<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
SCHEDULE 14D-1
(AMENDMENT NO. 1)
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D*
(AMENDMENT NO. 11)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
----------------
RHONE-POULENC RORER INC.
(Name of Subject Company)
----------------
RHONE-POULENC S.A.
(Bidder)
----------------
COMMON STOCK, WITHOUT PAR VALUE
(Title of Class of Securities)
----------------
76242T 10 4
(CUSIP Number of Class of Securities)
----------------
YVES BRISSY
RHONE-POULENC S.A.
25, QUAI PAUL DOUMER
92408 COURBEVOIE CEDEX, FRANCE
011-331-47-68-12-34
(Name, Address and Telephone Number of Persons Authorized to Receive Notices
and Communications on Behalf of Bidder)
----------------
With Copies to:
HUBERTUS V. SULKOWSKI, ESQ. CREIGHTON O'M. CONDON, ESQ.
SHEARMAN & STERLING SHEARMAN & STERLING
114, AVENUE DES CHAMPS-ELYSEES 599 LEXINGTON AVENUE
75008 PARIS, FRANCE NEW YORK, NEW YORK
011-331-53-89-70-00 (212) 848-4000
SEPTEMBER 9, 1997
- -------------------------------------------------------------------------------
*This Statement also constitutes Amendment No. 11 to the Statement on Schedule
13D of Rhone-Poulenc S.A. with respect to the Common Stock, without par value,
of Rhone-Poulenc Rorer Inc. which may be deemed to be beneficially owned by
Rhone-Poulenc S.A.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
This Amendment No. 1 to the Tender Offer Statement on Schedule 14D-1 and
Amendment No. 11 to the Statement on Schedule 13D (this "Amendment") filed by
Rhone-Poulenc S.A., a societe anonyme organized under the laws of the Republic
of France ("Purchaser") relates to the offer by Purchaser to purchase all of
the issued and outstanding shares (the "Shares") of common stock, without par
value, of Rhone-Poulenc Rorer Inc., a Pennsylvania corporation, at a price of
$97 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated August 22, 1997 (the
"Offer to Purchase") and in the related Letter of Transmittal (which together
constitute the "Offer").
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
Item 6 is hereby amended and supplemented as follows:
Purchaser has effected the following transactions in Shares during the past
60 days:
<TABLE>
<CAPTION>
DATE AMOUNT OF SHARES PRICE PER SHARE PLACE OF TRADE TYPE OF TRADE
- ---- ---------------- --------------- -------------- --------------------------------
<S> <C> <C> <C> <C>
August 26, 1997......... 10,000 $ 57.00 Private sale Sale pursuant to option exercise
September 8, 1997....... 6,000 $32.125 Private sale Sale pursuant to option exercise
</TABLE>
ITEM 10. ADDITIONAL INFORMATION.
Item 10(c) is hereby amended by deleting the last sentence of the paragraph
of the Offer to Purchase entitled "THE TENDER OFFER--Certain Legal Matters and
Regulatory Approvals--Litigation" and inserting in lieu thereof the following:
On August 25, 1997, an additional putative class action was filed by a
shareholder of the Company. In Columbo v. Rhone-Poulenc Rorer Inc. et al.,
(Pennsylvania Court of Common Pleas, Trial Division, Montgomery County, filed
August 25, 1997), plaintiff alleges that the defendants--Purchaser and several
individuals who are officers and/or directors of the Company and/or
Purchaser--have breached their fiduciary duties by using positions of power
and control to impose an allegedly inadequate price per share on the minority
Shareholders. The relief sought includes a declaration that defendants have
breached their fiduciary duties, an injunction against the Offer or, in the
alternative, rescission of the contemplated transaction and damages. Purchaser
believes that all five putative class actions lack merit and intends to
vigorously defend such actions.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 is hereby amended and supplemented by adding the following Exhibits:
(a)(10) English translation of French-language Erratum to the Communique
published in Les Echos and La Tribune on August 22, 1997.
(a)(11) Communications Package to Holders of Company Stock Options.
(g)(7) Complaint filed in Columbo vs. Rhone-Poulenc Rorer Inc., et.al.
(Pennsylvania Court of Common Pleas, Trial Divisions Montgomery
County, filed August 25, 1997).
2
<PAGE>
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.
September 9, 1997
RHONE-POULENC S.A.
By: /s/ Yves Brissy
Name: Yves Brissy
Title: General Counsel
3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
(a)(10) English translation of French-language Erratum to the Communique published in Les
Echos and La Tribune on August 22, 1997.
(a)(11) Communications Package to Holders of Company Stock Options
(g)(7) Complaint filed in Colombo vs. Rhone-Poulenc Rorer Inc., et. al. (Pennsylvania
Court of Common Pleas, Trial Division, Montgomery County, filed August 25, 1997).
</TABLE>
4
<PAGE>
Exhibit (a)(10)
---------------
TENDER OFFER
FOR THE SHARES OF
RHONE-POULENC RORER
BY RHONE-POULENC
ERRATUM
Erratum to the Communique published on Friday, August 22, 1997 setting
forth the terms of the tender offer for the shares of Rhone-Poulenc Rorer by
Rhone-Poulenc.
. PAGE 1 (1. Presentation of the Offer, I. Terms of the Offer, B.
Conditions), read 35,250,573 shares instead of 37,306,616.
. PAGE 2 (1. Presentation of the Offer, I. Terms of the Offer, B.
Conditions), read August 19, 1997 instead of August 19, 1996.
. PAGE 3 (1. Presentation of the Offer, IV. Factors to Be Considered in
Assessing the Offer, A. Market Price), for the market price of the Rorer
shares on the Paris Bourse during the third semester of 1997 (until August
19), read FF 614 (highest price) and FF 529 (lowest price) instead of FF
588 and FF 584, respectively.
. PAGE 4 (3. Presentation of Rorer, B. Financial Information, 2. Rorer's
Budgets and Financial Forecasts), in the 1997 Budget (May 1997), read,
under the line item "Income before tax", US$ 690 million instead of US$ 699
million.
RHONE-POULENC S.A.,
25, QUAI PAUL DOUMER, 92408 COURBEVOIE CEDEX
<PAGE>
Exhibit (a)(11)
RHONE-POULENC RORER INTEROFFICE CORRESPONDENCE
- ------------------------------------------------------------------------------
Date 8 September 1997 Information
Copies
To
To All RPR Stock Option Holders
From Hadia Lefavre
- ------------------------------------------------------------------------------
Subject US RPR STOCK OPTIONS - ALTERNATIVES OFFERED BY THE RP TENDER
If the current tender offer by RP is closed successfully, you will have
your existing RPR stock options, both vested and unvested, canceled and
cashed out at the $97 offer price. The gains received by you in the
cashout will be considered ordinary income and you will be subject to
applicable income and FICA taxes for 1997 on the full amount. For many,
this will cause you to be taxed at a higher tax bracket if you receive
the full cashout gains in 1997.
We have received many requests from employees for alternatives to this
cashout approach and, with the assistance of many people at RPR and RP,
we have been able to develop two alternatives for you in the US. In each
alternative, your gain as of August 22nd, the day the tender offer was
launched, is carried over into the new program with favorable terms and
conditions. In offering these choices we are attempting to assist you in
better managing your tax and financial planning needs.
The two alternatives to receiving cash are:
* A CASH DEFERRAL PLAN WHICH ALLOWS YOU TO DEFER THE IMMEDIATE PAYMENT
WITH INTEREST AND TO RECEIVE 3 EQUAL PAYMENTS OF PRINCIPAL, WITH INTEREST
COMPOUNDED MONTHLY, OVER 3 YEARS.
* THE RP CONTINUITY PLAN WHICH ALLOWS YOU TO CONVERT YOUR EXISTING RPR
OPTIONS THAT ARE LESS THAN 5 YEARS OLD INTO RP STOCK OPTIONS WITH THE
EXERCISE PRICE SET SO THAT A GAIN COMPARABLE TO THAT EXISTING IN THE RPR
OPTIONS YOU HOLD IS BUILT INTO THE NEW RP OPTIONS BASED ON THE DATE OF
THE TENDER OFFER.
You have the choice between any combination of cash and/or one or both of
-------------------------------------------------------------------------
the alternatives described above for each stock option award. Each of
------------------------------------------------------------
these alternatives has distinct benefits and are explained in more detail
on the following pages.
<PAGE>
* CASH DEFERRAL PLAN
- --------------------
If you would prefer not to receive all of your option gains in this tax year,
you can defer, on the grants that you choose and on an pre-tax basis, those
gains you want to receive over a three-year period. This is the short-term Cash
Deferral Plan. All US option holders are eligible and you can pick and choose
which of your grants you would like to defer. For many, the gains from cashing
out the RPR options will result in higher marginal federal taxes than you would
normally pay. Even if the tax implications are not an issue, you may still want
to defer this cash and receive a payout over time. A key plan feature is that
THE MONEY DEFERRED EARNS INTEREST during the 3-year deferral period -- on a
gross (pre-tax) versus net (after-tax) amount.
Plan Features:
- --------------
* Open to all US RPR stock option holders.
* Defers existing gain into a short-term deferral plan of 3 years allowing
employees to spread out the gain and better manage their tax liability.
* Employees can earn interest on their deferred pre-tax gain during the 3 year
period.
* The interest rate for this deferral plan will be six month LIBOR (London
Interbank Offered Rate, a universally-recognized borrowing rate). As of this
writing, LIBOR is approximately 6%. The interest rate will be determined on
October 1, 1997 and then will be adjusted every six months thereafter. IN
ADDITION, AN INTEREST RATE PREMIUM OF 1% WILL BE ADDED TO THE SIX MONTH LIBOR
-------------
RATE.
* Employees will receive payouts of 1/3 of the amount deferred plus interest in
October of years 1998, 1999 and 2000.
* Income received from this deferral plan will be considered ordinary income
earned in the year it is paid out and will be subject to income tax in that
year.
* All deferrals are subject to FICA payable at the time of deferral.
* If you leave the company within the 3-year period, your monies will remain
deferred and continue to accrue interest and be paid to you as originally
scheduled. However, if you would prefer to receive your monies in a lump sum in
the event you terminate within the 3 year period, please complete and return the
enclosed election form along with the beneficiary form.
* In the case of death, the balance of your deferral would be paid to your
beneficiary.
The terms of this deferral should raise some questions for you on whether this
will better meet your tax and financial needs rather than taking the cash this
year. This plan offers you a very competitive rate when compared with what is
available from banks and there is little risk to your money. It would only be
at risk if RPR goes bankrupt. If you compare LIBOR + 1% to your normal after-
tax investment return, we believe you would need to get a rate of 8-13%,
depending on your tax bracket, in order to equal what you could receive in this
deferral plan.
<PAGE>
PLAN SUMMARY: US CASH DEFERRAL PLAN ALLOWS YOU TO DEFER MONIES OVER 3 YEARS --
POTENTIALLY LESSENING YOUR IMMEDIATE INCOME TAX IMPACT AND RECEIVING INTEREST ON
THE MONEY DEFERRED AT AN ATTRACTIVE INVESTMENT RATE.
* RP CONTINUITY PLAN
- --------------------
Another alternative to receiving cash is to convert your RPR options into RP
stock options. The conversion rate that has been established by the tax
authorities in France and would be applied worldwide is an attractive 2.4 RP
OPTIONS FOR EVERY RPR OPTION. This conversion rate is based on RPR and RP
stock prices on August 22, 1997, the date RP launched its tender offer. Details
on the conversion rate are addressed in the enclosed Q&A.
This alternative can be very good as it allows you to continue to hold stock
options with the potential for appreciation in value carried out into the future
and you would not have to pay taxes today. This choice would apply only for
those option grants which are less than 5 years old as of October 1, 1997.
----- ---- - ----- ---
Plan Features:
- --------------
* Available to all active RPR and Centeon employees, as of October 1, 1997.
* Converts existing RPR options which are less than five years old into RP
options for active RPR employees
* Offers 2.4 RP options for every RPR option.
* The new RP option exercise price is set by dividing the existing RPR exercise
price by 2.4.
* Your CONVERTED RP STOCK OPTIONS ARE IMMEDIATELY VESTED.
* The other basic terms and conditions of the RPR stock option program will hold
for the RP stock option -- that is, if your RPR option has seven years left
before it expires, your new RP stock option will have seven years in which you
can exercise.
* The same rules apply with respect to voluntary termination, death, disability
and retirement as currently exist in the RPR stock option program.
* YOU WILL CONTINUE TO BE ABLE TO EXERCISE YOUR CONVERTED RP OPTIONS IN THE
EVENT YOU ARE INVOLUNTARILY TERMINATED, FOR REASONS OTHER THAN FOR CAUSE, FOR
THE REMAINDER OF THE INITIAL TEN-YEAR TERM.
* RP has established a maximum number of RP options that can be granted in this
Continuity Plan. In the event the number of RP options resulting from the
selection of this alternative exceeds the maximum, there will be an equitable
reduction across the organization.
This continuity approach will allow you to manage both your gains and tax
liability beyond a three year period of time This also links you to the future
success of the new Rhone-Poulenc organization and its emphasis on the Life
Sciences business.
<PAGE>
PLAN SUMMARY : THE RP CONTINUITY PLAN ALLOWS YOU TO CONVERT YOUR EXISTING RPR
OPTIONS INTO RP STOCK OPTIONS. THE GAINS EXISTING IN THE RPR OPTIONS BEING
CONVERTED WOULD, AS OF AUGUST 22ND, BE MAINTAINED IN THE RP OPTION. STOCK
PRICE APPRECIATION IS WHAT MAKES AN OPTION VALUABLE AND, AS WE HAVE SEEN IN THE
PAST WITH RPR OPTIONS, STOCK VALUE VARIES OVER TIME. YOU CAN DETERMINE WHEN AND
HOW YOU WILL EXERCISE AND INCUR THE TAX LIABILITY.
PROCESS
- -------
Enclosed you will find the formal documents addressing the cancellation and
cashing out of your RPR stock options. Part of this is an Election Form that
you must complete and return to Collegeville in the enclosed postage-paid
envelope. If you are interested in allocating any portion of your gain into
either the Deferral Plan or the Continuity Plan, YOU MUST RETURN YOUR SIGNED
ELECTION FORM BY MIDNIGHT (EDT) SEPTEMBER 15, 1997. You can fax your form to
610-454-3076 or 610-454-3607 and as long as it is received by the above
deadline, we can accept it as your election form, providing the original form is
also received within one week. If no form is received by September 15, then you
will receive the cash-out following the successful close of the tender.
FUTURE COMPENSATION PHILOSOPHY
- ------------------------------
We have had preliminary discussions with Rhone-Poluenc regarding our
compensation philosophy going forward. They are comfortable with our
compensation philosophy and principals and therefore see no reason to change.
We will remain a pay-for-results company and will continue to be competitive
locally within our industry. We are working on the details of what exactly the
replacement for RPR stock options will be, but we will continue to offer long-
term incentives as part of our total compensation philosophy. As soon as the
details of the new plan are approved, we will communicate them to you.
SUMMARY
- -------
It is our belief that the alternatives being offered can be advantageous to you
and that there are reasons to consider them in lieu of receiving cash. The goal
of all the work done by RP and RPR is to offer you the best alternatives
possible to manage your tax and financial needs. However, while we are
comfortable with the alternatives we are offering, we can't predict interest
rate fluctuation, stock price performance, currency exchange rates, etc., nor
can we guarantee favorable consequences, if any, of these alternatives. It is
ultimately your choice and therefore you are responsible for your tax
liabilities now and in the future, especially in the event of any adverse
determination by tax authorities. It is strongly recommended that you seek the
advice of your tax and/or financial planning advisor on which choices are best
for you.
For specific questions, please contact the Stock Administration Hotline at 610-
454-3662 or fax 610-454-3076 or 610-454-3607.
<PAGE>
RPR STOCK OPTION CANCELLATION
1. Rhone-Poulenc Rorer Inc. (the "Company") granted you options to
purchase shares of its common stock (the "Options"), as shown on the enclosed
statement, the terms and conditions of which were described in certain written
materials furnished to you at that time (the "Grant Documents").
2. You have the right to exercise your currently vested stock
option(s); you do not have the right to exercise your currently unvested stock
option(s).
3. On August 22, 1997, Rhone Poulenc S.A. ("RP") announced an offer
to purchase all of the outstanding common shares of the Company not already
owned by RP (the "Tender Offer"). The Tender Offer expires on October 1, 1997
(the Closing Date"). If the Tender Offer is successful, and RP owns all of the
outstanding shares of the Company on or after the Closing Date, there will be no
common shares of the Company available for you to purchase under the Options.
4. In order to compensate you for the loss of the ability to
purchase common shares of the Company under the Options, if the Tender Offer is
successful, the Company will cancel both the Vested Portion and the Unvested
Portion of the Options and, in exchange therefor, make a cash payment to you
equal to the full value of the Options in October, 1997. Alternatively, at your
election, WHICH MUST BE MADE ON OR BEFORE SEPTEMBER 15, 1997 (i.e., before it is
-------------------------------------------------- -----
known whether the Tender Offer will be successful), you may receive in lieu of a
cash payment, (i) a deferred cash payment, with interest, equal to the full
value of the Option payable in annual installments in October, 1998, 1999 and
2000, or (ii) FOR INDIVIDUALS WHO ARE ACTIVE EMPLOYEES OF THE COMPANY OR CENTEON
AND ONLY AS TO OPTIONS HELD FOR LESS THAN FIVE YEARS FROM THEIR ORIGINAL DATE OF
GRANT, a new option to receive from the Company a number of common shares of RP
or (iii) a combination of the foregoing. Note that to receive a combination,
the election must still be made ON OR BEFORE SEPTEMBER 15, 1997. The following
-------------------------------
pages of this document generally provide a summary of these alternatives as
well as specific information for you based on the Options you hold to the extent
not exercised as of the date of this Agreement (according to the Company's
current records) and asks you to make your elections.
5. If the Tender Offer is successful, all of your Options shall
terminate and be canceled on the Closing Date. ACCORDINGLY YOU MUST RETURN THIS
ELECTION FORM. If we do not receive a properly completed election form by
September 15, 1997, you will be deemed to have elected to receive an immediate
cash payment as described in paragraph 4. Please review the enclosed
description of the alternatives and your specific grant information, and please
indicate your election in the space provided and return the completed election
form in the enclosed envelope. PLEASE NOTE THAT, WHILE YOUR ELECTION IS
IRREVOCABLE, IF THE TENDER OFFER IS NOT SUCCESSFUL, YOUR OPTIONS WILL CONTINUE.
-1-
<PAGE>
PAYMENT ALTERNATIVES TO RPR STOCK OPTION GAINS
The following alternatives to your RPR stock option gains are being offered by
Rhone-Poulenc.
ELECTION A (ALL STOCK OPTION HOLDERS ARE ELIGIBLE)
All your outstanding options will be cashed out at a value of $97.00. Your gain
will be taxed as ordinary income earned in 1997. Your FEDERAL tax will be
withheld at the rate of 28%; however, you may elect to have up to 39.6% of
federal tax withheld. If you wish to have a percentage higher than 28% withheld
from this income, please complete the attached FEDERAL tax election form and
return it in the enclosed envelope along with your election form.
ELECTION B (US-BASED EMPLOYEES AND US-PAID EXPATRIATES ARE ELIGIBLE)
The cash-out value of your grant under this election will be deferred on a
short-term basis. You will receive three installment payments over three years
from the closing date of the tender. These payments will include principal and
interest consisting of the 6-month LIBOR Borrowing rate (cost of money adjusted
every six months) plus 1%. For example, in 1997, LIBOR approximates 6% which
with a 1% premium yields a total of 7%. Each payment (principal and interest)
will be considered ordinary income earned in the year of distribution and will
be taxed as such in that year.
Additionally, if you were to terminate within three years, for any reason other
than death, your deferral would continue. You currently have the option to
elect to receive a lump sum distribution in the event of termination by
completing and signing the enclosed Cash Deferral Distribution Election form.
You are fully vested in these monies and have the rights of a creditor of Rhone-
Poulenc Rorer, Inc.
ELECTION C (ALL STOCK OPTION HOLDERS WITH GRANTS LESS THAN FIVE YEARS OLD ARE
ELIGIBLE)
Each of your RPR stock options that have been granted within the past five years
can be exchanged for 2.4 RP stock options. In addition, the new exercise price
will be set by dividing the current RPR exercise price for a given grant by 2.4.
The conversion rate was set as of August 22, 1997, the date RP initiated the
tender offer. The amount of RP stock options and the option price will be set
so that what would have been your RPR stock option cash-out gain (see Election
A) is preserved as of the date of the tender offer. For example, if you have
100 RPR options with an option exercise price of $40.00 and a total gain of
$5,700 ($97.00 RPR tender price - $40.00 X 100 RPR stock options), you would
receive 240 RP options at an option exercise price of $16.66
Additionally, your converted stock options will vest immediately and will be
available for exercise based on the current expiration date of the RPR option
grant you are exchanging.
INSTRUCTIONS FOR COMPLETING THE ELECTION FORM
On the attached Election form, please indicate your election BY PERCENTAGE for
each stock option grant in increments of 25%. These elections must total 100%
for each grant. For example, you may elect 50% cash-out, 25% cash deferral and
25% RP stock or 100% cash-out. Please note that only the elections for which
you are eligible are listed for each grant. Additionally, please note that in
the event of an oversubscription for RP shares under Election C, the number of
RP stock options to which you would be entitled would be reduced
proportionately, and your remaining gain will be processed according to your
alternate election for that particular grant. Your first election(s) combined
- --------- --------
with your alternate election(s) must equal 100%. If your total election(s) do
not equal 100%, an adjustment will be made to your cash-out election so that
your total election(s) do equal 100%. Furthermore, if you do not make an
election or make an alternate election, in either case, you would be cashed out
under Election A. Finally, please note that these election forms, dated
September 2, 1997, reflect your outstanding options through September 1, 1997.
Any exercise or cancellation activity after this date is not reflected on this
election form. Please make your elections accordingly.
Please use the enclosed envelope to return your election form(s). If you want
Election B or Election C, you must return your form by September 15, 1997.
Faxes will be accepted until 12 midnight on September 15, 1997 (610) 454-3076 or
(610) 454-3607; however, the original election form(s) must be received within
one week. If you have any questions, please call the Stock Administration
hotline (610) 454-3662.
<PAGE>
RHONE-POULENC RORER
FEDERAL TAX ELECTION FORM
All gains earned from the cash-out of RPR stock options will be taxed as
ordinary income in 1997. The federal income tax rate that will be used is 28%.
You have the option to elect to have federal income taxes withheld up to 39.6%.
If you would like your federal taxes withheld at a higher rate, please indicate
below, sign and return with your election form. Under no circumstance will
federal taxes be withheld at a rate less than 28%.
Federal Tax Rate _________%
________________________________________
Employee Name
________________________________________
Date
Please return your election form(s) in the enclosed envelope.
<PAGE>
RHONE-POULENC RORER - CASH DEFERRAL PROGRAM
BENEFICIARY DESIGNATION/DISTRIBUTION ELECTION FORM
NAME:
----------------------------------------
SOCIAL SECURITY NUMBER
-----------------------
- --------------------------------------------------------------------------------
BENEFICIARY DESIGNATION
I nominate the following beneficiary(ies) with respect to my stock option cash
deferral now and hereafter, still reserving to myself the privilege of other and
further changes.
<TABLE>
<CAPTION>
Beneficiary Name % of Share Date of Birth Sex Relationship Social Security Number
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
If more than one beneficiary is designated, settlement will be made in equal
shares to such of the designated beneficiaries (or beneficiary) as survives me,
unless otherwise provided herein. If no designated beneficiary survives me, the
payment shall be made to my estate.
<TABLE>
<CAPTION>
<S> <C>
- ------------------------------------ -----------------------------------------------
Date Signature
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
CASH DEFERRAL DISTRIBUTION ELECTION
In the event of my termination from RPR, other than for reason of death, I elect
to receive any balance in my deferral account in a lump sum distribution at the
time of my termination.
<TABLE>
<S> <C>
- ------------------------------------ -----------------------------------------------
Date Signature
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
QUESTIONS & ANSWERS ABOUT YOUR RPR STOCK OPTIONS
GENERAL QUESTIONS
- -----------------
Q. WHY ARE THREE ALTERNATIVES BEING OFFERED FOR THE CANCELLATION OF RPR STOCK
OPTION GRANTS?
A. Employees are being offered three alternatives to help them manage their
stock option gains. The three alternatives are: a cash payment; a cash deferral
plan; or the RP Continuity Plan. This allows employees to manage their tax
payments and cash flow as well as offering two different investment
opportunities with differing degrees of risk and potential return.
Q. WHAT ARE THE BENEFITS AND RISKS OF EACH ALTERNATIVE?
A. RPR can describe the alternatives available and their features, but we cannot
advise you on which choice to make. You know your financial situation best and
should discuss all alternatives with your personal tax and/or financial advisor.
Q. CAN I COMBINE ALTERNATIVES?
A. Yes. You will be required to make an election for each stock option grant in
25% increments. The elections for which you are eligible are listed for each
grant. Only grants less than five years old will be eligible for the RP
Continuity Plan.
Q. WHO WILL HANDLE THESE TRANSACTIONS? WILL THERE BE ADMINISTRATIVE CHARGES FOR
PROCESSING ANY OF THESE TRANSACTIONS?
A. Smith Barney will handle the cashout for the U.S. option holders who elect
to receive cash. You will not be subject to any commission or fees if you
participate in the tender. However, if you choose to exercise your options
prior to October 1, 1997, you will have to pay the customary fees.
Q. ONCE I CHOOSE MY ELECTION, CAN I CHANGE MY MIND?
A. No, your election is irrevocable. You will need to return your election form
to RPR Stock Administration by midnight (EDT), September 15, 1997. Forms may be
faxed back as long as they are followed by the originals within one week. The
fax numbers for Stock Administration are (610) 454-3076 or (610) 454-3607.
Q. WHAT HAPPENS IF I DO NOT RETURN MY FORM?
A. If your form is not received by September 15, 1997, and the tender closes as
proposed, you will receive a cash payment equal to the difference between $97
and the exercise price(s) of your options (less withholding taxes).
Q. WHAT IF I DO NOT WANT TO SURRENDER MY STOCK OPTIONS?
A. If RP is successful in this merger and achieves a 90% ownership position, all
remaining option holders will have their options canceled and will receive a
payment equal to the difference between the $97.00 offer price and the exercise
price of your options less withholding taxes. If you do not wish to receive
cash for your options, you might want to consider the alternative plans.
1
<PAGE>
GENERAL QUESTIONS (CONT'D)
- ----------------------------
Q. WHAT HAPPENS TO THE RPR SHARES IN THE COMPANY'S 401(K) SAVINGS PLAN?
A. Participants in the company's 401(k) savings plan will receive
communications from American Express soliciting instructions about tendering the
shares of RPR stock owned by the pooled stock fund.
Q. WHAT HAPPENS IF I LEAVE THE COMPANY BEFORE THE CLOSE OF THE TENDER PERIOD?
WHAT ABOUT VOLUNTARY OR NON-VOLUNTARY TERMINATION? RETIREES?
A. If you leave RPR for any reason before the close of the tender period, all
vested RPR options will be cashed out and all unvested RPR options will be
canceled without payment.
Q. WHEN CAN I EXPECT THE PAYOUT TO HAPPEN? WHEN WILL I GET MY CHECK? WILL I GET
DIFFERENT CHECKS AT DIFFERENT TIMES FOR THE DIFFERENT GRANT CHOICES I MAKE? CAN
THE MONEY BE DIRECT DEPOSITED INTO MY BANK OR AS PART OF MY PAYCHECK?
A. You will receive your cashout within 2 weeks of the close of the tender
offer, if successful. You will receive one payment for all your cash elections.
If you are interested in direct deposit of your cash payout, you would have to
deal directly with Smith Barney on this issue and you would be responsible for
any wire fees. You can reach Smith Barney at 1-800-235-1205, extension 9533 or
617-570-9533.
Q. IS THERE ANY REASON WHY MY STOCK OPTIONS WOULD NOT BE CASHED OUT OR WOULD BE
DELAYED -- FOR EXAMPLE, IF I AM ON A PIP (PERFORMANCE IMPROVEMENT PLAN) OR ON A
PERSONAL LEAVE/DISABILITY?
A. All eligible option holders will be paid out at the same time regardless of
performance plans or leave of absences.
Q. WHO CAN I CALL FOR CLARIFICATION OR WITH QUESTIONS?
A. For general questions about RPR Stock Options, you can call the Stock
Administration hotline in Collegeville at (610) 454-3662.
2
<PAGE>
ELECTION A - CASHOUT
- ---------------------
Q. HOW WILL THE CASHOUT BE HANDLED? DO I NEED TO FILL OUT ANY ADDITIONAL FORMS
OR SUBMIT A CHECK FOR THE OPTION EXERCISE?
A. If you do not exercise any of your vested options before October 1, and elect
to tender your stock options for cash, you will automatically receive a check
from Smith Barney within two weeks of the close of the tender. There are no
employee fees for the cashout and you will not need to write a check for the
exercise price. You will receive the difference between $97 and the exercise
price for each option you hold (less taxes). If you want to choose either of
the two other alternatives for part or all of your option awards, you need to
fill out the enclosed election form and return it by September 15, 1997.
Q. WILL MY VESTED AS WELL AS UNVESTED OPTIONS BE ELIGIBLE FOR THE CASHOUT VALUE
OF $97.00?
A. Yes. As long as you are actively employed by RPR at of the close of the
tender offer (October 1, 1997).
Q. IN WHAT CURRENCY WILL MY GAIN BE DISTRIBUTED?
A. The stock option cashouts will be made in US dollars for all US participants.
Q. WHAT ARE THE TAX CONSEQUENCES FOR A CASH OUT OF MY OUTSTANDING RPR OPTIONS?
A. Your gain (the difference between the $97.00 offer price and the grant price)
will be taxed as ordinary income earned in 1997. Federal income taxes will be
withheld at 28% as required by law, no matter which tax bracket you are in. Your
Federal income tax burden for 1997 will depend on your total income tax position
for the year. You can elect to have Federal taxes withheld from 28% to 39.6% by
filling out and returning the enclosed Federal Tax Election Form. The applicable
state, local and FICA taxes will be withheld from your gains. If the tax
implications are a concern for you, you may want to consider the other available
alternatives.
3
<PAGE>
ELECTION B - CASH DEFERRAL PLAN
(FOR US-BASED EMPLOYEES AND US-HOME COUNTRY EXPATRIATES)
-------------------------------------------------------
Q. WHAT IS LIBOR BORROWING RATE AND WHERE IS IT PUBLISHED?
A. LIBOR is London Interbank Offered Rate and is the average of interbank
offered rates for Dollar deposits in the London market based on quotations at
five major banks. The LIBOR rate is published daily in the financial section of
most daily newspapers, including the Wall Street Journal.
Q. WHY WAS LIBOR CHOSEN AS THE INTEREST RATE FOR THE DEFERRAL ALTERNATIVE?
A. LIBOR is a well known and readily accessible market rate.
Q. WHAT ARE THE TAX BENEFITS TO ELECTING A CASH DEFERRAL?
A. Aside from the benefit of being able to invest the gains on a pretax basis,
many RPR employees will be faced with "tax bracket creep" because of the size of
their gains. The deferral enables you to spread your tax liability over three
years thus reducing the amount of tax someone with tax bracket creep would have
to pay versus taking the cashout all at once. Federal taxes are deferred until
the time you receive a distribution from the plan. FICA taxes are non-
deferrable and need to be paid at the time of the deferral. The total amount
that you defer will be net of any FICA and applicable taxes.
Q. IS MY DEFERRAL DISTRIBUTION GUARANTEED TO PAY OUT EACH YEAR DURING THE THREE-
YEAR DEFERRAL PERIOD?
A. Any monies you might defer are held as general assets of Rhone-Poulenc Rorer.
As a participant of the plan, you are an unsecured creditor of the company with
respect to your plan benefits. However, in the case of bankruptcy of RPR, you
will be paid out as promised.
Q. CAN I WITHDRAW MY DEFERRAL AT ANY TIME OTHER THAN THE 3 SCHEDULED ANNUAL
PAYMENTS?
A. No.
Q. CAN MY DEFERRAL DISTRIBUTION BE ROLLED OVER TO AN IRA?
A. No. The RPR stock option program is not an IRS tax-qualified plan. You must
take payout of your deferral over the three year period.
Q. WHAT HAPPENS IF I LEAVE THE COMPANY WITHIN 3 YEARS?
A. If you leave RPR for any reason within three years, your deferral will
continue. If you wish to receive a lump sum distribution upon termination, you
will have to indicate this preference on the distribution election form.
Q. IF I DIE WITHIN THE THREE-YEAR PERIOD, WILL MY BENEFICIARIES BE ENTITLED TO
THE DEFERRAL MONIES IN MY ACCOUNT? DO I NEED TO IDENTIFY A SPECIFIC BENEFICIARY?
A. Yes. Your beneficiaries (or your estate) would receive a lump sum payout of
your deferral account. If you elect cash deferral, you will need to fill out
the enclosed beneficiary form and return it with your election form.
4
<PAGE>
ELECTION C - RP CONTINUITY PLAN
- --------------------------------
Q. IF I EXCHANGE MY RPR STOCK OPTIONS FOR RP OPTIONS, AM I AUTOMATICALLY VESTED
AND ARE THE OPTIONS EXERCISABLE AT ANY TIME?
A. Yes. Your exchanged options will vest upon receipt of your grant and will be
available for exercise. You will have the remaining life of your exchanged RPR
option in which to exercise. For example, if you exchange a four year old RPR
option for RP options, you would have six years in which to exercise the option
before it would expire, if you remain actively employed. (See below for other
circumstances).
Q. HOW WILL MY RPR STOCK OPTIONS BE CONVERTED INTO RP OPTIONS?
A. Your RPR options will be converted into RP options at the rate of 2.4 RP
stock options for each RPR stock option. The exercise price of the new RP
option will be equal to the exercise price of the RPR option to be converted,
divided by 2.4. An example has been included in the documentation describing
the RP Continuity Plan.
Q. HOW WAS THE CONVERSION RATE OF 2.4 RP OPTIONS FOR EACH RP OPTION ESTABLISHED?
A. The conversion rate was established by the tax authorities in France as
follows: The RPR tender price of $97 was converted into FF 593.83 (using an
exchange rate of 6.122) and then divided by the closing price of RP (FF 247.5),
on the Paris Bourse, as of the date of the offer (August 22, 1997). The
conversion is 593.83/247.5 = 2.4 RP options for each RPR option. The exercise
price of the new RP option would be the exercise price of the RPR option divided
by the conversion rate.
Q. CAN I EXCHANGE ALL MY RPR STOCK OPTIONS FOR RP STOCK OPTIONS?
A. No. Only stock options granted since Oct. 1, 1992 are eligible for exchange
into RP stock options.
Q. WHAT WILL BE THE PROCESS FOR EXERCISING RP STOCK OPTIONS?
A. Further communication regarding RP options will be provided when the grants
are made.
Q. IS THERE A LIMIT TO THE NUMBER OF RP SHARES AVAILABLE?
A. Yes.
Q. WHAT HAPPENS IF THE OPTION EXCHANGE IS OVER SUBSCRIBED?
A. If the option continuity plan is oversubscribed, we will look at all employee
elections by country to determine an equitable way to reduce the number. Any
possible reductions will be handled proportionately within a country.
Q. WHAT HAPPENS IF I DO NOT MAKE AN ALTERNATE ELECTION AND THE OPTION EXCHANGE
IS OVER-SUBSCRIBED?
A. Your outstanding options under each grant will be cashed out.
5
<PAGE>
ELECTION C - RP CONTINUITY PLAN (CONT'D)
- -----------------------------------------
Q. WHAT HAS BEEN THE AVERAGE RP STOCK PRICE WITHIN THE PAST YEAR?
A. Over the past year, RP ADRs (American Depository Receipts) have been trading
between $25 and $44.
Q. IF I LEAVE THE COMPANY, WILL MY RP OPTIONS EXPIRE?
A. If you voluntarily leave RPR, you will have six months in which to exercise
your options. However, if you are involuntarily terminated for reasons other
-------
than for cause, you will have the balance of the remaining life of the original
RPR option in which to exercise. All other current termination rules continue to
apply with respect to retirement, death and disability.
6
<PAGE>
ALTERNATIVE 2 - RP OPTION EXCHANGE (FRANCE)
Q. IF I EXCHANGE MY RPR STOCK OPTIONS FOR RP OPTIONS, AM I AUTOMATICALLY VESTED
AND ARE THE OPTIONS EXERCISABLE AT ANY TIME?
A. Yes. Your exchanged options will vest immediately, however you will be unable
to exercise the new RP stock option until the end of five years from the date
the original RPR stock option was awarded. You will have the remaining life of
your exchanged RPR option in which to exercise. For example, if you exchange a
four year old RPR option for RP options, you will be restricted from exercising
for one year and then you will have the remaining life of the option in which to
exercise.
Q. CAN I EXCHANGE ALL MY RPR STOCK OPTIONS FOR RP STOCK OPTIONS?
A. No. Only stock options granted less than five years ago are eligible for
exchange into RP stock options.
Q. CAN FRENCH STOCK OPTION HOLDERS EXERCISE THEIR CONVERTED RP STOCK OPTIONS AT
ANY TIME?
A. No. Although fully vested RP options cannot be exercised prior to 5 years
from the date of grant of the original RPR option that was exchanged, except in
the case of termination.
Q. WHAT WILL BE THE PROCESS FOR EXERCISING RP STOCK OPTIONS?
A. Further communication regarding RP options will be provided when the grants
are made.
Q. WHAT IS THE TOTAL NUMBER OF RP SHARES AVAILABLE?
A. A total of 5,000,000 shares will be available for exchange at a rate of 2.4
RP stock options for every 1 RPR stock option.
Q. WHAT HAPPENS IF THE OPTION EXCHANGE IS OVER SUBSCRIBED?
A. If more than 5,000,000 RP options are elected, we will look at all employee
elections by country to determine the best way to reduce the number back to
5,000,000. Any possible reductions will be handled proportionately within a
country.
Q. IS THERE A BENEFIT TO THE OPTION EXCHANGE?
A. Yes, If you elect to take cash rather than exchange your option, you will be
subject to higher taxation on your option gains including social charges of 23%.
Q. WHAT WILL HAPPEN IF I DO NOT RETURN MY ELECTION FORM?
A. If you do not return your election form, your options will be cashed out and
you will pay higher taxes and social charges.
Q. WHAT HAS BEEN THE AVERAGE RP STOCK PRICE WITHIN THE PAST YEAR?
A. Over the past year, RP ADRs have been trading between $25 and $44.
Q. IF I LEAVE THE COMPANY, WILL MY RP OPTIONS EXPIRE?
7
<PAGE>
A. If you voluntarily leave RPR, you will have six months in which to exercise
your options. However, if you are involuntarily terminated for reasons other
than for cause, you will have the life of the remaining life of the option in
which to exercise the option.
Q. WILL MY EXCHANGED OPTION HAVE A US DOLLAR EXERCISE PRICE OR A FRENCH FRANC
EXERCISE PRICE?
A. Your exchanged stock option will have a French Franc exercise price.
8
<PAGE>
Exhibit (g)(7)
<PAGE>
[STAMP OF OFFICE OF THE
PROTHONOTARY MONTGOMERY
COUNTY, PA 97 AUG 25 PM
2:14 APPEARS HERE]
--------------------------
By: Anthony Chu
--------------------------
Attorney I.D. 79645
-----------------
--------------------------
-------------------------- Attorney for Plaintiff
---------------------
IN THE COURT OF COMMON PLEAS OF MONTGOMERY COUNTY, PENNSYLVANIA
CIVIL ACTION - LAW
Patrick F. Columbo *
- --------------------------------
*
- -------------------------------- CLASS ACTION
v. * No. 97 15704
--------------
Rhone-Poulenc Rorer, Inc. *
- --------------------------------
et al. *
- --------------------------------
NOTICE
You have been sued in court. If you wish to defend against the claims set
forth in the following pages, you must take action within twenty (20) days after
this Complaint and notice are served, by entering a written appearance
personally or by attorney and filing in writing with the court your defenses or
objections to the claims set forth against you. You are warned that if you fail
to do so the case may proceed without you and a judgment may be entered against
you by the court without further notice for any money claimed in the Complaint
or for any other claim or relief requested by the plaintiff. You may lose money
or other rights important to you.
YOU SHOULD TAKE THIS PAPER TO YOUR LAWYER AT ONCE. IF YOU DO NOT HAVE A
LAWYER OR CANNOT AFFORD ONE, GO TO OR TELEPHONE THE OFFICE SET FORTH BELOW TO
FIND OUT WHERE YOU CAN GET LEGAL HELP.
Lawyer Reference Service
100 West Airy Street
Norristown, Pennsylvania 19401
Telephone (610) 279-9660
[STAMP OF LEGAL DEPT.
RECEIVED AUG 26, 1997
APPEARS HERE]
[STAMP OF RECEIVED
MONTGOMERY COUNTY
SHERIFFS DEPT.
97 AUG 25 PM 2:39
APPEARS HERE]
<PAGE>
SPECTOR & ROSEMAN, P.C.
BY: Robert M. Roseman
I.D. No.: 37989
BY: Anthony Chu
I.D. No.: 79645
2000 Market Street, 12th Floor
Philadelphia, PA 19103
(215) 864-2400
IN THE COURT OF COMMON PLEAS
OF MONTGOMERY COUNTY PENNSYLVANIA
- --------------------------------------X
PATRICK F. COLUMBO, :
:
Plaintiff, :
: CLASS ACTION COMPLAINT
v. : ----------------------
:
RHONE-POULENC RORER, INC., : CIVIL ACTION - LAW
RHONE-POULENC S.A., JEAN-MARC :
BRUEL, CHARLES-HENRI FILIPPI, : NO. 97-15704
E. MANFRED KAROBATH, JAMES S. :
RIEPE, ERIC I. TOPOL, M.D., : JURY TRIAL DEMANDED
ROBERT E. CAWTHORN, CLAUDE :
HELENE, JEAN-JAQUES BERTRAND, :
MICHEL DE ROSEN, DALE F. FREY, :
IGOR LANDAU, TIMOTHY ROTHWELL :
and JEAN-PIERRE TIROUFLET :
:
Defendants. :
- --------------------------------------X
Plaintiff, by his attorneys, for his Complaint alleges, upon information
and belief, except as to the allegations contained in paragraph 2, which
plaintiff alleges upon knowledge, as follows:
<PAGE>
NATURE OF ACTION
----------------
1. Plaintiff brings this class action on behalf of himself and all
other shareholders of defendant Rhone-Poulenc Rorer, Inc. ("Rorer" or the
"Company") similarly situated (the "Class") to enjoin defendants from
effectuating an unfair cash-out acquisition be Rhone-Poulenc S.A.
("Rhone-Poulenc"), designed to force the sale of minority shareholders' equity
interest in Rorer at a grossly inadequate and unfair price of $97 per share. As
set forth below, pursuant to the proposed tender offer, Rhone-Poulenc, which now
controls approximately 68% of the Company's total shares outstanding, will
acquire the remaining 32% equity interest in the Company. Moreover, the
acquisition proposal is manifestly unfair as it is below the fair market value
of the Company on a private market basis and/or as a multiple of said value,
according to independent valuations preformed by financial analysts familiar
with the Company and the pharmaceutical industry.
PARTIES
-------
2. Plaintiff Patrick F. Columbo, residing at 34 Sunset Ridge Road,
Franconia, New Hampshire, 03580, at all times relevent hereto, owned Rorer
common stock.
3. Defendant Rorer is a Pennsylvania corporation with its principal
executive offices located at 500 Arcola Road, Collegeville, Pennsylvania 19426.
Rorer is primarily engaged in the discovery, development and marketing of
pharmaceutical products for human use. As of February 28, 1997, the Company had
136.82 million shares of common stock outstanding. For the fiscal year ended
December 31, 1996, the Company reported net income of $473.5 million, or $3.16
per share, on revenues of $5.42 billion.
4. Defendent Rhone-Poulenc is a multinational conglomerate that
manufactures chemicals, polymers, fibers, pharmaceuticals and agricultural
chemicals. Rhone-Poulenc's
<PAGE>
principal place of business is 25 Quai Paul Doumer, 92408 Courbevoie Odax,
France. As of February 27, 1997, Rhone-Poulenc owned approximately 86.806
million shares, or 68.3% of Rorer common stock.
5. At all relevant times herein, defendant Michel de Rosen ("Rosen") was
Chief Executive Officer of the Company and Chairman of its Board of Directors
(the "Board"). Rosen is also a member of the Executive Committee of
Rhone-Poulenc.
6. At all relevant times herein, defendant Timothy J. Rothwell
("Rothwell") was President of Rorer, and a member of the Board.
7. At all relevant times herein, defendant E. Manford Karobath
("Karobath") was Executive Vice President of the Company and a member of the
Board.
8. At all relevant times herein, defendant Jean-Mare Bruel ("Bruel") was
Vice Chairman of Rhone-Poulenc Group, a member of Rhone-Poulenc's Executive
Committee, and a member of the Board.
9. At all relevant times herein, defendant Robert E. Cawthorn
("Cawthorn") was Chairman Emeritus of the Company and a member of the Board.
Cawthorn was Chief Executive Officer of the Company and Chairman of the Board
from 1986 to 1995.
10. At all relevant times hereto, defendant Claude Helms ("Helms") was
Vice President and director of Rhone-Poulenc, and a member of the Board.
11. At all relevant times hereto, Jean-Jaques Bertrand ("Bertrand") was
a member of the Board. From 1990 to 1993, Bertrand was an Executive Vice
President of the Company, and from 1987 to 1990 was a President at Rhone-Poulenc
Sante.
-3-
<PAGE>
12. At all relevant times hereto, defendant Igor Landau ("Landau") was a
member of Rhone-Poulenc's Executive Committee and a member of the Board.
13. At all relevant times hereto, defendant Jean-Pierre Tirouflet
("Tirouflet") was Chief Financial Officer of Rhone-Poulenc, a member of its
Executive Committee, and a member of the Board.
14. At all relevant times hereto, the following Individual Defendants were
also members of the Board of Rorer and/or committees thereof as follows:
(a) Defendant James S. Riepe ("Riepe") was a member of the Board and
a member of the Boards' Audit and Compensation Committees.
(b) Defendant Eric Topol ("Topol") was a member of the Board.
(c) Defendant Dale F. Frey ("Frey") was a member of the Board and a
member of the Boards' Audit and Nominating Committees.
(d) Defendant Charles-Henri Filippi ("Filippi") was a member of the
Board.
15. By virtue of their positions as directors and/or senior executive
officers of Rorer and their exercise of control over its business and corporate
affairs, defendants Rosen, Rothwell, Karobath, Bruel, Cawthorn, Helene,
Bertrand, Landau, Tirouflet, Riepe, Topol, Frey and Filippi (collectively the
"Individual Defendants") had, at all relevant times, the power to control and
influence, and did control and influence, and cause Rorer to engage in the
practices complained of herein.
16. Each Individual Defendant owes Rorer and its public stockholders
fiduciary obligations and is required to:
-4-
<PAGE>
(a) use his ability to control and manage Rorer in a fair, just and
equitable manner;
(b) maximize shareholder value;
(c) act in furtherance of the best interests of Rorer and its public
stockholders;
(d) govern Rorer in such a manner as to heed the expressed views of
its public shareholders;
(e) refrain from abusing his position of control;
(f) provide full disclosure to the public shareholders; and
(g) not favor his own or any other party's interests at the expense of
Rorer and its public shareholders.
17. At all relevant times hereto, defendant Rhone-Poulenc owned and
controlled approximately 68 percent of the outstanding shares of Rorer common
stock.
18. Rhone-Poulenc has failed to discharge its fiduciary duties to
plaintiff and the other members of the Class. Rhone-Poulenc exercises domination
and control over the affairs of Rorer by virtue of its representation on the
Company's thirteen member Board.
19. As a result of Rhone-Poulenc's domination and control over the Board,
said defendant has decided to sell to itself the remaining outstanding shares of
Rorer at a grossly inadequate price to the detriment of the other public
shareholders.
- 5 -
<PAGE>
CLASS ACTION ALLEGATIONS
------------------------
20. Plaintiff brings this action pursuant to Rule 1702 of the
Pennsylvania Rules of Civil Procedure, for declaratory, injunctive and other
relief on his own behalf and as a class action, on behalf of all public
stockholders of Rorer (except defendants herein and any person, firm, trust,
corporation or other entity related to or affiliated with any of the defendants)
and their successors in interest, who are being deprived of their equity
interest in Rorer and the opportunity to maximize the value of their Rorer
shares by the wrongful acts of the defendants described herein.
21. This action is properly maintainable as a class action for the
following reasons:
(a) The class of stockholders for whose benefit this action is
brought is so numerous that joinder of all class members is impracticable. As
of February 28, 1997 Rorer had approximately 136.8 million shares of common
stock duly issued and outstanding, which trade on the New York Stock Exchange,
and are owned by thousands of shareholders. Members of the Class are scattered
throughout the United States.
(b) There are questions of law and fact that are common to the
members of the Class and that predominate over any questions affecting any
individual members. The common questions include, inter alia, the following:
----- ----
(i) whether the defendants have engaged in conduct
constituting unfair dealing to the detriment of the public stockholders of
Rorer;
-6-
<PAGE>
(ii) whether the proposed acquisition proposal by Rhone-Poulenc of
$97 per share is unfair to the public stockholders of Rorer because it does
not constitute a fair price for the shares of the Company; and
(iii) whether the defendants have breached their fiduciary and common
law duties owned by them to plaintiff and the other members of the Class.
(c) The claims of plaintiff are typical of the claims of the other
members of the Class, and plaintiff has no interests that are adverse or
antagonistic to the interests of the Class.
(d) Plaintiff is committed to the vigorous prosecution of this action and
has retained competent counsel experienced in litigation of this nature.
Accordingly, plaintiff is an adequate representative of the Class and will
fairly and adequately protect the interests of the Class.
(e) The prosecution of separate actions by individual members of the
Class would create a risk of inconsistent or varying adjudications with respect
to individual members of the Class, and that would establish incompatible
standards of conduct for the party opposing the Class.
(f) Defendants have acted, and are about to act, on grounds generally
applicable to the Class, thereby making appropriate final injunctive or
corresponding declaratory relief with respect to the Class as a whole.
-7-
<PAGE>
(g) Plaintiff anticipates that there will be no difficulty in
the management of this litigation. A class action would provide a fair
and efficient method for the adjudication of this controversy.
CLAIM FOR RELIEF
----------------
22. Rorer is a corporation duly organized and existing under the laws
of the Commonwealth of Pennsylvania and maintains its principal executive
offices at 500 Arcola Road, Collegeville, Pennsylvania 19242. Rorer is primarily
engaged in the development, manufacture, and marketing of a line of
pharmaceutical products, including prescription drugs, over-the-counter
medicines and plasma-derived products. Rorer is a majority-owned subsidiary of
Rhone-Poulenc.
23. Rorer has approximately 136.8 million shares of common stock
outstanding, of which approximately 62.3% are owned by Rhone-Poulenc. The
remaining approximately 42 million shares are held by at least several hundred
public shareholders of record other than defendants.
24. The Company's products are focused in the high-growth area of the
respiratory, cardiovascular and oncology markets. In 1995 and 1996, the
Company's common stock was the best performing stock in the S&P pharmaceutical
stock universe, with a total average annual return of 35.2%. The stellar
performance of the Company's common stock mirrored the strong performance of its
key products, such as Lovenox, which in 1996 showed
-8-
<PAGE>
revenue growth of 49%, and Nasacort, which in the same period showed revenue
growth of 40%.
25. However, the Company quickly and unexpectedly found itself in a crisis
when concerns were raised that two of its plasma-based products, Albuminar and
Plasma Plex, may have been contaminated by bacteria.
26. In March, 1997, Rorer announced that Centeon, LLC ("Centeon"), which
is a joint venture between the Company and Hoechst A.G. established to
manufacture plasma products, would temporarily cease manufacturing its two
products to allow for "full implementation of new production improvements." The
cessation of manufacturing at Centeon followed a worldwide recall of Albuminar
and Plasma Plex due to fears of bacterial contamination, which in turn spurred
an investigation by the Food and Drug Administration.
27. In response to the shut-down at Centeon, the price of Rorer common
stock began to lag the market significantly and, by late April 1997, Rorer's
common stock was trading at a discount to its peer group and approximately 15%
below its 1996 closing price.
28. Analysis, however, viewed the Company's problems at Centeon as a
"one-time event" and continued to view favorably Rorer's future. Indeed, in a
report dated April 16, 1997, issued by Morgan Stanley & Co., investors were
informed that Rorer's stock would be "materially higher" in a year or two. The
-----------------
report stated:
We view this Centeon situation as a one-time event -- just
painfully protracted, as was Warner-Lambert's Puerto Rican
problem four years ago. Were it not for the improving core
--------------
fundamentals, we would be less patient. In this case, RPR
-----------
remains a peripheral name, representing good value, in our
view;
-9-
<PAGE>
in a year or two, the stock should be materially higher (emphasis
-------------------------------------------------------
added).
29. On June 26, 1997, in order to take advantage of Rorer's temporarily
depressed stock price, Rhone-Poulenc announced it was considering an offer (the
"Offer") to acquire all of the shares of Rorer it does not already own in a cash
transaction whereby Rhone-Poulenc would pay $92.00 cash for each of such shares.
30. Finally, on August 20, 1997, Rhone-Poulenc and the Company announced
that a definitive agreement had been approved and signed by both parties whereby
Rhone-Poulenc would acquire the remaining shares of the Company in a tender
offer (the "Tender Offer") at $97 per share.
31. Shareholders and analysts of Rhone-Poulenc applauded the "excellent
price" that Rhone-Poulenc was able to negotiate for itself, believing that
Rhone-Poulenc would need to pay $110 per share to acquire Rorer at fair market
value, and in response the public shares of Rhone-Poulenc quickly rose 6.2% on
heavy trading in Paris.
32. Shareholders and analysts of Rorer, however, were deeply dismayed.
Many Rorer analysts had valued the Company at least $100 per share, while one
prominent pharmaceutical analyst, as reported by Bloomberg News on August 13,
--------------
1997, valued the Company at $105 per share.
33. Rhone-Poulenc is taking advantage of its majority stock ownership
position in Rorer by imposing the inadequate Tender Offer on Rorer's public
stockholders.
34. The Tender Offer is part of a sweeping corporate overhaul of
Rhone-Poulenc, meant to benefit solely Rhone-Poulenc.
- 10 -
<PAGE>
35. Pursuant to the planned overhaul, Rhone-Poulenc intends to spin
off its chemical, fibers, and polymer operations, in order to become one of the
world's biggest pharmaceutical companies, by combining Rorer's business with
Rhone-Poulenc's vaccine and animal health businesses.
36. According to an article in The Wall Street Journal dated June 27,
-----------------------
1997, the chemical business has been less profitable than the pharmaceutical
business and has weighed down Rhone-Poulenc's profits and price share. Thus,
Rhone-Poulenc's plan is to divest itself of its less profitable businesses and,
taking advantage of its dominant position over Rorer, as well as Rorer's
temporarily depressed share price, acquire from the public shareholders of
Rorer, at an inadequate consideration, Rorer's more profitable pharmaceutical
business.
37. Given Rhone-Poulenc's domination and control of Rorer, the Rorer
Board cannot be expected to act independently and advocate the best interests of
Rorer's public shareholders.
38. By virtue of its control and domination of Rorer, Rhone-Poulenc
has unique knowledge of the Company and has access to information denied or
unavailable to the public.
39. Given the domination and control of Rorer, the Individual
Defendants cannot be expected to negotiate for the best and highest price for
Rorer's public shareholders.
40. In view of defendant Rhone-Poulenc's control of Rorer, it is
unfair and in violation of defendants' fiduciary duties to consummate the
transaction without first obtaining a recommendation and input by a truly
independent representative of the public stockholders or obtaining the majority
approval of the public stockholders.
-11-
<PAGE>
41. By virtue of the acts and conduct alleged herein, the defendants
are carrying out a preconceived plan whereby Rhone-Poulenc will acquire the
minority public shares of Rorer pursuant to a price that is grossly inadequate
and intrinsically unfair to Rorer public shareholders, is substantially below
true value, and is a product of defendants' conflicts of interest. As a result,
the public common stockholders of Rorer will be wrongfully deprived of their
valuable investment in the Company and all of its present and continuing
profitability and growth and will receive, in return for their investment,
grossly inadequate consideration.
42. The proposed Tender Offer constitutes an improper and unlawful
attempt by the defendants unfairly to cash-out the minority shareholders of
Rorer.
43. Unless enjoined by this Court, defendants will continue to breach
fiduciary duties owed to plaintiff and the other members of the Class, and will
succeed in consummating an unfair transaction by virtue of the unfair dealing
complained of herein, all to the irreparable harm of the Class.
44. Plaintiff and the other members of the Class have no adequate
remedy at law.
WHEREFORE, plaintiff demands judgement and relief in his favor and in
favor of the Class and against defendants, as follows:
A. Declaring that this action be certified as a proper class actions
and certifying plaintiff as a class representative;
B. Declaring that the defendants and each of them have committed a
gross abuse of trust and have breached their fiduciary duties to plaintiff and
other members of the class;
-12-
<PAGE>
C. Preliminarily and permanently enjoining defendants and their counsel,
agents, employees and all persons acting under, in concert with, or for them,
from proceeding with, consummating or closing the proposed Tender Offer that
will irreparably harm plaintiff and the Class;
D. In the event the Tender Offer is consummated, rescinding it and setting
it aside and/or granting rescissory damages;
E. Awarding compensatory damages in excess of Fifty Thousand ($50,000.00)
dollars or the mandatory compulsory arbitration limits, whichever is greater.
F. Awarding the costs and disbursements of this action;
G. Awarding plaintiff counsel fees; and
H. Awarding such other and further relief which the Court may deem just
and proper.
Dated: August 25, 1997
SPECTOR & ROSEMAN
/s/ Anthony Chu
-----------------------
Robert M. Roseman
Anthony Chu
2000 Market Street
Philadelphia, PA 19103
(215) 864-2400
-13-
<PAGE>
OF COUNSEL:
BERNSTEIN LITOWITZ BERGER
& GROSSMANN LLP
Vincent R. Cappucci
Kevin M. McGee
1285 Avenue of the Americas
New York, New York 10019
(212) 554-1400
MAGER LIEBENBERG & WHITE
Ann D. White
Two Penn Center Plaza
Philadelphia, PA 19102
(215) 569-6921
-14-
