offer and represents that (i) the Board, at a meeting duly called and held on June 27, 1999, has duly adopted resolutions that (A) determined that the Merger is advisable and that this Agreement and the transactions contemplated hereby, including the Offer and the Merger, are fair to and in the best interests of the Holders, (B) approved and adopted this Agreement and the transactions contemplated hereby (such approval and adoption having been made in accordance with the provisions of (S) 203 of Delaware Law), (C) recommended that the stockholders of the Company accept the Offer, approve the Merger and approve and adopt this Agreement and the transactions contemplated hereby and (D) took all other applicable action necessary to render (x) Section 203 of the General Corporation Law of the State of Delaware and other state takeover statutes and (y) the Rights Agreement, inapplicable to the Offer and the Merger, and (ii) Goldman Sachs & Co. ("Goldman") has delivered to ------- the Board its opinion (which will be confirmed in writing), as of the date hereof, that the consideration to be received by the holders of shares of Common Stock pursuant to each of the Offer and the Merger is fair to the holders of shares of Common Stock from a financial point of view. Subject to the fiduciary 4 duties of the Board under applicable law as determined by the Board in good faith after receiving advice from independent counsel, the Company hereby consents to the inclusion in the Offer Documents of the recommendation of the Board described in the immediately preceding sentence. The Company has advised Parent that each of its directors and executive officers intends to tender pursuant to the Offer all Shares owned of record and beneficially by him or her except to the extent such tender would violate applicable securities laws. (b) As soon as reasonably practicable on the date of commencement of the Offer, the Company shall file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 (together with all amendments and supplements thereto, the "Schedule 14D-9") containing, subject to the fiduciary duties of -------------- the Board under applicable law as determined by the Board in good faith after receiving advice from experienced, independent counsel, the recommendation of the Board described in Section 1.02(a) and shall disseminate the Schedule 14D-9 to the extent required by Rule 14d-9 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and any other applicable federal ------------ securities laws. Parent and its counsel shall be given an opportunity to review and comment upon the Schedule 14D-9 prior to the filing thereof with the SEC. The Company, Parent and Purchaser agree to correct promptly any information provided by any of them for use in the Schedule 14D-9 which shall have become false or misleading, and the Company further agrees to take all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to Holders, in each case as and to the extent required by applicable federal securities laws. To the extent practicable, the Company shall cooperate with Parent and Purchaser in mailing or otherwise disseminating the Schedule 14D-9 with the Offer Documents to the Company's stockholders. The Company agrees to provide Parent and Purchaser and their counsel with any comments the Company or its counsel may receive from the SEC or its staff with respect to the Schedule 14D-9 promptly after receipt of such comments. (c) The Company shall promptly furnish to Purchaser mailing labels containing the names and addresses of all record Holders and with security position listings of Shares held in stock depositories, each as of a recent date, together with all stockholder lists, other available listings and computer files containing names, addresses and security position listings of record holders and beneficial owners of Shares. The Company shall furnish to Purchaser such additional information, including, without limitation, updated listings and computer files of stockholders, mailing labels and security position listings, and such other assistance as Parent, Purchaser or their agents may reasonably request. Subject to the requirements of applicable law, and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Offer or the Merger, Parent and Purchaser shall hold in confidence the information contained in such labels, listings and files, shall use such information only in connection with the Offer and the Merger, and, if this Agreement shall be terminated in accordance with Section 8.01, shall deliver to the Company all copies of such information then in their possession. 5 ARTICLE II THE MERGER ---------- SECTION 2.01. The Merger. Upon the terms and subject to the ---------- conditions set forth in Article VII, and in accordance with Delaware Law, at the Effective Time (as hereinafter defined) Purchaser shall be merged with and into the Company. As a result of the Merger, the separate corporate existence of Purchaser shall cease and the Company shall continue as the surviving corporation of the Merger (the "Surviving Corporation"). --------------------- SECTION 2.02. Effective Time; Closing. As promptly as practicable ----------------------- after the satisfaction or, if permissible, waiver of the conditions set forth in Article VII, the parties hereto shall cause the Merger to be consummated by filing this Agreement or a certificate of merger or certificate of ownership and merger (in either case, the "Certificate of Merger") with the Secretary of State --------------------- of the State of Delaware, in such form as is required by, and executed in accordance with, the relevant provisions of Delaware Law (the date and time of such filing being the "Effective Time"). -------------- SECTION 2.03. Effect of the Merger. At the Effective Time, the -------------------- effect of the Merger shall be as provided in the applicable provisions of Delaware Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all the property, rights, privileges, powers and franchises of the Company and Purchaser shall vest in the Surviving Corporation, and all debts, liabilities, obligations, restrictions, disabilities and duties of the Company and Purchaser shall become the debts, liabilities, obligations, restrictions, disabilities and duties of the Surviving Corporation. SECTION 2.04. Certificate of Incorporation; By-laws. (a) At the ------------------------------------- Effective Time, the Restated Certificate of Incorporation of the Company shall be restated in a form acceptable to Purchaser and shall be the Certificate of Incorporation of the Surviving Corporation until thereafter amended as provided by law and such Certificate of Incorporation; provided, however, that such -------- ------- restated Certificate of Incorporation shall be in accordance with the provisions of Section 6.07 hereof. (b) The By-laws of Purchaser, as in effect immediately prior to the Effective Time, shall be the By-laws of the Surviving Corporation until thereafter amended as provided by law, the Certificate of Incorporation of the Surviving Corporation and such By-laws. SECTION 2.05. Directors and Officers. The directors of Purchaser ---------------------- immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the Certificate of Incorporation and By-laws of the Surviving Corporation, and the officers of the Company immediately prior to the Effective Time shall be 6 the initial officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified. SECTION 2.06. Conversion of Securities. At the Effective Time, by ------------------------ virtue of the Merger and without any action on the part of Parent, Purchaser, the Company or the holders of any of the following securities: (a) Each share of Common Stock issued and outstanding immediately prior to the Effective Time (other than any shares of Common Stock to be canceled pursuant to Section 2.06(c) and any Dissenting Shares (as hereinafter defined)), together with the associated right to purchase Company Series C Junior Participating Preferred Stock (the "Junior C -------- Preferred Stock") pursuant to the Rights Agreement, shall be canceled and --------------- shall be converted automatically into the right to receive an amount equal to the Per Common Share Amount in cash (the "Merger Consideration") -------------------- payable, without interest, to the holder of such share of Common Stock, upon surrender, in the manner provided in Section 2.09, of the certificate that formerly evidenced such share of Common Stock; (b) Each share of ESOP Preferred Stock issued and outstanding immediately prior to the Effective Time (other than shares of ESOP Preferred Stock to be canceled pursuant to Section 2.06(c)) shall be canceled and shall be converted automatically into the right to receive an amount in cash equal to the product of the Merger Consideration multiplied by the number of shares of Common Stock into which such share of ESOP Preferred Stock shall be convertible immediately prior to the Effective Time, payable, without interest, to the holder of such share of ESOP Preferred Stock, upon surrender, in the manner provided in Section 2.09, of the certificate that formerly evidenced such share of ESOP Preferred Stock; (c) Each Share held in the treasury of the Company and each Share owned by Purchaser, Parent or any direct or indirect wholly owned subsidiary of Parent or of the Company immediately prior to the Effective Time shall be canceled without any conversion thereof and no payment or distribution shall be made with respect thereto; and (d) Each share of common stock, par value $.01 per share, of Purchaser issued and outstanding immediately prior to the Effective Time shall be converted into, and exchanged for, one validly issued, fully paid and nonassessable share of Common Stock, par value $.01 per share, of the Surviving Corporation. SECTION 2.07. Employee and Director Stock Options. (a) The Company ----------------------------------- shall, immediately prior to the Effective Time, (i) terminate the Company Stock Option Plans (as defined in Section 2.07(b) below) and any other plan, program or arrangement providing for the issuance, grant or purchase of any other interest in respect of the capital stock of the Company or any of its Subsidiaries without prejudice to the holders of Options (as defined in Section 2.07(b) 7 below), and (ii) amend the provisions of any other Company Benefit Plan, or related trust or funding vehicle, providing for the issuance, holding, transfer or grant of any Shares, or any interest in respect of any Shares (collectively the "Company Stock Plans"), to provide no continuing rights to acquire, hold, transfer, or grant any Shares or any interest in any Shares. Prior to the Effective Time, the Company shall cause all amounts currently held as cash in participant accounts under the Company's Employee Stock Purchase Program to be returned to the applicable participants and all previously purchased shares of Common Stock held in such accounts to be distributed to the applicable participants. (b) Parent and the Company shall take all action necessary to (i) provide that each option to purchase shares of Common Stock (an "Option") ------ pursuant to the Non-Employee Directors Stock Option Plan, the Company's Employee Stock Compensation Plan, the 1990 Stock Option Plan and the 1982 Stock Option Plan or any stock option agreement to which the Company is a party (the "Company Stock Option Plans"), which is outstanding immediately prior to the - --------------------------- acceptance of the Shares by the Purchaser pursuant to the Offer, shall become fully exercisable and vested, whether or not previously exercisable or vested, as of the time of such acceptance and (ii) provide that, with respect to each such Option, the holder thereof shall be entitled to receive from the Company, at the time payment is made for the Shares tendered pursuant to the Offer, an amount in cash in cancellation of such Option equal to the difference between the Merger Consideration and the per share exercise price of such Option, multiplied by the number of shares of Common Stock to which such Option remains unexercised, less any income or employment tax withholding required under the Code or any provision of state or local law. Prior to the acceptance of the Shares by the Purchaser pursuant to the Offer, the Company shall make all amendments to the Company Stock Plans necessary, and take all actions necessary, to effect the transactions contemplated by this Section 2.07 and Annex B. The Company and the Parent shall cooperate, and take all reasonable steps to share in advance information, to effect the transactions contemplated by this Section 2.07. SECTION 2.08. Dissenting Shares. Notwithstanding any provision of ----------------- this Agreement to the contrary, Shares that are outstanding immediately prior to the Effective Time and which are held by stockholders who shall have not voted in favor of the Merger or consented thereto in writing and who shall have demanded properly in writing an appraisal for such Shares in accordance with Section 262 of Delaware Law (collectively, the "Dissenting Shares") shall not be ----------------- converted into or represent the right to receive the Merger Consideration. Such stockholders shall be entitled to receive payment of the appraised value of such Shares held by them in accordance with the provisions of such Section 262, except that all Dissenting Shares held by stockholders who shall have failed to perfect or who effectively shall have withdrawn or lost their rights to appraisal of such Shares under such Section 262 shall thereupon be deemed to have been converted into and to have become exchangeable for, as of the Effective Time, the right to receive the Merger Consideration, without any interest thereon, upon surrender, in the manner provided in Section 2.09 of the certificate or certificates that formerly evidenced such Shares. The Company will give Parent and Purchaser (i) prompt notice of any written demands for 8 appraisal, withdrawals of demands for appraisal and any other related instruments received by the Company, and (ii), after the acceptance of the Shares by Purchaser pursuant to the Offer, the opportunity to direct all negotiations and proceedings with respect to demands for appraisal. The Company will not, except with the prior written consent of Parent, voluntarily make any payment with respect to any demands for appraisal or settle or offer to settle any such demand. SECTION 2.09. Surrender of Shares; Stock Transfer Books. (a) As of ----------------------------------------- the Effective Time, Purchaser shall deposit (and Parent shall provide all necessary funds and otherwise cause Purchaser to deposit), or shall cause to be deposited, with a bank or trust company designated by Parent or Purchaser (and reasonably satisfactory to the Company) to act as its paying agent (the "Paying ------ Agent"), for the benefit of the Holders, for payment in accordance with this - ----- Article II, through the Paying Agent, cash in an amount equal to the sum of (i) the Per Common Share Amount multiplied by the number of shares of Common Stock outstanding immediately prior to the Effective Time plus (ii) the Per Preferred ---- Share Amount multiplied by the number of shares of ESOP Preferred Stock outstanding immediately prior to the Effective Time (such cash being hereinafter referred to as the "Payment Fund"). The Paying Agent shall, pursuant to ------------ irrevocable instructions, deliver the cash contemplated to be paid pursuant to this Article II out of the Payment Fund. The Payment Fund shall not be used for any other purpose. The Payment Fund shall be invested by the Paying Agent as directed by the Surviving Corporation, provided that such investments shall be in obligations of or guaranteed by the United States of America or of any agency thereof and backed by the full faith and credit of the United States of America, in commercial paper obligations rated A-1 or P-1 or better by Moody's Investors Service, Inc. or Standard & Poor's Rating Services, respectively, or in deposit accounts, certificates of deposit or banker's acceptances of, repurchase or reverse repurchase agreements with, or Eurodollar time deposits purchased from, commercial banks with capital, surplus and undivided profits aggregating in excess of $1 billion (based on the most recent financial statements of such bank which are then publicly available at the SEC or otherwise). (b) Promptly after the Effective Time, the Surviving Corporation shall cause to be mailed to each person who was, at the Effective Time, a holder of record of Shares entitled to receive the Merger Consideration pursuant to Sections 2.06(a) and 2.06(b) a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the certificates evidencing such Shares (the "Certificates") shall pass, only upon ------------ proper delivery of the Certificates to the Paying Agent) and instructions for use in effecting the surrender of the Certificates pursuant to such letter of transmittal. Upon surrender to the Paying Agent of a Certificate, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration for each Share formerly evidenced by such Certificate, and such Certificate shall then be canceled. No interest shall accrue or be paid on the Merger Consideration payable upon the surrender of any Certificate for the benefit of the holder of such Certificate. If payment of the Merger Consideration is to be made to a person other than the 9 person in whose name the surrendered Certificate is registered on the stock transfer books of the Company, it shall be a condition of payment that the Certificate so surrendered shall be endorsed properly or otherwise be in proper form for transfer and that the person requesting such payment shall have paid all transfer and other taxes required by reason of the payment of the Merger Consideration to a person other than the registered holder of the Certificate surrendered or shall have established to the satisfaction of the Surviving Corporation that such taxes either have been paid or are not applicable. (c) At any time following the first anniversary of the Effective Time, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds which had been made available to the Paying Agent and not disbursed to Holders (including, without limitation, all interest and other income received by the Paying Agent in respect of all funds made available to it), and thereafter such Holders shall be entitled to look to the Surviving Corporation (subject to abandoned property, escheat and other similar laws) only as general creditors thereof with respect to any Merger Consideration that may be payable. Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying Agent shall be liable to any holder of a Share for any Merger Consideration delivered in respect of such Share to a public official pursuant to any abandoned property, escheat or other similar law. (d) At the close of business on the day of the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of Shares on the records of the Company. From and after the Effective Time, the Holders outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Shares except as otherwise provided herein or by applicable law. SECTION 2.10. Merger Without Meeting of Stockholders. -------------------------------------- Notwithstanding the foregoing, in the event that Purchaser, or any other direct or indirect subsidiary of Parent, shall acquire at least 90 percent of the outstanding Shares, the parties hereto agree to take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after the expiration of the Offer without a meeting of stockholders of the Company, in accordance with Section 253 of Delaware Law. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY --------------------------------------------- Except as set forth in the disclosure schedule (the "Disclosure ---------- Schedule") delivered by the Company to Parent and Purchaser on or prior to the - -------- date of this Agreement or as disclosed in any of the SEC Reports, the Company hereby represents and warrants to Parent and Purchaser that: 10 SECTION 3.01. Organization and Qualification; Material Subsidiaries. ----------------------------------------------------- Each of the Company and each Material Subsidiary is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization and has the requisite power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted, except where the failure to be so organized, existing or in good standing or to have such power, authority and governmental approvals does not, individually or in the aggregate, have a Material Adverse Effect. Each of the Company and each Material Subsidiary is duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for such failures to be so qualified or licensed and in good standing that do not, individually or in the aggregate, have a Material Adverse Effect. Exhibit 21 to the Company's Annual Report on Form 10-K for the year ended December 31, 1998, as filed with the SEC, is a true, accurate and correct list of all of the Subsidiaries of the Company. All of the outstanding capital stock of, or ownership interests in, each Subsidiary of the Company is owned by the Company, directly or indirectly, free and clear of all liens. All of the shares of capital stock of each Subsidiary are validly issued, fully paid and non-assessable. SECTION 3.02. Certificate of Incorporation and By-laws. The Company ---------------------------------------- has heretofore made available to Parent a complete and correct copy of the Restated Certificate of Incorporation and the By-laws, each as amended to date, of the Company. Such Restated Certificate of Incorporation and By-Laws are in full force and effect, and the Company is not in material violation of any provision thereof. SECTION 3.03. Capitalization. The shares of issued and outstanding -------------- capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable; none of the outstanding shares of capital stock of the Company was issued in violation of the preemptive or other similar rights of any security holder of the Company. The authorized capital stock of the Company consists of 200,000,000 shares of Common Stock and 2,000,000 shares of preferred stock of the Company ("Company Preferred Stock"), par value $1.00 ----------------------- per share (of which 450,000 shares have been designated Series A Junior Participating Preferred Stock ("Junior A Preferred Stock"), 415,800 have been ------------------------ designated as ESOP Preferred Stock and 200,000 have been designated Junior C Preferred Stock). As of June 24, 1999, (i) 66,263,894 shares of Common Stock and 353,908.409 shares of ESOP Preferred are issued and outstanding, all of which are validly issued, fully paid and nonassessable, and no shares of Junior A Preferred Stock or of Junior C Preferred Stock are issued and outstanding, (ii) 14,023,674 shares of Common Stock and no shares of Company Preferred Stock are held in the treasury of the Company, (iii) no shares of Common Stock and no shares of Company Preferred Stock are held by the Subsidiaries, (iv) no shares of Common Stock and no shares of Company Preferred Stock are reserved for issuance pursuant to currently outstanding stock options granted pursuant to the Company's Stock Option Plans, (v) no shares of Common Stock and no shares of Company Preferred Stock are reserved for issuance pursuant to stock options to be granted 11 pursuant to the Company's Stock Option Plans and (vi) 200,000 shares of Junior C Preferred Stock are reserved for issuance pursuant to the Rights Agreement. All of the outstanding shares of ESOP Preferred Stock are held by the Company's employee stock ownership plan. Except as set forth in this Section 3.03, in the Restated Certificate of Incorporation of the Company or for the rights to purchase Junior C Preferred Stock pursuant to the Rights Agreement, neither the Company nor any Subsidiary has granted any options, warrants or other rights, or entered into any agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of the Company or any Subsidiary or obligating the Company or any Subsidiary to issue or sell any shares of capital stock of, or other equity interests in, the Company or any Subsidiary. All Shares subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. The total number of Options outstanding is no greater than 10,888,271 and the weighted average exercise price is no less than $34.27. There are no outstanding contractual obligations of the Company or any Subsidiary to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any Subsidiary or any other person other than to Subsidiaries in the ordinary course of business consistent with past practice. SECTION 3.04. Authority Relative to this Agreement. The Company has ------------------------------------ all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby (the "Transactions"). The execution and ------------ delivery of this Agreement by the Company and the consummation by the Company of the Transactions have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the Transactions (other than, with respect to the Merger, the approval and adoption of this Agreement by the holders of a majority of the votes cast by the holders of the then outstanding shares of Common Stock and shares of ESOP Preferred Stock, voting together as a single class, if and to the extent required by applicable law, and the filing and recordation of appropriate merger documents as required by Delaware Law). This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Parent and Purchaser, constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms. SECTION 3.05. No Conflict; Required Filings and Consents. (a) The ------------------------------------------ execution and delivery of this Agreement by the Company does not, and the performance of this Agreement by the Company will not, (i) conflict with or violate the Certificate of Incorporation or By-laws or equivalent organizational documents of the Company or any Material Subsidiary, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Company or any Material Subsidiary or by which any property or asset of the Company or any Material Subsidiary is bound or affected other than conflicts or violations that do not, individually or in the aggregate, have a Material Adverse Effect or prevent the consummation of any of the 12 Transactions, or (iii) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or other encumbrance on any property or asset of the Company or any Material Subsidiary pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation, other than breaches or defaults that do not, individually or in the aggregate, have a Material Adverse Effect or prevent the consummation of any of the Transactions or prohibit or materially limit the operation by Parent or Purchaser of all or any material portion of the business of the Company and its Subsidiaries, taken as a whole. (b) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, require any consent, approval, authorization or permit of, or filing or registration with or notification to, any governmental or regulatory authority, domestic or foreign, with respect to the Company or any of its Subsidiaries, except (i) for applicable requirements, if any, of the Exchange Act, state securities or "blue sky" laws ("Blue Sky Laws") and state takeover laws, the pre-merger notification ------------- requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder (the "HSR Act"), the filing of ------- a notification with the European Commission under Council Regulation (EC) No. 4064/89, as amended, or similar antitrust filings or notifications in other jurisdictions and filing and recordation of appropriate merger documents as required by Delaware Law and (ii) where failure to obtain such consents, approvals, orders, registrations, authorizations or permits, or to make such filings or notifications, would not prevent or delay consummation of the Offer or the Merger, or otherwise prevent the Company from performing its obligations under this Agreement, and do not, individually or in the aggregate, have a Material Adverse Effect. SECTION 3.06. Compliance. Neither the Company nor any Material ---------- Subsidiary is in conflict with, or in default or violation of, (i) any law, rule, regulation, order, judgment or decree applicable to the Company or any Material Subsidiary or by which any property or asset of the Company or any Material Subsidiary is bound or affected, or (ii) any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company or any Material Subsidiary is a party or by which the Company or any Material Subsidiary or any property or asset of the Company or any Material Subsidiary is bound or affected, except for any such conflicts, defaults or violations that do not, individually or in the aggregate, have a Material Adverse Effect. SECTION 3.07. SEC Filings; Financial Statements. (a) The Company --------------------------------- has filed all forms, reports and documents required to be filed by it with the SEC since January 1, 1998 and has heretofore made available to Parent, in the form filed with the SEC, (i) the Company's Annual Reports on Form 10-K for the fiscal years ended December 31, 1997 and 1998, (ii) the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1999, (iii) all proxy statements relating to the Company's meetings of stockholders (whether annual or special) 13 held since January 1, 1998, and (iv) all other forms, reports and other registration statements filed by the Company with the SEC since January 1, 1998 (the forms, reports and other documents referred to in clauses (i), (ii), (iii) and (iv) above, together with any amendments or supplements thereto, being referred to herein, collectively, as the "SEC Reports"). The SEC Reports (i) ----------- were prepared in accordance with the requirements of the Securities Act of 1933, as amended (the "Securities Act"), and the Exchange Act, as the case may be, and -------------- the rules and regulations thereunder and (ii) did not at the time they were filed contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. No Subsidiary is required to file any form, report or other document with the SEC. (b) Each of the consolidated financial statements (including, in each case, any notes thereto) contained in the SEC Reports was prepared in accordance with generally accepted accounting principles applied on a consistent basis throughout the periods indicated and each fairly presented, in all material respects, the consolidated financial position, results of operations and cash flow of the Company and the Subsidiaries as at the respective dates thereof and for the respective periods indicated therein (except as otherwise noted therein and subject, in the case of unaudited statements, to normal and recurring year- end adjustments). (c) Except as and to the extent set forth on the consolidated balance sheet of the Company and the Subsidiaries as at March 31, 1999, including the notes thereto, neither the Company nor any Subsidiary has any liability or obligation of any nature (whether accrued, absolute, contingent or otherwise) which would be required to be reflected on a balance sheet prepared in accordance with generally accepted accounting principles, except for liabilities and obligations that do not, individually or in the aggregate, have a Material Adverse Effect. SECTION 3.08. Absence of Certain Changes or Events. From March 31, ------------------------------------ 1999 through the date of this Agreement, there has not been (i) any event, occurrence or condition which, individually or in the aggregate, would be reasonably likely to have a Material Adverse Effect, (ii) any amendments or changes in the Certificate of Incorporation or Bylaws of the Company, (iii) any revaluation by the Company or any of its Subsidiaries of any of their respective assets, including, without limitation, write-offs of accounts receivable, other than in the ordinary course of the Company's and its Subsidiaries' businesses consistent with historical practices, (iv) any material change by the Company or any of its Subsidiaries in its accounting methods, principles or practices, (v) any entry by the Company or any Subsidiary into any contract material to the Company and the Subsidiaries, taken as a whole, (vi) any declaration, setting aside or payment of any dividend or distribution in respect of any capital stock of the Company or any redemption, repurchase or other acquisition of any of its securities (other than regular quarterly dividends on the shares of Common Stock and regular dividends on the shares of ESOP Preferred Stock), (vii) any event pursuant to which the Company or any of its Subsidiaries (A) incurred any liabilities (direct, contingent or otherwise) which are material to the Company and its Subsidiaries, taken as a whole, or (B) engaged in any transaction or entered into 14 any agreement material to the Company and its Subsidiaries, taken as a whole, in each of clause (A) and (B) outside of the ordinary course of business, or (viii) other than pursuant to the contractual arrangements referred to in Section 3.10 and Annex B, any increase in or establishment of any bonus, insurance, severance, deferred compensation, pension, retirement, profit sharing, stock option (including, without limitation, the granting of stock options, stock appreciation rights, performance awards, or restricted stock awards), stock purchase or other employee benefit plan, or any other increase in the compensation payable or to become payable to any officers or key employees of the Company or any Subsidiary, except in the ordinary course of business consistent with past practice. SECTION 3.09. Absence of Litigation; Joint Ventures. (a) As of the ------------------------------------- date of this Agreement, there is no claim, action, proceeding or investigation pending or, to the knowledge of the Company, threatened against the Company or any Subsidiary or against Treated Water Outsourcing, a Nalco/U.S. Filter Joint Venture ("TWO"), or any property or asset of the Company or any Subsidiary or TWO, before any court, arbitrator or administrative, governmental or regulatory authority or body, domestic or foreign, that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect. As of the date of this Agreement, none of the Company, any Subsidiary or TWO nor any property or asset of the Company, any Subsidiary or TWO is subject to any order, writ, judgment, injunction, decree, determination or award that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. (b) As of the date of this Agreement, the aggregate amount of indebtedness, net of cash and cash equivalents (i) of TWO is not materially greater than $24,700,000 and (ii) of Nalco/Exxon Energy Chemicals, L.P. is not materially greater than $6,700,000. SECTION 3.10. Employee Benefit Plans. (a) With respect to each ---------------------- employee benefit plan, program, arrangement and contract (including, without limitation, any "employee benefit plan", as defined in Section 3(3) of the --------------------- Employee Retirement Income Security Act of 1974, as amended ("ERISA")), ----- maintained or contributed to by the Company or any Subsidiary, or any organization which, together with the Company or any Subsidiary, would be treated as a "single employer" within the meaning of Section 414 of the Code or Section 4001(a)(14) of ERISA (collectively, the "Company Benefit Plans"), the --------------------- Company has made available to Parent a true and correct copy of (i) the most recent annual report (Form 5500) filed with the Internal Revenue Service (the "IRS"), (ii) such Company Benefit Plan, (iii) each trust agreement relating to - ---- each Company Benefit Plan, (iv) the most recent summary plan description for each Company Benefit Plan for which a summary plan description is required, (v) the most recent actuarial report or valuation, if any, relating to a Company Benefit Plan subject to Title IV of ERISA and (vi) the most recent determination letter, if any, issued by the IRS with respect to any Company Benefit Plan qualified under Section 401(a) of the Internal Revenue Code of 1986, as amended (the "Code"). ---- 15 (b) With respect to the Company Benefit Plans, to the knowledge of the Company, no event has occurred and there exists no condition or set of circumstances in connection with which the Company or any Subsidiary could be subject to any liability under the terms of such Company Benefit Plans, ERISA, the Code or any other applicable law which would have a Material Adverse Effect. (c) Except as required by law or as would not have a Material Adverse Effect, no Company Benefit Plan provides retiree medical or retiree life insurance benefits to any person. (d) The Company has made available to Parent (i) copies of all material employment agreements with officers of the Company and the Subsidiaries (or copies of forms of agreements setting forth representative employment terms and conditions) and (ii) copies of all plans, programs, agreements and other arrangements of the Company with or relating to its employees which contain change of control provisions (the "Company Change of Control Agreements"). ------------------------------------ (e) Except as would not have a Material Adverse Effect, (i) each Company Benefit Plan which is intended to be "qualified" within the meaning of Section 401(a) of the Code, has received a favorable determination letter from the Internal Revenue Service and, to the knowledge of the Company, no event has occurred and no condition exists which could reasonably be expected to result in the revocation of any such determination; (ii) during the six year period preceding the Effective Time, no Company Benefit Plan covered by Title IV of ERISA has been terminated and no proceedings have been instituted to terminate or appoint a trustee to administer any such plan; (iii) during the six year period preceding the Effective Time, no Company Benefit Plan subject to Section 412 of the Code or Section 302 of ERISA has incurred any accumulated funding deficiency within the meaning of Section 412 of the Code or Section 302 of ERISA, or obtained a waiver of any minimum funding standard or an extension of any amortization period under Section 412 of the Code or Section 303 or 304 of ERISA; and (iv) no liability, claim, action or litigation has been made, commenced or, to the Company's knowledge, threatened with respect to any Company Benefit Plan (other than routine claims for benefits payable in the ordinary course, and appeals of such denied claims). SECTION 3.11. Labor Matters. Neither the Company nor any Material ------------- Subsidiary is a party to any collective bargaining or other labor union contract applicable to persons employed by the Company or a Material Subsidiary in the United States and no collective bargaining agreement is being negotiated by the Company or any Material Subsidiary with respect to such United States employees. As of the date of this Agreement, there is no effort by or on behalf of any labor union to organize any persons employed by the Company or any Material Subsidiary in the United States, and, to the knowledge of the Company, no such effort has been threatened, and no labor dispute, strike or work stoppage against the Company or any Material Subsidiary pending or, to the knowledge of the Company, threatened in writing which may interfere with the respective business activities of the Company or the Material Subsidiaries, 16 except where such dispute, strike or work stoppage would not have a Material Adverse Effect. As of the date of this Agreement, to the knowledge of the Company, none of the Company or any of the Material Subsidiaries, or their respective representatives or employees, has committed any unfair labor practices in connection with the operation of the respective businesses of the Company or the Material Subsidiaries, and there is no charge or complaint against the Company or the Material Subsidiaries by the National Labor Relations Board or any comparable state agency pending or threatened in writing, except where such unfair labor practice, charge or complaint would not have a Material Adverse Effect. SECTION 3.12. Offer Documents; Schedule 14D-9; Proxy Statement. ------------------------------------------------ Neither the Schedule 14D-9 nor any information supplied by the Company for inclusion or incorporation by reference in the Offer Documents shall, at the respective times set out in the Schedule 14D-9, the Offer Documents or any amendments or supplements thereto that are filed with the SEC or are first published, sent or given to stockholders of the Company, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they are made, not misleading. Neither the proxy statement to be sent to the stockholders of the Company in connection with the Stockholders' Meeting (as hereinafter defined) nor the information statement to be sent to such stockholders, as appropriate (such proxy statement or information statement, as amended or supplemented, being referred to herein as the "Proxy Statement"), shall, at the date the Proxy Statement (or any --------------- amendment or supplement thereto) is first mailed to stockholders of the Company, at the time of the Stockholders' Meeting and at the Effective Time, be false or misleading with respect to any material fact, or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they are made, not misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the Stockholders' Meeting which shall have become false or misleading. If, at any time prior to the Effective Time, any event with respect to the Company, its officers and directors or any of its Subsidiaries should occur which is required to be described in an amendment of, or a supplement to, the Schedule 14D-9, the Offer Documents or the Proxy Statement, such event shall be so described, and such amendment or supplement shall be promptly filed with the SEC and, as required by law, disseminated to Holders. Prior to the filing of such amendment or supplement with the SEC, a copy thereof will be delivered to Parent and its counsel, who shall, to the extent practicable under the circumstances and applicable law, have the opportunity to comment on such amendment or supplement. The Schedule 14D-9 and the Proxy Statement shall comply in all material respects as to form with the requirements of the Exchange Act and the rules and regulations thereunder. SECTION 3.13. Taxes. (a) The Company and its Subsidiaries have ----- timely filed, or will timely file, all material Tax Returns required to be filed by, or with respect to, the Company and its Subsidiaries on or before the Effective Time (taking into account proper extensions of time to file), which Tax Returns are true and complete in all material respects. All material Taxes which are due and payable by the Company or any of its Subsidiaries as of the 17 date of this Agreement have been timely paid or have been adequately disclosed and fully provided for as a liability on the financial statements of the Company and its Subsidiaries in accordance with generally accepted accounting principles, consistently applied. All material Taxes which are not yet due and payable, but become due and payable by the Company or any of its Subsidiaries on or before the Effective Time, will be timely paid or will be adequately disclosed and fully provided for, on or before the Effective Time, as a liability on the financial statements of the Company and its Subsidiaries in accordance with generally accepted accounting principles, consistently applied. The Company and each Subsidiary have withheld and collected all material Taxes that are required to be withheld and collected by them as of the date of this Agreement and have timely paid to the proper authorities such Taxes withheld and collected to the extent due and payable. The Company and each Subsidiary will withhold and collect on or before the Effective Time all material Taxes that will be required to be withheld and collected by them on or before the Effective Time and will timely pay to the proper authorities such Taxes withheld and collected to the extent due and payable on or before the Effective Time. (b) Neither the Company nor any of its Subsidiaries has waived or been requested to waive any statute of limitations in respect of material Taxes of the Company or any of its Subsidiaries. Neither the Internal Revenue Service nor any other taxing authority (domestic or foreign) is now asserting or, to the knowledge of the Company, threatening to assert against the Company or any Subsidiary any deficiency or claim for material additional Taxes. No liens or security interests arising in connection with a failure (or alleged failure) to pay any material Taxes have attached to any of the assets of the Company or any of its Subsidiaries, except for Taxes that are being contested in good faith through proper proceedings. (c) Neither the Company nor any of its Subsidiaries has any liability for material Taxes of any person (other than the Company and its Subsidiaries), including liability arising from the application of Treasury regulation section 1.1502-6 or any analogous provision of state, local or foreign law, or as a transferee or successor, by contract or otherwise, other than a liability for which any person (other than the Company and its Subsidiaries) is required, by contract or otherwise, to indemnify the Company or any of its Subsidiaries, and other than a liability which is adequately disclosed and fully provided for on the financial statements of the Company and its Subsidiaries in accordance with generally accepted accounting principles, consistently applied. To the knowledge of the Company, no person or taxing authority has asserted liability against the Company or any of its Subsidiaries for material Taxes of any person (other than the Company and its Subsidiaries), including liability arising from the application of Treasury regulation section 1.1502-6 or any analogous provision of state, local or foreign law, or as a transferee or successor, by contract or otherwise. (d) There are no tax sharing, allocation, indemnification or similar agreements in effect as between the Company or its Subsidiaries or any predecessor or affiliate thereof and any other party under which Parent or Purchaser, the Company or its Subsidiaries could be liable for material Taxes or other material claims of any party (other than the Company or its 18 Subsidiaries), other than Taxes or other claims which are adequately disclosed and fully provided for on the financial statements of the Company and its Subsidiaries in accordance with generally accepted accounting principles, consistently applied. (e) No election under Section 341(f) of the Code has been made or shall be made prior to the Effective Time to treat the Company or any of its Subsidiaries as a consenting corporation, as defined in Section 341 of the Code. (f) The Company is not a "United States real property holding corporation" within the meaning of Section 897(c)(2) of the Code. (g) Neither the Company nor any of its Subsidiaries has applied for, been granted, been required to make, or agreed to any accounting method change for which it will be required to take into account any material adjustment under Section 481 of the Code or any similar provision of the Code or the corresponding tax laws of any nation, state or locality, and the Internal Revenue Service or any other taxing authority has not initiated or proposed any such adjustment or change in accounting period. (h) No material amount of indebtedness of the Company or any of its Subsidiaries consists of "corporate acquisition indebtedness" within the meaning of Section 279 of the Code. (i) For purposes of this Agreement (i) "Tax" (and, with correlative --- meaning, "Taxes") means any United States federal, state, local, foreign or ----- other income, gross receipts, profits, windfall profits, property, sales, use, license, excise, franchise, occupation, employment, payroll, premium, withholding, alternative or added minimum, ad valorem, transfer, stamp, severance, capital gains, capital stock or excise tax, or any other tax, levy, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever (whether payable directly or by withholding and whether or not requiring the filing of a Tax Return), all estimated taxes, deficiency assessments, additions to tax, penalties and interest imposed by any governmental authority with respect to the foregoing, and shall include any liability for such amounts as a result either of being a member of a combined, consolidated, unitary or affiliated group or of a contractual obligation to indemnify any person or other entity with respect to Taxes, and (ii) "Tax --- Return" means any return, form, report or similar statement with respect to any Tax (including any schedules, related or supporting information), including without limitation, any information return, claim for refund, amended return or declaration of estimated Tax. SECTION 3.14. Rights Agreement. The copy of the Rights Agreement, ---------------- dated as of June 20, 1996, between the Company and First Chicago Trust Company, as Rights Agent (the "Rights Agreement"), including all amendments and exhibits ---------------- thereto, that is set forth as an exhibit to the Company's Form 10-K for the year ended December 31, 1998 is a complete and correct copy thereof. The Board has taken all necessary action to amend the Rights Agreement 19 so that none of the execution of this Agreement, the making of the Offer or the consummation of the Merger will (a) cause the Rights issued pursuant to the Rights Agreement to become exercisable, (b) cause Parent or Purchaser to become an Acquiring Person (as such term is defined in the Rights Agreement) or (c) give rise to a Distribution Date or a Triggering Event (as each term is defined in the Rights Agreement). SECTION 3.15. Trademarks, Patents and Copyrights. The Company and ---------------------------------- the Subsidiaries own, or possess licenses or other valid rights to use, all patents, patent rights, trademarks, trademark rights, trade names, trade name rights, copyrights, servicemarks, trade secrets, applications for trademarks and for servicemarks, know-how and other proprietary rights and information that are material to the business of the Company and the Material Subsidiaries as currently conducted, and the Company is unaware of any assertion or claim challenging the validity of any of the foregoing, other than any assertion or claim which, individually or in the aggregate, does not have a Material Adverse Effect. The conduct of the business of the Company and the Material Subsidiaries as currently conducted does not conflict with any patent, patent right, license, trademark, trademark right, trade name, trade name right, service mark or copyright of any third party, other than conflicts that, individually or in the aggregate, do not have a Material Adverse Effect. To the knowledge of the Company, there are no infringements by any third party of any proprietary rights owned or licensed by or to the Company or any Material Subsidiary which, individually or in the aggregate, have a Material Adverse Effect. SECTION 3.16. Environmental Matters. Except as would not, --------------------- individually or in the aggregate, have a Material Adverse Effect, (a) the Company is in compliance with all applicable Environmental Laws and has obtained and is in compliance with all governmental permits, licenses and other authorizations required under any Environmental Law, (b) there are no written claims pursuant to any Environmental Law pending or, to the Company's knowledge, threatened, against the Company, (c) the Company has made available to Purchaser copies of any and all environmental assessment or audit reports or other similar studies or analyses generated within the last three years and in the Company's possession, that relate to the Company, and (d) there are no facts, circumstances or conditions relating to the business or operations of the Company or any Material Subsidiary, or to any real property currently owned or operated by the Company or any Material Subsidiary (or, to the knowledge of the Company, any real property previously owned or operated by the Company or any Material Subsidiary as a result of the actions or operations of the Company or any Material Subsidiary), that would reasonably be expected to give rise to any claim, proceeding or action, or to any liability, under any Environment Law. SECTION 3.17. Brokers. No broker, finder or investment banker (other ------- than Goldman) is entitled to any brokerage, finder's or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of the Company. The Company has heretofore furnished to Parent a complete and correct copy of all agreements between the 20 Company and Goldman pursuant to which such firm would be entitled to any payment relating to the Transactions. SECTION 3.18. Year 2000. Except as would not, individually or in the --------- aggregate, have a Material Adverse Effect, to the knowledge of the Company all internal computer systems, computer software, equipment or technology that are material to the business, finances or operations of the Company and its Material Subsidiaries or were sold or licensed to customers of the Company and its Material Subsidiaries are (i) able to receive, record, store, process, calculate, manipulate and output dates from and after January 1, 2000, time periods that include January 1, 2000 and information that is dependent on or relates to such dates or time periods, in the same manner and with the same accuracy, functionality, data integrity and performance as when dates or time periods prior to January 1, 2000 are involved, (ii) able to store and output date information in a manner that is unambiguous as to century and (iii) to recognize Year 2000 as a leap year. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER ------------------------------------------------------ Parent and Purchaser hereby, jointly and severally, represent and warrant to the Company that: SECTION 4.01. Corporate Organization. Each of Parent and Purchaser ---------------------- is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has the requisite power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted, except where the failure to be so organized, existing or in good standing or to have such power, authority and governmental approvals would not, individually or in the aggregate, have a material adverse effect on the ability of Parent or Purchaser to perform their obligations hereunder, or prevent or materially delay the consummation of the Transactions. SECTION 4.02. Authority Relative to this Agreement. Each of Parent ------------------------------------ and Purchaser has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution and delivery of this Agreement by Parent and Purchaser and the consummation by Parent and Purchaser of the Transactions have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of Parent or Purchaser are necessary to authorize this Agreement or to consummate the Transactions (other than, with respect to the Merger, the filing and recordation of appropriate merger documents as required by Delaware Law). This Agreement has been duly and validly executed and delivered by Parent and Purchaser and, assuming the due authorization, execution and delivery by the Company, 21 constitutes legal, valid and binding obligations of each of Parent and Purchaser enforceable against each of Parent and Purchaser in accordance with its terms. SECTION 4.03. No Conflict; Required Filings and Consents. (a) The ------------------------------------------ execution and delivery of this Agreement by Parent and Purchaser do not, and the performance of this Agreement by Parent and Purchaser will not, (i) conflict with or violate the Certificate of Incorporation or By-laws or equivalent organizational documents of either Parent or Purchaser, (ii) conflict with or violate any law, rule, regulation, order, judgment or decree applicable to Parent or Purchaser or by which any property or asset of either of them is bound or affected, or (iii) result in any breach of or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a lien or other encumbrance on any property or asset of Parent or Purchaser pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Parent or Purchaser is a party or by which Parent or Purchaser or any property or asset of either of them is bound or affected, except for any such violations, breaches, defaults or other occurrences which would not, individually or in the aggregate, have a material adverse effect on the ability of Parent or Purchaser to perform their obligations hereunder, or prevent or materially delay the consummation of the Transactions. (b) The execution and delivery of this Agreement by Parent and Purchaser do not, and the performance of this Agreement by Parent and Purchaser will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, domestic or foreign, except (i) for applicable requirements, if any, of the Exchange Act, Blue Sky Laws and state takeover laws, the HSR Act, the filing of a notification with the European Commission under Council Regulation (EC) No. 4064/89, as amended, or similar antitrust filings or notifications in other jurisdictions and filing and recordation of appropriate merger documents as required by Delaware Law and (ii) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not, individually or in the aggregate, have a material adverse effect on the ability of Parent or Purchaser to perform their obligations hereunder, or prevent or materially delay the consummation of the Transactions. SECTION 4.04. Financing. Parent has sufficient funds to permit --------- Purchaser to acquire all the outstanding Shares in the Offer and the Merger. SECTION 4.05. Offer Documents; Proxy Statement. The Offer Documents -------------------------------- will not, at the time the Offer Documents are filed with the SEC or are first published, sent or given to stockholders of the Company, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they are made, not misleading. The information supplied by Parent for inclusion in the Proxy Statement will not, on the date the 22 Proxy Statement (or any amendment or supplement thereto) is first mailed to stockholders of the Company, at the time of the Stockholders' Meeting and at the Effective Time, contain any statement which, at such time and in light of the circumstances under which it is made, is false or misleading with respect to any material fact, or omits to state any material fact required to be stated therein or necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the Stockholders' Meeting which shall have become false or misleading. Notwithstanding the foregoing, Parent and Purchaser make no representation or warranty with respect to any information supplied by the Company or any of its representatives which is contained in any of the foregoing documents or the Offer Documents. The Offer Documents shall comply in all material respects with the requirements of the Exchange Act and the rules and regulations thereunder. SECTION 4.06. Brokers. No broker, finder or investment banker (other ------- than J.P. Morgan & Co.) is entitled to any brokerage, finder's or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Parent or Purchaser. SECTION 4.07. Absence of Litigation. As of the date of this --------------------- Agreement, there is no litigation, suit, claim, action, proceeding or investigation pending or, to the knowledge of Parent and Purchaser, threatened against, Parent or Purchaser or any of their respective properties or assets before any court, arbitrator or administrator, governmental or regulatory authority or body, domestic or foreign, which seeks to delay or prevent or would result in the material delay of or would prevent the consummation of any Transaction. As of the date of this Agreement, neither Parent nor Purchaser or any property or asset of Parent or Purchaser is subject to any continuing order of, consent decree, settlement agreement or similar written agreement with, or, to the knowledge of Parent and Purchaser, continuing investigation by, any governmental or regulatory authority, domestic or foreign, or any order, writ, judgment, injunction, decree, determination or award of any governmental or regulatory authority or any arbitrator which would prevent Parent or Purchaser from performing their respective material obligations under this Agreement or prevent or materially delay the consummation of any Transaction. SECTION 4.08. No Prior Activities. Since the date of its ------------------- incorporation, Purchaser has not engaged and will not engage prior to the Effective Time or termination of this Agreement in any activities other than in connection with or as contemplated by this Agreement. SECTION 4.09. Parent Not an Affiliated Shareholder. As of the date ------------------------------------ hereof, (i) neither Parent nor any of its Affiliates is, with respect to the Company, an "interested stockholder" as such term is defined in Section 203 of Delaware Law and (ii) except to the extent that Parent or its Affiliates may be deemed to beneficially own Shares as a result of this Agreement, Parent and its Affiliates collectively do not hold directly or indirectly five percent or more of the outstanding voting securities of the Company. 23 ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER -------------------------------------- SECTION 5.01. Conduct of Business by the Company Pending the Merger. ----------------------------------------------------- Except as set forth in Section 5.01 of the Disclosure Schedule, the Company agrees that, between the date of this Agreement and the Effective Time, the Company shall, and shall cause its Subsidiaries to, conduct its businesses only in the ordinary course and shall use all reasonable efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of their current officers and employees and to preserve the current relationships of the Company and the Subsidiaries with customers, suppliers and other persons with which the Company or any Subsidiary has significant business relations. As amplification of the foregoing, except as contemplated by this Agreement or in Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parent: (a) amend or otherwise change its Certificate of Incorporation or By- laws or equivalent organizational documents; (b) issue, deliver, sell, pledge, dispose of, grant, encumber, or authorize the issuance, delivery, sale, pledge, disposition, grant or encumbrance of (i) any shares of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of Shares issuable pursuant to stock options outstanding on the date hereof) or (ii) any assets of the Company or any Subsidiary for consideration in excess of $25,000,000 in the aggregate; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except for regular quarterly dividends on the Shares declared and paid at times consistent with past practices; (d) reclassify, combine, split, subdivide, or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or redeem, purchase or otherwise acquire, directly or indirectly, any shares of the capital stock of the Company or any of its Subsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities; (e) (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets) any corporation, partnership, other business organization or 24 any division thereof for consideration in excess of $10,000,000 in the aggregate; (ii) except for borrowings under existing credit facilities not to exceed $30,000,000 in the aggregate and excepting transactions between the Company and any Subsidiary, incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of any person; (iii) except for transactions between the Company and any Subsidiary, make any loans, advances, or capital contributions to, or investments in, any person, for an amount in excess of $10,000,000 in the aggregate; (iv) authorize capital expenditures which are, in the aggregate, in excess of $25,000,000 for the Company and the Subsidiaries; (v) acquire any assets for consideration in excess of $10,000,000 in the aggregate; or (vi) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e); (f) except as provided in Section 5.01 of the Disclosure Schedule, as contemplated by this Agreement or in the ordinary course of business consistent with past practices (i) increase the compensation payable or to become payable to its officers or employees, (ii) other than in accordance with existing policies and arrangements, grant any severance pay to or (iii) establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, except as contemplated by the Agreement or to the extent required by applicable law or the terms or a collective bargaining agreement or a contractual obligation existing on the date hereof; (g) other than as required by generally accepted accounting principles, make any change to its accounting policies or procedures; (h) agree to the settlement of any claim or litigation which would have a Material Adverse Effect; (i) make, change or rescind any material Tax election (other than (i) recurring elections that customarily are made in connection with the filing of any Tax Return; provided that any such elections are consistent with the past practices of the Company or its Subsidiaries, as the case may be; (ii) gain recognition agreements under Section 367 of the Code and Treasury regulations thereunder with respect to transactions occurring in the 1998 fiscal year of the Company; and (iii) elections with respect to Subsidiaries purchased by the Company under Section 338(h)(10) of the Code or, solely in the case of non-U.S. Subsidiaries purchased by the Company, Section 338(g) of the Code) or settle or compromise any material Tax liability that is the subject of an audit, claim for delinquent Taxes, examination, action, suit, proceeding or investigation by any taxing authority; 25 (j) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement or as contemplated by this Agreement, accelerate the payment, right to payment or vesting of any bonus, severance, profit sharing, retirement, deferred compensation, stock option, insurance or other compensation or benefits; (k) pay, discharge or satisfy any material claims, material liabilities or material obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction (A) of any such material claims, material liabilities or material obligations in the ordinary course of business and consistent with past practice or (B) of material claims, material liabilities or material obligations reflected or reserved against in, or contemplated by, the consolidated financial statements (or the notes thereto) contained in the Company SEC Reports; (l) enter into any agreement, understanding or commitment that restrains, limits or impedes the Company's or any of its Subsidiaries' ability to compete with or conduct any business or line of business, including, but not limited to, geographic limitations on the Company's or any of its Subsidiaries' activities; (m) materially modify, amend or terminate any material contract to which it is a party or waive any of its material rights or claims except in the ordinary course of business consistent with past practice; or (n) agree or enter into, in writing or otherwise, or amend any contract, agreement commitment or arrangement with respect to any of the actions set forth in this Section 5.01. SECTION 5.02. Third Party Standstill Agreements and Confidentiality ----------------------------------------------------- Agreements. During the period from the date of this Agreement through the - ---------- Effective Time, subject to the fiduciary duties of the Board under applicable law as determined by the Board in good faith after receiving the advice of experienced, independent counsel (which counsel may be Shearman & Sterling) (i) the Company shall not terminate, amend, modify or waive any provision of any confidentiality or standstill agreement to which the Company or any of its Subsidiaries is a party (other than any involving Parent), and (ii) the Company shall enforce, to the fullest extent permitted under applicable law, the provisions of any such agreements, including, but not limited to, obtaining injunctions to prevent any breaches of such agreements and to enforce specifically the terms and provisions thereof in any court of the United States or any state thereof having jurisdiction. In the event of any Acquisition Proposal or unsolicited bid for any Shares from any third party which is a party to any such standstill agreement, the Company shall advise Parent that such third party is subject to such a standstill agreement and that the Company will enforce such standstill agreement as contemplated by this Section 5.02. 26 ARTICLE VI ADDITIONAL AGREEMENTS --------------------- SECTION 6.01. Stockholders' Meeting. The Company, acting through the --------------------- Board, shall, in accordance with applicable law and the Company's Restated Certificate of Incorporation and By-laws, (i) duly call, give notice of, convene and hold an annual or special meeting of its stockholders as soon as practicable following consummation of the Offer for the purpose of considering and taking action on this Agreement and the transactions contemplated hereby (the "Stockholders' Meeting") and (ii) subject to the fiduciary duties of the Board - ---------------------- under applicable law as determined by the Board in good faith after receiving the advice of experienced, independent counsel, (A) include in the Proxy Statement the recommendation of the Board that the stockholders of the Company approve and adopt this Agreement and the Transactions and (B) use all reasonable efforts to obtain such approval and adoption. At the Stockholders' Meeting, Parent and Purchaser shall cause all Shares then owned by them and their Subsidiaries to be voted in favor of the approval and adoption of this Agreement and the Transactions. The record date for the Stockholders' Meeting shall be a date subsequent to the date Parent or Purchaser becomes a record holder of Shares purchased pursuant to the Offer. SECTION 6.02. Proxy Statement. If stockholder approval of the Merger --------------- is required by applicable law, as soon as practicable following consummation of the Offer, the Company shall file the Proxy Statement with the SEC under the Exchange Act, and shall use all reasonable efforts to have the Proxy Statement cleared by the SEC. Parent, Purchaser and the Company shall cooperate with each other in the preparation of the Proxy Statement, and the Company shall notify Parent of the receipt of any comments of the SEC with respect to the Proxy Statement and of any requests by the SEC for any amendment or supplement thereto or for additional information and shall provide to Parent promptly copies of all correspondence between the Company, or any representative of the Company, and the SEC or its staff. The Company shall give Parent and its counsel the opportunity to review the Proxy Statement prior to its being filed with the SEC and shall give Parent and its counsel the opportunity to review all amendments and supplements to the Proxy Statement and all responses to requests for additional information and replies to comments prior to their being filed with, or sent to, the SEC. Each of the Company, Parent and Purchaser agrees to use all reasonable efforts, after consultation with the other parties hereto, to respond promptly to all such comments of and requests by the SEC and to cause the Proxy Statement and all required amendments and supplements thereto to be mailed to the Holders entitled to vote at the Stockholders' Meeting at the earliest practicable time. SECTION 6.03. Company Board Representation; Section 14(f). (a) ------------------------------------------- Promptly upon the purchase by Purchaser of Shares pursuant to the Offer, and from time to time thereafter, Purchaser shall be entitled to designate up to such number of directors, rounded up to the next whole number, on the Board as shall give Purchaser representation on the Board equal to the product of the total number of directors on the Board (giving effect to the directors elected 27 pursuant to this sentence) multiplied by the percentage that the aggregate number of shares of Common Stock beneficially owned by Purchaser or any Affiliate of Purchaser following such purchase bears to the total number of shares of Common Stock then outstanding, and the Company shall, at such time, promptly take all actions necessary to cause Purchaser's designees to be elected as directors of the Company, including increasing the size of the Board or securing the resignations of incumbent directors or both. At such times, the Company shall use all reasonable efforts to cause persons designated by Purchaser to constitute the same percentage of each committee of the Board as persons designated by Purchaser to constitute the Board to the extent permitted by applicable law. (b) The Company shall promptly take all actions required pursuant to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order to fulfill its obligations under this Section 6.03 and shall include in the Schedule 14D-9 such information with respect to the Company and its officers and directors as is required under Section 14(f) and Rule 14f-1 to fulfill such obligations. Parent or Purchaser shall supply to the Company and be solely responsible for any information with respect to either of them and their nominees, officers, directors and affiliates required by such Section 14(f) and Rule 14f-1. (c) Following the election of designees of Purchaser pursuant to this Section 6.03, prior to the Effective Time, any amendment of this Agreement or the Restated Certificate of Incorporation or By-laws of the Company, any termination of this Agreement by the Company, any extension by the Company of the time for the performance of any of the obligations or other acts of Parent or Purchaser or waiver of any of the Company's rights hereunder shall require the concurrence of a majority of the directors of the Company then in office who neither were designated by Purchaser nor are employees of the Company. SECTION 6.04. Access to Information; Confidentiality. (a) From the -------------------------------------- date hereof to the Effective Time, the Company shall, and shall cause the Subsidiaries and the officers, directors, employees, auditors and agents of the Company and the Subsidiaries to, afford the officers, employees and agents (including accountants, counsel, financial advisors and other representatives) of Parent and Purchaser reasonable access at all reasonable times to the officers, employees, agents, properties, offices and other facilities, books and records of the Company and each Subsidiary, and shall furnish Parent and Purchaser with (i) a copy of each report, schedule, registration statement and other documents filed by it during such period pursuant to the requirements of federal or state laws and (ii) all financial, operating and other data and information as Parent or Purchaser, through its officers, employees or agents, may reasonably request. (b) All information obtained by Parent or Purchaser pursuant to this Section 6.04 shall be kept confidential in accordance with the confidentiality agreement, dated April 13, 1999 (the "Confidentiality Agreement"), between ------------------------- Degremont S.A. and Goldman on behalf of the Company. 28 SECTION 6.05. No Solicitation. (a) The Company shall, and shall --------------- direct and use all reasonable efforts to cause its officers, directors, employees and agents (including accountants, counsel, financial advisors and other representatives) to, immediately cease any discussions or negotiations with any parties that may be ongoing with respect to any Acquisition Proposal (as defined below in this Section 6.05(a)). The Company shall not, nor shall it permit any of its Subsidiaries to, nor shall it authorize or permit any officer, director or employee of, or any agent (including accountants, counsel, financial advisors and other representatives) of, the Company or any of its Subsidiaries to, directly or indirectly, (i) solicit, facilitate or initiate, or knowingly encourage the submission of, any Acquisition Proposal (including, without limitation, the taking of any action which would make Section 203 of the Delaware Law inapplicable to the Acquisition Proposal) or (ii) participate in any discussions or negotiations regarding, or furnish or disclose to any person or legal entity (other than Parent or Purchaser) any information with respect to, or take any other action to facilitate any inquiries or the making of any proposal that constitutes, or may reasonably be expected to lead to, an Acquisition Proposal; provided, however, that if, prior to the acceptance for -------- ------- payment of Shares pursuant to the Offer, the Board determines in good faith that it is necessary to do so in accordance with its fiduciary duties to the Company's stockholders under applicable law as advised by experienced, independent counsel (which counsel may be Shearman & Sterling), the Company may, in response to an unsolicited Acquisition Proposal, and subject to compliance with Section 6.05(c), (x) furnish or disclose information with respect to the Company and its Subsidiaries to any third party pursuant to a customary confidentiality agreement on terms no less favorable to the Company nor more favorable to such third party than those contained in the Confidentiality Agreement and (y) participate in negotiations regarding such Acquisition Proposal. For purposes of this Agreement, "Acquisition Proposal" means any bona -------------------- fide inquiry, proposal or offer from any third party relating to any direct or indirect acquisition or purchase of all or a substantial part of the assets of the Company or of over 20% of the voting securities of the Company, any tender offer or exchange offer that if consummated would result in any person beneficially owning 20% or more of the voting securities of the Company, any merger, consolidation, business combination, sale of substantially all the assets, recapitalization, liquidation, dissolution or similar transaction involving the Company, other than the Transactions, or any other transaction the consummation of which could reasonably be expected to impede, interfere with, prevent or materially delay the Offer or the Merger or which could reasonably be expected to dilute materially the benefits to Parent of the Transactions. (b) Except as set forth in this Section 6.05, neither the Board nor any committee thereof shall (i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to Parent or Purchaser, the approval or recommendation by the Board or any such committee of the Offer, this Agreement or the Merger, (ii) approve or recommend, or propose to approve or recommend, any Acquisition Proposal or (iii) cause the Company to enter into any agreement with respect to any Acquisition Proposal or any letter of intent, agreement in principle, or other similar understanding or arrangement with respect to an Acquisition Proposal or any understanding, arrangement or agreement requiring or incentivizing the Company to abandon, 29 terminate or fail to consummate the Merger or any of the Transactions. Notwithstanding the foregoing, in the event prior to the time of acceptance for payment of Shares pursuant to the Offer the Board determines in good faith that it is necessary to do so in accordance with its fiduciary duties to the Company's stockholders under applicable law as advised by experienced, independent counsel (which counsel may be Shearman & Sterling), the Board may recommend to its stockholders an Acquisition Proposal and in connection therewith withdraw or adversely modify its approval or recommendation of the Offer or the Merger if (i) a third party makes a Superior Proposal and (ii) (A) five Business Days have elapsed following delivery to Parent of a written notice of the determination by the Board to take such action and during such five Business Day period the Company has fully cooperated with Parent, with the intent of enabling Parent and Purchaser, on the one hand, and the Company, on the other hand, to agree to a modification of this Agreement and (B) at the end of such five Business Day period, the Acquisition Proposal continues to constitute a Superior Proposal, and concurrently therewith or afterwards the Board may terminate this Agreement pursuant to the provisions of Section 8.01(e) in order to permit the Company to enter into any agreement with respect to any such Superior Proposal; provided that any agreement with a third party with -------- respect to a Superior Proposal shall provide an opportunity for Parent (and any other person) to make an additional final bid for the Company and, if such bid would constitute a Superior Proposal, for the Company to accept such bid. For purposes of this Agreement, a "Superior Proposal" means any bona fide proposal ----------------- made by a third party to acquire, directly or indirectly, for consideration consisting of cash and/or securities, all outstanding Shares pursuant to a tender offer or a merger or purchase of all of the assets of the Company (i) on terms which the Board determines in good faith (based on the written advice of a financial advisor of nationally recognized reputation) to be more favorable to the Company and its stockholders than the Transactions, as proposed to be modified by Parent in accordance with the provisions of this paragraph, (ii) for which financing, to the extent required, is then available (it being understood that financing evidenced by highly confident letters and similar letters shall not be considered "available" for purposes of this Section 6.05), and (iii) which is not subject to any financing or due diligence condition. (c) In addition to the obligations of the Company set forth in paragraphs (a) and (b) of this Section 6.05, immediately after receipt thereof, the Company shall advise Parent in writing of any request for information regarding an Acquisition Proposal, or any inquiry or proposal with respect to an Acquisition Proposal. The Company shall keep Parent informed of the status of any such request or Acquisition Proposal. The Company shall promptly provide to Parent any non-public information concerning the Company provided to any other person in connection with any Acquisition Proposal which was not previously provided to Parent. (d) Nothing contained in this Section 6.05 shall prohibit the Company from taking and disclosing to its stockholders a position contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from making any disclosure to the Company's stockholders if the Board determines in good faith that it is necessary to do so in accordance with its fiduciary duties 30 to the Company's stockholders under applicable law as advised by experienced, independent counsel (which counsel may be Shearman & Sterling). (e) The Company agrees not to release any third party from, or waive any provision of, any confidentiality or standstill agreement to which the Company is a party. Immediately following the execution of this Agreement, the Company shall request each person or entity which has heretofore executed a confidentiality agreement in connection with its consideration of acquiring the Company or any portion thereof to return all confidential information heretofore furnished to such person or entity by or on behalf of the Company. SECTION 6.06. Employee Benefits Matters. Annex B hereto sets forth ------------------------- certain agreements among the parties hereto with respect to the Plans and other employee benefits matters. SECTION 6.07. Directors' and Officers' Indemnification and Insurance. ------------------------------------------------------ (a) The Certificate of Incorporation and By-Laws of the Surviving Corporation shall contain provisions (collectively, "Indemnification Provisions") no less -------------------------- favorable with respect to indemnification than are set forth in the Restated Certificate of Incorporation and By-Laws of the Company, which provisions shall not be amended, repealed or otherwise modified for a period of six years from the Effective Time in any manner that would affect adversely the rights thereunder of individuals who at the Effective Time were directors, officers, employees, fiduciaries or agents of the Company, unless such modification shall be required by law. (b) The Surviving Corporation shall maintain in effect for six years from the Effective Time, if available, the current directors' and officers' liability insurance policies maintained by the Company (provided that Parent and the Surviving Corporation may substitute therefor policies of at least the same coverage containing terms and conditions which are not materially less favorable) with respect to matters occurring prior to the Effective Time. Notwithstanding the foregoing, in no event shall Parent or the Surviving Corporation be required to expend pursuant to this Section 6.07(b) more than an amount per year equal to 200% of current annual premiums paid by the Company for such insurance (which the Company represents to be $476,525 for the 12 month period ended October 1, 1999); provided further that, in the event of an -------- ------- expiration, termination or cancellation of such current policies, Parent or the Surviving Corporation shall be required to obtain as much coverage as is possible under substantially similar policies for such 200% amount. (c) Prior to the Effective Time, the Company shall, to the fullest extent permitted under applicable law and regardless of whether the Merger becomes effective, indemnify and hold harmless, and, after the Effective Time, the Surviving Corporation shall, to the fullest extent permitted under applicable law, indemnify and hold harmless, each present and former director, officer or employee of the Company and each Subsidiary (collectively, the "Indemnified Parties") against all costs and expenses (including attorneys' - -------------------- fees), judgments, 31 fines, losses, claims, damages, liabilities and settlement amounts paid in connection with any claim, action, suit, proceeding or investigation (whether arising before or after the Effective Time), whether civil, criminal, administrative or investigative, arising out of or pertaining to any action or omission in their capacity as an officer, director or employee whether occurring before or after the Effective Time (including, without limitation, the Transactions), for a period of six years after the date hereof. Without limiting the generality of the foregoing, in the event of any such claim, action, suit, proceeding or investigation, (i) the Company or the Surviving Corporation, as the case may be, shall pay as incurred, each Indemnified Party's legal and other expenses (including costs of investigation and preparation), including the fees and expenses of counsel selected by the Indemnified Party, promptly after statements therefor are received and (ii) the Company and the Surviving Corporation shall cooperate in the defense of any such matter; provided, -------- however, that none of the Company or the Surviving Corporation - ------- shall be liable for any settlement effected without its written consent (which consent shall not be unreasonably withheld); and provided further that, in the -------- ------- event that any claim for indemnification is asserted or made within such six- year period, all rights to indemnification in respect of such claim shall continue until the disposition of such claim. The parties intend, to the extent not prohibited by applicable law, that the indemnification provided for in this Section 6.07 shall apply without limitation to negligent acts or omissions of any Indemnified Party. Any determination to be made as to whether any Indemnified Party has met any standard of conduct imposed by law shall be made by legal counsel reasonably acceptable to such Indemnified Party and the Surviving Corporation, retained at the Surviving Corporation's expense. The Company or the Surviving Corporation shall pay all expenses, including counsel fees and expenses, that any Indemnified Party may incur in enforcing the indemnity and other obligations provided for in this Section 6.07. (d) In the event the Company, the Surviving Corporation or Parent or any of their respective successors or assigns (i) consolidates with or merges into any other person and shall not be the continuing or surviving corporation or entity of such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any person, then and in each such case, proper provision shall be made so that the successors and assigns of the Company, the Surviving Corporation or Parent, as the case may be, shall assume the obligations set forth in this Section 6.07. (e) This Section 6.07 is intended to benefit the Indemnified Parties and their respective heirs, executors and personal representatives, may be enforced by them and shall be binding on the successors and assigns of Parent, the Company and the Surviving Corporation. This Section 6.07 shall not limit or otherwise adversely affect any rights any Indemnified Party may have under any agreement with the Company or any Subsidiary or the Company's or any Subsidiary's Articles of Incorporation or By-Laws. SECTION 6.08. Further Action; Reasonable Best Efforts. (a) Upon the --------------------------------------- terms and subject to the conditions hereof, each of the parties hereto shall, and shall use their 32 reasonable best efforts to cause their respective Subsidiaries, as applicable, to (i) make promptly all respective filings, and thereafter make any other required submissions, under the HSR Act and under Council Regulation (EC) No. 4064/89, as amended, with respect to the Merger and the Transactions, (ii) use its reasonable best efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the Transactions, including, without limitation, using all reasonable efforts to obtain all licenses, permits, consents, waivers, approvals, authorizations, qualifications and orders of governmental authorities and parties to contracts with the Company and the Subsidiaries as are necessary for the consummation of the Transactions and to fulfill the conditions to the Offer and the Merger and (iii) not take action (including effecting or agreeing to effect or announcing an intention or proposal to effect any acquisition, business combination or other transaction) which could reasonably be expected to impede, interfere with, prevent, impair or delay the ability of the parties to consummate the Merger. The parties shall consult and cooperate with each other in connection with the making of all such filings or submissions, including providing copies of all such documents to the non-filing or non-submitting party and its advisors prior to filing or submitting. In case at any time after the Effective Time any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of each party to this Agreement shall use their reasonable best efforts to take all such action. (b) Each of Parent and Purchaser shall use its best efforts to defend through litigation on the merits any claim asserted in court by any party in order to avoid the entry of, or to have vacated or terminated, any decree, order, or judgment that would restrain or prevent the consummation of the Offer by December 31, 1999. SECTION 6.09. Public Announcements. Parent and the Company shall -------------------- consult with each other before issuing any press release or otherwise making any public statements with respect to this Agreement or any Transaction and shall not issue any such press release or make any such public statement without the prior consent of the other parties, except as may be required by applicable law or regulation or by obligations pursuant to any listing agreement with a national securities exchange to which Parent or the Company is a party. SECTION 6.10. Confidentiality Agreement. The Company hereby waives ------------------------- the provisions of the Confidentiality Agreement as and to the extent necessary to permit the consummation of each Transaction. Upon the acceptance for payment of Shares pursuant to the Offer, the Confidentiality Agreement shall be deemed to have terminated without further action by the parties thereto. 33 ARTICLE VII CONDITIONS TO THE MERGER ------------------------ SECTION 7.01. Conditions to the Merger. The respective obligations ------------------------ of each party to effect the Merger shall be subject to the satisfaction at or prior to the Effective Time of the following conditions: (a) Stockholder Approval. This Agreement and the Transactions shall -------------------- have been approved and adopted by the affirmative vote of the stockholders of the Company to the extent required by Delaware Law and the Restated Certificate of Incorporation of the Company; (b) HSR Act; EC. Any waiting period (and any extension thereof) ----------- applicable to the consummation of the Merger under the HSR Act shall have expired or been terminated and the Commission of the European Union shall have approved the Transactions under Regulation (EC) No. 4064/89, as amended, of the Council of the European Union; (c) Other Reviews/Approvals. Any review or approval required by ----------------------- governmental authorities in countries in which the Company or its Subsidiaries have operations material to the Company and its Subsidiaries, taken as a whole, shall have been completed or obtained; (d) No Order. No United States federal or state or Republic of France -------- governmental authority or other agency or commission or court of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any law, rule, regulation, executive order, decree, injunction or other order (whether temporary, preliminary or permanent) (a "Governmental ------------ Order") which is then in effect and has the effect of prohibiting consummation of the Merger; and (e) Offer. Purchaser or its permitted assignee shall have purchased ----- all Shares validly tendered and not withdrawn pursuant to the Offer. ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER --------------------------------- SECTION 8.01. Termination. This Agreement may be terminated and the ----------- Merger and the other Transactions may be abandoned at any time prior to the Effective Time, notwithstanding any requisite approval and adoption of this Agreement and the transactions contemplated hereby by the stockholders of the Company: 34 (a) By mutual written consent duly authorized by the Boards of Directors of Parent, Purchaser and the Company; or (b) By either Parent, Purchaser or the Company if (i) the Offer is not completed on or before December 31, 1999; provided, however, that the right -------- ------- to terminate this Agreement under this clause (i) shall not be available to any party whose failure to fulfill any obligation under this Agreement has been the cause of, or resulted in, the failure to complete the Offer on or before such date; or (ii) any United States federal or state court of competent jurisdiction or court of the Republic of France of competent jurisdiction or other United States federal or state governmental authority or other governmental authority of the Republic of France shall have issued an order, decree, ruling or taken any other action restraining, enjoining or otherwise prohibiting the Merger and such order, decree, ruling or other action shall have become final and non-appealable; or (c) By Parent, prior to the acceptance of Shares pursuant to the Offer, if (i) due to an occurrence or circumstance that would result in a failure to satisfy any condition set forth in Annex A hereto, Purchaser shall have (A) terminated the Offer without having accepted any Shares for payment thereunder or (B) failed to pay for Shares pursuant to the Offer by December 31, 1999, unless such failure to accept Shares for payment or to pay for Shares shall have been caused by or resulted from the failure of Parent or Purchaser to perform any covenant or agreement of either of them contained in this Agreement or the breach by Parent or Purchaser of any representation or warranty of either of them contained in this Agreement; or (ii) prior to the purchase of Shares pursuant to the Offer, the Board or any committee thereof shall have withdrawn or modified in a manner adverse to Purchaser or Parent its approval or recommendation of the Offer, this Agreement, the Merger or any other Transaction in order to approve or recommend any other Acquisition Proposal; or (d) By the Company, upon approval of the Board, if Purchaser shall have (A) failed to commence the Offer within five Business Days following the date of this Agreement, (B) terminated the Offer without having accepted any Shares for payment thereunder or (C) failed to pay for Shares pursuant to the Offer by December 31, 1999, unless such failure to accept Shares for payment or to pay for Shares shall have been caused by or resulted from the failure of the conditions specified in paragraphs (c) or (d) of Annex A to be satisfied; or (e) By the Company, upon approval of the Board, if, prior to the acceptance of Shares by Purchaser pursuant to the Offer, the Board shall determine that it is necessary to do so in accordance with its fiduciary duties to the Company's stockholders under applicable law as advised by experienced, independent counsel (which counsel may be Shearman & Sterling) in order to accept a Superior Proposal; provided that the Company -------- 35 may not terminate this Agreement pursuant to this Section 8.01(e) unless and until (i) five Business Days have elapsed following delivery to Parent of written notice of such determination of the Company, and during such five Business Day period the Company has fully cooperated with Parent, with the intent of enabling both parties to agree to a modification of the terms and conditions of this Agreement so that the transactions contemplated hereby may be effected, (ii) at the end of such five Business Day period the Acquisition Proposal continues to constitute a Superior Proposal and the Board shall determine that it is necessary to terminate this Agreement and accept such Superior Proposal in order to comply with its fiduciary duties to the Company's stockholders under applicable law as advised by experienced, independent counsel (which counsel may be Shearman & Sterling), and (iii) (x) prior to such termination, Parent has received the amount required by Section 8.03(d) and (y) concurrently with such termination the Company enters into a definitive acquisition, merger or similar agreement to effect the Superior Proposal which agreement with respect to a Superior Proposal shall provide an opportunity for Parent (and any other person) to make an additional final bid for the Company and, if such bid would constitute a Superior Proposal, for the Company to accept such bid. SECTION 8.02. Effect of Termination. In the event of the termination --------------------- of this Agreement pursuant to Section 8.01, this Agreement shall have no further effect, and there shall be no further liability on the part of any party hereto, except (i) as set forth in Sections 6.04, 8.03 and 9.01 and (ii) nothing herein shall relieve any party from liability for any wilful breach hereof. SECTION 8.03. Fee. (a) In the event that (i) Parent terminates this --- Agreement pursuant to Section 8.01(c)(ii), (ii) at the time of such termination a third party shall have publicly made an Acquisition Proposal (whether or not such Acquisition Proposal shall have been subsequently withdrawn), and (iii) such Acquisition Proposal is consummated within 12 months after the date of such termination, then the Company shall pay Parent promptly (but in no event later than two Business Days after the consummation of the Acquisition Proposal referred to in clause (ii) above) a fee of $125,000,000 (the "Fee"), which --- amount shall be payable in immediately available funds. (b) In the event that (i) Parent terminates this agreement pursuant to Section 8.01(c)(i) because of a failure to satisfy the condition specified in paragraph (c) or (d) of Annex A, (ii) at the time of such termination a third party shall have publicly made an Acquisition Proposal (whether or not such Acquisition Proposal shall have been subsequently withdrawn), and (iii) such Acquisition Proposal is consummated within 12 months after the date of such termination, then the Company shall pay Parent promptly (but in no event later than two Business Days after the consummation of the Acquisition Proposal referred to in clause (ii) above) the Fee, which shall be paid in immediately available funds. 36 (c) Subject to the application of the provisions of paragraph (b) above (in which case the provisions of this paragraph (c) shall not apply), in the event that Parent terminates this Agreement pursuant to Section 8.01(c)(i) because of a failure to satisfy the conditions specified in paragraphs (c) or (d) of Annex A, then the Company shall pay to Parent promptly after being invoiced by Parent therefor (but in no event later than two Business Days after receiving such invoice) an amount equal to Parent's Expenses, which shall be paid in immediately available funds. (d) In the event the Company terminates this Agreement pursuant to Section 8.01(e), then, simultaneously with such termination by the Company, the Company shall pay to Parent the Fee, which shall be paid in immediately available funds. (e) In the event that the Company terminates this Agreement pursuant to Section 8.01(d) and Parent or Purchaser shall have failed to perform or comply with, in any material respect, any material agreement or covenant of Parent or Purchaser under this Agreement, then Parent shall pay to the Company promptly after being invoiced by the Company therefor (but in no event later than two Business Days after receiving such invoice) an amount equal to the Company's Expenses, which shall be paid in immediately available funds. (f) In the event that any party shall fail to pay the Fee or Expenses when due, such party, without being relieved of any obligation to pay the Fee or Expenses as the case may be in full, shall reimburse the other party for the Expenses actually incurred or accrued by such other party in connection with the collection under and enforcement of this Section 8.03, together with interest on such unpaid Fee or Expenses, commencing on the date that the Fee or Expenses became due, at a rate equal to the rate of interest publicly announced by Citibank, N.A., from time to time, in the City of New York, as such bank's Base Rate. (g) "Expenses" shall mean documented and reasonable out-of-pocket fees and expenses incurred or paid by or on behalf of the party incurring such fees and expenses in connection with the Offer, Merger or the consummation of the Transactions, including, but not limited to, all filing fees, printing fees and reasonable fees and expenses of law firms, commercial banks, investment banking firms, accountants, experts and consultants to such party. SECTION 8.04. Amendment. Subject to Section 6.03, this Agreement may --------- be amended by the parties hereto by action taken by or on behalf of their respective Boards of Directors at any time prior to the Effective Time; provided, however, that, after the approval and adoption of this Agreement and - -------- ------- the transactions contemplated hereby by the stockholders of the Company, no amendment may be made which would reduce the amount or change the type of consideration into which each Share shall be converted upon consummation of the Merger. This Agreement may not be amended except by an instrument in writing signed by the parties hereto. 37 SECTION 8.05. Waiver. At any time prior to the Effective Time, any ------ party hereto may (i) extend the time for the performance of any obligation or other act of any other party hereto, (ii) waive any inaccuracy in the representations and warranties contained herein or in any document delivered pursuant hereto and (iii) waive compliance with any agreement or condition contained herein. Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the party or parties to be bound thereby. ARTICLE IX GENERAL PROVISIONS ------------------ SECTION 9.01. Non-Survival of Representations, Warranties and ----------------------------------------------- Agreements. The representations, warranties and agreements in this Agreement - ---------- shall terminate at the Effective Time or upon the termination of this Agreement pursuant to Section 8.01, as the case may be, except that the agreements set forth in Article II and Section 6.07 shall survive the Effective Time indefinitely; the agreement set forth in Section 6.06 shall survive the Effective Time until the expiration of the applicable statute of limitations; and those set forth in Sections 6.04(b) and 8.03 shall survive termination indefinitely. SECTION 9.02. Notices. All notices, requests, claims, demands and ------- other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by cable, telecopy, telegram or telex or by registered or certified mail (postage prepaid, return receipt requested) to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 9.02): if to Parent or Purchaser: Suez Lyonnaise des Eaux 1, rue d'Astorg 75008 Paris, France Attention: Patrice Herbet Telephone: 33-1-40-06-65-58 Fax: 33-1-40-06-66-22 with a copy to: White & Case LLP 1155 Avenue of the Americas New York, New York 10036 Attention: Kevin Keogh Telephone: (212) 819-8227 Fax: (212) 354-8113 38 if to the Company: Nalco Chemical Company One Nalco Center Naperville, Illinois 60563 Attention: General Counsel Telephone: (630) 305-2837 Fax: (630) 305 -1890 with a copy to: Shearman & Sterling 599 Lexington Avenue New York, New York 10022 Attention: David W. Heleniak Telephone: (212) 848-7049 Fax: (212) 848-7179 SECTION 9.03. Certain Definitions. For purposes of this Agreement, ------------------- the term (a) "Affiliate" of a specified person means a person who directly or --------- indirectly through one or more intermediaries controls, is controlled by, or is under common control with, such specified person; (b) "Beneficial Owner" with respect to any Shares means a person who ---------------- shall be deemed to be the beneficial owner of such Shares (i) which such person or any of its Affiliates or associates (as such term is defined in Rule 12b-2 promulgated under the Exchange Act) beneficially owns, directly or indirectly, (ii) which such person or any of its Affiliates or associates has, directly or indirectly, (A) the right to acquire (whether such right is exercisable immediately or subject only to the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of consideration rights, exchange rights, warrants or options, or otherwise, or (B) the right to vote pursuant to any agreement, arrangement or understanding or (iii) which are beneficially owned, directly or indirectly, by any other persons with whom such person or any of its Affiliates or associates or person with whom such person or any of its Affiliates or associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any Shares; (c) "Business Day" means any day on which the principal offices of the ------------ SEC in Washington, D.C. are open to accept filings, or, in the case of determining a date when any payment is due, any day on which banks are not required or authorized to close in the City of New York; 39 (d) "control" (including the terms "controlled by" and "under common ------- ------------- ------------ control with") means the possession, directly or indirectly or as trustee ------------ or executor, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, as trustee or executor, by contract or credit arrangement or otherwise; (e) "Environmental Laws" means any foreign or U.S. federal, state or ------------------ local statute, regulation, rule, law or common law applicable to the Company or its operations relating to (A) releases or threatened releases of, or exposure to, Hazardous Substances or materials containing Hazardous Substances; (B) the manufacture, handling, transport, use, generation, treatment, storage or disposal of Hazardous Substances or materials containing Hazardous Substances; or (C) otherwise relating to pollution or protection of the environment or the protection of human health; (f) "Hazardous Substances" means (i) petroleum or any fraction -------------------- thereof, asbestos or asbestos-containing material, polychlorinated biphenyls, urea formaldehyde foam insulation, radon gas, or (ii) any pollutant, contaminant, constituent, chemical, mixture, raw material, intermediate, product or by-product, industrial, solid, toxic, radioactive, infectious, disease-causing or hazardous substance, material, waste or agent as defined, prohibited, limited or regulated under any Environmental Laws; (g) "knowledge" or "known" means, as for the Company with respect to --------- ----- any matter in question, if Edward J. Mooney, Steven Newlin, W.S. Weeber, William Buchholz, William Parry, James Lambe, Suzzanne Gioimo, Anthony J. Sadowski, Steven Landsman and Sarah Garvey, after due inquiry, has actual knowledge of such matter; (h) "Material Adverse Effect" means any change, effect, condition, ----------------------- event or circumstance that is materially adverse to the properties, assets, liabilities, operations, results of operations or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole; provided, -------- however, that "Material Adverse Effect" shall not include any change, ------- effect, condition, event or circumstance arising out of or attributable to (i) any decrease in the market price of the shares of Common Stock (but not any change, effect, condition, event or circumstance underlying such decrease to the extent that it would otherwise constitute a Material Adverse Effect), (ii) changes, effects, conditions, events or circumstances that generally affect the industries in which the Company or the Subsidiaries operate (including legal and regulatory changes), (iii) general economic conditions or change, effects, conditions or circumstances affecting the securities markets generally or (iv) changes arising from the consummation of the Transactions or the announcement of the execution of this Agreement; (i) "Material Subsidiary" means a Subsidiary of the Company that is ------------------- material to the financial condition or results of operation of the Company; 40 (j) "person" means an individual, corporation, partnership, limited ------ partnership, syndicate, person (including, without limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act), trust, association or entity or government, political subdivision, agency or instrumentality of a government; (k) "SEC" means the U.S. Securities and Exchange Commission; --- (l) "SEC Rules" means any rule, regulation or interpretation of the --------- SEC or the staff thereof; and (m) "Subsidiary" or "Subsidiaries" means an Affiliate of the Company ---------- ------------ controlled by the Company, directly or indirectly, through one or more intermediaries. SECTION 9.04. Severability. If any term or other provision of this ------------ Agreement is determined by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the Transactions is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the Transactions be consummated as originally contemplated to the fullest extent possible. SECTION 9.05. Entire Agreement; Assignment. This Agreement ---------------------------- constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes, except as set forth in Sections 6.04(b) and 6.10, all prior statements, agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. This Agreement shall not be assigned by operation of law or otherwise, except that Parent and Purchaser may assign all or any of their rights and obligations hereunder to any wholly owned subsidiary of Parent provided that no such assignment shall relieve the assigning party of its obligations hereunder if such assignee does not perform such obligations. SECTION 9.06. Parties in Interest. This Agreement shall be binding ------------------- upon and inure solely to the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement, other than Article II and Sections 6.06 and 6.07 (which are intended to be for the benefit of each of the persons covered thereby and may be enforced by such persons). SECTION 9.07. Governing Law. This Agreement shall be governed by, ------------- and construed in accordance with, the laws of the State of New York applicable to contracts executed in and to be performed in that State. All actions and proceedings arising out of or relating to this 41 Agreement shall be heard and determined in any federal or state court sitting in the Borough of Manhattan, City of New York. SECTION 9.08. Headings. The descriptive headings contained in this -------- Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. SECTION 9.09. Counterparts. This Agreement may be executed in one or ------------ more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. SECTION 9.10. Waiver of Jury Trial. EACH PARTY HERETO HEREBY -------------------- IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT THEREOF. 42 IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized. SUEZ LYONNAISE DES EAUX By /s/ Philippe Brongniart ------------------------------------ Name: Philippe Brongniart Title: Member of the Executive Board H2O ACQUISITION CO. By /s/ Christian Maurin ------------------------------------ Name: Christian Maurin Title: President NALCO CHEMICAL COMPANY By /s/ E.J. Mooney ------------------------------------ Name: E.J. Mooney Title: Chairman and CEO ANNEX A ------- Conditions to the Offer ----------------------- Notwithstanding any other provision of the Offer, Purchaser shall not be required to accept for payment or pay for any Shares tendered pursuant to the Offer, and, on or after the initial scheduled expiration date of the Offer (as contemplated by Section 1.01(a)), may amend the Offer and may postpone the acceptance for payment of and payment for Shares tendered, if (i) the Minimum Condition shall not have been satisfied, (ii) any applicable waiting period under the HSR Act shall not have expired or been terminated prior to the expiration of the Offer, or (iii) the Commission of the European Union shall not have approved the Transactions under Regulation (EC) No. 4064/89, as amended, of the Council of the European Union. In addition, notwithstanding any other term of the Offer, Purchaser shall not be required to accept for payment or pay for any Shares tendered pursuant to the Offer, and, at any time on or after the date of this Agreement and prior to the acceptance of Shares for payment, may terminate or amend the Offer and may postpone the acceptance for payment of and payment for Shares tendered if any of the following conditions shall exist: (a) there shall be instituted or pending any action or proceeding by any United States federal or state court or Republic of France court or United States or Republic of France governmental, administrative or regulatory authority or agency, in each case of competent jurisdiction over the Company or a Material Subsidiary (i) challenging or seeking to make illegal or otherwise directly or indirectly restrain, prohibit or make materially more costly the Offer or the Merger, (ii) seeking to prohibit or materially limit the ownership or operation by Parent of all or any material portion of the business or assets of the Company and its Subsidiaries taken as a whole or to compel Parent to dispose of or hold separately all or any material portion of the business or assets of Parent and its subsidiaries taken as a whole or the Company and its Subsidiaries taken as a whole or seeking to impose any material limitations on the ability of Parent or the Company to conduct or own any material portion of the business or assets of Parent and its subsidiaries taken as a whole or the Company and its Subsidiaries taken as a whole, in each case as a result of the Transactions, (iii) seeking to impose limitations on the ability of Parent or Purchaser to exercise effectively full rights of ownership of any Shares, including, without limitation, the right to vote any Shares acquired or owned by Parent or Purchaser on all matters properly presented to the Company's stockholders, including, without limitation, the approval and adoption of this Agreement and the Transactions, or (iv) seeking to require divestiture by Parent or Purchaser of any Shares; (b) there shall be any action taken, or any statute, rule, regulation, legislation, judgment, order or injunction, enacted, enforced, promulgated, amended or issued and applicable to (i) Parent, Purchaser, the Company or any Subsidiary of any of them or (ii) the Offer or the Merger, by any United States federal or state or Republic of France legislative body, court, government or governmental, administrative or regulatory A-2 authority or agency, other than the routine application of the waiting period provisions of the HSR Act to the Offer or to the Merger, which would reasonably be expected to directly or indirectly, result in any of the consequences referred to in clauses (i) through (iv) of paragraph (a) above; (c) any representation or warranty of the Company in this Agreement shall not be true and correct so as to have a Material Adverse Effect, in each case as if such representation or warranty was made as of such time on or after the date of this Agreement (except for representations and warranties made as of a specific date which shall be true and correct as of such date so as not to have a Material Adverse Effect); provided, however, ----------------- that for purposes of this paragraph (c), if any representation or warranty of the Company in this Agreement is qualified in any respect by materiality or the words "Material Adverse Effect", such materiality or Material Adverse Effect qualification shall be ignored for purposes of this paragraph (c); (d) the Company shall have failed to perform, or comply with, any agreement or covenant of the Company to be performed or complied with by it under this Agreement, which failure has a Material Adverse Effect; (e) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on the New York Stock Exchange, Inc. and such suspension shall continue for six consecutive Business Days (excluding any coordinated trading halt triggered solely as a result of a specified decrease in a market index), (ii) a declaration of a banking moratorium or any suspension of payments in respect of banks in the United States or France, and such moratorium or suspension shall continue for six consecutive Business Days, (iii) any material limitation (whether or not mandatory) by any United States Federal or French governmental authority or agency on the extension of credit by banks or other lending institutions and such limitation shall continue for six consecutive Business Days; (f) this Agreement shall have been terminated in accordance with its terms; or (g) Purchaser and the Company shall have agreed that Purchaser shall terminate the Offer or postpone the acceptance for payment of or payment for Shares thereunder; provided that, with respect to paragraphs (a), (b), (c) and (d) above, -------- ---- Purchaser shall give the Company advance written notice of any intention by Purchaser to assert the nonsatisfaction of any of the conditions set forth in such paragraphs (a), (b), (c) or (d), which notice shall describe in reasonable detail the basis for the belief that any such condition has not been satisfied; and, provided further that (i) in the event of any action, -------- ------- proceeding, judgment, order or injunction contemplated by such paragraphs (a) or (b), the Purchaser shall not terminate the Offer under such paragraphs (a) or (b), nor exercise any A-3 related rights to terminate this Agreement, unless and until such action, proceeding, judgment, order or injunction shall have become final and nonappealable and (ii) if any breach or failure to perform contemplated by any of such paragraphs (c) and (d) is capable of being cured through the exercise by the Company of its reasonable best efforts and for so long as the Company continues to use such reasonable best efforts to cure such breach or failure to perform, the Purchaser shall not terminate the Offer under such paragraphs (c) or (d) or exercise any related right to terminate this Agreement, in either case for a period not to exceed 10 Business Days. The foregoing conditions are for the benefit of Purchaser and Parent and may be asserted by Purchaser or Parent regardless of the circumstances giving rise to any such condition or, subject to the terms of this Agreement, may be waived by Purchaser or Parent, in whole or in part, at any time and from time to time in their discretion. The failure by Parent or Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right; the waiver of any such right with respect to particular facts and other circumstances shall not be deemed a waiver with respect to any other facts and circumstances; and each such right shall be deemed an ongoing right that may be asserted at any time and from time to time. ANNEX B ------- Employee Benefits Matters ------------------------- Parent and the Company agree to the following with respect to the compensation and benefits programs of Parent, the Company and the Subsidiaries: 1. Continuation of Benefits. For a period of one year following the ------------------------ Effective Time, Parent, the Company and the Subsidiaries shall continue and maintain the employee benefit plans and programs of the Company and the Subsidiaries for active and retired employees and former directors of the Company and the Subsidiaries as in effect immediately prior to the Effective Time; provided that Parent, the Company and the Subsidiaries shall not be obligated to continue the Supplemental Management Incentive Plan, the Performance Share Plan, the Company Stock Option Plans, the 1984 Restricted Stock Plan, the Employee Stock Ownership Plan, the Company Common Stock investment option contained in the Profit Sharing, Investment and Pay Deferral Plan, or any other plan or program providing for compensation, in the form of, or based on the value of the stock of Parent, the Company or the Subsidiaries, or to provide any other incentive plan or benefits in lieu thereof. Notwithstanding the foregoing, during the aforesaid period of one year following the Effective Time, the Parent, the Company and the Subsidiaries shall give due consideration to providing a reasonable level of equity based compensation. From and after the Effective Time, Parent shall honor, and shall cause the Company and the Subsidiaries to honor, in accordance with their terms, all contracts, arrangements, policies, plans and commitments of the Company and the Subsidiaries in accordance with such terms that are applicable to any current or former employees or directors of the Company or the Subsidiaries and that have been disclosed or made available to Parent pursuant to the provisions of Section 3.10 of this Agreement. Parent and the Company acknowledge and agree that the transactions contemplated by this Agreement shall constitute, as of the Effective Time, a "Change of Control" as such term is defined in the Company Change of Control Arrangements. 2. Service Recognition. To the extent that service is relevant for ------------------- purposes of eligibility, participation or vesting under any employee benefit plan, program or arrangement established or maintained by Parent, the Company or any of their respective subsidiaries, employees of the Company and the Subsidiaries shall be credited with service accrued prior to the Effective Time with the Company or any of the Subsidiaries, as the case may be. Employees of the Company and the Subsidiaries shall be credited with service accrued prior to the Effective Time to the extent service is relevant for purposes of benefit accrual (a) with respect to plans, programs or arrangements established or maintained by Parent, the Company or the Subsidiaries covering predominantly employees employed in the United States, and, (b) with respect to plans, programs, or arrangements maintained by the Company or the Subsidiaries (and not by the Parent or its Affiliates other than the Company and the Subsidiaries) covering predominantly persons B-2 employed outside the United States. Notwithstanding the foregoing, the crediting of any service described in this Section 2 of Annex B shall not operate to duplicate any benefit. 3. Management Incentive Plan. With respect to the payment of ------------------------- bonuses under the Company's Management Incentive Plan (the "MIP") for the fiscal --- year ending December 31, 1999 (the "1999 Fiscal Year"), the Company shall pay ---------------- participants in the MIP whose employment is terminated by Parent, the Company or any of the Subsidiaries without Cause (as defined in Section 4 of this Annex B) on or after the Effective Time and prior to January 1, 2000 a bonus under the MIP equal to the pro rata portion of the bonus such participant would have earned under the MIP for the 1999 Fiscal Year had such participant remained employed through the end of the 1999 Fiscal Year. Any payment described in the immediately preceding sentence shall be made following the end of the 1999 Fiscal Year, at the same time as such payment would have been made had such person remained employed by the Company. Notwithstanding the provisions of this Section 3 of Annex B, any person covered by a Key Executive Agreement which remains in effect on the date of such person's termination of employment (without Cause) shall receive the payment provided under the Key Executive Agreement with respect to any bonus under the MIP in lieu of the pro rata payment provided for in this Section 3. The MIP shall be administered by the Company with respect to the 1999 Fiscal Year in accordance with past practice. 4. Restricted Stock Unit and Performance Awards. (a) Prior to the -------------------------------------------- acceptance of the Shares by the Purchaser pursuant to the Offer, each restricted stock unit award under the Company's 1984 Restricted Stock Plan or the Employee Stock Compensation Plan and each performance award assigned in 1995 under the Company's Performance Share Plan (including restricted stock awarded in the 1995 to 1998 performance cycle) (collectively the "Current Stock Awards") shall become fully and immediately payable or distributable and the restrictions thereon shall lapse. At the Effective Time, each holder of a Current Stock Award shall be paid in full satisfaction of such Current Stock Award a cash payment in an amount in respect thereof equal to the product of (i) the Merger Consideration and (ii) the number of shares of Common Stock subject to such Current Stock Award, less any income or employment tax withholding required under the Code or any provision of state or local law. (b) Each performance award assigned in the 1997 to 1999 performance cycle or the 1998 to 2000 performance cycle under the Company's Performance Share Plan (collectively the "Deferred Performance Awards") shall be awarded assuming a performance level of 100% of the target award and shall vest and become payable on the following date (referred to herein as the "Vesting Date"): (i) on the third anniversary of the Effective Time, provided the executive to whom such award was made has been continuously employed, including any leaves of absence authorized by the Company, by the Company or an Affiliate of the Company from the Effective Time until such date or (ii) upon the death or Disability or Retirement of the executive, the termination of the executive's employment by the Company and its Affiliates without Cause or the termination by the executive of his or her employment with the B-3 Company and its Affiliates for Good Reason, provided such death, Disability, Retirement or termination occurs on or after the Effective Time and prior to the third anniversary of the Effective Time. On the Vesting Date, each holder of a Deferred Performance Award shall be paid in full satisfaction of such Deferred Performance Award a cash payment in an amount in respect thereof equal to the product of (x) the Merger Consideration and (y) the number of shares of Common Stock subject to such Deferred Performance Award. For purposes of Sections 3 and 4(b) of Annex B, "Disability", "Cause" and "Good Reason" shall have the following meanings: (i) "Disability" shall mean the executive's physical or mental incapacity which (A) would entitle the executive to disability benefits under the Company's or Affiliate's long-term disability plan by which the executive is covered or (B) as a result of which, in the judgment of a physician appointed by the Company, the executive is unable to perform the duties of his or her position with the Company and its Affiliates for 180 days during any continuous period of 365 days. (ii) "Cause" shall mean (A) the executive's conviction of, plea of nolo contendere to, or written admission of his commission of, a felony, (B) any act by the Executive involving moral turpitude, fraud or misrepresentation with respect to his duties for the Company or its Affiliates; or (C) gross negligence or willful misconduct on the part of the executive in the performance of his or her duties to the Company or its Affiliates. (iii) "Good Reason" means (A) any termination of employment of the executive with the Company and its Affiliates or any resignation from employment with the Company and its Affiliates by the executive following a reduction in his or her base salary in effect on the Effective Time or following the Company's material breach of any of its agreements set forth in this Annex B or (B) any other termination of employment of the executive with the Company and its Affiliates which is approved in writing by the Company. (iv) "Retirement" means an executive's termination of employment on or after the date he or she attains age 62. (c) At the Effective Time, each restricted stock unit award under the SAP letter agreements shall be converted to a right to receive cash equal to the product of (i) the Merger Consideration and (ii) the number of shares of Common Stock subject to such restricted stock unit award. The foregoing amount of cash shall be paid out pursuant to the terms of the SAP letter agreement, to the extent that, and at the same time as, such restricted stock unit would otherwise, in the absence of the transactions contemplated by this Agreement, have been vested and paid out. B-4 (d) The provisions of this Section 4 shall not operate to duplicate any amounts payable to the executive under his or her Key Executive Agreement. 5. Deferred Compensation Plans. Prior to the acceptance of the --------------------------- Shares by the Purchaser pursuant to the Offer, all stock units, share units or stock equivalent units held under the Company's deferred compensation plan for directors or held under the Agreement to Restore Benefits Reduced by ERISA- Related Limits (the "Company Deferred Compensation Plans") (each a "Company ----------------------------------- ------- Stock Unit") shall be converted into an obligation to pay cash with a value - ---------- equal to the product of (i) the Merger Consideration and (ii) the number of shares of Common Stock subject to such Company Stock Unit. With respect to the obligation to pay cash in respect of the conversion of Company Stock Units under the Company Deferred Compensation Plans, the obligation shall be payable or distributable in accordance with the terms of the plan or arrangement relating to the Company Stock Unit. 6. Directors' Retirement Policy. For purposes of calculating the ---------------------------- pension benefits payable under the Company's 1993 retirement policy for non- employee directors (the "Directors' Retirement Policy"), each non-employee ---------------------------- director who is serving as a member of the Board as of the Effective Date and who has less than five years of service as a member of the Board, shall be credited with five years of service; provided, however, that each non-employee -------- ------- director as of the Effective Date who has at least five years of service as a member of the Board, but has less than ten years of service, shall be credited with ten years of service. In addition, the Parent, the Company and the Subsidiaries shall either (i) continue and maintain the Directors' Retirement Policy as in effect on the Effective Date until each non-employee director entitled to receive a pension benefit calculated thereunder (whether active or retired) has received his or her pension benefit, or (ii) purchase or cause to be purchased an annuity contract for each such non-employee director that provides for the payment of such pension benefit. 7. Amendments to Tax-Qualified Plans. (a) Prior to the acceptance --------------------------------- of the Shares by the Purchaser pursuant to the Offer: (i) The Company shall amend or cause to be amended its Employee Stock Ownership Plan (the "ESOP") and the trust agreement establishing the trust under the ESOP to provide that the net proceeds in the Suspense Account (as defined in the ESOP) resulting from the disposition of the Shares held in such trust and repayment of the ESOP Loans (as defined in the ESOP) will be immediately allocated to Participants' Accounts (as defined in the ESOP) using the ratio of the balance of each such Participant's Account to the Accounts of all Participants. (ii) The Company shall amend or cause to be amended its Profit Sharing, Investment and Pay Deferral Plan and the trust agreement establishing the trust under such plan to substantially provide that, subject to applicable law, (1) the trustee of such trust shall vote shares of Common Stock allocated to a participant's account under such B-5 plan in accordance with written instructions given by such participant; (2) any such shares held in such trust for which the trustee receives no such voting instructions shall be voted by the trustee in the same ratio as the shares held in the trust for which the trustee receives voting instructions; (3) in the event of a tender offer or exchange offer for the shares of Common Stock held in such trust, the trustee shall tender or exchange the shares of Common Stock held in such trust which are allocated to a plan participant's account in accordance with written instructions given by such participant; and (4) any such shares held in such trust for which the trustee receives no such tender or exchange instructions shall be tendered or exchanged by the trustee in the same ratio as the shares held in the trust for which the trustee receives such tender or exchange instructions. (iii) The Company shall amend its Retirement Income Plan for Eligible Employees to delete Article 20 thereof in its entirety. (iv) The Company shall adopt such other amendments to the plans referenced in this Section 7, and any related agreements or instruments, or obtain any consents, as are necessary or appropriate to effectuate the transactions contemplated by this Agreement. (b) The Company and the Parent shall cooperate and take all reasonable steps to share in advance information to effect the transactions contemplated by this Annex B. EX-99.(C)(2) 11 CONFIDENTIALITY AGREEMENT DATED APRIL 16, 1999 Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004 Tel: 212-902-1000 Exhibit (c)(2) PERSONAL AND CONFIDENTIAL - ------------------------- April 13, 1999 Degremont S.A. 183, Avenue du 18 Juin 1940 92508 Rueif-Mafmaisoin France Attn: Mr. Christian Morin President Directeur General Dear Mr. Morin: In connection with your consideration of a possible transaction with Nalco Chemical Company (the "Company"), you have requested information concerning the Company. As a condition to your being furnished such information, you agree to treat any information concerning the Company (whether prepared by the Company, its advisors or otherwise) which is furnished to you by or on behalf of the Company, its advisors or otherwise) which is furnished to you by or on behalf of the Company (herein collectively referred to as the "Evaluation Material") in accordance with the provisions of this letter and to take or abstain from taking certain other actions herein set forth. The term "Evaluation Material" dies not include information which (i) is already in your possession, provided that such information is not known by you to be subject to another confidentiality agreement with or other obligation of secrecy to the Company or another party, or (ii) becomes generally available to the public other than as a result of a disclosure by you or your directors, officers, employees, agents or advisors, or (iii) becomes available to you on a non-confidential basis from a source other than the Company or its advisors, provided that such source is not known by you to be bound by a confidentiality agreement with or other obligation of secrecy to the Company or another party. You hereby agree that the Evaluation Material will be used solely for the purpose of evaluating a possible transaction between the Company and you, and that such information will be kept confidential by you and your advisors; provided, however, that (i) any of such information may be disclosed to your directors, offices and employees and representatives of your advisors who need to know such information for the purpose of evaluating any such possible transaction between the Company and you (it being understood that such directors, officers, employees and representatives shall be informed by you of the confidential nature of such information and shall 1 Degremont S.A. April 13, 1999 Page 2 be directed by you to treat such information confidentially), and (ii) any disclosure of such information may be made to which the Company consents in writing. You hereby acknowledge that you are aware and that you will advise such directors, officers, employees and representatives who are informed as to the matters which are the subject of this letter, that the United States securities laws prohibit any person who has received from an issuer material, non-public information concerning the matters which are the subject of this letter 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. In addition, without the prior written consent of the Company, you will not, and will direct such directors, officers, employees and representatives not to, disclose to any person either the fact that discussions or negotiations are taking place concerning a possible transaction between the Company and you or any of the terms, conditions or other facts with respect to any such possible transaction, including the status thereof. You hereby acknowledge that the Evaluation Material is being furnished to you in consideration of your agreement that you will not propose to the Company or any other person any transaction between you and the Company and/or its security holders or involving any of its securities or security holders unless the Company shall have requested in writing that you make such a proposal, and that you will not acquire, or assist, advise or encourage any other persons in acquiring or attempting to acquire, directly or indirectly, control of the Company (including by way of election of any directors of the Company) or any of the Company's securities, businesses or assets for a period of three years from the date of this letter unless the Company shall have consented in advance in writing to such acquisition or attempted acquisition. You also agree that the Company shall be entitled to equitable relief, including injunction, in the event of any reach of the provisions of this paragraph and that you shall not oppose the granting of such relief. Although the Company has endeavored to include in the Evaluation Material information known to it which it believes to be relevant for the purpose of your investigation, you understand that neither the Company nor any of its representatives or advisors have made or make any representation or warranty as to the accuracy or completeness of the Evaluation Material. You agree that neither the Company nor its representatives or advisors shall have any liability to you or any of your representatives or advisors resulting from the use of the Evaluation Material. In the event that you do not proceed with the transaction which is the subject of this letter within a reasonable time, you shall promptly deliver tot he Company all written Evaluation Material and any other written material containing or reflecting any information in the Evaluation Material (whether prepared by the Company, its advisors or otherwise) and will not retain any copies, extracts or other reproductions in whole or in part of such written material. All documents, memoranda, notes and reproductions in whole or in part of such written material. All documents, memoranda, notes and other writings whatsoever prepared by you or your advisors abased on the 2 Degremont S.A. April 13, 1999 Page 3 information in the Evaluation Material shall be destroyed, and such destruction shall be certified in writing to the Company by an authorized officer supervising such destruction. You agree that unless and until a definitive agreement between the Company and you with respect to any transaction referred to in the first paragraph of this letter has been executed and delivered, neither the Company nor you will be under any legal obligation of any kind whatsoever with respect to such a transaction by virtue of this or any written or oral expression with respect to such a transaction by any of its directors, officers, employees, agents or any other representatives or its advisors or representatives thereof except, in the case of this letter, for the matters specifically agreed to herein. The agreement set forth in this paragraph may be modified or waived only by a separate writing by the Company and you expressly so modifying or waiving such agreement. This letter shall be governed by, and construed in accordance with, the laws of the State of New York. Very truly yours, NALCO CHEMICAL COMPANY By: /s/ Goldman, Sachs & Co. -------------------------------------- Goldman, Sachs & Co. on behalf of NALCO CHEMICAL COMPANY Confirmed and Agreed to: DEGREMONT S.A. By: /s/ Pascal Remy ------------------------------------- Date: 15/04/99 ----------------------------------- 3 EX-99.(C)(3) 12 FORM OF EMPLOYMENT AGREEMENTS Exhibit (c)(3) [FORM OF EMPLOYMENT AGREEMENT] Nalco Chemical Company One Nalco Center Naperville, Illinois 60563-1198 (630) 305-1000 [DATE] [Executive] Nalco Chemical Company One Nalco Center Naperville, Illinois 60563-1198 Dear [Executive] Upon completion of the proposed merger (the "Merger") between H2O Acquisition Co. (the "Purchaser"), a whollyowned subsidiary of Degremont S.A. (the "Parent"), and Nalco Chemical Company (the "Company"), Parent shall cause the Company to offer you employment with the Company on the terms and conditions described in the attached "Terms of Employment Contract between Nalco Chemical Company and [Executive]," which are incorporated into this letter agreement (the "Agreement") by reference. By signing this Agreement you hereby accept employment with the Company on such terms and conditions. This offer of employment is conditioned upon the completion of the Merger and shall become effective at the Effective Time (as defined in the Agreement and Plan of Merger by and among the Parent, Purchaser and the Company (the "Merger Agreement")) of the Merger. You, as well as the Parent and Purchaser, agree to enter into a more definitive employment agreement that reflects these terms and conditions promptly after the date of this Agreement. In the event of any inconsistency between the terms of this Agreement and the terms of the Merger Agreement, the terms of this Agreement will control. Very truly yours, Date:______________________________ DEGREMONT S.A. By:__________________________ Name: Title: Date:______________________________ H2O ACQUISITION CO. By:__________________________ Name: Title: Accepted and agreed to: ____________________________ [Executive] Date: ________________ -2-
1. Settlement of Key Executive Agreements* --------------------------------------- . 3 Times Base Salary > > > Payout in cash at time of change in control ("CIC") . 3 Times Regular Management > Incentive Plan ("MIP") > . 3 Times Supplemental MIP > Deferred for three years in cash with interest. > To vest and be paid at end of three years if > employed or in event of prior death, > disability, termination by Company without > "cause" or by executive for "good reason" > or retirement on or after age 62 . 97/98 Outstanding > assuming a performance level of 100% Performance Share Awards > of the target award . Outstanding Restricted Stock > including 1995 Performance > Share Plan > > Payout in cash at time of CIC . Stock Options > > . 280G Tax Gross-up Payment > 2. Provisions ---------- Duration . Three years . One-year evergreen after three years . Six months' notice of non-renewal Position . Chief Executive Officer for Mr. Mooney; Senior Executive for other executives . Responsibilities and duties as assigned by Board for Mr. Mooney and by the Board and Chief Executive Officer for other executives Compensation . Current salary with opportunity for increase . Compensation opportunities comparable to those provided to similar senior executives
- --------------- * Payments to be excluded from pension and benefit calculations. . Participation in all incentive and benefit plans provided to similar senior executives Retention Payment . Two times sum of salary plus regular target MIP bonus (as of June 22, 1999) payable in cash if employed by Company three years from date of CIC; payment to be excluded from pension and benefit calculations and from 280G gross-up obligation Termination Provisions* . Death, Disability and . Accrued Amounts** Retirement . Long term incentives in accordance with plan provisions . By Company without "Cause" or . Accrued Amounts Resignation by Executive for . Long term incentives in accordance with plan "Good Reason"*** provisions . Two times (for Messrs. Buchholz, Lambe, Mooney, Newlin and Weeber) and 1.5 times (for Messrs. Brannon, Burns, Kahler and Roe) salary plus regular target MIP bonus; not to exceed age 65 - Payment to be offset by Retention Payment if such termination occurs within two years of receipt of Retention Payment . Additional pension credit equal to three years less number of years worked from date of CIC . Welfare benefits continuation for same period . By Company for "Cause" or . Accrued salary Resignation without "Good . Unpaid earned amounts Reason"*** Restrictive Covenants . Non-competition and non-solicitation of customers and employees during employment and for two years thereafter . Perpetual non-disclosure, non-disparagement and availability for litigation support Taxes . Full CIC gross-up for current merger (excluding Retention Payment); for future CIC, full CIC gross-up (excluding Retention Payment), but only in the event of termination without "Cause" or resignation for "Good Reason" following future CIC Elective Deferral . Flexible elective deferral plan with tax-sheltered investment alternatives
- -------------------- * Applicable both prior and subsequent to any future change in control; payments to be excluded for pension and benefit calculation purposes. ** Salary and pro rata bonus at target for year of termination plus unpaid earned amounts. *** "Good Reason" and "Cause" similar to definition in merger agreement. Legal Fees and Expenses . Reimbursement of reasonable costs unless actions found to be in bad faith or frivolous Settlement of Disputes . Arbitration; injunctive relief
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