PRELIMINARY PROXY STATEMENT
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON MARCH 31, 2000
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(a) of the
Securities Exchange Act of 1934.
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6 (e) (2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Under Rule 14a-12
DEXTER CORPORATION
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
INTERNATIONAL SPECIALTY PRODUCTS INC.
ISP INVESTMENTS INC.
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(NAME OF PERSON (S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(I) (1) and
0-11.
1) Title of each class of securities to which transaction
applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
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NY2:\881389\16\$W3116!.DOC\54104.0016
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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[_] Fee paid previously with preliminary materials:
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[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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PRELIMINARY PROXY MATERIALS DATED MARCH 31, 2000
SUBJECT TO COMPLETION
[The information included herein is as it is expected to be when the definitive
proxy statement is mailed to shareholders of Dexter Corporation. This proxy
statement will be revised to reflect actual facts at the time of the filing of
the definitive proxy statement.]
No GOLD Proxy Card is included with these materials.
PROXY STATEMENT
OF INTERNATIONAL SPECIALTY PRODUCTS INC.
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2000 ANNUAL MEETING OF THE SHAREHOLDERS
OF DEXTER CORPORATION
--------------------------
We are sending this proxy statement to you as one of the
holders of common stock, par value $1.00 per share, of Dexter Corporation, a
Connecticut corporation, in connection with our solicitation of your proxy for
use at the 2000 Annual Meeting of the Shareholders of Dexter scheduled for 10:00
A.M., local time, on Thursday, April 27, 2000, at The Hartford Club, 46 Prospect
Street, Hartford, Connecticut and at any adjournments or postponements thereof.
We are International Specialty Products Inc. and its wholly owned subsidiary ISP
Investments Inc., each a Delaware corporation, and beneficially own 9.98% of
Dexter's outstanding shares of common stock.
On December 14, 1999, we proposed to Dexter a business
combination (the "ISP Proposal") in which all Dexter shareholders would receive
at least $45 per share in cash, subject to the execution of a mutually
acceptable merger agreement. Although we indicated a willingness to pay more if
Dexter provided us with additional information that justified an increased
price, Dexter's Board rejected our proposal without negotiation. Soon
thereafter, Dexter offered to purchase our shares of Life Technologies, Inc., a
majority-owned subsidiary of Dexter, which offer we rejected. We believe that
Dexter made its offer in an attempt to deter us from pursuing the ISP Proposal.
Following the public announcement of our proxy
solicitation, Dexter announced that it would allow us to review certain
non-public information concerning Dexter and Life Technologies to determine
whether we would be willing to increase our $45 per share proposal, but stated
that "we have made no decision to sell the Company and no one else will be
invited into the data room." Less than three weeks later, Dexter issued a press
release in which it announced that it would "institute a process in which we
will survey all of the Company's available options" and invite other parties
into the data room, but again emphasized that its Board "has made no decision to
sell the Company at this time."
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On March 23, 2000, we announced an increase in the ISP
Proposal to $50 per share in cash and further indicated that we had obtained a
commitment from The Chase Manhattan Bank to provide credit facilities to finance
the business combination contemplated by the ISP Proposal. ISP's $50 per share
price represents a 53% premium over Dexter's closing price immediately prior to
our initial $45 per share proposal made on December 14, 1999 (Dexter's share
price has increased since we made our initial $45 per share proposal, and closed
on the NYSE at $53 1/8 per share on March 30, 2000, the most recent trading day
prior to the printing of this proxy statement). You can obtain a current
quotation for Dexter's share price prior to voting at the 2000 Annual Meeting or
granting your proxy. In addition, we informed Dexter that if it cooperated with
us in connection with the balance of our due diligence review of the company and
could demonstrate that the value of the company would justify a higher price, we
would consider a further increase in the price of the ISP Proposal. You should
know that, to date, Dexter has not entered into negotiations with us relating to
the ISP Proposal.
Based on the statements and conduct of the Dexter Board
described above, we believe that Dexter's incumbent directors have not committed
to pursue the ISP Proposal or a superior proposal. We are now asking you to
elect our nominees and approve several proposals intended to facilitate the ISP
Proposal or a superior proposal. You should note that there can be no assurance
that the adoption of our proposals will ensure the consummation of such a
transaction.
OUR NOMINEE ELECTION PROPOSALS:
We are proposing to amend the Dexter Bylaws to increase the
size of Dexter's Board to seventeen directors and are nominating ten persons for
election as directors. Our nominees are committed to pursue the ISP Proposal or
a superior proposal and, if elected, would constitute a majority of Dexter's
Board. Our nominees, if elected, and Dexter's incumbent directors, if
re-elected, would each owe the same fiduciary duties to Dexter shareholders.
OUR SHAREHOLDER RIGHTS PROPOSALS:
We believe that Dexter shareholders - the owners of the
corporation - should be permitted to consider the merits of any offer for their
shares. Accordingly, we are proposing that the Dexter Bylaws be amended to
require Dexter's Board to implement any special resolution passed by Dexter
shareholders directing Dexter's Board to redeem the rights issued under Dexter's
"poison pill" shareholder rights plan (the "Rights Agreement") or to amend the
Rights Agreement to render it inapplicable to types of offers or transactions
specified in any such resolution. Furthermore, in connection with this Bylaw
amendment, we seek your approval of a special resolution directing Dexter's
Board to amend the Rights Agreement promptly to make it inapplicable to any
offer to purchase all shares of Dexter for at least $45 per share in cash.
Although we have increased the price of the ISP Proposal to $50 per share in
cash, we have not similarly amended our proposed special resolution because
Dexter has refused to assure us that such amendment would be deemed timely made
under Dexter's bylaws. Accordingly, if each of our Shareholder Rights Proposals
is adopted, the Rights Agreement will not provide shareholder protection for
proposals to acquire all Dexter shares for at least $45 per share in cash,
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including certain offers that are lower than our $50 per share proposal. The
Shareholder Rights Proposals, if adopted, will also allow the Dexter
shareholders to decide whether Dexter's Board can adopt any future "poison pill"
shareholder rights plans.
OUR VOTING RIGHTS PROPOSALS:
In order to minimize any attempt by Dexter's Board to
frustrate the consideration or implementation of our proposals, we are also
proposing to repeal any Bylaw amendments that may be unilaterally adopted by
Dexter's Board between February 26, 1999 and the date of the 2000 Annual
Meeting. Finally, we are proposing a resolution to set the order in which our
proposals will be voted upon at the 2000 Annual Meeting.
[THIS PROXY STATEMENT AND THE GOLD PROXY CARD ARE FIRST BEING FURNISHED TO
SHAREHOLDERS ON OR ABOUT MARCH __, 2000].
WE URGE YOU TO SIGN, DATE AND RETURN THE GOLD PROXY CARD IN FAVOR OF THE
ELECTION OF OUR NOMINEES AND THE ADOPTION OF THE PROPOSALS DESCRIBED IN THIS
PROXY STATEMENT.
IF YOU HAVE ALREADY SENT A WHITE PROXY CARD TO THE DEXTER DIRECTORS, YOU MAY
REVOKE THAT PROXY AND VOTE AGAINST THE ELECTION OF DEXTER'S NOMINEES AND
PROPOSALS BY SIGNING, DATING AND RETURNING THE ENCLOSED GOLD PROXY CARD. THE
LATEST DATED PROXY IS THE ONLY ONE THAT COUNTS. ANY PROXY MAY BE REVOKED AT ANY
TIME PRIOR TO THE 2000 ANNUAL MEETING BY DELIVERING A WRITTEN NOTICE OF
REVOCATION OR A LATER DATED PROXY FOR THE 2000 ANNUAL MEETING TO INNISFREE M&A
INCORPORATED OR TO THE SECRETARY OF DEXTER, OR BY VOTING IN PERSON AT THE 2000
ANNUAL MEETING. SEE "VOTING PROCEDURES" ON PAGE 51.
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QUESTIONS AND ANSWERS ABOUT THIS PROXY SOLICITATION
Q: WHO IS SOLICITING YOUR PROXY?
A: We are International Specialty Products Inc. ("ISP") and its wholly
owned subsidiary ISP Investments Inc. As of the date of this proxy
statement, we beneficially own 2,299,200 shares of Dexter's common
stock, representing approximately 9.98% of the outstanding shares. In
addition, on such date we, together with our reporting "group" for
Schedule 13D purposes, beneficially own 5,417,991 shares of common stock
of Life Technologies, representing approximately 21.7% of the
outstanding shares of Life Technologies. We are a multinational
manufacturer of specialty chemicals and mineral products. For more
information on participants in our proxy solicitation, please see
"Certain Information Concerning the Participants" on page 55.
Q: WHY ARE WE SOLICITING YOUR PROXY?
A: As Dexter's largest shareholder and an investor in the company's shares
since September 1998, we have been dissatisfied with Dexter's share
price performance and the recent conduct of Dexter's Board described
below. This has led us to engage in this proxy fight to protect the
value of our and your investment in Dexter. Although subsequent to the
public announcement of our initial $45 per share proposal and our proxy
solicitation, Dexter's Board appears to have moderated somewhat its
previous hard-line stance, Dexter's directors -- unlike our nominees --
have not committed to pursue the ISP Proposal or a superior proposal.
1. On October 4, 1999, one week after we announced that we had
acquired 9.98% of the outstanding common stock of Dexter,
Dexter's Board amended the company's poison pill Rights
Agreement to lower the threshold of beneficial ownership that
will automatically trigger the defensive provisions of the
Rights Agreement from 20% to 11%.
2. On December 3, 1999, we discussed with Dexter's
representatives our view that Life Technologies, with its
higher growth and higher margins, can better fulfill its
potential as an independent entity, or in combination with
another similarly strategically situated company, rather than
in combination with Dexter. We therefore recommended that it
would be in the best interests of both companies and their
respective shareholders if Dexter and Life Technologies were
independent corporate entities. Dexter did not respond to our
recommendation.
3. After Dexter failed to respond to our recommendation, we
proposed a business combination in which all holders of Dexter
common stock would receive at least $45 per share in cash,
subject to the execution of a mutually acceptable merger
agreement. Although we indicated a willingness to pay more if
Dexter provided us with additional information that justified
an increased price, Dexter's Board rejected our initial
proposal without negotiation. By not approving the ISP
Proposal, Dexter's Board has effectively deprived you of the
right to consider for yourself whether or not to accept our
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acquisition proposal. It would be uneconomical for us or any
other person to make an offer directly to the Dexter
shareholders, due to the "poison pill" rights (the "Rights")
which would be automatically triggered by a purchase of shares
under such an offer unless, under a recently-created exception
described below, Dexter's Board or its financial advisors take
action. In addition, under Connecticut law, in the absence of
Board approval, a person who acquires more than 10% of the
outstanding voting stock of a Connecticut corporation in a
tender offer is prohibited from effecting a merger to acquire
the shares not tendered for a five year period.
4. On January 27, 2000, we informed Dexter that we believed that
the failure of Dexter's Board to encourage negotiation of the
ISP Proposal left us "with no choice but to take our proposal
directly to our fellow shareholders," and announced our
intention to present the proposals contained in this proxy
statement at the 2000 Annual Meeting.
5. Following the public announcement of the ISP Proposal and our
proxy solicitation, on February 9, 2000, Dexter's Board took
the following actions:
(a) Dexter announced that it had amended its Rights
Agreement to make the poison pill Rights
inapplicable to any offer which is for all
shares, is substantially unconditional, remains
available to shareholders for 60 days, is
supported by firm financing commitments and is
for a price which is, in the opinion of Dexter's
financial advisor, fair from a financial point of
view; and
(b) Dexter announced that it would allow us to review
certain non-public information concerning Dexter
and Life Technologies to determine whether we
would be willing to increase our initial $45 per
share proposal, but stated, "we have made no
decision to sell the company or to explore a sale
of the company or to test the market ... and no
one else will be invited into the data room."
6. On February 28, 2000, Dexter announced that it would
"institute a process in which we will survey all of the
Company's available options" and invite other parties into the
data room. However, Dexter again emphasized that its Board
"has made no decision to sell the Company at this time."
7. On March 23, 2000, we announced an increase in the ISP
Proposal to $50 per share in cash and further indicated that
we had obtained a commitment from The Chase Manhattan Bank to
provide credit facilities to finance the business combination
contemplated by the ISP Proposal. ISP's $50 per share price
represents a 53% premium over Dexter's closing price
immediately prior to our initial $45 per share proposal made
on December 14, 1999 (Dexter's share price has increased since
we made our initial $45 per share proposal, and closed on the
NYSE at $53 1/8 per share on March 30, 2000, the most recent
trading day prior to the printing of this proxy statement).
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You can obtain a current quotation for Dexter's share price
prior to voting at the 2000 Annual Meeting or granting your
proxy. In addition, we informed Dexter that if it cooperated
with us in connection with the balance of our due diligence
review of the company and could demonstrate that the value of
the company would justify a higher price, we would consider a
further increase in the price of the ISP Proposal. You should
know that, to date, Dexter has not entered into negotiations
with us relating to the ISP Proposal.
In short, we believe that the actions recently taken by Dexter's Board
described above were taken only under the pressure of our proxy
solicitation and underscore the urgent need for the adoption of our
proposals. In our opinion, the changes to Dexter's poison pill are not
satisfactory in that they still do not permit shareholder choice, but
leave the decision as to whether shareholders should be permitted to
consider an offer in the hands of Dexter's Board or its hand-picked
financial advisors. In addition, , Dexter's Board, to date, has made no
determination to sell the Company. We are seeking your proxy to vote in
favor of the adoption of our Nominee Election Proposals, Shareholder
Rights Proposals and Voting Rights Proposals described in this document,
because we believe that each of these proposals will facilitate the ISP
Proposal or a superior proposal. If you grant us your proxy, we will
also be entitled to vote your shares in our discretion on matters
incident to the conduct of the 2000 Annual Meeting and on other matters
brought to a vote at the meeting for which we have not yet been given
notice.
Q: WHY ARE WE ASKING YOU TO INCREASE THE SIZE OF DEXTER'S BOARD AND ELECT
OUR NOMINEES?
A: We are soliciting your proxy in favor of increasing the size of Dexter's
Board so that you will have the opportunity to elect, as a majority of
Dexter's Board of Directors, persons who are committed to pursue the ISP
Proposal or a superior proposal. Dexter is currently proposing that only
three of the ten current directors will stand for election at the 2000
Annual Meeting. We are proposing to increase the number of directors
from its current number of ten to seventeen, so that a total of ten
directors will be elected by Dexter shareholders at the 2000 Annual
Meeting. If all of our nominees are elected, a majority of Dexter's
directors would not be continuing incumbents and a lack of continuity in
Dexter's corporate policy and governance may occur. However, our
nominees, if elected, and Dexter's incumbent directors, if re-elected,
would each owe the same fiduciary duties to Dexter shareholders.
Q: WHO ARE THE NOMINEES?
A: Our nominees include eight independent persons who are not affiliated
with ISP and two persons who are affiliates of ISP, all of whom are
well-respected members of the business and legal community. Our
nominees, unlike Dexter's incumbent directors, are committed to pursue
the ISP Proposal or a superior proposal. Two of our nominees, Samuel J.
Heyman and Sunil Kumar, are affiliates of ISP. Mr. Heyman is the
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Chairman of the Board of ISP and Mr. Kumar is President and Chief
Executive Officer of ISP. If elected to Dexter's Board, Messrs. Heyman
and Kumar would not participate in any Board action relating to the ISP
Proposal or any other business combination transaction while our
acquisition proposal remains in effect, and would act in accordance with
their fiduciary duties to Dexter shareholders with respect to any action
they do take as directors. We have no reason to believe that any of our
nominees will be disqualified or unable or unwilling to serve if
elected. However, if any of our nominees are unable to serve or for good
cause will not serve, proxies may be voted for another person nominated
by ISP to fill the vacancy.
Q: WHY SHOULD SHAREHOLDERS DETERMINE IF THE POISON PILL RIGHTS AGREEMENT
SHOULD BE AMENDED OR REDEEMED?
A: In 1996, Dexter's Board adopted the Rights Agreement, dated as of August
23, 1996, by and between Dexter and ChaseMellon Shareholder Services,
L.L.C. The poison pill Rights issued under the Rights Agreement permit
Dexter shareholders to purchase shares of Dexter common stock, or shares
of an acquiring company's common stock, at less than market prices, if,
among other things, persons not approved by Dexter's Board acquire
beneficial ownership of 11% or more of Dexter's common stock, unless the
offer falls within the recently-created exception requiring a fairness
determination by Dexter's financial advisor. No action is required to
trigger the exercisability of the Rights, once the threshold of
ownership has been passed. Currently, any person or group who acquires
beneficial ownership of 11% or more of Dexter's outstanding shares of
common stock without Board approval or a fairness determination by
Dexter's financial advisor and who cannot, like institutional investors
and certain other parties, take advantage of an exception in the Rights
Agreement applicable to "passive investors," will experience immediate
and substantial economic and voting power dilution, because the poison
pill rights issued to each other holder of Dexter common stock under the
Rights Agreement would become automatically exercisable to purchase
additional shares of common stock for each share then outstanding, at
one-half the current market price, from and after the date of such
threshold acquisition.
In its current form, we believe that the Rights Agreement is harmful to
your interests as a shareholder because it is a device that provides
Dexter's Board with the power to block a transaction which could be
economically beneficial to you, unless the offer falls within a limited,
recently-created exception requiring, among other things, a fairness
determination by Dexter's financial advisors. Our proposed Bylaw
amendment would require Dexter's Board to follow the direction of a
majority of Dexter shareholders by redeeming the Rights or amending the
Rights Agreement to render it inapplicable to types of offers or
transactions specified by Dexter shareholders. In addition, Dexter's
Board would be required to seek shareholder approval prior to adopting a
new "poison pill" shareholder rights plan. As discussed below, we are
also proposing that you direct Dexter's Board to amend the Rights
Agreement now.
We believe that you should be permitted to consider for yourself the
merits of offers for your shares. However, we note that proponents of
poison pills claim that plans such as the Rights Agreement provide
boards of directors with time to respond to unsolicited bids in an
orderly manner and provide incentives for a potential bidder to
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negotiate with the board, thereby potentially leading to a higher price
for shareholders. If our Bylaw proposal and the shareholder resolution
described below are adopted, the potential benefits of the Rights
Agreement will no longer apply to any proposal for all shares for at
least $45 in cash.
Q: WHY DO WE WANT DEXTER'S BOARD TO AMEND DEXTER'S POISON PILL RIGHTS
AGREEMENT NOW?
A: On December 14, 1999, we proposed a business combination in which Dexter
shareholders would receive at least $45 per share in cash, subject to
the execution of a mutually acceptable merger agreement. Dexter's Board
rejected our initial $45 per share proposal without negotiation. On
March 23, 2000, we increased our proposal to $50 per share in cash.
Because Dexter's poison pill rights would be triggered by most
acquisitions of 11% or more of Dexter's shares, it would be uneconomical
for us or any third party to make an offer directly to Dexter
shareholders over the current Board's refusal, unless the offer falls
within a limited, recently-created exception requiring, among other
things, a fairness determination by Dexter's financial advisors.
It should be noted that Dexter's Board rejected our initial $45 per
share proposal as inadequate, we have subsequently increased our
proposal to $50 per share, and Dexter has not disclosed what price
Dexter's financial advisors would deem fair. We have not amended our
proposed shareholder resolution to reflect our increased $50 per share
bid because Dexter has refused to assure us that such amendment would be
deemed timely made under Dexter's bylaws. Accordingly, if each of our
Shareholder Rights Proposals is adopted, the Rights Agreement will not
provide shareholder protection for proposals to acquire all Dexter
shares for at least $45 per share in cash, including certain offers that
are lower than our $50 per share proposal. However, we believe that the
shareholder resolution we propose, which would require Dexter's Board to
amend the Rights Agreement to make it inapplicable to any offer for all
outstanding shares of Dexter for at least $45 per share in cash, would
send a clear message to Dexter's Board that it should pursue offers of
at least $45 per share and would end the uncertainty as to the minimum
bid required to make the poison pill Rights inapplicable.
Q: WHAT WILL HAPPEN IF THE POISON PILL RIGHTS AGREEMENT IS INVALIDATED IN
COURT?
A: We have commenced litigation seeking to invalidate the Rights Agreement
under Connecticut law. If the Rights Agreement is invalidated, it will
no longer be an obstacle to stock accumulations or offers at any price
and no longer would provide the protections referred to above, as
advocated by poison pill proponents. If the Rights Agreement is
judicially invalidated prior to the 2000 Annual Meeting, we will
withdraw our Shareholder Rights Proposals.
Q: IS ISP PREPARED TO ACQUIRE DEXTER?
A: We are prepared to promptly negotiate and execute a mutually acceptable
merger agreement with Dexter. We have obtained a commitment from The
Chase Manhattan Bank to provide senior credit facilities in the
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aggregate amount of $1,825,000,000 to, among other things, finance the
acquisition of Dexter, refinance certain existing indebtedness and
provide working capital following the acquisition. See "Description of
Credit Facilities."
Q: WHY ARE YOU PROPOSING TO REPEAL BYLAWS ADOPTED BY DEXTER'S BOARD?
A: We propose to repeal any Bylaw amendments adopted by Dexter's Board
between February 26, 1999 and the date of the 2000 Annual Meeting. We
are not aware of any amendments made between February 26 and now. We
believe that any Bylaw amendments adopted by Dexter's Board prior to the
2000 Annual Meeting are likely to be aimed at frustrating our proposals
and therefore are not likely to be in the best interests of the Dexter
shareholders. Any Bylaw amendments validly adopted by Dexter's Board
prior to the Annual Meeting would remain in effect unless and until our
proposal to repeal such Bylaws is adopted. If Dexter's Board adopts any
such Bylaw amendments before the 2000 Annual Meeting, it will have an
opportunity to inform shareholders of the benefits of these amendments
and to attempt to persuade shareholders to vote against this proposal.
Q: WHO CAN VOTE AT THE 2000 ANNUAL MEETING?
A: If you owned Dexter shares on February 25, 2000 (the "Record Date"), you
have the right to vote at the 2000 Annual Meeting. We believe that as of
the close of business on the Record Date, there were 23,058,969 shares
of common stock of Dexter issued and outstanding and entitled to vote.
Shareholders have one vote for each share of common stock they own with
respect to all matters to be considered at the 2000 Annual Meeting.
Q: HOW MANY SHARES MUST BE VOTED IN FAVOR OF THE PROPOSALS TO EFFECT THEM?
A: Assuming that a quorum, defined as holders of not less than a majority
of the shares of Common Stock outstanding and entitled to vote, is
present in person or by proxy at the 2000 Annual Meeting, our proposals
can be adopted by the following votes:
Nominee Proposals -- Election of our nominees will require the
affirmative vote of a plurality of the votes cast. The election of our
nominees for seven newly-created directorships will not be effective
unless our proposed Bylaw amendment increasing the size of Dexter's
Board is adopted.
Proposals Requiring Bylaw Amendments -- We believe that our proposals
involving amendments to the Dexter Bylaws will be approved if the votes
cast for each respective proposal exceed the votes cast against the
respective proposal. Accordingly, our Bylaw amendment proposals could be
approved by less than a majority of the issued and outstanding shares of
common stock once a quorum is present at the 2000 Annual Meeting. We
have received the opinion of our Connecticut counsel, Levett Rockwood
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P.C., that, to the extent the Dexter Bylaws may require a two-thirds
supermajority shareholder vote for an amendment, such provision is
invalid under Connecticut law. Levett Rockwood P.C. has consented to the
use of its name and the reference to its opinion in this Proxy
Statement. We have also instituted litigation seeking to have any such
supermajority amendment requirement held ineffective. See "Certain
Litigation." If the Bylaws are held to contain an effective
supermajority shareholder voting requirement, our proposals involving
Bylaw amendments would each require the affirmative vote of the holders
of two-thirds of the issued and outstanding shares of common stock.
Proposals Not Requiring Bylaw Amendments -- Adoption of our shareholder
resolution requiring Dexter's Board to amend the Rights Agreement and
our Omnibus Proposal providing the order for voting at the 2000 Annual
Meeting will be approved if the votes cast for the respective proposals
exceed the votes cast against the respective proposals. Accordingly,
these proposals could be adopted by less than a majority of the issued
and outstanding shares of common stock once a quorum is present at the
2000 Annual Meeting. The shareholder resolution as to the Rights
Agreement will not be effective unless our related Bylaw amendment is
adopted.
Dexter has not included our Board Size Bylaw Proposal and Additional
Directors Election Proposal on its proxy cards and has stated that no
action will be taken on them at the 2000 Annual Meeting. A proxy will be
counted as present for purposes of a quorum on each matter for which
such proxy confers the right to vote. Dexter has stated that its
representatives intend to exercise discretionary authority to vote
proxies submitted on the Dexter proxy card even with respect to
proposals that are omitted from the cards. If Dexter takes such an
action, we plan to challenge through litigation the validity of such
proxies with respect to such proposals.
Q: WHAT WILL HAPPEN IF DEXTER SUCCESSFULLY INVALIDATES CERTAIN OF OUR
PROPOSALS IN COURT?
A: Dexter has asserted that our proposals to increase the size of Dexter's
Board and elect seven additional directors at the 2000 Annual Meeting
are invalid. Dexter also has asserted that our Shareholder Rights
Proposals are invalid, and that it will not implement these proposals
even if they are adopted by the Dexter shareholders. In connection with
our proposals, we have filed a complaint with the United States District
Court for the District of Connecticut in which we are seeking, among
other things, a declaratory judgment that our Nominee Election
Proposals, Shareholder Rights Proposals and Voting Rights Proposals are
valid under Connecticut law. See "Certain Litigation." Insofar as there
is a lack of direct Connecticut case law to either substantiate or
contradict the validity of the proposals challenged by Dexter, the
courts will ultimately determine the legality and enforceability under
Connecticut law of such proposals. We intend to present all of our
proposals at the 2000 Annual Meeting. If, after the 2000 Annual Meeting,
any of our proposals were to be finally adjudicated as invalid under
Connecticut law, such proposal, even if adopted, would then not be
effective. If there was a final adjudication prior to the 2000 Annual
Meeting holding that any proposal was invalid, we would not present such
proposal at the 2000 Annual Meeting.
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Q: WHAT SHOULD YOU DO TO VOTE?
A: Sign, date and return the enclosed GOLD Proxy card TODAY in the envelope
provided. For more information on how to vote your shares, please see
"Voting Procedures" on page 31.
Q: WHO DO YOU CALL IF YOU HAVE QUESTIONS ABOUT THE SOLICITATION?
A: Please call Innisfree M&A Incorporated toll free at (888) 750-5834.
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IMPORTANT
PLEASE REVIEW THIS DOCUMENT AND THE ENCLOSED MATERIALS
CAREFULLY. YOUR VOTE IS VERY IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES YOU
OWN.
1. If your shares are registered in your own name, please sign, date and
mail the enclosed GOLD Proxy Card to Innisfree M&A Incorporated in the
postage-paid envelope provided today.
2. If you have previously signed and returned a WHITE proxy card to
Dexter, you have every right to change your vote. Only your latest
dated card will count. You may revoke any WHITE proxy card already sent
to Dexter by signing, dating and mailing the enclosed GOLD Proxy Card
in the postage-paid envelope provided. Any proxy may be revoked at any
time prior to the 2000 Annual Meeting by delivering a written notice of
revocation or a later dated proxy for the 2000 Annual Meeting to
InnisFree M&A Incorporated or the Secretary of Dexter, or by voting in
person at the 2000 Annual Meeting.
3. If your shares are held in the name of a brokerage firm, bank nominee
or other institution, only it can sign a GOLD Proxy Card with respect
to your shares and only after receiving your specific instructions.
Accordingly, please sign, date and mail the enclosed GOLD Proxy Card in
the postage-paid envelope provided, and to ensure that your shares are
voted, you should also contact the person responsible for your account
and give instructions for a GOLD Proxy Card to be issued representing
your shares.
4. After signing the enclosed GOLD Proxy Card, do not sign or return the
WHITE proxy card unless you intend to change your vote, because only
your latest dated proxy card will be counted.
If you have any questions about giving your proxy or
require assistance, please call:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Call Toll-Free: (888) 750-5834
Banks and Brokerage Firms Call Collect: (212) 750-5833
- --------------------------------------------------------------------------------
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REASONS FOR THE SOLICITATION
The purpose of our proposals is to facilitate the ISP
Proposal or a superior proposal, in which you would receive at least $50
per share in cash, although there can be no assurance that the adoption of our
proposals will result in the consummation of such a transaction. Please note
that we are not soliciting your proxy to vote on a merger or other business
combination transaction in which you would exchange your Dexter shares for cash.
The adoption of our proposals would facilitate our ability to effect the ISP
Proposal by making a tender offer directly to you for your shares. In the event
that ISP chooses to proceed by making a tender offer, a shareholder vote would
not be required. Our nominees to Dexter's Board, unlike Dexter's incumbent
directors, are committed to pursue the ISP Proposal or a superior proposal.
Another reason for our proposals is to permit Dexter shareholders to consider,
on their own, the merits of offers for their shares by permitting them to issue
instructions to Dexter's Board as to the manner in which the Rights Agreement
will be applied to particular offers. We intend to mail this proxy statement,
together with our proxy card, to all holders of Dexter common stock.
As the largest Dexter shareholder and an investor in the
company's shares since September 1998, we have been dissatisfied with
the share price performance of Dexter's common stock. Specifically, on December
3, 1999, we discussed with representatives of Dexter our view that Life
Technologies, with its higher growth and higher margins, can better fulfill its
potential as an independent entity or in combination with another similarly
strategically situated company, rather than in combination with Dexter. We
therefore recommended that it would be in the best interests of both companies
and their respective shareholders if Dexter and Life Technologies were
independent corporate entities. Dexter did not respond to our recommendation.
Therefore, on December 14, 1999, we proposed to Dexter a business combination in
which Dexter shareholders would receive at least $45 per share in cash, subject
to the negotiation of a mutually acceptable merger agreement. Although we
indicated a willingness to pay more if Dexter provided us with additional
information that justified an increased price, Dexter's Board rejected our
initial proposal without negotiation. Then, on January 20, 2000, Dexter, in what
we believe was an attempt to deter us from pursuing the ISP Proposal, offered to
purchase our shares of Life Technologies for $49 per share, which offer we
rejected. Finally, on January 27, 2000, we informed Dexter that we believed that
the failure of Dexter's Board to encourage negotiation of the ISP Proposal left
us "with no choice but to take our proposal directly to our fellow
shareholders," and announced our intention to present the proposals contained in
this proxy statement at the 2000 Annual Meeting.
Following the public announcement of our proxy
solicitation, Dexter's Board announced on February 9, 2000 that it would allow
us to review certain non-public information concerning Dexter and Life
Technologies to determine whether we would be willing to increase our $45
proposal. Dexter stated "[d]o not misread the Board's decision or its
intentions: we have made no decision to sell the Company or to explore a sale of
the Company or to test the market for a possible sale of the Company, and no one
else will be invited into the data room." Less than three weeks later, on
February 28, 2000, Dexter announced that it would "institute a process in which
we will survey all of the Company's available options" and that "third parties
will be invited to sign confidentiality agreements, review comprehensive data
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room materials and receive Dexter management presentations." However, Dexter
emphasized that its Board "has made no decision to sell the Company at this
time." On March 23, 2000, we increased our proposal to $50 per share in cash.
ISP's $50 per share price represents a 53% premium over Dexter's closing price
immediately prior to our initial proposal made on December 14, 1999(Dexter's
share price has increased since we made our initial $45 per share proposal, and
closed on the NYSE at $53 1/8 per share on March 31, 2000, the most recent
trading day prior to the printing of this proxy statement). You can obtain a
current quotation for Dexter's share price prior to voting at the 2000 Annual
Meeting or granting your proxy. In addition, we informed Dexter that if it
cooperated with us in connection with the balance of our due diligence review of
the company and could demonstrate that the value of the company would justify a
higher price, we would consider a further increase in the price of the ISP
Proposal. You should know that, to date, Dexter has not entered into
negotiations with us relating to the ISP Proposal.
Based on the statements and conduct of Dexter's Board
referred to above, we do not believe that the incumbent Dexter directors
have committed to pursue the ISP Proposal or a superior proposal. Our nominees,
unlike Dexter's incumbent directors, are committed to pursue the ISP Proposal or
a superior proposal. All determinations made by our nominees, if elected, as
well as those made by Dexter's incumbent directors, if re-elected, will be
subject to their fiduciary duties to Dexter shareholders. Two of our nominees,
Samuel J. Heyman and Sunil Kumar, are affiliated with ISP and, if elected to
Dexter's Board, would not participate in any Board action relating to the ISP
Proposal or any other business combination transaction while our acquisition
proposal remains in effect, and would act in accordance with their fiduciary
duties to Dexter shareholders with respect to any action they do take as
directors.
We are prepared to promptly negotiate and execute a
mutually acceptable merger agreement with Dexter. We have obtained a commitment
from The Chase Manhattan Bank to provide senior credit facilities in the
aggregate amount of $1,825,000,000 to, among other things, finance the
acquisition of Dexter, refinance certain existing indebtedness and provide
working capital following the acquisition. See "Description of Credit
Facilities." We have also engaged Chase Securities Inc. to serve as our
financial advisor in connection with any business combination transaction
involving Dexter.
In connection with our proposals, we have filed a complaint
with the United States District Court for the District of Connecticut in which
we are seeking, among other things, (1) a declaratory judgment that our Nominee
Election Proposals, Shareholder Rights Proposals and Voting Rights Proposals are
valid under Connecticut law, that any supermajority voting requirement contained
in Dexter's Bylaws is invalid, and that the Rights Agreement is invalid, and (2)
an order requiring that the 2000 Annual Meeting be held no later than April 30,
2000. Insofar as there is a lack of direct Connecticut case law to either
substantiate or contradict the validity of the proposals challenged by Dexter,
the courts will ultimately determine the legality and enforceability under
Connecticut law of such proposals. See "Certain Litigation." We intend to
present all of our proposals at the 2000 Annual Meeting. If, after the 2000
Annual Meeting, any of our proposals were to be finally adjudicated as invalid
under Connecticut law, such proposal, if adopted, would then not be effective.
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If there was a final adjudication prior to the 2000 Annual Meeting holding that
any proposal was invalid, we would not present such proposal at the 2000 Annual
Meeting.
We are soliciting your proxy to vote in favor of the
following proposals at the 2000 Annual Meeting:
THE NOMINEE ELECTION PROPOSALS
1. The election of our slate of nominees to replace the three
directors whose terms expire at the 2000 Annual Meeting (the
"Director Election Proposal");
2. A Bylaw amendment that would increase the size of Dexter's Board
to permit our nominees for directorships, if elected, to
constitute a majority of Dexter's Board (the "Board Size Bylaw
Proposal");
3. The election of our slate of nominees to fill the vacancies
created by the increased number of directorships (the
"Additional Directors Election Proposal");
THE SHAREHOLDER RIGHTS PROPOSALS
4. A Bylaw amendment that would require Dexter's Board to make
certain amendments to Dexter's "Poison Pill" Rights Agreement or
redeem the Rights issued thereunder if Dexter shareholders
instruct Dexter's Board to do so by majority vote, and not to
adopt a new rights agreement without shareholder approval (the
"Poison Pill Bylaw Proposal");
5. A shareholder resolution directing Dexter's Board to amend the
Rights Agreement promptly to make it inapplicable to any offer
for all outstanding shares of Dexter for at least $45 per share
in cash (the "Poison Pill Amendment Proposal");
THE VOTING RIGHTS PROPOSALS
6. A shareholder resolution repealing any and all amendments made
by Dexter's Board of Directors to the Bylaws after February 26,
1999 (the "Bylaw Repeal Proposal"); and
7. A resolution providing the order for voting at the 2000 Annual
Meeting (the "Omnibus Proposal").
EACH OF OUR PROPOSALS IS SEPARATE AND DISTINCT FROM EACH
OTHER PROPOSAL. YOU MAY APPROVE OR VOTE SEPARATELY ON ANY OR ALL OF THE
PROPOSALS, BUT THE ADDITIONAL DIRECTORS ELECTION PROPOSAL WILL NOT BE EFFECTIVE
UNLESS THE BOARD SIZE BYLAW PROPOSAL IS ADOPTED AND THE POISON PILL AMENDMENT
PROPOSAL WILL NOT BE EFFECTIVE UNLESS THE POISON PILL BYLAW PROPOSAL IS ADOPTED.
DEXTER HAS ASSERTED THAT CERTAIN OF OUR PROPOSALS ARE INVALID. IF ANY PROPOSAL
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IS ADJUDGED INVALID UNDER CONNECTICUT LAW, IT WILL THEN NOT BE EFFECTIVE. SEE
"CERTAIN LITIGATION."
BY ADOPTING OUR PROPOSALS YOU WILL BE GIVEN THE OPPORTUNITY
TO ELECT NOMINEES TO FORM A MAJORITY OF DEXTER'S BOARD WHO ARE COMMITTED TO
PURSUE THE ISP PROPOSAL OR A SUPERIOR PROPOSAL, AND YOU WILL BE GIVEN THE RIGHT
TO DECIDE WHETHER DEXTER'S POISON PILL RIGHTS AGREEMENT SHOULD APPLY TO SUCH A
TRANSACTION. YOU SHOULD NOTE THAT THERE CAN BE NO ASSURANCE THAT THE ADOPTION OF
OUR PROPOSALS WILL ENSURE THE CONSUMMATION OF SUCH A TRANSACTION. WE RECOMMEND
THAT YOU SIGN, DATE AND RETURN THE GOLD PROXY CARD TODAY IN FAVOR OF OUR
PROPOSALS.
CERTAIN LITIGATION
On January 27, 2000, we commenced a lawsuit against Dexter
and seven members of Dexter's Board of Directors in the United States District
Court for the District of Connecticut. International Specialty Products Inc. and
ISP Investments Inc. v. Dexter Corporation, et al., Civil Action No. 3:00 CV 157
(SRU). The Dexter directors who are named as defendants are K. Grahame Walker,
Henrietta Holsman Fore, Robert M. Furek, Edgar G. Hotard, Peter G. Kelly,
Jean-Francois Saglio and George M. Whitesides.
Count I of the Complaint alleges that Article X of the
Dexter bylaws, to the extent it requires a two-third supermajority vote of
Dexter shareholders to amend Dexter's bylaws, is invalid under ss. 33-807 of the
Connecticut Business Corporation Act, which permits supermajority voting
provisions only if expressly authorized by the certificate of incorporation. The
Complaint alleges that Dexter's certificate of incorporation does not authorize
a supermajority provision in the bylaws and therefore any two-thirds voting
requirement in Article X constitutes an ultra vires act of the board of
directors and may not be enforced. Accordingly, the Complaint seeks a
declaratory judgment that: (i) if Article X of the Dexter bylaws imposes a
supermajority voting requirement, then it is invalid, void and of no effect
under Connecticut law; and (ii) Dexter's shareholders may alter, amend or repeal
any Dexter bylaw or bylaws without a supermajority vote. The Complaint also
seeks preliminary and permanent injunctive relief barring enforcement of a
supermajority voting requirement in Article X of Dexter bylaws.
Count II of the Complaint alleges that Dexter's poison pill
shareholder rights plan violates ss. 33-665(a) of the Connecticut Business
Corporation Act, which states, in relevant part, that "[a]ll shares of a class
shall have preferences, limitations and relative rights identical with those of
other shares of the same class." The Complaint alleges that Dexter's poison pill
violates ss. 33-665 because it impermissibly discriminates among shares of the
same class of stock by entitling all holders of Dexter common stock, except
shareholders owning 11 percent or more of Dexter's outstanding shares who do not
file a Schedule 13G with the SEC stating that their ownership position has been
acquired without any intent to change or influence control of Dexter, to
exercise the right under certain circumstances to obtain additional shares of
Dexter common stock in exchange for one-half of the then current market price of
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Dexter common stock. Accordingly, the Complaint seeks a declaratory judgment
that Dexter's poison pill violates Connecticut law and is ultra vires, invalid,
void and of no effect. The Complaint also seeks preliminary and permanent
injunctive relief barring enforcement of Dexter's poison pill.
Counts III, IV and V of the Complaint allege that ISP's
Nominee Election Proposals, Shareholder Rights Proposals and Voting
Rights Proposals are each valid under Connecticut law, consistent with Dexter's
certificate of incorporation and may be voted upon at Dexter's 2000 annual
meeting. The gravamen of these claims is that Dexter's shareholders have the
authority to: (i) amend the bylaws in order to create (and then elect directors
to fill) new directorships; (ii) amend the bylaws to require directors to modify
poison pills and prevent the board from adopting a new poison pill without
shareholder approval; and (iii) amend or repeal bylaws and bar directors from
vetoing shareholder determinations to amend or repeal bylaws.
Accordingly, the Complaint seeks a declaratory judgment
that: (i) Dexter's shareholders have the lawful right to increase the size of
Dexter's Board by amending the bylaws and to fill all newly created
directorships by majority vote at the 2000 annual meeting; (ii) that Dexter's
shareholders have the lawful right to amend the bylaws to require that Dexter's
Board amend the poison pill or redeem the rights issued under the rights plan
and to prevent the board from adopting further poison pills without shareholder
approval; and (iii) that the Nominee Election Proposals, Shareholder Rights
Proposals and Voting Rights Proposals are valid under Connecticut law and
consistent with Dexter's certificate of incorporation, are the proper subjects
for action by Dexter's shareholders and may be voted upon by shareholders at
Dexter's 2000 annual meeting. The Complaint also seeks preliminary and permanent
injunctive relief permitting a shareholder vote on these proposals at Dexter's
2000 annual meeting.
Count VI of the Complaint alleges that Dexter's directors
have breached their fiduciary and other legal obligations to the company and its
shareholders, including ISP, by, among other things, amending Dexter's poison
pill in October 1999 to apply to 11 percent shareholders who do not file a
Schedule 13G with the SEC stating that their ownership position has been
acquired without any intent to change or influence control of Dexter, refusing
to consider with the care, loyalty and good faith required by law ISP's proposal
to purchase all of Dexter's shares at a price of $45 per share, seeking to
entrench themselves in office and failing to pursue opportunities and
transactions that would benefit Dexter's shareholders and which are in the
company's best interests.
The Complaint seeks a declaratory judgment that Dexter's
directors may not breach their fiduciary obligations by acting to impede or
block an offer for Dexter shares at a price of $45 per share or more in cash
either by utilizing Dexter's poison pill or refusing to approve the transaction
under ss. 33-844 of the Connecticut Business Corporation Act (which prohibits
certain transactions with interested shareholders for a five-year period unless
approved by the board). The Complaint also seeks preliminary and permanent
injunctive relief barring Dexter's directors from acting to impede or block such
an offer for Dexter's shares either by utilizing the poison pill or refusing to
approve the transaction under ss. 33-844 of the Connecticut Business Corporation
Act. In addition, the Complaint seeks injunctive and declaratory relief
preventing Dexter's directors from conducting Dexter's 2000 annual meeting of
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Dexter's shareholders after April 30, 2000. Furthermore, the Complaint seeks
money damages arising from the directors' breach of their legal obligations.
On or about March 9, 2000, Dexter and the individual
director defendants filed a motion for partial summary judgment seeking
dismissal of Count III of ISP's Complaint, which concerns ISP's proposed bylaw
amendment to increase the size of Dexter's board of directors. ISP has filed a
brief in opposition to this motion.
Dexter has stated that it will refuse to bring our Board
Size Bylaw Proposal and Additional Directors Election Proposal before the 2000
Annual Meeting, and that even though the Poison Pill Bylaw Proposal and the
Poison Pill Amendment Proposal will be brought before the 2000 Annual Meeting,
such proposals will not be implemented by Dexter, even if adopted. If our
proposals are adopted at the 2000 Annual Meeting, and this litigation is still
pending, we will seek appropriate relief to require Dexter to implement any
proposals which have received the requisite affirmative vote. Because the issue
of whether certain proposals are entitled to be voted upon at the 2000 Annual
Meeting may not be resolved by the time of the 2000 Annual Meeting, we will
present each of our proposals at the 2000 Annual Meeting together with the
proxies we have collected to vote in favor of such proposals. Ultimately, a
court will be required to decide whether any disputed proposals were properly
presented to and adopted at the 2000 Annual Meeting.
None of ISP's nominees are named parties to the litigation.
Two of ISP's nominees, Samuel J. Heyman and Sunil Kumar, however, are affiliated
with ISP and ISP Investments Inc., which are the named plaintiffs in the
litigation. Mr. Heyman is also the beneficial owner (as defined in Rule 13d-3)
of approximately 76% of the capital stock of ISP.
DESCRIPTION OF CREDIT FACILITIES
We have obtained a commitment from The Chase Manhattan Bank
to provide senior credit facilities in the aggregate amount of $1,825,000,000 in
order to finance the acquisition of Dexter, to refinance certain existing
indebtedness of ISP's subsidiaries, Dexter and its subsidiaries, to provide
working capital for the combined companies following the acquisition and to pay
certain related fees and expenses. The facilities consist of a seven year
revolving credit facility, a seven year term loan and an 18 month term loan,
each in amounts to be specified in the definitive documentation for the
facilities. The commitment provides that obligations under the facilities will
be guaranteed by all of the domestic wholly owned subsidiaries of ISP and, if
the acquisition is completed, by Dexter and its wholly owned subsidiaries. The
commitment further provides that the facilities will be secured by the capital
stock of certain ISP subsidiaries, and all of the capital stock of Dexter and
Life Technology to be owned by us following the consummation of a transaction.
The collateral will be released upon the occurrence of certain events to be
agreed upon in the definitive documentation regarding the facilities. The
commitment is subject to customary conditions, including the absence of a
material adverse change in the business, operations or financial condition of
the borrower or Dexter, and the execution of definitive documentation with
respect to the facilities on or before December 31, 2000 (or on or before
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October 31, 2000 if the acquisition of Dexter is financed through the tender
offer facility contemplated therein or if Chase is unable to syndicate the
facilities prior to such date). You should note that although the adoption of
our proposals would facilitate our ability to effect the ISP Proposal by making
a tender offer directly to you for your shares, we are not soliciting your proxy
to vote on a merger or other business combination in which you would exchange
your Dexter shares for cash. In the event that ISP chooses to proceed by making
a tender offer, a shareholder vote would not be required.
The facilities will require, under certain circumstances,
mandatory prepayments and commitment reductions and we will be permitted to make
optional prepayments and commitment reductions. Borrowings under the facilities
will bear interest at either a base rate or a eurodollar rate, plus an
applicable margin based, under certain circumstances, upon our consolidated
leverage ratio (which margin will not exceed 1.50% for base rate loans or 2.50%
for eurodollar rate loans).
The definitive loan documents for the facilities will
contain certain customary covenants that, among other things, will restrict our
ability to dispose of assets, incur additional indebtedness, repay indebtedness
or amend debt instruments, pay dividends, create liens on assets, make
investments, make acquisitions, engage in mergers or consolidations, or engage
in certain transactions with affiliates. In addition, the facilities will
require us to comply with certain financial ratios and maintenance tests.
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BACKGROUND AND RECENT EVENTS
We began purchasing shares of Dexter and Life Technologies
common stock in September 1998 because we believed that the shares of both
companies were substantially undervalued. As the largest Dexter shareholder and
an investor in the company's shares since September 1998, we have been
dissatisfied with the share price performance of Dexter's common stock.
Specifically, we have discussed with representatives of Dexter a recommendation
with respect to the separation of Life Technologies and Dexter. Dexter rejected
our recommendation. Therefore, on December 14, 1999, we proposed a business
combination in which Dexter shareholders would receive at least $45 per share in
cash, subject to the negotiation of a mutually acceptable merger agreement. On
March 23, 2000, we increased our proposal to $50 per share in cash. Set forth
below is a summary of events leading up to and following our proposal.
Life Technologies is the surviving corporation of a merger
in 1983 of Bethesda Research Laboratories, Inc. with a Dexter-owned subsidiary.
Dexter owned approximately 52% of the outstanding stock of Life Technologies in
1998.
On July 7, 1998, Dexter proposed to purchase the remaining
48% of the outstanding shares of Life Technologies that it did not already own,
at a purchase price of $37 per share in cash. The proposal was made subject to,
among other things, the approval of the Board of Directors of Life Technologies,
and, since a majority of the Life Technologies Board was affiliated with Dexter,
the approval of the Life Technologies Board's unaffiliated directors. Following
receipt of Dexter's proposal, Life Technologies's Board of Directors formed a
special committee of independent directors (the "Special Committee") to consider
and respond to the proposal. Thomas H. Adams, Ph.D., Frank F. Samuel, Jr. and
Iain C. Wylie were appointed as the members of the Special Committee, with Dr.
Adams to act as chairman. The Special Committee retained outside counsel and a
nationally recognized investment banking firm to assist in their analysis of
Dexter's proposal.
After a comprehensive valuation of Life Technologies and
its prospects by the Special Committee and its advisors, on October 27, 1998,
the Special Committee reported to the Life Technologies Board that it would be
unable to recommend that Life Technologies shareholders accept Dexter's offer of
$37 per share of Life Technologies stock. Among its findings, the Special
Committee reported that:
A. it did not believe that Dexter's proposal adequately reflected
the value of the prospects of Life Technologies; in particular,
the Special Committee noted that Dexter's proposal did not
adequately address the value of Life Technologies's research and
development pipeline;
B. it had received inquiries from a third party interested in
acquiring all of Life Technologies at a price in excess of
Dexter's $37 per share offer, but was unable to respond to such
offer because Dexter had advised that it was not interested in
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disposing of its controlling block of Life Technologies shares;
and
C. Dexter's proposed purchase price of $37 per share of Life
Technologies common stock was substantially below the $50+ range
which the Special Committee considered an appropriate price
range for shares of Life Technologies at that time.
In response to the Special Committee's findings, K. Grahame
Walker, Chairman and Chief Executive Officer of Dexter and Chairman of the Board
of Life Technologies, proposed that the Life Technologies Board disband the
Special Committee. Mr. Walker also announced that Dexter was withdrawing its
original proposal and would make an offer directly to the shareholders of Life
Technologies to tender their shares for $37 per share in cash. All five of the
directors affiliated with Dexter, representing a majority of the Life
Technologies Board, voted in favor of a resolution to disband the Special
Committee, while all three members of the Special Committee voted against the
resolution. A few days thereafter, two of the three independent Life
Technologies directors who served on the Special Committee (Messrs. Samuel and
Wylie) resigned as directors of Life Technologies in protest of the disbanding
of the Special Committee.
In his resignation letter, dated November 3, 1998, to the
Life Technologies Board, Frank E. Samuel, Jr. stated that Dexter's proposal
"ignored important components of Life Technologies's overall value, including
the value of the products in Life Technologies's R&D Pipeline." Mr. Samuel
further characterized Dexter's Proposal as "heavyhanded" and as a "coercive
attempt to buy out the [Life Technologies] public stockholders at a price which,
I believe, deprives these stockholders of the significant inherent values to
which they are rightfully entitled." Iain C. Wylie, in his resignation letter to
the Life Technologies Board, echoed Mr. Samuel's concerns with respect to
Dexter's proposal.
Despite the Special Committee's findings, on November 2,
1998, Dexter commenced a tender offer for the outstanding shares of Life
Technologies at $37 per share. Dexter also announced its intention to acquire
any shares not purchased in the tender offer through a second-step merger in
which the remaining shareholders would receive the same share price paid in the
tender offer.
On November 16, 1998, Life Technologies filed a Schedule
14D-9 Solicitation/Recommendation Statement in which Life Technologies disclosed
that the Life Technologies Board would remain neutral and express no opinion
with respect to Dexter's tender offer, since a majority of the Life Technologies
Board was affiliated with Dexter. However, Life Technologies included in the
Schedule 14D-9 the view of the Special Committee that the shareholders should
reject Dexter's tender offer and not tender their shares, along with the
analysis by the investment banking firm hired by the Special Committee which
detailed its finding that Dexter's offer price was inadequate to Life
Technologies shareholders.
On December 7, 1998, Dexter amended its tender offer by
increasing the purchase price from $37 per share to $39.125 per share and
dropping the condition that Dexter acquire at least 80% of the outstanding
shares of Life Technologies following the consummation of the tender offer. Upon
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the completion of the tender offer, Dexter owned approximately 71% of the
outstanding shares of Life Technologies.
Shortly after the commencement of Dexter's tender offer, in
November 1998, we filed a Schedule 13D with respect to our beneficial ownership
of shares of Life Technologies. On November 25, 1998, we signed an agreement
with Bear, Stearns & Co. Inc., The Frederick R. Adler Intangible Asset
Management Trust, The Cohen Revocable Trust and Annie Chang, each of whom is a
shareholder of Life Technologies, to form a group (the "Life Technologies
Group") for purposes of Section 13(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The agreement was for a term of six months and
provided for, among other things, each party not to sell or otherwise dispose of
its Life Technologies shares without the consent of the other parties to the
agreement. Thereafter, we, together with the other members of the Life
Technologies Group, filed an amendment to our Schedule 13D reporting our group
ownership of Life Technologies shares. On December 2, 1998, each of York Capital
Management, L.P., JGD Management Corp. and York Investment Limited became
members of the Life Technologies Group, and on December 18, 1998, each of Idoya
Partners, Prescott Associates, Prescott International Partners, L.P., Thomas W.
Smith as Trustee for the Jack McKenzie Trust Under Agreement Dated April 12,
1992, Thomas W. Smith as Trustee for the Leo Carroll Wolfensohn Trust Under
Agreement Dated March 9, 1994 and Thomas W. Smith (collectively, the "Prescott
Entities") joined the Life Technologies Group, in each case by entering into
similar agreements with the other existing members of the Life Technologies
Group. Additional amendments to our Schedule 13D were filed to reflect the
additional members of the Life Technologies Group, so that, as of December 23,
1998 we, together with the other members of the Life Technologies Group, owned
approximately 26.2% of the outstanding shares of Life Technologies. On that
date, ISP individually owned approximately 14.75% of the outstanding shares of
Life Technologies.
On February 1, 1999, the common stock of Life Technologies
was delisted from the Nasdaq Stock market because of Life Technologies's
inability to remain in compliance with certain maintenance standards required
for continued listing, including the number of shareholders and public float
requirements, as a result of Dexter's completed tender offer for Life
Technologies's stock. Life Technologies currently remains a reporting company
under the Securities and Exchange Commission rules and its common stock is
available for quotation on the OTC Bulletin Board.
On July 26, 1999, Life Technologies announced that its
Board had decided to discontinue regular quarterly dividends on its common
stock.
On September 27, 1999, pursuant to an amended Schedule 13D
filing, we disclosed that we beneficially owned approximately 9.98% of the
outstanding common stock of Dexter. Soon thereafter, on October 4, 1999,
Dexter's Board amended the Company's Rights Agreement to lower the threshold of
beneficial ownership that will trigger the defensive provisions of the Rights
Agreement from 20% to 11% of the outstanding common stock of Dexter, applicable
to any shareholder who does not file a Schedule 13G with the SEC stating that
its ownership position has been acquired without any intent to change or
influence control of Dexter.
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On December 3, 1999, representatives of ISP and Dexter met
to discuss our dissatisfaction with Dexter's share price performance. At such
meeting, we expressed our belief that Life Technologies, with its higher growth
and higher margins, can better fulfill its potential as an independent entity or
in combination with another similarly strategically situated company, rather
than in combination with Dexter, for reasons detailed in Mr. Heyman's letter to
Mr. Walker on December 14, 1999. Our representatives noted that there are no
apparent synergies between Dexter and Life Technologies that would justify
Dexter's continued control of Life Technologies and, as an independent company,
Life Technologies would likely have greater access to the capital markets and
receive a higher level of analyst coverage. We therefore recommended that it
would be in the best interests of both companies and their respective
shareholders if Dexter and Life Technologies were independent corporate
entities. We further offered to work with Dexter to try to develop a tax
efficient strategy (i.e. - a strategy which minimizes tax costs to investors and
the respective companies), subject to a proper business purpose, to separate
Dexter and Life Technologies.
On December 6, 1999, pursuant to an amended Life
Technologies 13D filing, we disclosed that our initial group agreements with
other Life Technologies shareholders, which had been renewed and extended on May
10, 1999, had been further extended until September 30, 2000 by all of the
members of the Life Technologies Group other than the Prescott Entities.
Currently, the continuing members of the Life Technologies Group beneficially
own approximately 21.7% of the outstanding shares of Life Technologies.
After receiving no response to our proposal made during the
December 3, 1999 meeting, on December 14, 1999, Samuel J. Heyman, Chairman of
the Board of ISP, sent the following letter to Mr. Walker proposing to acquire
all of the shares of Dexter not owned by ISP for a price of $45 per share:
Dear Grahame:
It was nice meeting with you, John Thompson, and Bruce
Beatt on December 3rd.
As Kumar Shah and I indicated to you, our interest is in
the realization of shareholder values for all Dexter Corporation and
Life Technology shareholders. In this connection, based on our
analysis, we believe that Life Technologies, with its higher growth
and higher margins, can better fulfill its potential as an
independent entity, or in combination with another similarly
strategically situated company, rather than in combination with
Dexter Corporation. We also believe that it will be in the best
interests of both companies and their respective shareholders if
Dexter Corporation and Life Technologies were separate corporate
entities.
The overriding reason for this conclusion stems primarily
from the fact that there are practically no overlaps and the
companies add no value to each other. Specifically, Dexter
Corporation's R&D, product development and manufacturing technology
have no interface, and lack any synergy, with Life Technologies.
Furthermore, we believe that Dexter Corporation has restrained Life
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Technologies' growth by limiting Life Technologies' R&D expenditures,
new product development and new product introductions. Marketing,
sales and distribution likewise provide no crossover benefits for the
two companies. In addition to the operational issues, we note that
Dexter Corporation management has little or no experience in the life
science field.
From a financial perspective, as an independent company,
Life Technologies would have much greater access to the capital
markets, without the constraints of Dexter Corporation's financial
profile. Life Technologies, as a pure play on which analysts and
shareholders can more clearly and easily focus, would attract a high
level of Wall Street coverage, providing the opportunity to achieve
P/E multiples similar to those achieved by others, who serve the same
market. This would enable Life Technologies to consummate attractive
stock acquisitions and mergers in the emerging life science field,
which you acknowledge has been constrained under your ownership.
Finally, as an independent company, or as part of a high
technology company serving the biotechnology industry, Life
Technologies would be in a position to provide greater incentives for
its executives. Through making available stock options with a
significant upside potential to all key-operating employees, Life
Technologies would be providing a better opportunity to attract,
hire, and most importantly, retain quality personnel to insure and
maximize its continued profitable growth.
As a substantial shareholder of both Dexter Corporation and
Life Technologies, it is our position that, for the foregoing
reasons, there is value to be realized in the separate corporate
existence of these two entities. At our meeting, while I was pleased
that you appeared to share our view that there are few, if any,
synergies between Dexter Corporation and Life Technologies, I had
hoped that you would be more receptive to our proposal. However,
since that time, by your lack of response and your recent comments to
security analysts, it appears that you disagree with our approach to
maximizing shareholder value nor do you appear to have in mind any
alternative strategy for accomplishing the same goal.
As long term shareholders of both Dexter and Life
Technologies, we think we have been more than patient. Our Board has
therefore decided to propose acquiring all of the Dexter Corporation
common stock not owned by ISP and its affiliates for a price of
$45.00 per share subject to the execution of a mutually acceptable
merger agreement. Such a price represents a 38% premium over where
Dexter Corporation closed last night (32-9/16), and is higher than
the stock has ever traded. In addition, if you would provide us
additional information on Dexter Corporation and Life Technologies
that justifies an increased price we would be willing to pay more. We
would be willing to enter into a confidentiality agreement in
connection therewith (but not any such agreement that would limit our
rights as shareholders).
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We and our advisors are available to move quickly to
consummate this transaction. Grahame, please let me know how you and
your Board would like to proceed.
Sincerely,
/s/ Samuel J. Heyman
On December 14, 1999, Dexter issued a press release
indicating that it has received ISP's December 14 letter and that Dexter's
Board would consider ISP's proposed offer, but noting that the December 14th
letter did not mention a source of funds for ISP's cash offer.
In response to Dexter's press release, on December 16,
1999, Mr. Heyman sent the following letter to Mr. Walker:
Dear Grahame:
I note from Dexter's news release yesterday your mention
that our letter "contained no information concerning the source of
funds for its proposal."
In this regard, we intend to finance with bank borrowings
and will provide commitments for such financing as appropriate.
As I indicated in yesterday's letter, we stand ready with
our advisors to meet with you as soon as possible regarding all
aspects of the proposed merger agreement.
All the best.
Sincerely,
/s/ Samuel J. Heyman
On December 23, 1999, Mr. Walker sent the following letter
to ISP rejecting ISP's offer to purchase the outstanding shares of Dexter:
Dear Mr. Heyman:
On behalf of Dexter's Board of Directors, I am replying to
your letter of December 14.
The Board has carefully considered your proposal to
negotiate an acquisition of Dexter at a price of $45 per share. It
has discussed the proposal as well as the strategic initiatives
mentioned in your letter with the company's management and its
advisors - Lehman Brothers and Skadden, Arps. The Board has received
an opinion from Lehman Brothers that $45 per share is inadequate from
a financial point of view to the stockholders of Dexter. It is the
unanimous view of the Board of Directors that your proposal is both
inadequate and contrary to the best interests of the stockholders of
Dexter. Accordingly, it is hereby rejected.
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We noted with interest the research comment on your
proposal published by Merrill Lynch the same day you made it. Merrill
Lynch said, "... the bid is too low. It appears that ISP could be
just trying to put Dexter in play." The comment also noted:
"Interestingly, ISP's total bid for Dexter is only slightly larger
than Dexter's bid for Life Technologies - an offer that was deemed as
too low by ISP management." New Vernon Associates, an institutional
research firm, was even more definitive in its characterization of
the ISP proposal. "Mr. Heyman is clearly playing the role of
arbitrageur here. There is little or no strategic fit between ISP and
either Dexter or Life Technologies." Yet a third report published by
Schroders on December 15 was to a similar effect.
The Board has thoroughly reviewed the company's present
circumstances in light of your public proposal to acquire Dexter for
an inadequate price, ostensibly to separate Dexter and Life
Technologies. In consequence of that review, they have asked me to
share the following additional thoughts with you.
The Dexter Board is committed to its business strategy of
maximizing the long-term growth of Dexter through its investment in
Life Technologies. It will continue these efforts, despite any
attempt on your part to divert their benefits for ISP's short-term
interests, as you have done in numerous other cases in which you
purchased shares of a company - purporting to espouse stockholder
interests - and subsequently sold out your position at a profit.
Last year, in pursuit of its shareholder value growth
strategy, Dexter decided to strengthen its focus on life sciences.
Among other initiatives, it sought to acquire the public minority
shares of Life Technologies. Your company opportunistically
intervened to frustrate this objective and bought 15% of the
outstanding shares in the open market, while Dexter was proceeding
with its tender offer at a price that was available to every LTI
stockholder. Our Board's plan was to realize synergistic benefits and
cost savings from 100% ownership of LTI, in addition to securing our
platform for growth in life sciences. The Dexter stockholders have
been denied those benefits and the related stockholder value
enhancement by your actions, not by any inadequacy in our basic
strategy.
The second phase of your opportunistic strategy was an
open-market purchase program in Dexter shares which purported to be
"for investment purposes only." Immediately after you assembled a 10%
block, you dropped your pretense of being a passive investor. You
invited yourself to a meeting with management, asserted Dexter and
Life Technologies should be separated, waited 11 days and then made a
public unsolicited acquisition proposal at an inadequate price
benefiting only ISP and not all Dexter stockholders. Your disregard
for the interests - indeed welfare - of Dexter stockholders is
especially exemplified by the fact that both Moody's and Standard &
Poor's have now put Dexter on credit watch with negative implications
expressly as a result of the apprehension that ISP will over-leverage
in order to combine with Dexter.
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You have also made some factual assertions about Dexter and
Life Technologies which are simply wrong and which are potentially
damaging to one or both companies. Dexter has not been a restraining
influence on LTI's R&D spending. Indeed, you sought to elicit such a
statement from the Life Technologies management in your meeting with
them but they declined to provide it. Nor is there any basis for your
claim that Dexter's ownership of LTI shares makes it difficult to
attract, hire and retain quality management. Quite simply, that has
not been the case. Your contention further implies that the current
management of LTI is not first rate, a similarly baseless suggestion.
You have mischaracterized the relationship between Dexter
and Life Technologies, and your position is internally inconsistent.
You affirmatively asserted in our conversation on December 3 that
Life Technologies has no place with ISP. We agree. However, it is
illogical and self-contradictory for you to suggest that you wish to
acquire Dexter in order to spin off Life Technologies in some
unspecified transaction likely to have adverse tax consequences to
all participants. Second, and more important by far, we are convinced
that both Dexter and Life Technologies have bright future prospects
which justify a valuation of Dexter shares significantly in excess of
what is reflected in the current market price. We fervently hope (and
strongly recommend) that you return your managerial focus to your own
companies, leaving the stewardship of Dexter and LTI where it belongs
- with their respective Boards.
Sincerely
/s/ K. Grahame Walker
In a complaint filed in Connecticut Superior Court dated
January 18, 2000, Lee Brennan and Ellis Investments LTD. asserted claims on
behalf of themselves and a putative class consisting of all Dexter shareholders
(other than the defendants and any person or entity affiliated with them)
against Dexter, Mr.Walker and the directors of Dexter, asserting claims which
were previously brought separately in the Delaware courts. In their complaint,
such shareholders allege, among other things, that "[i]n rejecting the ISP
offer, reducing the threshold for activation of the shareholder rights plan and
failing to make any attempts to negotiate with ISP, [Dexter, Mr. Walker and
Dexter's Board] have acted wrongfully to the detriment of Dexter public
stockholders."
On January 20, 2000, Dexter announced that it had sent a
letter to Life Technologies proposing to acquire for $49.00 per share the 28.5%
of Life Technologies that Dexter does not own in a merger transaction. Dexter
asked for "appropriate indications of support" for the merger from ISP and the
other members of the 13D group.
On January 27, 2000, Mr. Heyman sent the following letter
to Mr. Walker:
Dear Grahame:
In view of ISP's $45 all cash offer and our stated
willingness to pay more if additional information justified a higher
price, I was disappointed that your Board did not decide to encourage
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negotiations with a view toward increasing shareholder value for
Dexter shareholders. Its refusal to do so leaves us no choice but to
take our proposal directly to our fellow shareholders.
We are today delivering to your Corporate Secretary a
notice of our intention to present a series of resolutions at your
April Annual Meeting. The effect of the resolutions is to elect ten
of our nominees to the Dexter Board, including eight directors
independent of ISP, who are committed to considering and pursuing
ISP's offer or a superior proposal. We are also proposing a by-law
amendment and a resolution requiring Dexter's Board to remove its
"poison pill" in favor of offers for all shares of at least $45 per
share in cash. We intend to solicit proxies in favor of these
resolutions.
Your December 23rd letter questioned the seriousness of
ISP's intent. First, as you know, ISP currently holds a stake in
Dexter which is more than five times that held by Dexter's entire
Board. Second, so that there should be no doubt as to our ability to
finance the acquisition, Chase Securities Inc. advised us, confirmed
in writing, that they are highly confident in their ability to
arrange the credit facilities for this acquisition.
There are so many inaccuracies and mischaracterizations in
your letter that I find it difficult to know where to start. By way
of just one example, your heavy reliance upon security analysts to
defend your rejection of our proposal is misplaced. For instance, in
comparing ISP's offer to Dexter's bid last year for Life
Technologies, the Merrill Lynch report contained an error of almost
$300 million by ignoring the value of the minority interests. Also,
you failed to quote a relevant section of the New Vernon Associates
report you cited, which states the following: "there is little or no
interplay between the company's [Dexter's] industrial and life
sciences businesses," "we do find merit in his [Mr. Heyman's]
initiative to separate the company's [Dexter's] disparate assets,"
and "in our view Dexter's ownership of LTEK is constraining the
latter company's ability to recruit and retain key employees." With
regard to the last point, it should be made clear that we indeed view
the management of Life Technologies as first rate. However, your
attempted squeeze-out of the minority shareholders more than a year
ago resulted in the elimination of meaningful stock incentives for
Life Technologies executives, which ultimately impacts the ability to
retain and recruit key personnel.
As you know, Life Technologies' shareholders have rejected
Dexter's recent belated $49 per share offer. Parenthetically, it
should be noted that Dexter's own shareholders appear to have
rejected its business strategy as well, as Dexter's stock price has
declined substantially since the company's rejection of our offer and
its decision to attempt to acquire 100% of Life Technologies. It is
apparent from the timing of Dexter's offer for our Life Technologies
shares, coming on the heels of ISP's $45 per share offer for Dexter,
upon which many of Dexter's shareholders have relied, seeks to divert
ISP from a course of action designed to maximize shareholder values
for all Dexter shareholders. In this connection, we believe that
Dexter's attempt to deter us by providing benefits to ISP not
available to other Dexter shareholders is simply not appropriate.
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Grahame, I just do not think it would be productive at this
time to respond to your mischaracterizations and attempts to impugn
our motives - which by the way I do not appreciate. The real issue
here, however, is the maximization of shareholder value for all
Dexter shareholders, and I believe that shareholders will more likely
benefit from a dialogue along this line. In fact, I would be willing
to appear with you before any group of Dexter shareholders to discuss
the merits of Dexter's proposed course of action vs. ISP's offer.
All the best.
Sincerely,
/s/ Samuel J. Heyman
Also on January 27, 2000, we gave formal written notice to
Dexter of our intention to bring our proposals before the 2000 Annual Meeting.
On that same day, we filed a complaint against Dexter and seven members of
Dexter's Board in the United States District Court for the District of
Connecticut. The Dexter directors who are named as defendants are K. Grahame
Walker, Henrietta Holsman Fore, Robert M. Furek, Edgar G. Hotard, Peter G.
Kelly, Jean-Francois Saglio and George M. Whitesides. See "Certain Litigation."
These developments were reflected in an amended 13D filing with respect to our
Dexter shares on the same day.
On January 28, 2000, we, together with the other members of
the Life Technologies Group, amended our 13D filing to reflect the group's
rejection of Dexter's offer to purchase shares of Life Technologies. Also on
January 28, we demanded a copy of Dexter's shareholder list and certain other
corporate information to which we are entitled under the Connecticut Business
Corporation Act, by no later than February 7, 2000.
On February 4, 2000, Dexter acknowledged its receipt of our
written notice to bring our proposals before the 2000 Annual Meeting. Shortly
thereafter, by letter dated February 7, 2000, Dexter's counsel, Skadden, Arps,
Slate, Meagher & Flom LLP, acknowledged its receipt of our demand for a copy of
Dexter's shareholder list and certain other corporate information. In its
February 7 letter, Dexter's counsel stated that ISP needed to provide Dexter
with a certified check in the amount of $1,454.86 to cover expenses incurred by
Dexter in providing the requested materials before such materials would be made
available, and a check was forwarded by ISP to Dexter promptly thereafter.
Certain, but not all, of the materials requested were received on February 11,
2000.
On February 8, 2000, Dexter's Board amended the Rights
Agreement, causing the poison pill Rights to be inapplicable to any offer which
is for all shares, is substantially unconditional, remains available to
shareholders for 60 days, is supported by firm financing commitments and is for
a price which is, in the opinion of Dexter's financial advisor, fair from a
financial point of view.
On February 9, 2000, Mr. Walker sent the following letter
to ISP responding to ISP's notice of its intention to present its proposals and
director nominations at the 2000 Annual Meeting:
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Dear Mr. Heyman:
Just last month ISP disclosed that your company's 4th
quarter operating results would be 40% to 57% below analysts'
estimates and that full fiscal year operating results would be 19% to
20% below analysts' estimates. You publicly attributed ISP's
disappointing performance to "substantial unabsorbed manufacturing
costs" and to "competitive pressures." With evidence of this kind of
managerial dereliction so recently emerging, we are incredulous that
you have apparently launched a campaign that deflects the focus from
concentrating on improving your own poor results to one that will
inevitably harass and distract Dexter's Board and its management at
this crucial time in our company's history. We think ISP's
stockholders have a right to expect undivided and more effective
attention to ISP's obvious strategic and operational deficiencies. We
think they are entitled to expect that you would not spend hundreds
of thousands of dollars - to say nothing of the time, effort and
managerial distraction ISP will devote to matters unrelated to its
immediate business problems - to run a spurious and legally defective
proxy campaign in support of your invitation to negotiate that has
been rejected.
However, since you are anxious to pursue a course of action
that can be harmful to our shareholders and to yours, you leave us
with no reasonable alternative but to deal with you in the most
responsible manner that we can. To that end, our Board has authorized
the following actions:
1. Specifically to address your claim of "[ISP's] stated
willingness to pay more [than $45 per share] if
additional information justified a higher price," we are
prepared to make available a due diligence data room
containing detailed and comprehensive information
relating to both Dexter and Life Technologies. Because
our Board and its advisors believe that your offer is
inadequate from a financial point of view, we are
inviting ISP to send representatives into the data room
for the purpose of ascertaining whether you are indeed
willing to pay more. If you wish, you are welcome to
bring representatives of your lender Chase Securities
Inc. with you. We are prepared to respond to reasonable
requests for additional information and we will make
appropriate members of senior management available for
presentations and question/answer sessions that should
provide you with more than adequate "additional
information." We accept your offer of a confidentiality
agreement in this connection. We accept in principle
your limitation that the agreement not "limit your
rights as shareholders" by which we mean one which will
not prevent you from making a tender offer to Dexter
stockholders, proceeding with your proxy campaign or
making a proposal to the Board of Dexter.
Do not misread the Board's decision or its intentions: we
have made no decision to sell the company or to explore a sale of the
company or to test the market for a possible sale of the company, and
no one else will be invited into the data room. It is simply the
Board's firm belief that Dexter's stockholders should not be
victimized by your disingenuous suggestion that your price could be
higher but for reasons beyond your control. We offer you the
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opportunity to conduct a reasonable due diligence so that you can
honestly, forthrightly and candidly tell our stockholders what your
proposal is - not that it might be higher if . . .
2. Our Board has amended Dexter's stockholder rights plan.
As a consequence of the amendment, the rights will not
be triggered by and the plan will pose no obstacle for
any offer to our stockholders for all shares which
Dexter's financial advisor opines is fair from a
financial point of view, is supported by liquid funds on
hand or by fully committed financing, is substantially
unconditional and has been open to Dexter stockholders
for at least 60 calendar days. Although we believe your
rights plan proposals for our stockholder meeting are
illegal and unenforceable, we have elected to preempt
this issue. We believe our stockholders' interests will
be better served if we relieve them of the burden of a
lot of rhetorical sound and fury from ISP designed to
obfuscate its plan and intention to seize control of
Dexter without paying a fair price for the company.
3. We will address your proposals for Dexter's 2000 Annual
Meeting of Stockholders separately. However, on the
subject of electing directors, Dexter accepts the
nomination of yourself, Mr. Kumar and Mr. Peller as
timely in accordance with the By-laws.
You claim Chase Securities Inc. has advised ISP in writing
"that they are highly confident in their ability to arrange credit
facilities for this acquisition." If that were true, we think ISP
owes it to the Dexter stockholders to make an honest, forthright and
candid public disclosure of the letter text. We think ISP's failure
to do so is yet another instance of its disregard for the federal
securities laws which we believe required disclosure of ISP's
contracts, arrangements, understandings and relationships with Chase
Securities promptly after it received their assurances. We also think
ISP's disclosure is legally deficient for failing to describe the
transactions in which the funds will be borrowed and the names of the
parties thereto.
In December you said that the impetus for your takeover
proposal was, among other things, your belief that it was in the best
interests of both Dexter and Life Technologies and their stockholders
"if Dexter Corporation and Life Technologies were separate corporate
entities." In our meeting you stated that you would support a
pro-rata spinoff of the LTI shares owned by Dexter to Dexter
stockholders and you stated that such a transaction could be effected
on a tax-free basis. We are advised to the contrary. We should
provide our stockholders an honest, forthright and candid assessment
of this issue. In order to achieve that, we invite you to help us
arrange a meeting among our respective tax advisors to reach a common
analytical conclusion. We think the Dexter stockholders are entitled
to know whether or not there is any possibility that such a
transaction could be effected without incurring material tax
liabilities at Dexter or for the account of the stockholder
recipients of the spinoff.
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There is another allegation in your letter relating to LTI
which I feel I must briefly address. You keep talking about Dexter's
ability to retain and recruit key personnel at LTI. We have been a
majority stockholder of LTI for nearly two decades without any
problems either in recruiting or retaining key personnel, and if it
were not for the uncertainty that your tactics have introduced we are
confident that would continue. I think it particularly telling on the
subject of executive retention that, in contract to ISP, LTI has
retained its entire senior management team (except the CFO who
retired to teach and remains a director of LTI).
Your letter claims "[a]s you know, Life Technologies'
shareholders have rejected Dexter's recent belated $49 per share
offer." As you know, this statement is false. First, as of this very
moment, neither you nor any other member of your current 13D group
has spoken or written a word to Dexter in response to our good faith
$49 proposal. Second, a former member of your 13D group who owned
more than 825,000 shares (about 3.3% of LTI and over 13% of the
shares owned by your former 13D group) responded favorably to our
proposal, and we acquired those shares for $49 each. Moreover, you
also know our offer was in no way an attempt to provide benefits to
ISP not available to other Dexter stockholders - it was an offer to
buy LTI shares from LTI stockholders, whether or not they were Dexter
stockholders. In fact, it was an honest, forthright and candid
attempt to resolve a difficult situation created by ISP solely for
its own selfish purposes. Although obvious from the terms of our
offer, we repeat here for the record there was no condition
associated with ISP's reaction to our proposal. As we clearly stated,
we were perfectly willing to discuss our proposal with any other
stockholders of Life Technologies who wished to do so, and we in fact
did that very thing.
Mr. Heyman, your campaign to anoint yourself as the savior
of Dexter stockholders is misleading because, ultimately, it is ISP's
own selfish interests which drive your program. The shareholders will
understand that. Moreover, it appears that your hand-picked nominees
lack the necessary experience in corporate governance and in our
industry and none owns a single share of Dexter stock. By contrast,
the Dexter Board has demonstrated its independence and commitment to
serving the Dexter shareholders. We will continue to forthrightly and
clearly articulate our program for value enhancement for our
stockholders to consider. I am confident that our stockholders will
understand it, agree with it and act accordingly.
Sincerely,
/s/ K. Grahame Walker
On February 9, 2000, Mr. Heyman sent the following letter
to Mr. Walker in response to Dexter's offer to allow ISP to conduct a due
diligence review of the business, finances and operations of Dexter and its
subsidiaries:
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Dear Grahame:
We are in receipt of your letter today and, while not
commenting on the host of ancillary issues raised, we agree that the
central focus should be whether Dexter's shareholders are able to
maximize the value of their investment. We take at face value your
statement that Dexter is willing to enter into substantive
discussions with us regarding ISP's proposal and are delighted that
you have taken this step. I have asked our legal counsel to prepare a
confidentiality agreement and advise you that we are in a position to
move very promptly.
All the best.
Sincerely,
/s/ Samuel J. Heyman
On February 9, 2000, Mr. Walker sent the following letter
to Mr. Heyman in response to Mr. Heyman's letter of the same date:
Dear Mr. Heyman:
Your letter this afternoon suggests that you need to reread
my letter of this morning. Please have your counsel contact ours on
the subject of a confidentiality agreement. I believe they are
well-acquainted.
Sincerely,
/s/ K. Grahame Walker
On February 23, 2000, ISP and Dexter entered into a
confidentiality agreement which provided for ISP to conduct a review of
non-public information relating to the business, finances and operations of
Dexter and its subsidiaries and which did not contain any standstill provisions.
On February 24, 2000, ISP commenced a review of certain information made
available by Dexter in a data room.
On February 28, 2000, Dexter issued a press release in
which it announced that it would "institute a process in which we [Dexter] will
survey all of the Company's available options." Dexter stated in its press
release that although Dexter's Board "has made no decision to sell the Company
at this time," it would explore "every available alternative - including a
merger or sale of the Company, a financial restructuring, or a spin-off or sale
of one or more of the Company's businesses." Dexter further stated in its press
release that "third parties will be invited to sign confidentiality agreements,
review comprehensive data room materials and receive Dexter management
presentations."
On March 1, 2000, Dexter filed its preliminary proxy
statement with the SEC. Mr. Heyman sent the following letter to Mr. Walker
addressing Dexter's February 28 press release and the filing:
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Dear Grahame:
With regard to your February 28th announcement that your
Board "has decided to institute a process in which we will survey all
of the Company's options," we would hope that this move was indeed
designed with the view toward maximizing shareholder value for all
Dexter shareholders as we have been urging for quite some time now.
As you know, while your Board has made no decision to sell Dexter at
this time, our nominees are committed to pursue ISP's $45 per share
merger proposal or a superior proposal.
We also note Dexter's statement that it will consider a
"spin-off or sale of one or more of the Company's businesses." In
this connection, we would remind you that ISP's interest continues to
be in the acquisition of Dexter as a whole and therefore trust that,
before considering any such dismemberment, Dexter will enter into
discussions with ISP concerning our acquisition proposal.
Although we are pleased that you have started to provide us
with information, we will need certain additional technical,
financial and operating data. We are compiling a separate list
concerning these requirements which we will furnish shortly to your
representatives, and I would very much appreciate your cooperation
with regard to these requests.
Finally, we have just received your preliminary proxy
statement that was filed with the SEC for the first time today. We
were shocked and surprised by your decision to selectively choose
among the ISP proposals to be presented to Dexter shareholders at
this year's Annual Meeting scheduled for April 27 - and especially by
your attempt to deny Dexter shareholders the right to vote on our
proposal to increase the size of the Dexter Board. We believe this
proposal is legal, appropriate, and was timely made, and ISP intends
to present this proposal at the Annual Meeting and take all necessary
legal action to cause its implementation if passed. We also do not
understand your position that Dexter will refuse to follow the wishes
of its shareholders in the event that they adopt ISP's Rights Plan
proposals.
All the best.
Sincerely,
/s/ Samuel J. Heyman
On March 9, 2000, in response to Mr. Heyman's March 1
letter, Mr. Walker sent a letter to Mr. Heyman in which he reiterated Dexter's
rejection of the ISP Proposal, stating that "[t]here is nothing to discuss or
negotiate." Mr. Walker also stated that Dexter is continuing to conduct its
previously announced process to explore its alternatives. Finally, Mr. Walker
defended Dexter's refusal to present at the 2000 Annual Meeting ISP's proposals
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to increase the size of Dexter's Board and elect additional directors to fill
the vacancies created by such increase.
ISP and Dexter exchanged further correspondence in March
relating to ISP's additional requests for documents and information to assist
ISP in its assessment of Dexter and Life Technologies. Dexter has not yet
provided certain items requested by ISP.
On March 23, 2000, Mr. Heyman sent the following letter to
Mr. Walker in which the ISP Proposal was increased to $50 per share in cash:
Dear Grahame:
Based upon our evaluation to date, ISP's Board has
authorized an increase in the price of ISP's cash merger proposal to
$50 per share. If we receive the proper cooperation from Dexter in
connection with the balance of the due diligence process and Dexter
can demonstrate that the value of the Company would justify a higher
price, we would consider increasing this price as well.
You should know that ISP has, on this date, executed a
commitment letter in which Chase has committed to raise all the
financing necessary for the acquisition, a copy of which I have
attached. You should note that Chase's commitment for $1.825 billion
contains provision for a tender facility so that Dexter shareholders
can receive cash payments promptly.
Grahame, we are most interested in concluding this
transaction and are prepared to proceed promptly. However, should
Dexter be inclined to proceed on a different course, I sincerely hope
that it will allow the Company's shareholders to make the ultimate
decision as to what is in their best interests.
We are still awaiting the due diligence information which
we requested in our March 8th letter.
Sincerely,
/s/ Samuel J. Heyman
Also on March 23, 2000, ISP's counsel, Weil, Gotshal &
Manges LLP, sent a letter to Dexter's counsel, Skadden, Arps, Slate, Meagher &
Flom LLP, requesting that the Poison Pill Amendment Proposal be amended to
provide that offers or transactions in which Dexter shareholders would receive
at least $50 per share in cash (rather than $45) will not trigger the defensive
provisions of the Rights Agreement. Dexter has refused to assure us that such
amendment would be deemed timely made under Dexter's bylaws.
37
<PAGE>
THE PROPOSALS
We are soliciting your proxy in favor of adopting the
following three sets of proposals at the 2000 Annual Meeting, in opposition to
Dexter's Board of Directors: (1) the Nominee Election Proposals, (2) the
Shareholder Rights Proposals and (3) the Voting Rights Proposals. The full text
of shareholder resolutions to effect each proposal are contained in the
respective Annexes to this proxy statement.
EACH OF OUR PROPOSALS IS SEPARATE AND DISTINCT FROM EACH OTHER PROPOSAL. YOU MAY
APPROVE OR VOTE SEPARATELY ON ANY OR ALL OF THE PROPOSALS, BUT THE ADDITIONAL
DIRECTORS ELECTION PROPOSAL WILL NOT BE EFFECTIVE UNLESS THE BOARD SIZE BYLAW
PROPOSAL IS ADOPTED, AND THE POISON PILL AMENDMENT PROPOSAL WILL NOT BE
EFFECTIVE UNLESS THE POISON PILL BYLAW PROPOSAL IS ADOPTED.
If each of our proposals is adopted, the overall result
would be that the intended effect of certain of Dexter's anti-takeover
measures - the classified board of directors and the "poison pill" Rights
Agreement - could be neutralized. In addition, you should know that our nominees
are committed to pursue the ISP Proposal or a superior proposal. If our nominees
are elected as a majority of Dexter's Board, the anti-takeover measures
mentioned above, as well as the Connecticut statutory anti-takeover devices
described in the discussion of Proposal No. 4 below, could be potentially
removed by Dexter's Board in connection with any approval of the ISP Proposal or
a superior proposal - regardless of the outcome of the vote on our Shareholder
Rights Proposals. Any action taken by our nominees, if elected as directors,
will be subject to their fiduciary duties to you. In addition, note that we are
seeking to have the Rights Agreement judicially invalidated. See "Certain
Litigation." If the Rights Agreement is judicially invalidated prior to the 2000
Annual Meeting, we will withdraw our Shareholder Rights Proposals.
In connection with our proposals, we have filed a complaint
with the United States District Court for the District of Connecticut in which
we are seeking, among other things, (1) a declaratory judgment that our Nominee
Election Proposals, Shareholder Rights Proposals and Voting Rights Proposals are
valid under Connecticut law, that any supermajority voting requirement contained
in Dexter's Bylaws is invalid, and that the Rights Agreement is invalid, and (2)
an order requiring that the 2000 Annual Meeting be held no later than April 30,
2000. Insofar as there is a lack of direct Connecticut case law to either
substantiate or contradict the validity of the proposals challenged by Dexter,
the courts will ultimately determine the legality and enforceability under
Connecticut law of such proposals. See "Certain Litigation." We intend to
present all of our proposals at the 2000 Annual Meeting. If, after the 2000
Annual Meeting, any of our proposals were to be finally adjudicated as invalid
under Connecticut law, such proposal, if adopted, would then not be effective.
If there was a final adjudication prior to the 2000 Annual Meeting holding that
any proposal was invalid, we would not present such proposal at the 2000 Annual
Meeting.
38
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THE NOMINEE ELECTION PROPOSALS
PROPOSAL NO. 1: THE DIRECTOR ELECTION PROPOSAL
According to publicly available information, Dexter
currently has ten directors, divided into three classes having staggered terms
of three years each. The terms of one class of incumbent directors, consisting
of Charles H. Curl, Peter G. Kelly and Jean Francois Saglio, will expire at the
2000 Annual Meeting. Accordingly, at the 2000 Annual Meeting, you will be asked
to elect three persons to fill the directorships in this class for a three-year
term continuing until the 2003 Annual Meeting and the election and qualification
of each person's respective successor. The following persons are our nominees
for election as directors in such class:
<TABLE>
<CAPTION>
Name and Business Present Principal Occupation and Five Year
Address Age Employment History Class
- ------- --- ------------------ -----
<S> <C> <C>
Samuel J. Heyman 61 Mr. Heyman has been a director and Chairman of ISP 2003
1361 Alps Road since its formation and served as its Chief Executive
Wayne, New Jersey 07470 Officer from its formation until June 1999. He has
also been a director, Chairman and Chief Executive
Officer of GAF Corporation ("GAF"), and certain of
its subsidiaries for more than five years. GAF's
primary business is conducted through Building
Materials Corporation of America ("BMCA"), an
indirect, approximately 97%-owned subsidiary of GAF
which is primarily engaged in the commercial and
residential roofing business. Mr. Heyman has been a
director and Chairman of BMCA since its formation,
and has served as Chief Executive Officer of BMCA
since June 1999, a position he also held from June
1996 to January 1999. He is also the Chief Executive
Officer, Manager and General Partner of a number of
closely held real estate development companies and
partnerships whose investments include commercial
real estate and a portfolio of publicly traded
securities.
Sunil Kumar 50 Mr. Kumar has been a director, President and Chief 2003
1361 Alps Road Executive Officer of ISP since June 1999. Mr. Kumar
Wayne, New Jersey 07470 has also been President and Chief Executive Officer
of certain subsidiaries of ISP, including ISP
Investments Inc., since June 1999. Mr. Kumar was a
director, President and Chief Executive Officer of
BMCA from May 1995, July 1996 and January 1999,
respectively, until June 1999. He was Chief Operating
Officer of BMCA from March 1996 to January 1999. Mr.
Kumar also was President, Commercial Roofing Products
39
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Division, and Vice President of BMCA from February
1995 to March 1996. From 1992 to February 1995, he
was Executive Vice President of
Bridgestone/Firestone, Inc., a retail distributor and
manufacturer of tires and provider of automobile
services.
Philip Peller 60 Prior to his retirement on November 30, 1999, Mr. 2003
Peller was a partner of Andersen Worldwide S.C. and
Arthur Andersen LLP, a role he had held since 1970.
He served as Managing Partner - Practice Protection
and Partner Affairs for Andersen Worldwide during the
period 1998 to 1999 and as Managing Partner -
Practice Protection from 1996 to 1998. During the
period 1995 to 1996, he was the Managing Director -
Quality, Risk Management and Professional Competence
for Arthur Andersen's global audit practice.
</TABLE>
Each of the nominees has consented to serve as a director
until the expiration of his respective term and until such nominee's successor
has been elected and qualified or until the earlier resignation or removal of
such nominee. We have no reason to believe that any of the nominees named above
will be disqualified or unable or unwilling to serve if elected. However, if any
of the nominees are unable to serve or for good cause will not serve, proxies
may be voted for another person nominated by ISP to fill the vacancy.
The nominees understand that, if elected as directors of
Dexter, each of them will have an obligation under Connecticut law to discharge
his duties as a director in good faith, consistent with his fiduciary duties to
Dexter and its shareholders.
WE STRONGLY RECOMMEND THAT YOU VOTE
"FOR" THE ELECTION OF OUR NOMINEES
PROPOSAL NO. 2: THE BOARD SIZE BYLAW PROPOSAL
We are proposing a Bylaw amendment that would require
additional directors to be elected at the 2000 Annual Meeting so that Dexter's
Board will consist of seventeen directorships, rather than its current ten
directorships. If our Board Size Bylaw Proposal is adopted, Dexter shareholders
would be entitled to elect, in addition to the three directors under Proposal
No. 1 above, seven additional directors, for a total of ten directors at the
2000 Annual Meeting. The Board Size Bylaw Proposal would allow Dexter
shareholders to elect a majority of Dexter's Board at the 2000 Annual Meeting.
The Board Size Bylaw Proposal provides that the seven
additional directorships proposed will be allocated to the classes with terms
expiring at the 2001 Annual Meeting and the 2002 Annual Meeting, unless the
additional nominees are allocated to the class with a term expiring at the 2003
40
<PAGE>
Annual Meeting by Dexter's Board, consistent with its duties under Connecticut
law to allocate directors among the three classes so that all classes are equal
in size to the extent possible. We believe, based on our interpretation of
Connecticut law and the Dexter Certificate of Incorporation, that either the
current Dexter Board could make such an allocation, contingent on the approval
of Proposal Nos. 2 and 3 by the shareholders, or the new Dexter Board could make
such an allocation following the 2000 Annual Meeting.
The Board Size Bylaw Proposal will allow you to elect a
majority of Dexter's Board of Directors at the 2000 Annual Meeting. The adoption
of our Board Size Bylaw Proposal would have the effect of neutralizing the
impact of Dexter's classified Board of Directors, which is divided into three
classes serving staggered, three-year terms. Opponents of classified boards,
like Dexter's, believe that they help entrench the incumbency of the current
board and therefore deter change in control transactions which may be beneficial
to shareholders, because ordinarily at least two annual meetings - rather than
one - would be required before a change in control of the board could be
effected. However, proponents of classified boards argue that the device
encourages a party seeking to obtain control of a company to negotiate with the
board, and that it provides continuity and stability to a company and its
business and operational strategies. If all of our nominees are elected, a
majority of Dexter's directors would not be current incumbents and a lack of
continuity in Dexter's corporate policy and governance may occur. However, our
nominees, if elected, and Dexter's incumbent directors, if reelected, would owe
the same fiduciary duties to Dexter shareholders. Given the refusal of Dexter's
current board to commit to pursue the ISP Proposal or a superior proposal - we
believe now is an appropriate time to create a new majority on Dexter's Board.
The proposed Bylaw amendment provides that the new Bylaw
provision cannot be unilaterally repealed or altered by Dexter's Board. This
means that a shareholder vote - with the votes cast "for" exceeding the votes
cast "against" - will be required to amend or repeal the Bylaw provision, if it
is adopted. Ordinarily, Dexter's Board can unilaterally amend, adopt or repeal
Bylaws. Connecticut law permits the board's rights to amend or repeal bylaws to
be limited if so provided by the shareholders in connection with adopting any
Bylaw amendment. If the Board Size Bylaw is adopted, Dexter's Board elected at
the 2000 Annual Meeting will still be able to change the size of Dexter's Board
from and after the date of the meeting. The full text of the Bylaw amendment to
effect the Board Size Bylaw Proposal is contained in Annex I to this proxy
statement.
Dexter has asserted that our Board Size Bylaw Proposal and
Additional Directors Election Proposal are invalid. In connection with our
proposals, we have filed a complaint with the United States District Court for
the District of Connecticut in which we are seeking, among other things, a
declaratory judgment that our Nominee Election Proposals are valid under
Connecticut law. On or about March 9, 2000, Dexter and the individual director
defendants filed a motion for partial summary judgment seeking dismissal of this
portion of our complaint. We intend to oppose this motion. See "Certain
Litigation."
41
<PAGE>
The following legal analysis is the basis for ISP's belief
that its Board Size Bylaw Proposal and Additional Directors Election Proposal
are valid under Dexter's certificate of incorporation and Connecticut law.
Section 33-737 of the Connecticut Business Corporation Act
explicitly provides that a shareholder adopted bylaw may fix the number of
directors unless the corporation's certificate of incorporation provides
otherwise. Nothing in Dexter's certificate fixes the number of directors on
Dexter's board or states that only Dexter's board can determine the total number
of directors. Accordingly, ISP believes that shareholders can, under Connecticut
law, increase or decrease the number of directors through an amendment to the
bylaws. Furthermore, the only provision in Dexter's certificate relating to the
issue of increasing the size of the board appears in Article VII of the
certificate, which states that Dexter's board "may from time to time by
resolution increase or decrease the number of directorships." Courts have held
that the use of the word "may" rather then "shall" in a provision of this type
means that both the board and the shareholders have the authority to increase
board size. See Homac Corp. v. DSA Fin. Corp., 661 F. Supp. 776 (E.D. Mich.
1987). In contrast, the provision in Article VII upon which Dexter has relied to
support its opposition to ISP's proposed bylaw (which states that the "number of
directorships within each class shall be determined by the board of directors")
governs only the allocation of directors within classes and not the total number
of directors.
ISP believes that this statutory analysis under CBCA
Section 33-737 is confirmed by judicial decisions, both in Connecticut and other
states, holding that shareholders have the inherent authority to create and fill
new directorships. See, e.g., Gold Bluff Mining & Lumber Corp. v. Whitlock, 55
A. 175 (Conn. 1903); Moon v. Moon Motor Car Corp., 151 A. 298 (Del. Ch. 1930);
Automatic Steel Prods., Inc. v. Johnston, 64 A.2d 416 (Del. 1949); DiEleuterio
v. Cavaliers of Del., Inc., 1987 WL 6338 (Del. Ch. Feb. 9, 1987). This inherent
authority can be taken away from shareholders only if shareholders explicitly
are asked to give up this power and only if shareholders knowingly agree to do
so in clear and unambiguous language. Dexter's certificate lacks the "strong"
language the cases have required to prevent shareholders from exercising their
inherent authority. Finally, ISP believes that its proposal complies withss.
33-740(a) of the Connecticut Business Corporation Act, which provides that each
class of directors shall contain "approximately the same percentage of the
total, as near as may be," because it expressly authorizes Dexter's board to
determine the classes in which the new directors are placed.
Dexter's Connecticut counsel, Day, Berry & Howard LLP, has
provided Dexter's Board with an opinion letter which states that, subject to the
qualifications contained in the letter, "it is our opinion that, although there
are no controlling Connecticut cases directly on point, a Connecticut court
presented with the questions of the validity of the Board Size Bylaw Proposal
and the Additional Directors Election Proposal, would hold that they are invalid
and unenforceable under Connecticut law." Our Connecticut counsel, Levett
Rockwood P.C., has provided us with a response to Dexter's counsel's letter, but
for the reasons described below, has not given a legal opinion or statement as
to whether it believes these proposals are legal and valid under Connecticut
law. First, Levett Rockwood notes that under American Bar Association
guidelines, lawyers should normally refrain from expressing judgments or
predictions as to the outcome of litigation, due to the inherent uncertainties.
42
<PAGE>
Second, Levett Rockwood notes that neither it nor Dexter's counsel have located
any Connecticut case law directly on point. Third, Levett Rockwood believes
that, in accordance with these guidelines, it would be inappropriate to issue an
opinion regarding the validity of the Board Size Bylaw Proposal and Additional
Directors Election Proposal while the issue of such validity is subject to
pending litigation, especially where there is no Connecticut case law directly
on point, because any such opinion could reasonably be considered a judgment or
prediction as to the outcome of such litigation, which would first establish
such case law. Finally, Levett Rockwood asserts that "[w]e believe that ISP's
arguments in support of the validity of the Board Size Bylaw Proposal and the
Additional Directors Election Proposal are strong and persuasive."
Insofar as there is a lack of direct Connecticut case law
to either substantiate or contradict the validity of the proposals challenged by
Dexter, the courts will ultimately determine the legality and enforceability
under Connecticut law of such proposals. See "Certain Litigation." We intend to
present all of our proposals at the 2000 Annual Meeting. If, after the 2000
Annual Meeting, our Board Size Bylaw and Additional Directors Election Proposal
were to be finally adjudicated as invalid under Connecticut law, such proposals,
even if adopted at the 2000 Annual Meeting, would then not be effective. If
there was a final adjudication prior to the 2000 Annual Meeting holding that any
proposal was invalid, we would not present such proposal at the 2000 Annual
Meeting.
WE STRONGLY RECOMMEND THAT YOU VOTE
"FOR" THE BOARD SIZE BYLAW PROPOSAL
PROPOSAL NO. 3: THE ADDITIONAL DIRECTORS ELECTION PROPOSAL
If the Board Size Bylaw Proposal is adopted, we nominate
the following persons to Dexter's Board to fill the newly-created directorships.
Our proposal provides that our nominees will be assigned to classes as indicated
below, unless the additional nominees are allocated to the class with a term
expiring at the 2003 Annual Meeting by Dexter's Board, consistent with its
duties under Connecticut law.
<TABLE>
<CAPTION>
Name and Business Present Principal Occupation and Five Year
Address Age Employment History Class
- ------- --- ------------------ -----
<S> <C> <C>
Alan Meckler 54 Mr. Meckler has been the Chairman and Chief 2002
501 Fifth Avenue Executive Officer of Internet.com Corp., a
New York, NY provider of global real-time news and
10017 information resources for the internet
industry, since December 1998. He was
Chairman and Chief Executive Officer of
Mecklermedia Corp., a provider of internet
information, from June 1971 to November 30,
1998.
Dan Ogden 52 Mr. Ogden has been the President and Chief 2002
Yokohama Tire Operating Officer of Yokohama Tire
Corporation Corporation, the North American marketing
601 S. Acacia arm of Yokohama Rubber Company, a worldwide
Fullerton, CA tire manufacturer, since August 1997. From
92834-4550 September 1996 until August 1997, Mr. Ogden
was engaged in private investment
43
<PAGE>
activities. He was President and Chief
Operating Officer of EMCO Enterprises, Inc.,
a diversified manufacturer primarily of
storm and screen doors, from December 1992
until August 1996.
Morrison DeSoto Webb 52 Mr. Webb has been an attorney in private 2002
120 Rye Ridge Road practice since January 2000. He was
Harrison, NY 10528 Executive Vice President - External Affairs
and Corporate Communications at Bell
Atlantic Corporation from August 1997 until
December 1999. From May 1995 until August
1997, Mr. Webb was Executive Vice President,
General Counsel and Secretary of NYNEX
Corporation. He was Vice President - General
Counsel of New England Telephone and
Telegraph Company, a subsidiary of NYNEX
Corporation, from 1991 until 1995 and Vice
President - General Counsel of New York
Telephone Company, a subsidiary of NYNEX
Corporation from 1994 until 1995.
Robert Englander 57 Mr. Englander has been the Chairman of the 2002
75 Holly Hill Lane Board and Chief Executive Officer of Belvoir
Greenwich, CT 06830 Publications, a publisher of aviation,
marine, electronic, equestrian and other
special interest books, videos and
publications, since February 1973.
John Droney 53 Mr. Droney has been an attorney with Levy & 2001
74 Batterson Park Road Droney, P.C. since February 1988. Mr. Droney
Farmington, CT 06032 was also Chairman of the Democratic State
Central Committee of Connecticut and a
member of the Democratic National Committee
from 1986 to 1992.
Anthony T. Kronman 54 Mr. Kronman has been Dean and Professor of 2001
127 Wall Street Law at Yale Law School since 1994 and 1978,
New Haven, CT 06511 respectively.
Vincent Tese 56 Mr. Tese has been the Chairman of Wireless 2001
Wireless Cable Cable International Inc., a cable television
International, and wireless communications service
Inc. c/o Bear provider, since April 1995. Mr. Tese was
Stearns & Co. Chairman of Cross Country Wireless Inc.,
Inc. also a cable television and wireless
245 Park Avenue communications service provider, from
New York, NY October 1994 to July 1995. Mr. Tese was the
10167 Director of Economic Development for the
44
<PAGE>
State of New York from June 1987 to December
1994 and also served as the Chairman of the
Urban Development Corporation in New York
from 1985 to 1994. Mr. Tese currently serves
as a director of Allied Waste Industries,
Inc., Bear Stearns Companies Inc., Bowne &
Co., Inc., Cablevision Systems Corp.,
Keyspan Corp. and Mack-Cali Realty Corp.
</TABLE>
Each of the nominees has consented to serve as a director
until the expiration of his respective term and until such nominee's successor
has been elected and qualified or until the earlier resignation or removal of
such nominee. We have no reason to believe that any of the nominees named above
will be disqualified or unable or unwilling to serve if elected. However, if any
of the nominees are unable to serve or for good cause will not serve, proxies
may be voted for another person nominated by ISP to fill the vacancy.
The nominees understand that, if elected as directors of
Dexter, each of them will have an obligation under Connecticut law to discharge
his duties as a director in good faith, consistently with his fiduciary duties
to Dexter and its shareholders. The full text of a shareholder resolution to
effect the Additional Directors Election Proposal is contained in Annex II to
this proxy statement.
WE STRONGLY RECOMMEND THAT YOU VOTE
"FOR" THE ELECTION OF OUR ADDITIONAL NOMINEES
TO FILL THE NEWLY-CREATED DIRECTORSHIPS
THE SHAREHOLDER RIGHTS PROPOSALS
PROPOSAL NO. 4: THE POISON PILL BYLAW PROPOSAL
We are proposing an amendment to the Bylaws which would
require Dexter's Board to redeem the Rights, or to amend the Rights Agreement to
make the Rights inapplicable to transactions or offers specified by Dexter
shareholders, if shareholders adopt a special resolution requiring Dexter's
Board to do so. Such a resolution could be adopted at any duly organized
shareholder's meeting where a quorum is present if the votes cast for the
resolution exceed the votes cast against the resolution. In addition, our
proposed amendment would require Dexter's Board to obtain shareholder approval
prior to adopting any new shareholder rights plan, rights agreement or any other
form of "poison pill" which is designed to or has the effect of making
acquisitions of large holdings of Dexter's shares of stock more difficult or
expensive. The complete text of our proposed Bylaw amendment to effect the
Poison Pill Bylaw Proposal is included as Annex III to this proxy statement.
45
<PAGE>
Our Poison Pill Bylaw Proposal would allow Dexter
shareholders to make their own decision with respect to proposed offers or
transactions, by requiring that Dexter's Board follow the direction of Dexter
shareholders with respect to the amendment or replacement of the Rights
Agreement or the redemption of the Rights issued thereunder. If our proposed
Bylaw amendment is adopted, in order for Dexter shareholders to mandate Dexter's
Board to redeem the Rights or amend the Rights Agreement, Dexter shareholders
will, in instances where an annual meeting is not pending, face the procedural
necessity of calling a special meeting of shareholders, an action which requires
the written request of the holders of not less than 35% of the issued and
outstanding shares of Dexter common stock. As described below, our Poison Pill
Amendment Proposal proposes the adoption of a special shareholder resolution
requiring Dexter's Board to amend the Rights Agreement to make it inapplicable
to any offer for all outstanding Dexter shares of common stock at a price of at
least $45 per share in cash. Our Poison Pill Bylaw Proposal and Poison Pill
Amendment Proposal, taken together, will cause the Rights Agreement to remain in
effect to deter unsolicited proposals for less than $45 per share in cash for
all shares, for partial offers, and for non-cash transactions. However, if our
proposals are adopted, the Rights Agreement will no longer apply to any proposal
for all shares at a price of at least $45 per share. As described in "Certain
Litigation" we are seeking to have the Rights Agreement invalidated in its
entirety. If the Rights Agreement is invalidated, it will no longer be an
obstacle to stock accumulations or offers at any price. If the Rights Agreement
is judicially invalidated prior to the 2000 Annual Meeting, we will withdraw our
Shareholder Rights Proposals.
Dexter's Certificate of Incorporation and Connecticut law
provide significant impediments to many forms of unsolicited offers for Dexter,
in addition to the Rights Agreement. The Certificate provides that: (1)
directors serve staggered terms, preventing any independent shareholder or group
of shareholders from gaining a majority of the seats on Dexter's Board in a
single year, absent an amendment to the Bylaws approved by Dexter shareholders,
and (2) Dexter has authorized for issuance a "blank check" preferred stock that
can be used to dilute the ownership or voting power of a bidder not approved by
Dexter's Board. Connecticut law provides that: (a) certain transactions with a
beneficial owner of more than 10% of Dexter's voting stock, including mergers,
are subject to approval by Dexter's Board, 80% of the voting power of the
outstanding shares and 66-2/3% of voting power of the disinterested
shareholders, unless certain "fair price" requirements are met and (b) business
combinations with a beneficial owner of more than 10% of Dexter's voting stock
are prohibited for five years, unless approved by Dexter's Board. In addition,
Connecticut law requires directors in exercising their fiduciary duties to
consider, in addition to the interests of shareholders, the interests of the
corporation, its employees, customers, creditors and suppliers, and the
interests of the community and society. Our nominees are committed to pursue the
ISP Proposal or a superior proposal. If our nominees are elected as a majority
of Dexter's Board, they could potentially neutralize these anti-takeover devices
by participating in Dexter's Board's approval of the ISP Proposal or a superior
proposal.
Poison pills are considered extremely potent corporate
takeover defense mechanisms, and Dexter's existing Rights Agreement may be
viewed as being aligned with shareholder interests. Proponents of poison pills
assert that rights plans, such as the Rights Agreement, enable the board to
respond in an orderly manner to unsolicited bids by providing sufficient time to
carefully evaluate the fairness of an unsolicited offer and the credibility of
46
<PAGE>
the bidder, and thereby giving the board the flexibility to explore alternative
strategies for maximizing shareholder value. It has been argued that poison
pills deter abusive takeover tactics. Proponents of poison pills also assert
that rights plans provide incentives for a potential bidder to negotiate in good
faith with the board, and that such negotiations are likely to maximize value
for shareholders by soliciting the highest possible price from the bidder.
Removal of a poison pill could make the accomplishment of a given transaction,
such as a tender offer, easier even if it is unfavorable to the interests of
shareholders and could make the removal of management easier, even if such
removal would be generally detrimental to shareholders. Our Poison Pill Bylaw
Proposal and Poison Pill Amendment Proposal, taken together, would in effect
remove Dexter's poison pill with respect to any offer for all outstanding Dexter
shares for at least $45 per share in cash.
Shareholders have opposed poison pills on the grounds that
poison pills force potential investors to negotiate potential acquisitions with
management, instead of making their offer directly to the shareholders. Such
opponents to poison pills assert that poison pills can pose such an obstacle to
a takeover that management becomes entrenched. We believe that such entrenchment
and the consequential lack of management accountability to shareholders
adversely affects shareholder value and that poison pills can deter desirable
acquisition offers that would be in the shareholders' best interests. We believe
that poison pills insulate management from the threat of a change in control
because they provide a board, which is generally advised by and includes
representatives of management, with veto power over change in control bids, even
when shareholders believe that such bids are in their best interests.
The proposed Bylaw amendment provides that the new Bylaw
provision cannot be unilaterally repealed or altered by Dexter's Board. This
means that a shareholder vote - with the votes cast "for" exceeding the votes
cast "against" - will be required to amend or repeal the Bylaw provision, if it
is adopted. Ordinarily, Dexter's Board can unilaterally amend, adopt or repeal
Bylaws. Connecticut law permits the board's rights to amend or repeal bylaws to
be limited if so provided by the shareholders in connection with adopting any
bylaw amendment. The full text of the Bylaw amendment to effect the Poison Pill
Bylaw Proposal is contained in Annex III to this proxy statement.
Dexter has asserted that our Poison Pill Bylaw Proposal and
our Poison Pill Amendment Proposal are invalid. In connection with our
proposals, we have filed a complaint with the United States District Court for
the District of Connecticut in which we are seeking, among other things, a
declaratory judgment that our Shareholder Rights Proposals are valid under
Connecticut law. We recognize that the Connecticut courts have not considered
the validity of our proposed amendment or any similar bylaw amendment. See
"Certain Litigation." While there is a lack of case law in Connecticut to either
directly substantiate or directly contradict the validity of our Shareholder
Rights Proposals under Connecticut state law, the following legal analysis
supports ISP's position that its shareholders right bylaw proposal is valid
under Connecticut law.
First, shareholders have broad powers under the Connecticut
Business Corporation Act ("CBCA") to amend or repeal bylaws with respect to any
matter concerning the corporation's "business" or "affairs." See ss. 33-640(b)
(a corporation's bylaws "may contain any provision for managing the business and
47
<PAGE>
regulating the affairs of the corporation that is not inconsistent with law or
the certificate of incorporation"); ss. 33-806(b) (a "corporation's shareholders
may amend or repeal the corporation's bylaws even though the bylaws may also be
amended or repealed by its board of directors"). The CBCA imposes no
restrictions on the right of shareholders to amend or repeal the bylaws with
respect to such matters, including those otherwise within the board's general
authority over the corporation's business operations. Thus, ISP believes that
board action in adopting a poison pill is subject to any bylaws the shareholders
may enact regulating the exercise of that poison pill.
Second, neither the CBCA nor the Dexter certificate of
incorporation grant directors the exclusive authority to adopt and implement a
poison pill plan or preclude shareholders from modifying that plan provided they
act through appropriate governance procedures. Connecticut does not have an
enabling statute which expressly authorizes directors to enact such an
anti-takeover measure. The Dexter certificate of incorporation is silent with
respect to a board's ability to adopt a poison pill and does not contain any
provision barring shareholders from amending the bylaws to modify a
board-adopted rights plan. ISP believes that the absence of any such language in
either the Connecticut statute or the Dexter certificate of incorporation
strongly supports the validity of its proposed bylaw amendment.
Third, the only judicial decision which directly addresses
the issue has held, under a comparable statutory scheme, that "shareholders may
propose bylaws which restrict board implementation of shareholder rights plans,
assuming the certificate of incorporation does not provide otherwise" on the
ground that "there is no exclusive authority granted boards of directors to
create and implement shareholder rights plans, where shareholder objection is
brought and passed through official channels of corporate governance."
International Brotherhood of Teamsters General Fund v. Fleming, 975 P.2d 907,
908 (Okla. 1999). ISP believes that a court construing Connecticut law is likely
to follow Fleming.
We have neither requested nor received a written opinion of
Connecticut counsel on the validity of our Shareholders Rights Proposals under
Connecticut law. We believe that, in view of the lack of Connecticut case law
directly on point, any such opinion of counsel would be of limited value. We
recognize that Dexter has stated in its proxy materials that it has obtained an
opinion of its Connecticut counsel to the effect that such proposals are not
valid. We intend to present all of our proposals at the 2000 Annual Meeting. If
our Poison Pill Bylaw Proposal and our Poison Pill Amendment Proposal are
finally adjudicated as invalid under Connecticut law, the proposals, even if
adopted at the 2000 Annual Meeting, would then not be effective. If there was a
final adjudication prior to the 2000 Annual Meeting holding that any proposal
was invalid, we would not present such proposal at the 2000 Annual Meeting.
WE STRONGLY RECOMMEND THAT YOU VOTE
"FOR" THE POISON PILL BYLAW PROPOSAL.
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PROPOSAL NO. 5: THE POISON PILL AMENDMENT PROPOSAL
In connection with the Bylaw amendment in Proposal No. 4
above, we are proposing the adoption of a special shareholder resolution. The
resolution will require Dexter's Board to amend the Rights Agreement to make it
inapplicable to any offer for all outstanding Dexter shares of common stock at a
price of at least $45 per share in cash. The effect of our Poison Pill Bylaw
Proposal and our Poison Pill Amendment Proposal, if each is adopted, would be to
render the Rights Agreement inapplicable to any offer for at least $45 per share
in cash for all shares. The Rights Agreement would remain in full force and
effect with respect to all offers for less than $45 per share, offers for less
than all shares and non-cash offers, unless we are successful in having the
Rights Agreement judicially invalidated.
We are proposing a $45 per share threshold solely because
our initial proposal was for at least $45 per share. You should be aware that
Dexter has rejected our $45 per share proposal as being inadequate, and we have
subsequently increased our proposal to $50 per share. We have not amended the
Poison Pill Amendment Proposal to reflect our increased $50 per share proposal
because Dexter has refused to assure us that such amendment would be deemed
timely made under Dexter's bylaws. Accordingly, if each of our Shareholder
Rights Proposals is adopted, the Rights Agreement will not provide shareholder
protection for proposals to acquire all Dexter shares for at least $45 per share
in cash, including certain offers that are lower than our $50 per share
proposal. It can be argued that a $45 level is inappropriate because the value
of a company is constantly changing, or you could conclude that you believe that
the minimum premium for control of Dexter should be higher. However, we believe
that the adoption of our Poison Pill Amendment Proposal would send a clear
message to Dexter's Board that it should pursue offers of at least $45 and would
end the uncertainty as to the minimum bid required to make the defensive
provisions of the Rights Agreement inapplicable. The full text of a resolution
implementing the Poison Pill Amendment Proposal is included as Annex IV to this
proxy statement.
WE STRONGLY RECOMMEND THAT YOU VOTE
"FOR" THE POISON PILL AMENDMENT PROPOSAL.
THE VOTING RIGHTS PROPOSALS
PROPOSAL NO. 6: THE BYLAW REPEAL PROPOSAL.
Article X of the Dexter Bylaws provides that Bylaws may be
repealed by Dexter shareholders. We propose to repeal any Bylaw amendments
adopted by Dexter's Board between February 26, 1999 and the date of the 2000
Annual Meeting. The purpose of this proposal is to prevent Dexter's Board from
interfering with the implementation of the proposals being acted upon by Dexter
shareholders pursuant to this proxy solicitation. The complete text of our
proposed shareholder resolution to effect the Bylaw Repeal Proposal is included
as Annex V to this proxy statement.
We believe that any Bylaw amendments adopted by Dexter's
Board prior to the 2000 Annual Meeting are likely to be aimed at frustrating our
proposals and therefore are not likely to be in the best interests of the Dexter
shareholders. We are not aware of any Bylaw amendments adopted by Dexter's Board
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<PAGE>
since February 26, 1999. Any Bylaw amendments validly adopted by Dexter's Board
prior to the Annual Meeting would remain in effect unless and until our proposal
to repeal such Bylaws is adopted. If Dexter's Board adopts any such Bylaw
amendments before the 2000 Annual Meeting, it will have an opportunity to inform
shareholders of the benefits of these amendments and to attempt to persuade
shareholders to vote against this proposal.
WE STRONGLY RECOMMEND THAT YOU VOTE
"FOR" THE BYLAW REPEAL PROPOSAL.
PROPOSAL NO. 7: THE OMNIBUS PROPOSAL
In addition, Dexter shareholders will be asked at the 2000
Annual Meeting to consider the Omnibus Proposal, which sets forth the following
order in which our proposals will be voted upon by Dexter shareholders:
1. The Omnibus Proposal;
2. The Bylaw Repeal Proposal;
3. The Director Election Proposal;
4. The Board Size Bylaw Proposals;
5. The Additional Directors Election Proposal;
6. The Poison Pill Bylaw Proposal; and
7. The Poison Pill Amendment Proposal.
The full text of a shareholder resolution to effect the
Omnibus Proposal is contained in Annex VI to this proxy statement.
WE STRONGLY RECOMMEND THAT YOU
VOTE "FOR" THE OMNIBUS PROPOSAL.
OTHER MATTERS TO BE CONSIDERED
AT THE 2000 ANNUAL MEETING
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
As set forth in Dexter's Proxy Statement, at the 2000
Annual Meeting, Dexter shareholders will be asked to ratify the appointment by
Dexter's Board of PricewaterhouseCoopers LLP as Dexter's independent auditors
for the year 2000. We are not making any recommendation on this proposal.
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OTHER PROPOSALS
Except as set forth above, we are not aware of any
proposals to be brought before the 2000 Annual Meeting. However, we have
notified Dexter of our intention to bring before the 2000 Annual Meeting such
business as may be appropriate, including without limitation nominating
additional persons for directorships, or making other proposals as may be
appropriate to address any action of Dexter's Board not publicly disclosed prior
to the date of this proxy statement. Should other proposals be brought before
the 2000 Annual Meeting, the persons named as proxies in the enclosed GOLD proxy
card will vote on such matters in their discretion.
VOTING PROCEDURES
In order to ensure that your views on the proposals are
heard by Dexter and your vote represented at the 2000 Annual Meeting, we urge
you to sign and date the enclosed GOLD Proxy Card and return it to Innisfree M&A
Incorporated, 501 Madison Avenue, 20th Floor, New York, New York 10022, in the
enclosed postage paid envelope TODAY. Execution of the GOLD Proxy Card will not
affect your right to attend the 2000 Annual Meeting and to vote in person.
You are eligible to execute a GOLD Proxy only if you owned
the Common Stock on the Record Date. Dexter's Board has set February 25, 2000 as
the Record Date for determining those shareholders who will be entitled to
notice of and to vote at the 2000 Annual Meeting. You will retain the right to
execute a proxy card in connection with this proxy solicitation even if you sell
your shares after the Record Date. Accordingly, it is important that you vote
the Shares held by you on the Record Date, or grant a proxy to vote such Shares
on the GOLD proxy card, even if you sell such shares after the Record Date.
We believe that as of the close of business on the Record
Date, there were 23,058,969 shares of common stock of Dexter issued and
outstanding and entitled to vote. Shareholders will have one vote for each share
of common stock they own with respect to all matters to be considered at the
2000 Annual Meeting.
In order for your views on the above-described proposals to
be represented at the 2000 Annual Meeting, please sign and date the enclosed
GOLD proxy card and return it to Innisfree M&A Incorporated in the enclosed
prepaid envelope TODAY. Execution of the GOLD proxy card will not affect your
right to attend the 2000 Annual Meeting and to vote in person. Any proxy may be
revoked at any time prior to the 2000 Annual Meeting by delivering a written
notice of revocation or a later dated proxy for the 2000 Annual Meeting to
Innisfree M&A Incorporated or the Secretary of Dexter, or by voting in person at
the 2000 Annual Meeting. ONLY YOUR LATEST DATED PROXY WILL COUNT.
Unless otherwise indicated, the GOLD Proxy authorizes the
persons named in the proxy to vote, and such persons will vote, properly
executed and duly returned proxies FOR the Nominee Election Proposals, FOR the
Shareholder Rights Proposals and FOR the Voting Rights Proposals, all of which
are described in this proxy statement. If no marking is made on your GOLD Proxy
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<PAGE>
with respect to the ratification of the appointment of Dexter's independent
auditors, you will be deemed to have given a direction to abstain from voting on
such matter.
VOTE REQUIRED
Based on currently available public information, a quorum
will exist at the 2000 Annual Meeting if holders of not less than a
majority of the shares of Dexter common stock outstanding and entitled to vote
at the 2000 Annual Meeting are present in person or by proxy. If a quorum is
present, our proposals can be adopted by the following vote:
o NOMINEE PROPOSALS: Election of nominees for directorships will require
the affirmative vote of a plurality of the votes cast. Consequently,
only shares that are voted in favor of a particular nominee will be
counted toward such nominee's attaining a plurality of votes. The
election of our nominees for the seven newly-created directorships will
not be effective unless our Board Size Bylaw Proposal is adopted.
o PROPOSALS REQUIRING BYLAW AMENDMENTS: We believe that our proposals
involving amendments to the Dexter Bylaws, namely our Board Size Bylaw
Proposal, Poison Pill Bylaw Proposal and Bylaw Repeal Proposal, will be
approved if the votes cast for the respective proposal exceed the votes
cast against the respective proposal. Accordingly, our Bylaw amendment
proposals could each be approved by less than a majority of the issued
and outstanding shares of common stock once a quorum is present at the
2000 Annual Meeting. We have received the opinion of Levett Rockwood
P.C., our Connecticut counsel, that, to the extent the Dexter Bylaws may
require a supermajority shareholder vote for an amendment, such
provision is invalid under Connecticut law. Levett Rockwood P.C. has
consented to the use of its name and the reference to its opinion in
this Proxy Statement. We have also instituted litigation seeking to have
any such supermajority amendment requirement held ineffective. See
"Certain Litigation." If the Dexter Bylaws are held to contain an
effective supermajority provision, our Board Size Bylaw Proposal, Poison
Pill Bylaw Proposal and Bylaw Repeal Proposal would each require the
affirmative vote of the holders of two-thirds of the issued and
outstanding shares of common stock.
o PROPOSALS NOT REQUIRING BYLAW AMENDMENTS: Adoption of our Poison Pill
Amendment Proposal and Omnibus Proposal will be approved if the votes
cast for the respective proposal exceed the votes cast against the
respective proposal at the 2000 Annual Meeting. Accordingly, these
proposals could be adopted by less than a majority of the issued and
outstanding shares of common stock once a quorum is present at the 2000
Annual Meeting. Our Poison Pill Amendment Proposal will not be effective
unless our Poison Pill Bylaw Proposal is adopted.
Dexter has refused to include our Board Size Bylaw Proposal
and Additional Directors Election Proposal on its proxy cards and has stated
that no action will be taken on them at the Annual Meeting. A proxy will be
counted as present for purposes of a quorum on each matter for which such proxy
confers the right to vote. Dexter has stated that it intends to exercise
discretionary authority to vote proxies submitted on the Dexter proxy card even
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<PAGE>
with respect to proposals that are omitted from the cards. If Dexter takes such
an action, we may challenge in court the validity of such proxies with respect
to such proposals.
WE STRONGLY RECOMMEND THAT YOU
VOTE IN FAVOR OF EACH OF THE PROPOSALS DESCRIBED
IN THIS PROXY STATEMENT.
METHOD OF COUNTING VOTES
The holders of not less than a majority of the number of
shares of Dexter common stock outstanding and entitled to vote at the 2000
Annual Meeting must be represented in person or by proxy in order to constitute
a quorum for the transaction of business. Abstentions will be included for
purposes of determining whether a quorum exists, but broker non-votes will not.
After a quorum is determined to exist at the 2000 Annual Meeting, abstentions or
broker non-votes with respect to particular proposals brought to a vote or
nominees proposed for election will have no effect on the outcome of the vote on
such proposal or election. Broker non-votes occur when brokers do not receive
voting instructions from their customers on non-routine matters and consequently
have no discretion to vote on those matters. Accordingly, if your Dexter shares
are held in the name of a brokerage firm, bank nominee or other institution, you
should contact the person responsible for your account and give instructions for
a proxy card to be issued so that your shares will be represented at the 2000
Annual Meeting.
ADDITIONAL INFORMATION
The principal executive offices of Dexter Corporation are
at One Elm Street, Windsor Locks, Connecticut 06096-2334. Dexter is a global
specialty materials supplier, principally serving the worldwide aerospace,
electronics, food packaging and medical markets. Except as otherwise noted
herein, the information concerning Dexter has been taken from or is based upon
documents and records on file with the SEC and other publicly available
information. Although we do not have any knowledge that would indicate that any
statement contained herein based upon such documents and records is untrue, we
do not take any responsibility for the accuracy or completeness of the
information contained in such documents and records, or for any failure by
Dexter to disclose events that may affect the significance or accuracy of such
information.
The principal executive offices of ISP are at 300 Delaware
Avenue, Wilmington, Delaware 19801. We are a leading manufacturer of specialty
chemicals and mineral products.
We are subject to the informational requirements of the
Exchange Act, and, in accordance with the Exchange Act, file reports, proxy
statements and other documents with the SEC relating to our business, financial
condition and other matters. These reports, proxy statements and other documents
can be inspected and copied at the public reference facilities of the SEC at 450
Fifth Street, N.W., Washington, DC 20549, and at the regional offices of the SEC
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of ISP's filings with the SEC can also be obtained by mail for a fee by
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writing to the SEC's principal office at 450 Fifth Street, N.W., Washington, DC
20549. You can also get electronic copies of our filings with the SEC for free
on the SEC's Internet web site at http://www.sec.gov. Copies of our filings with
the SEC are also be available for inspection at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
PROXY SOLICITATION; EXPENSES
This proxy statement and the accompanying GOLD Proxy Card
are first being furnished to shareholders on or about March ___, 2000. Executed
proxies may be solicited in person, by mail, advertisement, telephone,
telecopier, telegraph or similar means. Solicitation may be made by directors,
officers, investor relations personnel and other employees of ISP and their
affiliates, none of whom will receive additional compensation for such
solicitation. Proxies will be solicited from individuals, brokers, banks, bank
nominees and other institutional holders. We have requested banks, brokerage
houses and other custodians, nominees and fiduciaries to forward all
solicitation materials to the beneficial owners of the shares they hold of
record. We will reimburse these record holders for their reasonable
out-of-pocket expenses.
In addition, ISP has retained Innisfree M&A Incorporated to
provide consulting and analytic services in connection with any proposal by us
to acquire Dexter in opposition to Dexter's Board. Among other things, Innisfree
has agreed to solicit proxies on our behalf in connection with the 2000 Annual
Meeting. Innisfree will employ approximately 75 people in its efforts. We have
agreed to reimburse Innisfree for its reasonable expenses and to pay to
Innisfree fees not to exceed $130,000.
Chase Securities, Inc. is acting as our financial advisor
in connection with any proposed business combination transaction involving
Dexter, and is assisting us in connection with the financing of any such
transaction. For its financial advisory services, Chase Securities will receive
from ISP a fee of $1 million upon the consummation of any such transaction, plus
an additional amount based on Chase Securities' performance, to be determined by
ISP and paid in ISP's sole discretion. Chase will also receive reimbursement of
its reasonable and documented expenses. In addition, ISP has agreed to indemnify
Chase Securities and related persons against certain liabilities arising out of
the engagement. In its capacity as our financial advisor, Chase Securities has
agreed, among other things, to assist us at our request in contacting (in
person, by telephone or otherwise) shareholders of Dexter identified to Chase
Securities by us and in soliciting their proxies in favor of such a transaction
on our behalf. Chase Securities will not receive any separate or additional fee
for, or in connection with, any such solicitation activities. Chase Securities
and its affiliates are engaged in providing a full range of banking, securities
trading, market making and brokerage services to institutional and individual
clients. In the normal course of its business Chase Securities and its
affiliates may have provided, and may in the future provide, subject to certain
contractual and conflict of interest limitations, financial advisory, investment
banking or other such services to Dexter, ISP or their respective affiliates,
and may trade securities of Dexter, ISP or their respective affiliates for its
own account and the accounts of its customers and, accordingly, may at any time
hold a long or short position in such securities.
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The entire expense of our proxy solicitation is being borne
by ISP. In the event that our nominees are elected to Dexter's Board, we may
seek reimbursement of such expenses from Dexter. ISP does not intend to seek
reimbursement for the stipend it pays to its nominees and does not intend to
seek shareholder approval of reimbursement of its other expenses. In addition to
the engagement of Innisfree and Chase Securities described above, costs related
to the solicitation of proxies include expenditures for printing, postage, legal
and related expenses and are expected to be approximately $1,250,000. Total
payment of costs to date in furtherance of our proxy solicitation is
approximately $900,000.
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
ISP, ISP Investments, our nominees for directorships and
the following officers of ISP may be deemed to be "participants" (as defined in
Instruction 3 to Item 4 of Rule 14a-101 of the Exchange Act) in this proxy
solicitation: Randall Lay, Executive Vice President and Chief Financial Officer;
Kumar Shah, Senior Vice President-Corporate Development; Susan B. Yoss, Senior
Vice President and Treasurer; Christopher Nolan, Vice President-Corporate
Development and Investor Relations; Jared Landaw, Vice President-Law; and Ben
Stoller, Manager-Corporate Finance. Information relating to the beneficial
ownership of common stock of Dexter by the participants in this solicitation and
certain other information relating to the participants is contained in Annex VII
to this proxy statement and is incorporated in this proxy statement by
reference. In addition, see "Certain Litigation" for a description of legal
proceedings in which ISP and ISP Investments have a material interest adverse to
Dexter. None of the participants in this solicitation are party to any
commercial dealings with Dexter or its subsidiaries required to be discussed
pursuant to Schedule 14A promulgated under the Exchange Act, which governs the
disclosure contained in this proxy statement. As described below under "Certain
Interests in the Proposals and with Respect to Securities of Dexter", ISP and
its affiliates beneficially own shares of Life Technologies, Dexter's majority
owned subsidiary. We have no knowledge of any commercial dealings between Life
Technologies and Dexter, other than information that may be disclosed in the
public filings of Life Technologies and Dexter.
CERTAIN INTERESTS IN THE PROPOSALS AND
WITH RESPECT TO SECURITIES OF DEXTER
To the knowledge of ISP, there are no contracts,
arrangements, understandings or relationships (legal or otherwise) among ISP or
its associates with respect to any securities of Dexter.
Between November 25, 1998 and December 18, 1998, ISP entered into agreements
(the "Group Agreements") with Bear, Stearns & Co. Inc., The Frederick R. Adler
Intangible Asset Management Trust, The Cohen Revocable Trust, Annie Chang, York
Capital Management, L.P., JGD Management Corp., York Investment Limited and the
Prescott Entities with respect to such parties' ownership of common stock of
Life Technologies, a majority owned subsidiary of Dexter. Pursuant to the terms
of the Group Agreements, ISP and the other parties thereto agreed (i) not to
sell or otherwise dispose of any shares of Life Technologies common stock unless
all of the parties mutually agreed (subject to certain exceptions), (ii) to bear
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its own costs and expenses incurred in connection with its ownership of Life
Technologies shares, the Group Agreements or any transactions entered into
pursuant to the Group Agreement (subject to certain exceptions for expenses
incurred for the benefit of all the parties thereto), (iii) to join with ISP in
a Schedule 13D filing and any required amendments thereto and (iv) not to enter
into any other contract, arrangement, understanding or relationship with any
other person with respect to the equity securities of Life Technologies. The
initial Group Agreements provided for a term of six months, but subsequent
agreements were entered into ultimately extending the term through September 30,
2000 for all but the Prescott Entities. As of January 27, 2000, ISP owned
beneficially 3,506,270 Life Technologies shares which represented approximately
14.05% of the outstanding shares of common stock of Life Technologies. As of
such date, the continuing parties to the Group Agreement (including ISP)
beneficially owned, in the aggregate, 5,417,991 Life Technologies shares,
representing approximately 21.7% of the outstanding shares of common stock of
Life Technologies.
Each of our nominees (other than Messrs. Heyman and Kumar)
will receive a stipend of $50,000 from ISP for his service as a nominee. This
stipend is not refundable in any manner in connection with the outcome of our
proxy solicitation or otherwise. The Nominees are each party to an indemnity
agreement with ISP (the "Director Indemnity Agreements"). In accordance with the
terms of the Director Indemnity Agreements, ISP has agreed to indemnify and hold
harmless each of the nominees from and against, among other things, all
expenses, liabilities and losses, including reasonable attorney's fees, related
to any action, suit or proceeding to which such nominee is made a party or
threatened to be made a party by reason of such nominee's action or inaction
while serving as a nominee.
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SECURITY OWNERSHIP OF DIRECTORS
AND MANAGEMENT OF DEXTER
The following table presents, as of December 31, 1999,
based solely on information contained in Dexter's 2000 Proxy Statement, the
common stock beneficially owned (as that term is defined by the SEC) by all
directors and named executive officers of Dexter, and the directors and
executive officers of Dexter as a group. This beneficially owned common stock
includes shares of common stock which they had a right to acquire within 60 days
of such date by the exercise of options granted under Dexter's stock option
plans.
Except as otherwise noted in a footnote below, each
director, nominee and executive officer has sole voting and investment power
with respect to the number of shares of common stock set forth opposite his or
her name in the table.
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
COMMON STOCK COMMON
BENEFICIALLY STOCK
SHAREHOLDERS OWNED(1) OUTSTANDING(1)
- ------------ -------- --------------
<S> <C> <C>
K. Grahame Walker.............................................. 229,681 *
Kathleen Burdett............................................... 63,668 *
John D. Thompson............................................... 38,241 *
Bruce H. Beatt................................................. 34,744 *
David G. Gordon................................................ 42,579 *
Charles H. Curl................................................ 4,165 *
Henrietta Holsman Fore......................................... 5,626 *
Bernard M. Fox................................................. 4,973 *
Robert M. Furek................................................ 4,510 *
Martha Clark Goss.............................................. 4,274 *
Edgar G. Hotard................................................ 3,148 *
Peter G. Kelly................................................. 8,301 *
Jean-Francois Saglio........................................... 3,201 *
George M. Whitesides........................................... 4,381 *
All Directors and Executive Officers of Dexter as a Group (24
persons)....................................................... 638,727 2.77
</TABLE>
- ----------------------------------------------------------
(1) The shares reported above as beneficially owned by the following persons
include vested stock options granted under the Dexter's stock option plans.
The shares reported above also include shares of restricted stock issued to
the following persons pursuant to the 1994 Long Term Incentive Plan (the
"1994 Plan") and the 1999 Long Term Incentive Plan (the "1999 Plan"): K.
Grahame Walker - 51,434; Kathleen Burdett - 21,142; John D. Thompson -
14,976; Bruce H. Beatt - 13,972; David G. Gordon - 11,460; and "All
Directors and Executive Officers of Dexter as a Group" - 171,233. Shares of
restricted stock issued pursuant to the 1994 Plan and the 1999 Plan are
subject to forfeiture, but may be voted by the holders thereof unless and
until forfeited. Percentages of common stock of less than 1% are indicated
by an asterisk.
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PRINCIPAL SHAREHOLDERS OF DEXTER
The following table sets forth, based solely, except as
otherwise described herein, on information contained in Dexter's 2000 Proxy
Statement, the number and percentage of outstanding shares of common stock
beneficially owned by each person known to ISP (other than ISP) as of such date
to be the beneficial owner of more than five percent of the outstanding shares
of common stock. The information with respect to ISP has been provided by the
members thereof as of ____ __, 2000.
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
COMMON STOCK COMMON
BENEFICIALLY STOCK
SHAREHOLDERS OWNED OUTSTANDING
- ------------ ----- -----------
<S> <C> <C>
ISP
ISP Investments Inc.
ISP Opco Holdings Inc.
c/o ISP Management Company, Inc.
1361 Alps Road, Wayne, New Jersey 07470........................ 2,299,200 9.97(1)
FMR Corp., 82 Devonshire Street Boston, Massachusetts 02109
(Fidelity Managed Funds)....................................... 1,703,300 9.8(2)
Mary K. Coffin, c/o Dexter Corporation, One Elm Street, Windsor
Locks, Connecticut 06096....................................... 1,290,000 5.6(3)
</TABLE>
(1) ISP Investments Inc. (through ISP Investments Grantor Trust) has the sole
power to vote, direct the voting of, dispose of and direct the disposition
of the shares. ISP Opco Holdings Inc., by virtue of its indirect ownership
of all of the outstanding capital stock of ISP Investments Inc., may be
deemed to own beneficially (solely for purposes of Rule 13d-3) the shares.
ISP, by virtue of its ownership of all of the outstanding common stock of
ISP Opco Holdings Inc., may be deemed to own beneficially (solely for
purposes of Rule 13d-3) the shares. Samuel J. Heyman, by virtue of his
beneficial ownership (as defined in Rule 13d-3) of approximately 76% of
the capital stock of ISP, may be deemed to own beneficially (solely for
purposes of Rule 13d-3) the shares.
(2) Share holdings as of December 31, 1999, as reported on the Schedule 13G most
recently filed by such shareholder.
(3) Of the 1,290,000 shares shown in the table as owned by Mary K. Coffin,
990,000 are held by Fleet Bank, N.A., trustee of a trust the beneficiary of
which is Dexter D. Coffin, Jr. Mary K. Coffin is a trustee of this trust and
shares the power to vote and dispose of shares owned by the trust. The power
to vote and dispose of the shares owned by this trust is held by a majority
of its three individual trustees. The remaining shares shown in the table
are held by Mary K. Coffin through a living trust.
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SHAREHOLDERS' PROPOSALS IN DEXTER'S PROXY STATEMENT
The Dexter's Bylaws require that notice of nominations to
Dexter's Board of Directors proposed by shareholders be received by the
Secretary of the Dexter, along with certain other specified material, not less
than 75 nor more than 125 days prior to the first anniversary of the prior
year's annual meeting; provided, however, that in the event that the date of the
annual meeting is advanced by more than seventy five days from such anniversary
date, notice by the shareholder to be timely must be so delivered not later than
the fifteenth day following the day on which public announcement of the date of
such meeting is first made. Any shareholder who wishes to nominate a candidate
for election to Dexter's Board should obtain a copy of the relevant section of
the Bylaws from the Secretary of the Dexter.
Pursuant to Rule 14a-8(e)(2) under the Exchange Act, any
proposal by a shareholder at the 2000 Annual Meeting, to be included in the
Dexter's proxy statement, must be received in writing at the Dexter's principal
executive offices not less than 120 calendar days in advance of the date of the
Dexter's proxy statement was released to security holders in connection with its
1999 Annual Meeting of Shareholders. However, if the date of the meeting is
changed by more than 30 days from the date of the previous year's meeting, then
the deadline is a reasonable time before the Dexter begins to print and mail its
proxy materials.
Proposals should be addressed to the Corporate Secretary,
Dexter Corporation, One Elm Street, Windsor Locks, Connecticut 06096.
WE URGE YOU TO SIGN, DATE AND RETURN THE GOLD PROXY CARD IN FAVOR OF THE
ELECTION OF OUR NOMINEES AND THE ADOPTION OF THE PROPOSALS DESCRIBED IN THIS
PROXY STATEMENT.
Dated: March __, 2000
Sincerely,
Your Fellow Shareholders:
INTERNATIONAL SPECIALTY PRODUCTS INC.
ISP INVESTMENTS INC.
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ANNEX I
BOARD SIZE BYLAW PROPOSAL
RESOLVED, that the Bylaws of Dexter Corporation be, and
they hereby are, amended, effective at the time this resolution is approved by
the shareholders of Dexter Corporation, by:
(i) deleting the fourth sentence of Article III, Section 1, which reads
"[e]ach class of directorships shall consist of not less than one nor
more than five directorships", in its entirety;
(ii) adding a new fourth and fifth sentence of Article III, Section 1 as
follows: "At the annual meeting of the shareholders of the corporation
held in 2000, additional directors shall be elected so that the Board of
Directors shall consist of seventeen directorships. The additional
directorships thereby created shall be allocated to the classes with
terms expiring at the annual meeting of the shareholders of the
corporation to be held in 2001 or 2002, unless otherwise allocated by
the Board of Directors consistent with Section 33-740 of the Connecticut
Business Corporation Act"; and
(iii) adding a new final sentence of Article III, Section 1 as follows:
"The fourth sentence of this Section 1 may be altered, amended or
repealed only with the approval of the shareholders of the corporation
entitled to vote thereon in the manner set forth in Section 33-709(c) of
the Connecticut Business Corporation Act."
A-1
<PAGE>
ANNEX II
THE ADDITIONAL DIRECTORS ELECTION PROPOSAL
RESOLVED, that each of the following persons be elected a
director of Dexter Corporation to fill the new directorships on the Board of
Directors of Dexter Corporation resulting from the adoption of the resolution
amending Article III, Section 1 of the Bylaws to increase the size of the Board,
for a term commencing at the time this resolution is adopted by the shareholders
of Dexter Corporation and shall be allocated into classes with terms continuing
until the annual meeting of the shareholders of Dexter Corporation to be held in
the year indicated below, and until the election and qualification of his
respective successor or until his earlier resignation or removal:
Alan Meckler 2002
Dan Ogden 2002
Morrison DeSoto Webb 2002
Robert Englander 2002
John Droney 2001
Anthony T. Kronman 2001
Vincent Tese 2001
; provided, that the Board of Directors may instead allocate certain of such
directorships to a different class, consistent with Section 33-740 of the
Connecticut Business Corporation Act.
A-2
<PAGE>
ANNEX III
THE POISON PILL BYLAW PROPOSAL
RESOLVED, that the Bylaws of Dexter Corporation be, and
they hereby are, amended, effective at the time this resolution is approved by
the shareholders of Dexter Corporation, by adding the following Section 7 to the
end of Article II:
"Section 7. Rights Agreements.
-----------------
The Board of Directors, in exercising its rights
and duties with respect to the administration of the Rights
Agreement, dated as of August 23, 1996, as amended, by and
between the corporation and Chase Mellon Shareholder
Services L.L.C., as Rights Agent (the "Rights Agreement")
will carry out a resolution authorizing (i) the partial or
complete redemption of the rights issued pursuant to the
Rights Agreement (the "Rights"), or (ii) an amendment to
the Rights Agreement making the Rights inapplicable to
offers or transactions or types of offers or transactions
specified in such resolution, if such resolution is
authorized and approved by the shareholders of the
corporation entitled to vote thereon in the manner set
forth in Section 33-709(c) of the Connecticut Business
Corporation Act. In addition, the Board of Directors shall
not adopt any new shareholder rights plan, rights agreement
or any other form of "poison pill" which is designed to or
has the effect of making acquisitions of large holdings of
the corporation's shares of stock more difficult or
expensive, unless such plan is first approved by the
shareholders of the corporation entitled to vote thereon in
the manner set forth in Section 33-709(c) of the
Connecticut Business Corporation Act. This Section 7 may be
altered, amended or repealed only with the approval of the
shareholders of the corporation entitled to vote thereon in
the manner set forth in Section 33-709(c) of the
Connecticut Business Corporation Act."
A-3
<PAGE>
ANNEX IV
THE POISON PILL AMENDMENT PROPOSAL
RESOLVED, that the shareholders of Dexter Corporation
hereby exercise their right under Article II, Section 7 of the Bylaws of Dexter
Corporation, as amended on the date hereof, to require the Board of Directors to
promptly amend the Rights Agreement, dated as of August 23, 1996, as amended, by
and between Dexter Corporation and ChaseMellon Shareholder Services, L.L.C. (the
"Rights Agreement") to provide that the acquisition of beneficial ownership of
shares of common stock, par value $1.00 per share, of Dexter Corporation
("Common Stock") pursuant to any offer for all outstanding shares of Common
Stock for consideration of at least $45 per share net to the seller in cash
shall constitute a "Qualifying Offer" within the meaning of Sections 11(a)(ii)
and 13(d) of the Rights Agreement.
A-4
<PAGE>
ANNEX V
THE BYLAW REPEAL PROPOSAL
RESOLVED, that any and all amendments made by the Board of
Directors of Dexter Corporation to the Bylaws of Dexter Corporation on or after
February 26, 1999, be, and the same hereby are, repealed, and that, without the
approval of the shareholders of Dexter Corporation, the Board of Directors may
not thereafter amend any section of the Bylaws affected by such repeal or adopt
any new Bylaw provision which serves to reinstate any repealed provisions or any
similar provisions.
A-5
<PAGE>
ANNEX VI
THE OMNIBUS PROPOSAL
RESOLVED, that each of the proposals of International
Specialty Products Inc. and ISP Investments Inc. shall be voted upon by the
shareholders of Dexter Corporation at the 2000 Annual Meeting in the following
order:
1. This Omnibus Proposal;
2. The Bylaw Repeal Proposal;
3. The Director Election Proposal;
4. The Board Size Bylaw Proposals;
5. The Additional Directors Election Proposal;
6. The Poison Pill Bylaw Proposal; and
7. The Poison Pill Amendment Proposal.
A-6
<PAGE>
ANNEX VII
INFORMATION CONCERNING INTERNATIONAL SPECIALTY
PRODUCTS INC. AND OTHER PARTICIPANTS
IN THE SOLICITATION
Information is being given herein for (i) International
Specialty Products Inc., a Delaware corporation ("ISP"), (ii) ISP Investments
Inc., a Delaware corporation ("ISP Investments"), (iii) Samuel J. Heyman, a
natural person and nominee for the Board of Directors of the Company, (iv) Sunil
Kumar, a natural person and nominee for the Board of Directors of the Company,
(v) Philip Peller, a natural person and nominee for the Board of Directors of
the Company, (vi) Alan Meckler, a natural person and nominee for the Board of
Directors of the Company, (vii) Dan Ogden, a natural person and nominee for the
Board of Directors of the Company, (viii) Morrison DeSoto Webb, a natural person
and nominee for the Board of Directors of the Company, (ix) Robert Englander, a
natural person and nominee for the Board of Directors of the Company, (x) John
Droney, a natural person and nominee for the Board of Directors of the Company,
(xi) Anthony T. Kronman, a natural person and nominee for the Board of Directors
of the Company, (xii) Vincent Tese, a natural person and nominee for the Board
of Directors of the Company, (xiii) Randall Lay, Executive Vice President and
Chief Financial Officer of ISP ("Lay"), (xiv) Kumar Shah, Senior Vice
President-Corporate Development of ISP ("Shah"), (xv) Susan B. Yoss, Senior Vice
President and Treasurer of ISP ("Yoss"), (xvi) Christopher Nolan, Vice
President-Corporate Development and Investor Relations of ISP ("Nolan"), (xvii)
Jared Landaw, Vice President-Law of ISP ("Landaw"), and (xviii) Ben Stoller,
Manager-Corporate Finance of ISP ("Stoller" and together with Lay, Shah, Yoss,
Nolan and Landaw, the "ISP Participants"), who are each a "participant in a
solicitation" as defined under the proxy rules (collectively, the
"Participants").
Information is also given for each of the entities listed
on Schedule A to this Annex VII, each of which is an "associate", as defined
under the proxy rules, of the Proponents.
Each of ISP and ISP Investments is a Delaware corporation.
Each of ISP and ISP Investments has its principal place of business at 300
Delaware Avenue, Wilmington, Delaware 19801. The business address of each of the
ISP Participants is c/o ISP Management Company, Inc., 1361 Alps Road, Wayne, New
Jersey 07470. The address of each of the entities listed on Schedule A to this
Annex VII is c/o ISP Management Company, Inc., 1361 Alps Road, Wayne, New Jersey
07470.
The Participants may be deemed to have beneficial ownership
of the Company's Common Stock and the common stock, par value $.01 per share
("LTI Common Stock"), of Life Technologies, Inc. ("LTI") as set forth
immediately below. Except as set forth below, no associates of any of the
Participants owns any Common Stock or LTI Common Stock.
A-7
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE MARGIN
NUMBER OF SHARES OF THE NUMBER OF SHARES INDEBTEDNESS WITH RESPECT
NAME COMPANY'S COMMON STOCK OF LTI'S COMMON STOCK TO COMMON STOCK
- ---- ---------------------- --------------------- ---------------
<S> <C> <C> <C>
ISP Investments Inc. 2,299,200 3,384,600 (5)
(direct ownership)(1) (direct/indirect ownership)(2)(3)
ISP Opco Holdings Inc. 2,299,200 3,384,600 (5)
(indirect ownership)(1) (indirect ownership)(2)(3)
ISP Ireland 0 452,000 (5)
(direct ownership)(3)
International Specialty 2,299,200 3,506,270 (5)
Products Inc. (indirect ownership)(1) (direct/indirect ownership)(2)(3)(4)
Samuel J. Heyman 2,299,200 3,506,270 (5)
(indirect ownership)(1) (indirect ownership)(2)(3)(4)
Sunil Kumar 0 0 $ 0
Philip Peller 0 0 $ 0
Alan Meckler 0 0 $ 0
Dan Ogden 0 0 $ 0
Morrison DeSoto Webb 0 0 $ 0
Robert Englander 0 0 $ 0
John Droney 0 0 $ 0
Anthony T. Kronman 0 0 $ 0
Vincent Tese 0 0 $ 0
A-7-1
<PAGE>
Randall Lay 0 0 $0
Kumar Shah 0 0 $0
Susan B. Yoss 0 0 $0
Christopher Nolan 0 0 $0
Jared Landaw 0 0 $0
Ben Stroller 0 0 $0
</TABLE>
(1) ISP Investments (through ISP Investments Grantor Trust) has the sole
power to vote, direct the voting of, dispose of and direct the
disposition of the Common Stock. ISP Opco Holdings Inc. ("ISP Opco"),
by virtue of its indirect ownership of all of the outstanding capital
stock of ISP Investments, may be deemed to own beneficially (solely
for purposes of Rule 13d-3) the Common Stock owned by ISP
Investments. International Specialty Products Inc. ("ISP"), by virtue
of its ownership of all of the outstanding common stock of ISP Opco,
may be deemed to own beneficially (solely for purposes of Rule 13d-3)
the Common Stock owned by ISP Investments. Mr. Heyman, by virtue of
his beneficial ownership (as defined in Rule 13d-3) of approximately
76% of the capital stock of ISP, may be deemed to own beneficially
(solely for purposes of Rule 13d-3) the Common Stock owned by ISP
Investments.
(2) ISP Investments (directly and through ISP Investments Grantor Trust)
has the sole power to vote, direct the voting of, dispose of and
direct the disposition of 2,932,600 shares of LTI Common Stock. ISP
Opco, by virtue of its indirect ownership of all of the outstanding
capital stock of ISP Investments, may be deemed to own beneficially
(solely for purposes of Rule 13d-3) all of the LTI Common Stock owned
by ISP Investments. ISP, by virtue of its ownership of all of the
outstanding common stock of ISP Opco, may be deemed to own
beneficially (solely for purposes of Rule 13d-3) the LTI Common Stock
owned by ISP Investments. Mr. Heyman, by virtue of his beneficial
ownership (as defined in Rule 13d-3) of approximately 76% of the
capital stock of ISP, may be deemed to own beneficially (solely for
purposes of Rule 13d-3) the LTI Common Stock owned by ISP
Investments.
(3) ISP Ireland has the sole power to vote, direct the voting of, dispose
of and direct the disposition of 452,000 shares of LTI Common Stock.
ISP Investments, by virtue of its indirect ownership of all of the
outstanding capital stock of ISP Ireland, may be deemed to own
beneficially (solely for purposes of Rule 13d-3) all of the LTI
Common Stock owned by ISP Ireland. ISP Opco, by virtue of its
indirect ownership of all of the outstanding capital stock of ISP
Investments, may be deemed to own beneficially (solely for purposes
of Rule 13d-3) all of the LTI Common Stock owned by ISP Ireland. ISP,
by virtue of its ownership of all of the outstanding common stock of
ISP Opco, may be deemed to own beneficially (solely for purposes of
Rule 13d-3) the LTI Common Stock owned by ISP Ireland. Mr. Heyman, by
virtue of his beneficial ownership (as defined in Rule 13d-3) of
approximately 76% of the capital stock of ISP, may be deemed to own
beneficially (solely for purposes of Rule 13d-3) the LTI Common Stock
owned by ISP Ireland.
(4) ISP has the sole power to vote, direct the voting of, dispose of and
direct the disposition of 121,670 shares of LTI Common Stock. Mr.
Heyman, by virtue of his beneficial ownership (as defined in Rule
13d-3) of approximately 76% of the capital stock of ISP, may be
deemed to own beneficially (solely for purposes of Rule 13d-3) the
LTI Common Stock owned by ISP.
(5) In the ordinary course of its business, ISP Investments Inc.
purchases securities for its investment portfolio with funds obtained
from the working capital of ISP Investments, loans from affiliates
and borrowings pursuant to standard margin arrangements. Because the
A-7-2
<PAGE>
securities from multiple investments are pooled in one account, the
amount of margin indebtedness incurred by ISP in connection with its
purchases of Dexter Common Stock, which purchases were numerous and
made over many months, is impossible to determine with any degree of
certainty.
Other than as set forth immediately below, to the best of
the knowledge of the Participants and their associates, none has been, within
the past year, a party to any contract, arrangement or understanding with any
person with respect to any securities of the Company, including but not limited
to joint ventures, loan or option arrangements, puts or calls, guarantees
against loss or guarantees of profits, division of losses or profits, or the
giving or withholding of proxies:
On November 25, 1998, ISP entered into an agreement (the
"Group Agreement") with certain other persons with respect to such parties'
ownership of LTI Common Stock. Pursuant to the terms of the Group Agreement, ISP
and the other parties thereto agreed (i) not to sell or otherwise dispose of any
shares of LTI Common Stock unless all of the parties mutually agreed (subject to
certain exceptions), (ii) to bear its own costs and expenses incurred in
connection with its ownership of LTI Common Stock, the Group Agreement or any
transactions entered into pursuant to the Group Agreement (subject to certain
exceptions for expenses incurred for the benefit of all the parties thereto),
(iii) to join with ISP in a Schedule 13D filing and any required amendments
thereto and (iv) not to enter into any other contract, arrangement,
understanding or relationship with any other person with respect to the equity
securities of LTI. The initial Group Agreement provided for a term of six
months, but subsequent agreements were entered into ultimately extending the
term through September 30, 2000 for all but one of the original members of the
group.
No Participant or associate owns any securities of the
Company of record but not beneficially.
Neither ISP nor ISP Investments has any special
arrangements with any of the ISP Participants in connection with this proxy
solicitation.
None of the Participants and none of their associates has
any arrangement or understanding with any person with respect to (i) any future
employment with the Company or (ii) any future transactions to which the Company
or any of its affiliates may be a party, except as set forth in the letter,
dated December 14, 1999, from Mr. Heyman to the Company's Chairman and Chief
Executive Officer, in which ISP proposed to purchase all of the Company's
outstanding Common Stock for $45 per share in a merger transaction, which
proposal was subsequently rejected by the Company's Board by correspondence
dated December 23, 1999. No family relationships exist among the Proponent's
Nominees or between any Company director or executive officer and any of the
Proponent's Nominees.
The following is a summary of all transactions in Company
securities by the Participants over the last two years.
A-7-3
<PAGE>
DATE OF TRANSACTION NATURE OF TRANSACTION NUMBER OF SHARES
- ------------------------------------------------------------------------------
09/15/98 Buy 37,000
09/17/98 Buy 440,000
09/21/98 Buy 64,700
09/23/98 Buy 5,400
09/25/98 Buy 10,000
09/30/98 Buy 10,600
10/01/98 Buy 100
10/02/98 Buy 25,000
10/05/98 Buy 600
10/06/98 Buy 14,200
10/07/98 Buy 18,400
10/09/98 Buy 55,500
10/16/98 Buy 169,100
10/19/98 Buy 75,000
11/11/98 Buy 47,500
11/12/98 Buy 69,600
12/01/98 Sell (50,000)
12/02/98 Sell (25,000)
12/04/98 Buy 106,500
12/09/98 Buy 11,600
12/10/98 Buy 15,600
12/11/98 Buy 18,500
12/14/98 Buy 14,000
12/15/98 Buy 6,000
02/17/99 Buy 5,000
03/31/99 Buy 7,500
05/07/99 Sell (25,000)
05/13/99 Buy 10,000
05/14/99 Buy 20,000
05/17/99 Buy 17,100
05/18/99 Buy 21,600
05/19/99 Buy 2,500
05/21/99 Buy 10,000
05/24/99 Buy 11,400
05/25/99 Buy 20,500
05/26/99 Buy 20,000
05/27/99 Buy 19,000
05/28/99 Buy 2,000
06/01/99 Buy 19,000
06/02/99 Buy 22,500
06/03/99 Buy 6,200
06/07/99 Buy 5,500
A-7-4
<PAGE>
06/08/99 Buy 1,900
06/09/99 Buy 31,500
06/10/99 Buy 1,300
06/15/99 Buy 10,000
06/24/99 Sell (25,000)
07/13/99 Sell (2,900)
07/22/99 Buy 9,600
07/23/99 Buy 5,000
07/26/99 Buy 4,700
07/28/99 Buy 7,700
08/03/99 Sell (6,300)
08/05/99 Buy 3,500
08/06/99 Sell (3,500)
08/09/99 Buy 248,400
08/10/99 Buy 11,400
08/11/99 Buy 12,700
08/19/99 Sell (5,300)
08/20/99 Buy 56,000
08/23/99 Buy 94,900
08/24/99 Buy 28,900
08/25/99 Buy 12,300
08/27/99 Buy 12,000
08/30/99 Buy 13,000
08/31/99 Buy 7,500
09/03/99 Buy 84,300
09/07/99 Buy 48,600
09/08/99 Buy 9,900
09/13/99 Sell (1,000)
09/14/99 Sell (1,400)
09/15/99 Sell (2,000)
09/17/99 Buy 46,300
09/20/99 Buy 76,000
09/21/99 Buy 31,400
09/22/99 Buy 15,000
09/23/99 Buy 34,000
09/24/99 Buy 47,600
09/27/99 Buy 46,500
------------------------------
2,299,200
==============================
A-7-5
<PAGE>
SCHEDULE A TO ANNEX VII
Associates of International Specialty Products Inc.
---------------------------------------------------
ISP Opco Holdings Inc.
Belleville Realty Corp.
ISP Alginates Inc.
ISP Management Company, Inc.
ISP Chemicals Inc.
ISP Minerals Inc.
ISP Technologies Inc.
ISP Mineral Products Inc.
ISP Environmental Services Inc.
Bluehall Incorporated
ISP Realty Corporation
ISP Real Estate Company, Inc.
International Specialty Products Funding Corporation
ISP Newark Inc.
ISP Van Dyk Inc.
ISP Fine Chemicals Inc.
ISP Freetown Fine Chemicals Inc.
Verona Inc.
ISP Global Technologies Inc.
ISP International Corp.
ISP Marl Holdings GmbH
ISP Holdings (U.K.) Ltd.
ISP Ireland
ISP (Puerto Rico) Inc.
ISP Marl Gmbh
ISP Acetylene Gmbh
ISP Alginates (U.K.) Ltd.
ISP (Great Britain) Co. Ltd.
ISP Andina, C.A.
ISP Argentina S.A.
ISP Asia Pacific Pte Ltd.
ISP (Australasia) Pte Ltd.
ISP (Belgium) N.V.
ISP (Belgium) International N.V.
ISP do Brasil Ltda.
ISP (Canada) Inc.
ISP Ceska Republika Spol S.R.O.
ISP (China) Limited
ISP Colombia Ltda.
ISP Freight Service N.V.
A-7-6
<PAGE>
ISP Global Operations (Barbados) Inc.
ISP Global Technologies (Belgium) S.A.
ISP Global Technologies (Germany) Holding Gmbh
ISP Customer Service Gmbh
ISP Global Technologies Deutschland Gmbh
International Specialty Products ISP (France) S.A.
ISP (Hong Kong) Limited
ISP (Italia) S.r.l.
ISP (Japan) Ltd.
ISP (Korea) Limited
ISP Mexico, S.A. de C.V.
ISP (Norden) A.B.
ISP (Osterreich) G.m.b.h.
ISP (Polska) Sp.z. o.p.
ISP Sales (Barbados) Inc.
ISP Sales (U.K.) Limited
ISP (Singapore) Pte Ltd.
ISP (Switzerland) A.G.
ISP (Thailand) Co., Ltd.
Chemfields Pharmaceuticals Private Limited
Kelp Industries Pty Ltd
Arramara Teoranta
Thorverk Hf
A-7-7
<PAGE>
[PRELIMINARY COPY]
PROXY
DEXTER CORPORATION
PROXY SOLICITED ON BEHALF OF INTERNATIONAL SPECIALTY
PRODUCTS INC., ISP INVESTMENTS INC. AND THE OTHER PARTICIPANTS
IDENTIFIED IN THE PROXY STATEMENT FURNISHED HEREWITH ("ISP")
FOR THE ANNUAL MEETING OF SHAREHOLDERS, APRIL 27, 2000 AT 10:00 A.M.
The undersigned shareholder of Dexter Corporation ("Dexter") hereby appoints
Samuel J. Heyman and Sunil Kumar and each of them, as attorneys and proxies,
each with power of substitution and revocation, to represent the undersigned at
the Annual Meeting of Shareholders of Dexter Corporation to be held at The
Hartford Club, 46 Prospect Street, Hartford, Connecticut on April 27, 2000 at
10:00 A.M., local time, and at any adjournment or postponement thereof, with
authority to vote all shares held or owned by the undersigned in accordance with
the directions indicated herein.
Receipt of the Proxy Statement furnished herewith is hereby
acknowledged.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. ON MATTERS FOR WHICH YOU DO NOT SPECIFY A CHOICE, YOUR
SHARES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF ISP. YOU MAY
APPROVE OR VOTE SEPARATELY ON ANY OR ALL OF THE PROPOSALS, BUT PROPOSAL NO. 3
WILL NOT BE EFFECTIVE UNLESS PROPOSAL NO. 2 IS ADOPTED, AND PROPOSAL NO. 5 WILL
NOT BE EFFECTIVE UNLESS PROPOSAL NO. 4 IS ADOPTED.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
<PAGE>
<TABLE>
<CAPTION>
ISP RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED BELOW.
<S> <C> <C> <C> <C> <C>
1. Election of Directors
FOR all nominees listed on the right (except WITHHOLD AUTHORITY to vote for NOMINEES: Samuel J. Heyman, Sunil Kumar,
as marked to the contrary hereon). all nominees listed to the Philip Peller (Instructions: To withhold
right. authority to vote for any individual
nominee, write that nominee's name in the
space provided below.)
[_] [_]
----------------------------------------
ISP RECOMMENDS A VOTE "FOR" PROPOSAL 2.
FOR AGAINST ABSTAIN
2. THE BOARD SIZE BYLAW PROPOSAL [_] [_] [_]
ISP RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED BELOW.
3. Election of ADDITIONAL Directors TO FILL VACANCIES FROM INCREASED BOARD
SIZE
FOR all nominees listed on the right (except WITHHOLD AUTHORITY to vote for NOMINEES: Alan Meckler, Dan Ogden, Morrison
as marked to the contrary hereon). all nominees listed to the DeSoto Webb, Robert Englander, John Droney,
right. Anthony T. Kronman, Vincent Tese.
(Instructions: To withhold authority to vote
[_] [_] for any individual nominee, write that
nominee's name in the space provided below.)
----------------------------------------
ISP RECOMMENDS A VOTE "FOR" PROPOSALS 4, 5, 6 and 7.
FOR AGAINST ABSTAIN
4. THE POISON PILL BYLAW PROPOSAL [_] [_] [_]
FOR AGAINST ABSTAIN
5. THE POISON PILL AMENDMENT PROPOSAL [_] [_] [_]
FOR AGAINST ABSTAIN
6. THE BYLAW REPEAL PROPOSAL [_] [_] [_]
FOR AGAINST ABSTAIN
7. THE OMNIBUS PROPOSAL [_] [_] [_]
<PAGE>
ISP MAKES NO RECOMMENDATION ON
THE FOLLOWING MATTER TO BE VOTED ON
AT THE 2000 ANNUAL MEETING
FOR AGAINST ABSTAIN
A. RATIFICATION OF INDEPENDENT AUDITORS [_] [_] [_]
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY BE PRESENTED TO THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.
P Dated: _____________, 2000
R -------------------------------------------
(Signature)
O -------------------------------------------
(Signature if held jointly)
X -------------------------------------------
Title:
Y
Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should sign.
When signing as attorney, executor, administrator,
trustee, or guardian, please give full title as such.
If a corporation, please sign in full corporate name
by president or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.
</TABLE>
