SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
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|X| Preliminary Proxy Statement |_| Confidential, for Use of the
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Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
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|_| Soliciting Material Pursuant to
Rule 14a-11(c) or Rule 14a-12
DEXTER CORPORATION
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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As filed with the Commission on May 12, 2000
[DEXTER CORPORATION LOGO]
May [day], 2000
Dear Shareholder:
We are pleased to invite you to attend the 2000 annual meeting of
shareholders of Dexter Corporation, which will be held on Friday, June 30,
2000, at 10:00 A.M., local time, at The Hartford Club, 46 Prospect Street,
Hartford, Connecticut.
The items to be considered and voted on at the meeting are
described in the notice of the 2000 annual meeting of shareholders and
proxy statement accompanying this letter.
You may have already received proxy soliciting materials from
International Specialty Products Inc. in connection with items ISP intends
to present at the meeting. As described more fully in the proxy statement
accompanying this letter, your Board of Directors has received opinions
from Day, Berry & Howard LLP, its Connecticut counsel, that certain of
ISP's proposals are illegal under Connecticut law. The legality of these
proposals is being litigated and will ultimately be decided by the courts.
In the meantime, the ONLY items that will be brought before the Company's
2000 annual meeting are the ones described in the accompanying proxy
statement and not the items described in ISP's proxy materials. YOUR BOARD
OF DIRECTORS BELIEVES THAT THE PROPOSALS SUBMITTED BY ISP AND DESCRIBED IN
THIS PROXY STATEMENT ARE NOT IN THE BEST INTERESTS OF THE COMPANY AND ITS
SHAREHOLDERS AND URGES YOU TO VOTE AGAINST THESE PROPOSALS. The reasons for
this belief are discussed throughout the proxy statement accompanying this
letter. We would encourage you to read our proxy statement carefully.
Your vote is important. We encourage you to vote your shares as
soon as possible. If you have any questions or need assistance in voting
your shares, please call our proxy solicitor, MacKenzie Partners, Inc.,
toll free at (800) 322- 2885.
Sincerely,
K. Grahame Walker
Chairman and Chief Executive Officer
[DEXTER LOGO]
Dexter Corporation -- One Elm Street -- Windsor Locks, CT 06096-2334 --
Tel: 860.292.7675
NOTICE OF ANNUAL MEETING
May [day], 2000
The annual meeting of the shareholders of Dexter Corporation (the
"Company" or "Dexter") will be held at The Hartford Club, 46 Prospect
Street, Hartford, Connecticut, on Friday, June 30, 2000, at 10:00 A.M.,
local time, for the following purposes:
(1) To elect three directors to serve for three-year terms expiring at
the 2003 annual meeting of shareholders. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE FOR THE ELECTION OF THE EXISTING DEXTER DIRECTOR
NOMINEES PROPOSED FOR REELECTION AND AGAINST THE ELECTION OF
INTERNATIONAL SPECIALTY PRODUCTS INC.'S DIRECTOR NOMINEES.
(2) To ratify the selection by the Company's Board of Directors of the
firm of PricewaterhouseCoopers LLP as auditor of the Company for
the year 2000. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS
PROPOSAL.
(3) To vote upon a proposal by International Specialty Products Inc.
and its wholly owned subsidiary ISP Investments Inc.
(collectively, "ISP"), as described in the Company's proxy
statement, relating to an amendment to the Company's Bylaws
requiring the Dexter Board to make certain amendments to the
Company's Rights Agreement or to redeem the rights issued under
the Agreement if the Company's shareholders instruct the Board to
do so and requiring the Board not to adopt a new rights agreement
without shareholder approval. THE BOARD OF DIRECTORS RECOMMENDS A
VOTE AGAINST THIS PROPOSAL.
(4) To vote upon a proposal by ISP, as described in the Company's
proxy statement, relating to 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 $45.00 per share in cash. THE BOARD OF DIRECTORS
RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
(5) To vote upon a proposal by ISP, as described in the Company's
proxy statement, relating to a shareholder resolution repealing
any and all amendments made by the Dexter Board to the Company's
Bylaws after February 26, 1999. THE BOARD OF DIRECTORS RECOMMENDS
A VOTE AGAINST THIS PROPOSAL.
(6) To transact such other business as may properly come before the
meeting or at any adjournments or postponements thereof.
The Board of Directors has fixed the close of business on May
15, 2000 as the record date for the determination of shareholders entitled
to notice of and to vote at the meeting.
THIS ANNUAL MEETING IS OF PARTICULAR IMPORTANCE TO ALL
SHAREHOLDERS OF THE COMPANY BECAUSE OF ISP'S ONGOING HOSTILE ATTEMPT TO
TAKE OVER YOUR COMPANY.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON AND
REGARDLESS OF THE NUMBER OF SHARES OF COMMON STOCK YOU OWN, YOUR BOARD
URGES YOU TO COMPLETE, SIGN, DATE AND RETURN THE WHITE PROXY CARD IN THE
ACCOMPANYING ENVELOPE, WHICH IS POSTAGE PAID IF MAILED IN THE UNITED
STATES.
YOUR BOARD ALSO URGES YOU NOT TO SIGN ANY GOLD PROXY CARDS SENT TO
YOU BY ISP. EVEN IF YOU HAVE PREVIOUSLY SIGNED A PROXY CARD SENT TO YOU BY
ISP, YOU CAN REVOKE THAT EARLIER PROXY BY SIGNING, DATING AND MAILING THE
ENCLOSED WHITE PROXY CARD IN THE ENVELOPE PROVIDED.
By order of the Board of Directors,
BRUCE H. BEATT,
Secretary
[DEXTER LOGO]
Dexter Corporation -- One Elm Street -- Windsor Locks, CT 06096-2334
-- Tel: 860.292.7675
May [day], 2000
PROXY STATEMENT
This proxy statement is furnished to the shareholders of Dexter
Corporation (the "Company" or "Dexter") in connection with the solicitation
by the Board of Directors of proxies to be used in voting at the annual
meeting of the shareholders of the Company to be held on Friday, June 30,
2000 and at any adjournments or postponements thereof. The accompanying
proxy is solicited on behalf of the Board of Directors of the Company. This
proxy statement and the accompanying proxy are first being mailed to
shareholders on or about May [day], 2000.
THE ISP PROPOSALS
International Specialty Products Inc. and its wholly owned
subsidiary ISP Investments Inc. (collectively, "ISP") are conducting a
proxy solicitation in opposition to your Board of Directors. ISP says it
plans to:
o Nominate three individuals for election to the Board of Directors
in opposition to the Company's nominees for election as directors
(the "Director Election Proposal").
o Present the following proposals to the shareholder meeting:
- A Bylaw amendment increasing the total number of
directorships from 10 to 17, with the current Class I
remaining at three directorships, Class II increasing
from three to six directorships and Class III increasing
from four to eight directorships (the "Board Size Bylaw
Proposal").
- Nomination of ISP's slate of 7 additional nominees to
fill new directorships created in Classes II and III (the
"Additional Directors Election Proposal").
- A Bylaw amendment that would require the Board to make
certain amendments to the Company's Rights Plan or redeem
the rights issued thereunder if so instructed by Dexter
shareholders, and not to adopt a new Rights Plan without
shareholder approval (the "Rights Plan Bylaw Proposal").
- A shareholder resolution directing the Board of Directors
to amend the Company's Rights Plan to make it
inapplicable to any offer for all outstanding shares of
the Company for at least $45.00 per share in cash (the
"Rights Plan Amendment Proposal").
- A shareholder resolution repealing any and all amendments
to the Company's Bylaws made by the Board of Directors
after February 26, 1999, and prohibiting the Board from
adopting certain new amendments to the Company's Bylaws
without the approval of shareholders (the "Bylaw Repeal
Proposal").
- A resolution providing the order of voting on the
proposals at the 2000 annual meeting (the "Omnibus
Proposal").
ISP seeks to amend Dexter's Bylaws to increase the total number of
directorships from 10 to 17, with the current Class I remaining at three
directorships, Class II increasing from three to six directorships and
Class III increasing from four to eight directorships, and then to elect
seven additional ISP nominees to fill the seven newly created seats in
Classes II and III (collectively, the "Board Expansion Proposal"). This
Board Expansion Proposal seeks to effect a change in a majority of the
Dexter Board (by having ISP nominees occupy 10 of 17 board seats). ISP says
that the Board Expansion Proposal will facilitate ISP's attempt to acquire
Dexter at $50 per share but there is no assurance that if ISP obtains
control of Dexter any transaction will result. DEXTER HAS RECEIVED AN
OPINION OF DAY, BERRY & HOWARD LLP, ITS CONNECTICUT COUNSEL, THAT, ALTHOUGH
THERE ARE NO CONTROLLING CONNECTICUT CASES DIRECTLY ON POINT, A CONNECTICUT
COURT PRESENTED WITH THE QUESTION OF THE VALIDITY OF THE BOARD EXPANSION
PROPOSAL WOULD HOLD THAT IT IS INVALID AND UNENFORCEABLE UNDER CONNECTICUT
LAW FOR AT LEAST TWO SEPARATE AND INDEPENDENT REASONS. Based on the opinion
of Day, Berry & Howard LLP, the Company believes that the Board Expansion
Proposal is squarely contradicted by the unambiguous terms of Article VII
of Dexter's certificate of incorporation, which plainly grant to the Board
the exclusive power to fix the number of directors in each of the three
classes, and thus the total number of directors. In addition, Connecticut
law requires that each class of directors on a classified board have
approximately the same number of directors "as near as may be." If ISP's
Board Expansion Proposal were adopted, the Dexter Board would consist of
classes of three, six and eight directors, which violates this "equal size"
requirement, and once such additional directors were elected there does not
appear to be any authority in the Board to re-allocate and change the terms
of the directors, as would be necessary to make the classes approximately
equal. Day, Berry & Howard LLP has consented to the use of its name and the
reference to its opinions in this Proxy Statement.
FOR THESE REASONS, THE COMPANY BELIEVES ISP'S BOARD SIZE BYLAW
PROPOSAL AND ADDITIONAL DIRECTORS ELECTION PROPOSAL ARE NOT AUTHORIZED (AND
ARE THEREFORE ILLEGAL) UNDER DEXTER'S RESTATED CERTIFICATE OF INCORPORATION
AND THE CONNECTICUT BUSINESS CORPORATION ACT. ACCORDINGLY, THEY CANNOT BE
BROUGHT BEFORE THE ANNUAL MEETING BY ISP, AND NO ACTION WILL BE TAKEN UPON
THEM AT THE ANNUAL MEETING. AS A RESULT, ISP IS NOT IN A POSITION TO TAKE
CONTROL OF A MAJORITY OF THE SEATS ON THE DEXTER BOARD. IN LIGHT OF THIS,
ISP'S OMNIBUS PROPOSAL IS NOT NECESSARY, AND WILL NOT BE BROUGHT BEFORE THE
ANNUAL MEETING. The legality of ISP's proposals is currently being
litigated and their validity and enforceability under Connecticut law will
ultimately be determined by the courts. See "Certain Litigation."
DEXTER ALSO BELIEVES THAT THE RIGHTS PLAN BYLAW PROPOSAL AND THE
RIGHTS PLAN AMENDMENT PROPOSAL ARE ILLEGAL AND UNENFORCEABLE UNDER
CONNECTICUT LAW AND DOES NOT PLAN TO IMPLEMENT THE ACTIONS CONTEMPLATED BY
THESE PROPOSALS, WHATEVER THE OUTCOME OF THE VOTE IS. HOWEVER, IN ORDER TO
GIVE SHAREHOLDERS THE OPPORTUNITY TO MOOT THE ISSUE BY VOTING THESE
PROPOSALS DOWN, DEXTER WILL PRESENT THEM TO THE ANNUAL MEETING. THE BYLAW
REPEAL PROPOSAL IS ILLUSORY AND UNNECESSARY BECAUSE DEXTER HAS NEITHER
AMENDED NOR ADOPTED ANY BYLAWS SINCE FEBRUARY 26, 1999 AND DOES NOT INTEND
TO TAKE ANY SUCH ACTION PRIOR TO THE ANNUAL MEETING. ACCORDINGLY, THIS
PROPOSAL SERVES NO PURPOSE WHATEVER. HOWEVER, TO AVOID THE EXPENSE AND
DISTRACTION OF LITIGATING THE ISSUE WITH ISP, DEXTER PLANS TO PRESENT THIS
PROPOSAL TO THE ANNUAL MEETING.
Despite Dexter's belief that these proposals are invalid and
unenforceable, ISP could challenge this conclusion in a court of competent
jurisdiction, and the outcome of such a challenge is uncertain. ISP has
commenced legal proceedings seeking to determine the legality of its
proposals, but has taken no further action to advance its contentions.
Indeed, it responded to Dexter's motion seeking an expedited declaration of
the illegality of the Board Size Bylaw Proposal and the Additional
Directors Election Proposal by asking the Court to delay any decision with
respect to the lawsuit IT FILED until after the annual meeting, arguing
that if ISP's proposals are not adopted, the issues will be mooted and
there will be no need to decide whether its proposals are invalid. We are
seeking an expedited resolution of these issues because we have serious
concerns about the confusion that may be created with respect to the
composition of the Board and the control of the Company following the
annual meeting unless there is a decisive resolution. In addition, we
believe that our shareholders should be entitled to know as a matter of law
what they will be voting on at the annual meeting. Since the legality of
ISP's proposals is currently being litigated, their validity and
enforceability under Connecticut law will ultimately be determined by the
courts. See "Certain Litigation."
The Board of Directors is soliciting votes FOR the Company's slate
of nominees for election to the Board of Directors, FOR ratification of the
appointment of the firm of PricewaterhouseCoopers LLC as auditor of the
Company for the year 2000 and AGAINST ISP's Director Election Proposal,
Rights Plan Bylaw Proposal, Rights Plan Amendment Proposal and Bylaw Repeal
Proposal (collectively, the "ISP Proposals").
Unless contrary instructions are indicated on the WHITE proxy
card, all shares represented by valid proxies received pursuant to this
solicitation (and not revoked) will be voted:
o FOR the election of all of the Company's nominees for
directors named in this proxy statement,
o FOR the ratification of the appointment of
PricewaterhouseCoopers LLC as auditor of the Company for
the year 2000, and
o AGAINST the ISP Proposals.
If you specify a different choice on the proxy card, your shares
will be voted as specified. Signing and dating Dexter's proxy card will
have the effect of revoking any ISP proxy card you signed on an earlier
date, and will constitute a revocation of all previously granted authority
to vote for every proposal included on the ISP proxy card, notwithstanding
that the Company's proxy card does not include three ISP proposals, two of
which the Company believes are illegal and as a result the third is
unnecessary. In the event that ISP's Board Size Bylaw Proposal, Additional
Directors Election Proposal and Omnibus Proposal are introduced at the
annual meeting, it is the intention of the persons named in the enclosed
proxy to exercise their discretionary authority to vote AGAINST these
proposals.
VOTING AND REVOCABILITY OF PROXIES
You are urged to sign and date the enclosed WHITE proxy card and
return it in the enclosed prepaid envelope whether or not you plan to
attend the meeting. A person giving any proxy has the power to revoke it
(whether such proxy was solicited by the Board of Directors or ISP) at any
time before the voting by submitting to the Company or to ISP a written
revocation or duly executed proxy bearing a later date. In addition, any
shareholder who attends the meeting in person may vote by ballot at the
meeting, thereby canceling any proxy previously given.
VOTING SECURITIES; QUORUM
The only outstanding voting securities of the Company are the
shares of its Common stock, par value $1 per share, xx,xxx,xxx of which
were outstanding as of May 15, 2000, and only shareholders of record
at the close of business on that date will be entitled to vote at the
meeting. Each share is entitled to one vote. Proxies may be solicited,
without additional compensation, by directors, officers or employees of the
Company by mail, telephone, facsimile, telegram, in person or otherwise.
Under Connecticut law and the Company's Bylaws, a majority of the
number of shares of stock issued and outstanding and entitled to vote at
the annual meeting must be present in person or by proxy to constitute a
quorum for the transaction of business.
VOTE REQUIRED
Under Connecticut law, directors are elected by a plurality of the
votes cast by the shares entitled to vote in the election at a meeting at
which a quorum is present.
The Company's Bylaws provide that the Bylaws may be altered,
amended or repealed, or new bylaws may be adopted, at any meeting of the
shareholders, provided that such action by shareholders be by the
affirmative vote of at least two-thirds of the voting power of the shares
of the Company entitled to vote thereon. Consequently, approval of the
Rights Plan Bylaw Proposal and the Bylaw Repeal Proposal would require the
affirmative vote of at least two-thirds of the voting power of the shares
of the Company entitled to vote thereon. Day, Berry & Howard LLP, the
Company's Connecticut counsel, has provided the Board of Directors with an
opinion stating that, although the matter is not free from doubt and there
are strong arguments to the contrary, they believe that a Connecticut court
should conclude that the two-thirds supermajority voting requirement in the
Company's Bylaws continues to be effective and prescribes the vote required
to adopt the proposed Bylaw amendments submitted by ISP. ISP's proxy
statement filed with the Securities and Exchange Commission ("SEC")
indicates that it has received an opinion of Levett Rockwood 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." In addition, ISP has instituted litigation in the United
States District Court for the District of Connecticut seeking, among other
things, to have the two-thirds supermajority voting provision contained in
the Bylaws held ineffective. Dexter believes that the supermajority
provision was properly adopted and is effective. Accordingly, Dexter will
require that approval of the Rights Plan Bylaw Proposal and the Bylaw
Repeal Proposal be approved by the affirmative vote of at least two-thirds
of the voting power of the shares of the Company entitled to vote thereon.
Should the Connecticut District Court rule in favor of ISP, each of the
Rights Plan Bylaw Proposal and the Bylaw Repeal Proposal will be approved
if the votes cast in favor of the proposal exceed the votes cast against
the proposal at the annual meeting. See "Certain Litigation."
ISP's Rights Plan Amendment Proposal will be approved if the votes
cast for the proposal exceed the votes cast against the proposal at the
annual meeting.
METHOD FOR COUNTING VOTES
Votes will be counted and certified by independent inspectors of
election. Under the rules of the SEC, boxes and a designated blank space
are provided on the proxy card for you to mark if you wish to vote "for" or
"against" or "abstain" from voting on one or more of the proposals or to
withhold authority for one or more of the nominees for director.
Connecticut law and the Company's Bylaws require the presence of a quorum
at the annual meeting. Abstentions are counted in determining whether a
quorum is present but are not counted in determining the votes cast for or
against any proposal. Votes withheld in connection with the election of one
or more nominees for director will not be counted as votes cast for those
individuals. Broker non-votes, which 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, are not counted
as votes cast for any proposal. However, because, as described above,
approval of the Rights Plan Bylaw Proposal and the Bylaw Repeal Proposal
would require the affirmative vote of at least two-thirds of the voting
power of the shares of the Company entitled to vote thereon, abstentions
and broker non-votes will have the effect of a vote against such proposals.
See "Certain Litigation."
BACKGROUND OF ISP'S PROXY CONTEST
In 1998 the Company's management undertook an extensive strategic
review of all the Company's businesses and operations. As part of this
review process, the management reviewed its investment in its majority
owned subsidiary, Life Technologies Inc. Life Technologies develops,
manufactures and supplies more than 3,000 products used in life sciences,
research and commercial manufacture of genetically engineered products. The
Company's management concluded that it was important to acquire the
remaining minority equity interest in Life Technologies that it did not own
as part of its long-term strategy to focus its efforts and resources on
businesses with strong market positions, and in particular to serve as the
platform from which to develop a broader participation in the life sciences
market. In furtherance of this strategy, on July 7, 1998, Dexter proposed
to acquire the remaining outstanding shares of Life Technologies that it
did not own at a price of $37.00 per share in cash. Following receipt of
Dexter's proposal, the Life Technologies Board of Directors formed a
special committee consisting of Thomas H. Adams, Ph.D., Frank E. Samuel,
Jr. and Iain C. Wylie to consider and respond to the proposal. The special
committee retained a financial advisor and legal counsel. After evaluating
Dexter's proposal with the assistance of its financial and legal advisors,
on September 14, 1998, the special committee determined that $37.00 per
share would not adequately compensate the public shareholders for the
inherent value of their shares. On October 27, 1998, the special committee
informed the Life Technologies Board of Directors that the special
committee was not prepared to recommend Dexter's proposal to the public
shareholders. In response to the special committee's findings, Mr. K.
Grahame Walker, Chairman of the Board and Chief Executive Officer of
Dexter, withdrew Dexter's $37.00 per share proposal in a letter he
presented to the Life Technologies Board. The letter stated:
"Dexter has determined that it is desirable to initiate a
process to enable the LTI public stockholders to accept
this attractive price in a timely manner and to end the
uncertainties which have arisen over the past
three-and-a-half months. Accordingly, Dexter will shortly
commence a tender offer for all of the outstanding shares
of LTI that it does not currently own at a cash price of
$37.00 per share."
In light of the withdrawal of Dexter's proposal, the Life
Technologies Board disbanded the special committee, over the objection of
its three members, because in the view of the five Dexter-affiliated
directors who voted to disband the special committee there appeared to be
no purpose in continuing its existence. After the special committee was
disbanded, two of the three members of the special committee resigned from
the Board. On November 2, 1998, Dexter commenced an all cash tender offer
for the outstanding shares of Life Technologies at $37.00 per share and the
tender offer would be followed by a merger in which all shares not
purchased in the offer would be acquired for $37.00 per share.
On November 16, 1998, Life Technologies filed a Schedule 14D-9
Solicitation/Recommendation Statement with the SEC 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. The
Schedule 14D-9 discussed the special committee's findings, including its
determination that Dexter's $37.00 per share proposal would not adequately
compensate Life Technologies' public stockholders for the inherent value of
their Life Technologies shares. In particular, the members of the special
committee believed that Dexter's $37.00 per share proposal omitted
"significant components to LTI's long term inherent value and earning
power. Foremost among these is the value of the products in LTI's R&D
pipeline that have not been commercialized."
On December 7, 1998, Dexter amended its tender offer by increasing
the purchase price from $37.00 per share to $39.125 per share. Dexter's
offer expired on December 22, 1998, at which time Dexter purchased all
shares tendered resulting in Dexter's owning approximately 71% of the
outstanding shares of Life Technologies.
Since the completion of its tender offer in December 1998, Dexter
has been pursuing what it believes to be a shareholder value growth
strategy by focusing on life sciences. In particular, it has been
attempting to acquire 100% of Life Technologies. Virtually
contemporaneously with Dexter's publicly announced efforts to maximize
value for all Dexter shareholders by pursuit of its life sciences strategy,
we believe ISP and its Chairman of the Board, Samuel J. Heyman, have been
frustrating the Company's efforts. Specifically, as Dexter was pursuing its
public tender offer at $39.125 per share in cash for all outstanding Life
Technologies shares, ISP was engaged in an open-market purchase program
resulting in ISP's acquiring 15% of the Life Technologies shares. On
November 20, 1998, ISP filed a Schedule 13D with the SEC revealing its
ownership in Life Technologies and stating that it acquired its shares
because the Life Technologies shares were "substantially undervalued ," and
that it considered its "equity position to be for investment purposes
only." ISP said it had no present plans or intentions that would result in
or relate to an acquisition of LTI, a change in LTI's board of directors or
any other change in LTI's business or corporate structure, among other
things. ISP's Schedule 13D revealed that ISP embarked on its open-market
purchase program on September 23, 1998 by purchasing 7,500 shares at $35.75
per share.
ISP's share ownership position and group formation, creating a
block of more that 20% of the outstanding Life Technologies shares, gave it
a veto over any amendments to Life Technologies' certificate of
incorporation and to other extraordinary corporate transactions that did
not receive the requisite Board approval. In practical effect, ISP's
ownership position made it extremely difficult - if not impossible - for
Dexter to pursue any value creation strategy through Life Technologies
because many of the transactions or steps it might take, such as a spin-off
or merger or joint venture, were likely to need ISP's cooperation. In
addition, one potential merger-of-equals partner with whom Dexter had a
brief discussion took the position that it could not proceed with Dexter
until Dexter resolved the uncertainties posed by ISP. For these and similar
reasons, Dexter believes that ISP's actions were instrumental in preventing
Dexter from realizing cost savings and cash flow benefits that could have
been achieved from owning 100% of Life Technologies as well as the ability
to secure its platform for growth in life sciences.
Contemporaneously with establishing its position in Life
Technologies, on September 15, 1998, ISP embarked on an open-market
purchase program in the Dexter shares. ISP first announced its ownership
position in Dexter in a Schedule 13D filed with the SEC on April 22, 1999,
once again stating that the purpose of its purchases was that the shares
were "undervalued" and that it had acquired the shares "for investment
purposes only." ISP continued to acquire (and on a number of occasions,
sell) Dexter shares through September 1999, until its publicly reported
ownership reached 9.98% of the Company's outstanding shares.
On October 4, 1999, the Dexter Board of Directors amended the
Company's Rights Agreement to change the definition of "Acquiring Person"
in the Rights Agreement by lowering the beneficial ownership percentage
threshold required to become an Acquiring Person, and at which the Rights
become exercisable, from 20% to 11% of the common shares of the Company
then outstanding and to exclude from the definition of "Acquiring Person"
any person who beneficially owns less than 20% of the outstanding Dexter
shares and is entitled to report its ownership on Schedule 13G under the
federal securities laws. A person is entitled to file a Schedule 13G if,
among other things, such person has acquired less than 20% of the
securities in the ordinary course of business and not with the purpose nor
the effect of changing or influencing the control of the issuer.
At the request of Mr. Heyman, representatives of Dexter met with
representatives of ISP on December 3, 1999. Dexter had requested an agenda
for the meeting, but Mr. Heyman declined to provide one. At the meeting the
ISP representatives expressed their belief that Life Technologies, with its
higher growth and higher margins, could better fulfill its potential as an
independent entity or in combination with another similarly strategically
situated company, rather than in combination with Dexter. The ISP
representatives argued 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. They recommended that Dexter and Life Technologies be
separate corporate entities. Mr. Heyman specifically recommended that
Dexter spin off Life Technologies to Dexter shareholders, which he claimed
could be accomplished tax-free, a claim which he subsequently recanted
after Dexter proposed a meeting of tax experts to explore whether a
tax-free spinoff could work. Nevertheless, Mr. Heyman continued to say
publicly that he had offered "to work with Dexter to try to develop a tax
efficient strategy . . . to separate Dexter and Life Technologies" and that
"a tax-free spin-off of Dexter's LTI shares is not a 'key aspect' of, or
even related in any way to, ISP's $45 per share acquisition proposal."
The December 3 meeting was rather short, approximately 45 minutes,
and concluded without any mutual understanding or agreement to meet or
speak again in the future. The Dexter representatives did inform the ISP
representatives that they intended to give ISP's proposals additional
thought and might share further reactions with ISP, but Mr. Heyman somewhat
curiously indicated that he might confirm some of his own thoughts
expressed in the meeting in a follow-up letter to Dexter. The Dexter
representatives did not respond.
Without giving Dexter an opportunity to explain what Dexter
believed were the serious fallacies in ISP's recommendations, including the
potentially enormous tax cost associated with such a separation, just 11
days later ISP proposed to acquire Dexter for $45.00 per share in cash,
subject to the execution of a mutually acceptable merger agreement. In Mr.
Heyman's letter of December 14, 1999, to Mr. Walker, Mr. Heyman stated:
"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)."
It was not until ISP filed its December 14, 1999 letter in an
amendment to its Schedule 13D that ISP revealed to the Dexter shareholders
that it had changed its "investment only" purpose for acquiring its Dexter
investment.
Following a careful consideration of ISP's $45.00 per share
proposal with its financial and legal advisors, on December 23, 1999, the
Dexter Board of Directors unanimously concluded that ISP's proposal was
both inadequate and contrary to the best interests of the shareholders of
Dexter and rejected it. The Board's conclusions were based upon the
following factors and considerations:
o The opinion of Dexter's financial advisor, Lehman
Brothers Inc., that the $45 per share was inadequate from
a financial point of view
o The fact that ISP's proposal was unfinanced and that,
even if it could be financed, the resulting entity would
be very highly leveraged
o The absence of any details of the proposal, such as a
merger agreement or a term sheet outlining proposed terms
and conditions of an ISP acquisition
o The Board's belief that long-term shareholder value would
be better served by continued pursuit of Dexter's plan
for growth through life sciences
o Mr. Heyman's involvement with Union Carbide in 1985, CBI
in 1986, Borg-Warner in 1987 and Cabot Corporation in
1988 where he generally acquired an investment in the
company, made an acquisition proposal at a low price and
ultimately sold his position in the company at a profit
-- a pattern of which the Board was informed based on
publicly available information
In an effort to pursue aggressively a strategic plan Dexter
believed would maximize value for all Dexter shareholders by focusing on
life sciences, initially through the acquisition of 100% of Life
Technologies, on January 20, 2000, Dexter announced that it had sent a
letter to Life Technologies proposing to acquire all of the remaining
outstanding Life Technologies shares that it did not own in a merger
transaction at $49.00 per share in cash. Dexter's letter indicated that
before a definitive agreement could be signed and before the Life
Technologies Board of Directors responded to the proposal, Dexter needed
appropriate indications of support for the merger from ISP and the other
"group" members who filed the Schedule 13D concerning the Life Technologies
shares.
Rather than allow Dexter to pursue its growth strategy by
supporting Dexter's $49.00 per share merger proposal with Life
Technologies, Mr. Heyman once again embarked on what we consider to be a
program of frustrating the Dexter Board's longstanding and considered
strategy it believed would maximize value for all Dexter shareholders by
becoming a preeminent life sciences supplier by commencing his proxy
contest to elect his hand-picked directors and to seek approval of the
other ISP proposals. On January 27, 2000, Mr. Heyman sent Mr. Walker a
letter indicating that ISP intended to present the Board Size Bylaw
Proposal, the Additional Directors Election Proposal, the Omnibus Proposal
and the other ISP Proposals at the annual meeting and solicit proxies in
favor of the proposals. On January 27, ISP also gave written notice to
Dexter of its intention to bring these proposals before the annual meeting.
Mr. Heyman's letter contained no mention of litigation. Nonetheless, in
addition to diverting Dexter management's attention from the Company's
business and operations with his proxy contest, Mr. Heyman also commenced
litigation in support of his proxy fight in the United States District
Court in the District of Connecticut. See "Certain Litigation."
Following a special meeting of the Dexter Board of Directors on
February 8, 2000, Dexter took the following actions:
o Dexter offered both ISP and Chase Securities Inc., ISP's
financial advisor, the opportunity to review confidential
business and financial information for the purpose of
determining whether they would be willing to increase
their $45.00 per share proposal to acquire Dexter.
o Dexter amended its rights plan to address ISP's concerns
evidenced by its shareholder proposals in a manner that
Dexter believes to be fair, even-handed and in the best
interests of its shareholders. Specifically, Dexter
amended the Rights Agreement to cause the rights to be
inapplicable to any tender or exchange offer that:
o is for all outstanding shares,
o is fully financed,
o is, in the Board's reasonable judgment,
substantially unconditional,
o remains available to Dexter shareholders for 60
days, and
o assuming all of the foregoing conditions are
met, Dexter's investment banker opines is at a
price that is fair to the Dexter shareholders.
See the discussion under the heading "Proposal (3) Rights
Plan Bylaw Proposal."
o Dexter requested that ISP make whatever financing
commitment letters that it had received public so that
shareholders could evaluate the terms, conditions and
sufficiency of ISP's financing arrangements for its
$45.00 per share cash proposal.
o Dexter offered a meeting among its tax advisors and those
of ISP for the purpose of understanding how ISP would
separate Life Technologies on a tax-free basis.
On Wednesday, February 23, 2000, ISP entered into a
confidentiality agreement and a total of 20 different representatives of
ISP, 11 different representatives of Chase Securities Inc., one
representative from its legal counsel, Weil, Gotshal & Manges, LLP, and one
representative of a biotechnology consulting firm visited the Dexter due
diligence data room (which contains in excess of 60,000 pages of due
diligence material) on 11 separate days. However, ISP never accepted
Dexter's offer for a meeting among Dexter's and ISP's tax advisors in order
to reach a common understanding with respect to the significant tax
implications associated with separating Life Technologies from Dexter.
Following a meeting of the Dexter Board of Directors, on Monday,
February 28, 2000, Dexter issued the following press release:
"Contact:
Kathleen Burdett
John Thompson
Dexter Corporation
(860) 292-7675
or
Lawrence A. Rand
Michael Freitag
Kekst and Company
(212) 521-4800
FOR IMMEDIATE RELEASE
DEXTER BOARD AUTHORIZES EXPLORATION OF STRATEGIC ALTERNATIVES
WINDSOR LOCKS, CONNECTICUT, February 28, 2000 -- Dexter
Corporation (NYSE:DEX) said today its Board of Directors has
authorized the Company's management and its financial advisor,
Lehman Brothers, to explore all strategic alternatives that may be
available to Dexter to maximize shareholder value in the short
term.
K. Grahame Walker, Chairman and Chief Executive Officer of Dexter,
said: "Based on the current circumstances that our company is
facing, our Board has decided to institute a process in which we
will survey all of the Company's available options. Several
specific factors contributed to the Board's decision, including
the acquisition by International Specialty Products, Inc.
(NYSE:ISP) of a blocking position in Life Technologies, Inc. (OTC
Bulletin Board:LTEK) that made it impossible for Dexter to
complete our plan to achieve 100 percent ownership of LTI as a
platform for implementation of Dexter's life sciences growth
strategy."
"Rather than negotiate a reasonable exit from LTI," Mr. Walker
continued, "ISP instead launched a proxy contest for control of
Dexter's Board with an unfinanced and inadequate $45 negotiation
proposal. The Board strongly believes and has confidence in the
long-term prospects for Dexter's growth strategy. However, ISP's
self-serving insistence on a debate confined to a short-term focus
coupled with ISP's ability to prevent Dexter from effectively
implementing its growth strategy made it necessary to explore all
other options at this time."
Dexter emphasized its Board has made no decision to sell the
Company at this time, but said 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 -- would be examined and considered. In
pursuit of that objective, third parties will be invited to sign
confidentiality agreements, review comprehensive data room
materials and receive Dexter management presentations. The Company
has entered into a confidentiality agreement with ISP, and, as of
February 24, three representatives of ISP and 10 representatives
of ISP's financial advisor, Chase Securities, began to visit
Dexter's data room. There can be no assurance that these
discussions will result in a transaction or other action by
Dexter.
Any statements in this press release that are not historical facts
are "forward-looking statements" as that term is defined under the
Federal Securities Laws. Forward-looking statements are subject to
risks, uncertainties and other factors, which could cause actual
results to differ materially from those stated in such statements.
These and other risks are detailed in the Company's filings with
the Securities and Exchange Commission.
Dexter Corporation is a global specialty materials supplier with
three operating segments: life sciences, nonwovens, and specialty
polymers. The company supplies specialty materials to the
aerospace, electronics, food packaging, and medical markets. . . ."
On March 21, 2000, Mr. Walker wrote the following letter to Mr. Heyman:
"Dear Mr. Heyman:
On March 10, 2000, our financial advisor Lehman Brothers
sent you a letter inviting you to submit a non-binding written
indication of interest for the purchase of Dexter or one or more
of its businesses. Lehman's letter requested that your proposal be
submitted by Noon (EST) on March 24, 2000.
In view of the conflict and disharmony that have plagued
the contacts and communications between our two companies, I
believe it is appropriate to address a few special comments to ISP
alone with respect to this process.
First, this is a serious and deliberate process which is
intended to maximize shareholder values for all Dexter
shareholders in the short term. Second, the Board of Dexter is
unconstrained by any objective or bias except what is best for the
shareholders. Put differently, what will count in this process is
price and certainty -- nothing else. Third, Lehman's invitation on
our behalf is genuine because the Dexter Board wants ISP to submit
its best possible competitive proposal. Please understand that
Dexter will negotiate any proposal with ISP, provided the proposal
is competitive as to price and likely to be consummated. Fourth,
your tactics and strategy in this process are, of course, up to
you and your Board, but I want to caution you it is critical to
your staying in the running to acquire Dexter that you submit a
competitive proposal this Friday. You can be assured that the
Dexter Board will be interested only in what is submitted on
Friday afternoon, and not in the rhetoric of your proxy campaign
nor in some new threat of litigation.
Let me also remind you what I have previously advised
both you and Mr. Kumar. Dexter has made an extraordinary effort to
accommodate ISP in its due diligence investigation. Since February
23, a total of 19 different representatives of ISP and 11
different representatives of Chase Securities Inc. have visited
the data room on 6 separate days -- a data room that contains more
than 60,000 pages of materials. Seven of your representatives and
3 Chase representatives have visited on more than one occasion. A
total of approximately 40 hours of data room time has been
dedicated to various subgroups of these 30 people conducting your
due diligence investigation. Nothing short of a voluminous
quantity of information from the data room has been copied and
sent to either ISP or Chase or both of you. This Thursday, March
23, we have scheduled a management presentation for 5 ISP
representatives and 4 Chase representatives to be given by senior
management of our corporation.
As I said, all proposals are due on Friday. Depending
upon the responses to this invitation, we anticipate there will be
a more select group of bidders proceeding into a second round.
However, we are telling participants that, if the circumstances
warrant, Dexter would be willing to consider and perhaps respond
to a pre-emptive proposal. For this and other reasons, you should
assume that the only sure means for staying in the process is to
submit a competitive proposal. If you fail to do so, you will have
no assurance either that you will be included in the next round
or, indeed, that there will be a next round. Specifically, you
should anticipate the possibility that Dexter could, in
appropriate circumstances, respond to requests for a "lock-up" or
"break-up" arrangements from a pre-emptive bidder that make it
materially more expensive for any other bidder to compete
thereafter. Naturally, if ISP would like to submit a pre-emptive
proposal, we would be willing to discuss its implications with you
and your advisors as well.
If you have any questions, let me suggest that you have
Chase Securities discuss them with Lehman or Weil Gotshal discuss
them with Skadden Arps.
Sincerely,
/s/ K. Grahame Walker"
On March 23, 2000, Mr. Heyman wrote a letter to Mr. Walker stating
that ISP's board had authorized an increase in the price of ISP's cash
merger proposal from $45.00 to $50.00 per share. Mr. Heyman attached to
this revised proposal a commitment letter from Chase Securities to provide
senior credit facilities in the aggregate amount of up to $1.825 billion in
order to finance ISP's acquisition of Dexter. Mr. Heyman further stated:
"If we receive the proper cooperation from Dexter in connection
with the balance of the due diligence process and Dexter can
demonstrate the value of the Company would justify a higher price,
we would consider increasing this price as well."
In response to Mr. Heyman's letter, on March 23, 2000, Dexter
issued the following press release:
"Contact:
Kathleen Burdett
John Thompson
Dexter Corporation
(860) 292-7675
or
Lawrence A. Rand
Michael Freitag
Kekst and Company
(212)521-4800
FOR IMMEDIATE RELEASE
DEXTER TO REVIEW REVISED OFFER FROM ISP; CONTINUES
EXPLORATION OF STRATEGIC ALTERNATIVES
WINDSOR LOCKS, CONNECTICUT, March 23, 2000 - Dexter Corporation
(NYSE:DEX), said today that it has received a letter from
International Specialty Products (NYSE:ISP), increasing its cash
merger proposal to $50 per share of Dexter common stock. Dexter's
Board of Directors plans to give this revised proposal full
consideration.
As announced last February 28, the Dexter Board has authorized the
Company's management and its financial advisor, Lehman Brothers,
to explore all strategic alternatives that may be available to
Dexter to maximize shareholder value in the short term.
K. Grahame Walker, Chairman and Chief Executive Officer of Dexter,
said: "Today's announcement from ISP confirms our view of ISP's
previous proposal of $45 per share as inadequate. The Board will
evaluate ISP's new proposal along with all other alternatives
presented to us as part of our program to maximize value in the
short term."
As previously announced, the Dexter Board is examining and
considering a wide range of alternatives - including a merger or
sale of the Company, a financial restructuring, or a spin-off or
sale or one or more of the Company's businesses in order to
achieve maximum value for shareholders in the short term. In
pursuit of that objective, 29 third parties including ISP have
signed confidentiality agreements. Dexter emphasized that every
available alternative will be examined and the one that will
maximize the value of the Dexter shareholders' investment will be
aggressively pursued. Dexter also said that there can be no
assurance that these discussions will result in a transaction or
other action by Dexter. . . ."
Also, on March 23, 2000, Dexter's counsel, Skadden, Arps, Slate,
Meagher & Flom LLP, received a letter from ISP's counsel, Weil, Gotshal &
Manges LLP, requesting an amendment to the Rights Plan Amendment Proposal
to reflect the increase in the price of ISP's acquisition proposal from
$45.00 to $50.00 per share. Dexter's counsel responded to such letter by
reiterating Dexter's belief that ISP's Rights Plan Amendment Proposal is
illegal and not a proper subject for action by Dexter's shareholders and
suggesting that ISP consider withdrawing its Rights Plan Amendment Proposal
in order to eliminate the necessity for explaining why it is advancing an
amendment and resolution with a $45.00 per share floor when ISP's proposal
is at $50.00 and may be some other number in the future.
On April 2, 2000, Dexter issued the following press release:
"Contact:
Kathleen Burdett
John Thompson
Dexter Corporation
(860) 292-7675
or
Lawrence A. Rand
Michael Freitag
Kekst and Company
(212)521-4800
FOR IMMEDIATE RELEASES
DEXTER PLEASED WITH FIRST STAGE OF PROGRAM TO
MAXIMIZE SHAREHOLDER VALUE POSTPONES ANNUAL MEETING
TO COMPLETE SALE PROCESS
WINDSOR LOCKS, CONNECTICUT, April 2, 2000 - Dexter Corporation
(NYSE:DEX) announced today that the results of the first stage of
its program to maximize the short-term value of its shareholders'
investment were very positive. Dexter said that it had received
several indications of interest in acquiring the entire company
and had also received multiple indications of interest in Dexter's
various constituent businesses. Dexter added that selected
potential merger partners and buyers are currently receiving
management presentations, facility tours and data room access.
K. Grahame Walker, Chairman of the Board and Chief Executive
Officer of Dexter said, "We are very pleased with the results of
the first stage of our sale process. Our first priority is to
maximize the value of our shareholders' investment in the short
term and based on progress to date we expect to be in a position
to make a definitive announcement in the next few weeks or so. In
the meantime, we are reinforced by the strong support we have
received from our shareholders who wish to see the sale process
concluded in a deliberate, orderly and successful manner. Based on
this and other factors, our Board of Directors has determined to
postpone our Annual Meeting of Shareholders until June 30, 2000.
Of course, it is our objective to present a definitive transaction
to our shareholders well before that date."
Dexter said that its Annual Meeting had been previously scheduled
for April 27, 2000. The Company noted that completion of
definitive proxy materials for the meeting had been delayed by the
introduction of illegal shareholder proposals by International
Specialty Products Inc. (ISP) as part of its proxy campaign to
seize control of Dexter's Board at the Annual Meeting. The Company
also said that it had submitted a motion to the court in ISP's
lawsuit against the Company seeking to have ISP's attempt to pack
Dexter's Board with seven new ISP designees declared illegal. ISP
sought to have a decision on this motion deferred. Dexter said it
remains hopeful that a decision on this motion will be forthcoming
promptly. Dexter cautioned shareholders that there can be no
assurance that its discussions to sell the Company will result in
the consummation of a sale transaction. . . ."
Between April 3 and April 18, 2000, various interested parties
that had submitted indications of interest in acquiring all or part of
Dexter, were provided management presentations, conducted site visits of
Dexter's facilities and reviewed the due diligence materials in Dexter's
data room.
By letter dated, April 12, 2000, each party participating in the
second stage of the sale process, including ISP, was advised by Lehman
Brothers that final bids would be due on April 19, 2000, and what the
procedures would be for submitting definitive acquisition proposals.
Bidders were requested to submit proposals to acquire both the Dexter
shares as well as the Life Technologies shares not owned by Dexter. The
Lehman Brothers' bid letter also required that each proposal "remain open
until May 19, 2000, unless rejected earlier in writing by Dexter."
Subsequently, Dexter's legal counsel distributed forms of
acquisition agreements for both Dexter and Life Technologies to each of the
bidders along with an invitation to negotiate the terms of the agreements
in advance of the April 19, 2000, submission date. ISP declined this
invitation.
Following the April 19, 2000 bid submission deadline, on April 20,
2000, ISP submitted a proposal only to acquire the outstanding common stock
of Dexter but declined to include a proposal to acquire the publicly-held
shares of Life Technologies. ISP offered to acquire the Dexter shares at a
price per share of $50.00 plus one "contingent value right." The contingent
value rights purported to allow Dexter's shareholders to participate in the
proceeds from a subsequent sale by ISP of Dexter's shares in Life
Technologies if such sale occurred on or prior to September 30, 2001 and
the sale price for the shares of Life Technologies was greater than $50.00
per share. However, the term sheet for the contingent value rights provided
to Dexter imposed no obligation on ISP to sell Life Technologies in advance
of September, 2001. Furthermore, ISP intended to cap the value each right
holder would receive to $10.00 per contingent value right The terms of
contingent value rights also provided that if ISP were to sell less than
100% of Life Technologies, ISP's shares and Dexter's shares of Life
Technologies would be included in the sale on a pro rata basis. CONTRARY TO
ISP'S STATEMENT THAT "DEXTER HAS NOT YET PROVIDED CERTAIN ITEMS REQUESTED
BY ISP," ISP'S APRIL 20, 2000 PROPOSAL STATES "ISP'S PROPOSAL IS NOT
CONDITIONED ON FURTHER DUE DILIGENCE." In addition, contrary to the
instructions provided to ISP by Lehman Brothers as to the length of time
bids should remain open, ISP's proposal indicated that it would expire on
Monday, April 24, 2000, unless Dexter commenced substantive negotiations
with ISP before that time. Following receipt of ISP's proposal, ISP's
representatives were advised that Dexter's Board would not be meeting until
that Monday afternoon and thus the deadline for their bid was unreasonable.
Following a meeting of the Dexter Board of Directors, on April 24,
2000, Dexter issued the following press release:
"Contact:
Kathleen Burdett
John Thompson
Dexter Corporation
(860) 292-7675
or
Lawrence A. Rand
Michael Freitag
Kekst and Company
(212)521-4800
FOR IMMEDIATE RELEASE
DEXTER CONTINUES DELIBERATIONS
WINDSOR LOCKS, CONNECTICUT, April 24, 2000 - Dexter Corporation
(NYSE-DEX) announced that its Board of Directors had met today to
review the status of its exploration of alternatives to maximize
shareholder value in the short term. The Board received reports
concerning proposals received and other pertinent developments.
The Board reached no conclusions, but authorized management and
its advisors to proceed with next steps in the process. . . ."
On May 1, 2000, Mr. Heyman sent a letter to Mr. Walker stating
that ". . . ISP is terminating further discussions with Dexter and
continuing its proxy contest . . . ." In response to Mr. Heyman's letter,
on May 2, 2000, Mr. Walker sent the following letter to Mr. Heyman:
"Dear Mr. Heyman:
This is in reply to your letter of May 1, 2000, which
came as a total surprise. The reasons you assign for your
precipitous and very public new position require some rebuttal.
In discussing your April 20 proposal, our representatives
expressed to yours the Board's desire for the best possible
economics on the best possible contract terms. If you choose to
translate those objectives into a characterization of your
proposal as unacceptable, so be it. Your suggestion that our
representatives "refused to meet" with yours over the April 22-23
weekend does not reflect the facts. In fact, Dexter's
representatives offered not only to meet with ISP's
representatives, but also to negotiate a transaction if ISP
submitted a proposal at a "compelling price," which ISP refused to
do. Nonetheless, our representatives were told by yours in
telephone discussions that occurred during the April 22-23 weekend
that they believed ISP's proposal had flexibility to be increased.
Moreover, in response to ISP's self-imposed deadline of Monday,
April 24, 2000, our representatives told yours that the Dexter
Board would not be meeting until Monday afternoon when it would
consider its alternatives. Promptly following the Board meeting,
on Monday evening our representatives called yours and said the
Board was prepared to authorize a transaction with ISP at a price
higher than what ISP was offering and invited ISP to negotiate.
Your representatives refused and demanded that ISP be shown all of
the bids received by Dexter in its value maximization process, a
demand which on its face was unreasonable.
Your suggestion that Dexter refused to provide ISP with
information regarding third party interest in Life Technologies is
entirely inaccurate. Not only did Dexter introduce ISP last
Thursday to a third party bidder for Life Technologies that had
indicated strong interest at an attractive value, but Dexter also
acceded to ISP's demand (which was made a non-negotiable condition
of proceeding) that Dexter be excluded from any discussions
between ISP and the third party. In view of the facts, your
contention is hardly credible. Moreover, your position is even
less credible when considered in light of the facts that ISP never
had a meeting with the third party, that ISP demanded to know the
third party's bid as a condition of the meeting and that there
were no conversations at all between ISP and the third party after
last Sunday.
Your contention regarding a "creditable alternative to
[ISP's] proposals for the Company" is similarly untenable. The
problem here is not creditable alternatives. The problem is ISP's
determination to frustrate the Board's efforts on behalf of
stockholders, to seize control of Dexter as cheaply as possible
and to dispose of Life Technologies at a price which allows ISP to
keep Dexter's wholly-owned businesses at minimal cost. It is for
these reasons that the Dexter Board must be in charge of
conducting the auction process. ISP is not interested in paying
fair value for the Dexter wholly-owned businesses, nor is it
interested in any bidder willing to do so. Based on ISP's conduct
during the course of the last weekend, ISP's interest in a Life
Technologies bidder only extends to the price such party will pay
ISP for that business, an approach which we have previously
illustrated to be tax inefficient.
We will continue to move forward with our program to
maximize value in the short term for all Dexter stockholders,
which may result in the sale of the assets you are interested to
acquire.
Sincerely,
/s/ K. Grahame Walker"
On May 2, 2000, Mr. Heyman sent the following letter to Mr. Walker:
"Dear Grahame:
While I believe your May 2nd letter is filled with
mischaracterizations, inaccuracies and irrelevancies, it is not
productive for you and I to engage in a debate about "who said or
did what to whom." Parenthetically, at Dexter's request, we had
agreed to keep discussions to which you refer "confidential" - an
agreement which we have honored and you have now chosen to ignore.
The simple fact of the matter is that we have made, in
our view, a fair and full offer for Dexter - which Dexter has seen
fit to reject. Notwithstanding Dexter's rhetoric and repeated
optimistic prognostications as to its progress with respect to the
bidding process, we believe that our offer is still the best offer
for Dexter, and if your company has a better one, we can only
assume that it would have been disclosed by now.
Your threats to dismember the company with the piecemeal
sale of one or more businesses smacks of scorched-earth tactics
which, while they may operate to entrench your management, may
only destroy shareholder value for Dexter shareholders.
Finally, whatever our differences, we believe that Dexter
has a legal and moral obligation to let its shareholders decide
what is in their best interests, and we trust that you will hold
to your previously announced commitment to present any transaction
to Dexter shareholders for their approval.
Sincerely,
/s/ Samuel J. Heyman"
On May 5, 2000, ISP filed revised proxy materials in which it
stated that the "ISP proposal still stands at $50 per share in cash." Based
on the information contained in ISP's proxy materials, it appears that ISP
has eliminated their offer of Contingent Value Rights included in its April
20 proposal thereby eliminating the additional value their representatives
suggested was attributable to such rights
No assurance can be given that shareholder value will be increased
if the ISP Proposals are rejected and the Board of Directors' proposal to
elect the Company's slate of nominees is adopted. In addition, no assurance
can be given that shareholder value will be increased if the ISP Proposals
are adopted and the Board of Directors' proposal to elect the Company's
slate of nominees is rejected.
PROPOSAL (1) ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation and Bylaws
provide for three classes of directorships, with the term of one class
expiring at each annual meeting of the shareholders. Pursuant to the
authority granted to the Board in Article VII of the Restated Certificate
of Incorporation, the Board of Directors has determined that effective on
the date of the 2000 annual meeting, the number of directors is fixed at
ten, three in the class whose term expires in 2001, four in the class whose
term expires in 2002 and three in the class whose term expires in 2003. At
the 2000 annual meeting, three directors are to be elected, all of whom
shall constitute the class whose term will expire in 2003. The Board of
Directors has nominated Messrs. Charles H. Curl, Peter G. Kelly and
Jean-Francois Saglio, who are currently serving as directors, having been
elected to serve for their present terms at the annual meeting in 1997.
Each nominee has consented to serve for the specified term. It is intended
that the shares represented by the accompanying proxy will be voted for the
election of Messrs. Curl, Kelly and Saglio, whose terms will expire in
2003.
If for any reason any nominee should be unavailable to serve as a
director at the time of the meeting, a contingency which the Board of
Directors does not expect, the shares represented by the accompanying proxy
may be voted for the election in his stead of such person as may be
determined by the holders of the proxy, unless the proxy withholds
authority to vote for all such nominees. Nominees shall be elected by a
plurality of the votes cast by the shares entitled to vote in the election
at a meeting at which a quorum is present in person or by proxy. An
abstention shall be included in the determination of the number of shares
present and voting, but shall not be counted as a vote in favor of the
election of a nominee. Broker non-votes shall not be counted for any
purpose.
ISP is seeking the election of a slate of three directors. The
Dexter Board of Directors believes that the election of ISP's nominees
would not be in your best interests. Your Board opposes the election of
ISP's nominees for several reasons. First, since the end of April ISP has
made the following public statements regarding its desire to acquire
Dexter:
o April 20 -- "For each issued and outstanding
share of common stock of Dexter, ISP will (a)
pay $50 per share in cash and (b) issue one
Contingent Value Right. . . .The CVRs are
intended to allow Dexter shareholders to
participate in the proceeds from a sale by ISP
of Dexter's shares of Life Technologies, Inc. at
a price in excess of $50 per share."
o May 1 -- ". . . ISP is terminating further
discussions with Dexter and continuing its proxy
contest . . . ."
o May 2 -- "The simple fact of the matter is that
we have made, in our view, a fair and full offer
for Dexter. . . ."
o May 4 -- "The purpose of our proposals is to
facilitate [ISP's merger 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 [ISP's] proposals
will result in the consummation of such a
transaction." (Emphasis added.)
We continue to have grave concerns about ISP's conviction and bona
fides about acquiring Dexter -- and especially at a price and on terms that
we believe represent maximum value for all our shareholders. Moreover, ISP
continues to refuse to present a proposal to acquire the publicly traded
minority shares of Life Technologies. At the same time, when ISP asked to
engage in discussions with interested buyers for Life Technologies, Dexter
introduced ISP to a third party bidder for Life Technologies that had
indicated strong interest at an attractive value, and Dexter acceded to
ISP's insistence that Dexter be excluded from any discussions between ISP
and the third party. However, ISP never had a meeting with the third party
because ISP demanded to know the third party's bid as a condition of the
meeting, which we understand the third party declined to do at that time.
We have also repeatedly asked ISP to submit a proposal to acquire Dexter's
wholly owned businesses, but ISP has repeatedly declined to do so,
indicating its strong interest in acquiring the entire company. It is these
contradictory indications that cause the Dexter Board of Directors to
believe that if ISP's nominees were to be elected they would pursue a
course which is not in your best interests.
The Dexter Board of Directors continues to believe that it is in
the best position to be an impartial auctioneer for the sale of the Company
- -- in its entirety or by business unit -- in order to maximize value for
all of the Dexter shareholders. However, no assurance can be given that our
program will maximize shareholder value. As described more fully below,
while they would have a fiduciary duty to the Dexter shareholders, we
believe that Mr. Heyman and ISP have a multitude of conflicts of interest.
For example, Mr. Heyman as Chairman of the Board of ISP is legally bound to
protect and promote the interests of ISP shareholders, whose interests run
directly counter to those of the Dexter shareholders. The protection of the
interests of ISP shareholders may require that the interests of Dexter
shareholders be directly damaged and undermined. We believe Mr. Heyman as
the controlling shareholder of ISP is driven by the same conflicting
interests. More fundamentally, ISP claims to be a prospective purchaser of
Dexter, which places Mr. Heyman and ISP's CEO Sunil Kumar directly and
irreconcilably in conflict with Dexter and certainly bars them from
participating in deliberations addressing the sale of Dexter. In simplest
terms, their interest as directors of ISP is to help ISP to acquire Dexter
for the LOWEST PRICE POSSIBLE, not the HIGHEST PRICE, as must be the
objective of the Dexter Board. ISP's proxy materials state that neither Mr.
Heyman nor Mr. Kumar will participate in Dexter Board action relating to an
ISP acquisition proposal or any other business combination transaction
while an ISP proposal is in effect. Mr. Heyman as a director and as the
controlling shareholder of ISP and Mr. Kumar as a director and the CEO of
ISP have a different and even more irreconcilable conflict by reason of
ISP's ownership of both Dexter shares and Life Technologies shares. As a
result, in every decision involving the relative values of Dexter
(excluding Life Technologies) and Life Technologies, we believe ISP has a
fundamentally different and conflicting interest from that of the Dexter
shareholders.
Your Board also believes that independence and experience are key
qualifications for a director of the Company, particularly in light of the
Company's previously announced decision to explore all strategic
alternatives that may be available to maximize shareholder value in the
short term. The Board believes that the ISP nominees lack these qualities.
Two of ISP's nominees -- Samuel Heyman and Sunil Kumar -- are officers and
directors of ISP. The Board believes they would be committed first and
foremost to furthering ISP's interests by virtue of their affiliation with
ISP rather than your interests. According to ISP's proxy statement, ISP's
other hand-picked nominee, Phillip Peller, is a retired accountant who does
not serve on the board of directors of any public company and does not
appear to have had any business experience in the industries in which the
Company operates. Additional information concerning the backgrounds and
experience of ISP's nominees is set forth in the proxy statement being
furnished by ISP in connection with its solicitation of proxies from the
Company's shareholders and, in accordance with Rule 14a-5(c) under the
Exchange Act, such information is incorporated herein by reference.
The Board of Directors believes that Dexter's nominees, on the
other hand, are independent, familiar with the Company and its businesses
and operations and are committed to exploring all strategic alternatives
that may be available to maximize shareholder value. However, no assurance
can be given that our program will maximize shareholder value.
FOR THESE REASONS, YOUR BOARD OF DIRECTORS BELIEVES YOU WOULD BE
FAR BETTER SERVED BY ELECTING THE COMPANY'S NOMINEES -- CHARLES H. CURL,
PETER G. KELLY AND JEAN-FRANCOIS SAGLIO -- TO THE BOARD, AND YOU ARE URGED
TO VOTE FOR THESE INDIVIDUALS ON THE ENCLOSED WHITE PROXY CARD. THE BOARD
OF DIRECTORS URGES YOU NOT TO SIGN ANY PROXY CARD SENT TO YOU BY ISP.
No assurance can be given that shareholder value will be increased
if the ISP Proposals are rejected and the Board of Directors' proposal to
elect the Company's slate of nominees is adopted. In addition, no assurance
can be given that shareholder value will be increased if the ISP Proposals
are adopted and the Board of Directors' proposal to elect the Company's
slate of nominees is rejected.
The following information relates to the Company's nominees for
reelection at the 2000 annual meeting, the other directors and the named
executive officers of the Company, who include the chief executive officer
and the other four most highly compensated executive officers of the
Company. There are no family relationships among the directors and
executive officers of the Company. The Board of Directors held ten meetings
in 1999.
DEXTER NOMINEES FOR DIRECTORS
Terms Expiring in 2003:
CHARLES H. CURL Director since 1992
[PHOTO] Mr. Curl, age 51, has been president of Curl
&Associates (independent management
consulting firm) since prior to 1995.
Mr. Curl is on the Environmental & Safety
Committee.
PETER G. KELLY Director since 1994
Mr. Kelly, age 62, has been senior principal
of Updike, Kelly & Spellacy, P.C., a
Hartford, Connecticut-based law firm, since
1999 and chairman of the firm from prior to
1995 to 1999. Mr. Kelly has been chairman of
Meridian Worldwide LLC (public affairs firm)
and Meridian Americas LLC (public affairs
firm) since 1998. From 1997 to 1998, Mr.
Kelly was chairman of the professional
advisory council of C.I.S. Strategies, Ltd.
(division of The PBN Company), and since 1999
has been chairman of The PBN Company (public
relations firm). From prior to 1995 to 1996,
Mr. Kelly was chairman of Black, Manafort,
Stone [PHOTO] & Kelly, a subsidiary of
Burson-Marsteller (worldwide public relations
firm). Mr. Kelly was also the managing
director of Black, Kelly, Scruggs & Healy, a
subsidiary of Burson-Marsteller, from 1996 to
1997. Mr. Kelly is a director of Phillips
Screw Corp. (manufacturer and licensor) and a
director of Life Technologies, Inc. (life
science/ biotechnology products), an
affiliate of the Company.
Mr. Kelly is on the Audit Committee and the
Environmental & Safety Committee.
JEAN-FRANCOIS SAGLIO Director since 1991
[PHOTO] Mr. Saglio, age 63, has been president of ERSO (a
consulting company in France) since 1994.
From prior to 1994 to 1995, he was senior
vice president of CEA Industrie (industrial
and financial holding company of the French
Atomic Energy Commission). Mr. Saglio is a
former member of the cabinet of M. Pompidou,
President of France, and also served as
director of the French Administration of
Environment Protection. Mr. Saglio is a
director of EEM (a French investment fund).
Mr. Saglio is on the Environmental & Safety
Committee.
DIRECTORS CONTINUING IN
OFFICE
Term expiring in 2002:
HENRIETTA HOLSMAN FORE Director since 1996
Mrs. Fore, age 51, has been chairman and chief
executive officer of Holsman International
(investment and management company) and
chairman and president of Stockton Products,
[PHOTO] formerly Stockton Wire Products (manufacturer
of wire and steel building materials and
additives) since prior to 1995. She is a
director of HSB Group, Inc. (equipment
insurance and engineering services).
Mrs. Fore is on the Compensation & Organization
Committee.
BERNARD M. FOX Director since 1990
Mr. Fox, age 57, has been a senior advisor to
Dignitas Partners, a private equity capital
general partnership, since 1999 and has been an
independent consultant to corporations and
clients on strategic, energy and marketing issues
since September 1997. Mr. Fox had been President
[PHOTO] since chief executive officer of Northeast
Utilities (public utility holding company)
since prior to 1995 and had been chairman
since August 1995, until his retirement in
September 1997. Mr. Fox is on the Advisory
Board of Cheng Power Systems, Inc. (advanced
electrical generation technology).
Mr. Fox is Chairman of the Audit Committee and is
on the Compensation & Organization Committee.
K. GRAHAME WALKER Director since 1989
Mr. Walker, age 62, has been chairman and chief
executive officer of the Company since prior to
1995. Mr. Walker was President of the Company
[PHOTO] since prior to 1995 until September 1999. He
is chairman of the board of directors of Life
Technologies, Inc.
GEORGE M. WHITESIDES Director since 1985
Dr. Whitesides, age 60, has been a professor of
chemistry at Harvard University since prior to
1995. Dr. Whitesides is a director of Advanced
Magnetics, Inc. (medical diagnostic products),
Hyperion Catalysis, Inc.(medical products) and
[PHOTO] is a director of Life Technologies, Inc.
Dr. Whitesides is Chairman of the Environmental
& Safety Committee and is on the Audit
Committee.
Term Expiring in 2001:
ROBERT M. FUREK Director since 1990
Mr. Furek, age 57, has been chairman of the State
Board of Trustees for the Hartford, Connecticut
public school system since June 1997. Mr. Furek
is also a partner in Resolute Partners, a private
equity investment firm. Mr. Furek served as
president and chief executive officer of
[PHOTO] Heublein, Inc. (wine and spirits producer)
from prior to 1995 until his retirement in
December 1996. Mr. Furek is a director of
Massachusetts Mutual Life Insurance Company
(insurance) and Ikon Office Solutions, Inc.
(business communication products and
services).
Mr. Furek is Chairman of the Compensation &
Organization Committee and is on the Audit
Committee.
MARTHA CLARK GOSS Director since 1992
[PHOTO] Mrs. Goss, age 50, has been the chief financial
officer of The Capital Markets Company
(private investment consulting and software
solutions firm) since October 1999. Mrs. Goss
was vice president and chief financial
officer of Booz, Allen & Hamilton Inc. from
July 1995 to October 1999. From prior to 1995
to July 1995, Mrs. Goss was a senior vice
president of The Prudential Insurance Company
of America. From prior to 1995 to July 1995,
Mrs. Goss was the enterprise control officer
of The Prudential Insurance Company of
America. Mrs. Goss is a director of Foster
Wheeler Corporation (engineering,
construction and manufacturing).
Mrs. Goss is on the Compensation & Organization
Committee and the Audit Committee.
EDGAR G. HOTARD Director since 1996
Mr. Hotard, age 56, has been an independent
consultant to corporations since January 1999.
Mr. Hotard served as chief operating officer of
Praxair, Inc. (industrial gases supplier) from
December 1997 to December 1998 and as President
[PHOTO] of Praxair since prior to 1995 to December
1998. Mr. Hotard is a director of Global
Industries, Ltd. (offshore oil and gas
engineering and construction) and Iwatani
Industrial Gases Corp. (industrial gases
supplier in Japan).
Mr. Hotard is on the Compensation & Organization
Committee and the Environmental & Safety
Committee.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has appointed a Compensation & Organization
Committee, an Audit Committee, and an Environmental & Safety Committee.
The Compensation & Organization Committee is composed of the
following five members, none of whom is an officer or employee of the
Company or its subsidiaries: Robert M. Furek, Chairman, Henrietta Holsman
Fore, Bernard M. Fox, Martha Clark Goss, and Edgar G. Hotard. This
Committee monitors the Company's compensation policy, with particular
emphasis on officer remuneration matters. It also serves as a nominating
committee for the Board of Directors, oversees organizational matters for
the Company and the Board of Directors, and administers the granting of
restricted stock and stock options under the 1999 Long Term Incentive Plan
(the "1999 Plan"). Six meetings of the Compensation & Organization
Committee were held in 1999, and five meetings have been scheduled for
2000.
The Audit Committee is composed of the following five members,
none of whom is an officer or employee of the Company or its subsidiaries:
Bernard M. Fox, Chairman, Robert M. Furek, Martha Clark Goss, Peter G.
Kelly, and George M. Whitesides. The Audit Committee's meetings include, as
a matter of course, private sessions with the Company's independent
certified public accountants and internal auditors. The Audit Committee
recommends the selection of independent accountants to the Board of
Directors and is concerned with the scope and quality of audit and
quarterly reviews performed by the independent accountants as well as other
services provided by them to the Company. The Audit Committee monitors the
Company's Code of Conduct, the integrity of officers, accounting policies,
internal controls and the quality of accounting and published financial
statements. Three meetings of the Audit Committee were held in 1999, and
three meetings have been scheduled for 2000.
The Environmental & Safety Committee is composed of the following
five members: George M. Whitesides, Chairman, Charles H. Curl, Edgar G.
Hotard, Peter G. Kelly, and Jean-Francois Saglio. The Environmental &
Safety Committee monitors and evaluates the Company's environmental and
safety policies and practices and makes recommendations in respect thereof
to the Board of Directors. Three meetings of the Environmental & Safety
Committee were held in 1999, and three meetings have been scheduled for
2000.
During 1999, each of the directors attended at least 75% of the
aggregate number of meetings of the Board of Directors and committees of
the Board of Directors.
COMPENSATION OF DIRECTORS
In 1999, each director of the Company who was not an officer of
the Company or a subsidiary received (a) a fee of $1,000 for each meeting
of the Board (with the exception of meetings not held at the Company's
headquarters, for which a fee of $2,000 was paid), and (b) a fee of $1,000
for each meeting of a permanent committee of the Board. For 1999, the
annual retainers for serving on the Board of Directors of the Company and
for serving as Chairman of a permanent committee were $20,000 and $4,000,
respectively. Under the 1996 Non- Employee Directors' Stock Plan, as
amended, each director receives 50% of his or her annual retainer in the
form of common stock and may also elect to receive all or a portion of the
remainder of his or her retainer in the form of common stock.
Pursuant to the 1996 Non-Employee Directors' Stock Plan (the "1996
Plan") on April 22, 1999, Messrs. Curl, Fox, Furek and Hotard and Mrs. Fore
each elected to receive all of the remainder of the retainer in stock, and
accordingly received an aggregate of 621 shares of the Company's common
stock, issued at fair market value, as such term is defined in the 1996
Plan. Messrs. Kelly, Saglio and Whitesides and Mrs. Goss each received 50%
of their retainer in stock, and accordingly received 310 shares of the
Company's common stock which were issued at fair market value, as such term
is defined in the 1996 Plan. In addition, on December 31, 1999, each
outside director was granted 300 shares of the Company's common stock
pursuant to the Company's 1994 Stock Plan for Outside Directors which were
issued at fair market value, as such term is defined in that plan. As of
December 31, 1999, the aggregate value computed as of the respective dates
of grant of the shares of the Company's common stock received by Messrs.
Curl, Fox, Furek and Hotard and Mrs. Fore was $31,760. The aggregate value
computed as of the respective dates of grant of the shares of the Company's
common stock received by Messrs. Kelly, Saglio and Whitesides and Mrs. Goss
was $21,749.
CERTAIN TRANSACTIONS AND LEGAL MATTERS
Section 16(a) of the Exchange Act, requires the Company's
directors, executive officers and holders of more than 10% of the Company's
common stock to file with the SEC and the New York Stock Exchange reports
of beneficial ownership and changes in beneficial ownership of the common
stock and other equity securities of the Company. These persons are
required by SEC rules to furnish the Company with copies of all Section
16(a) forms they file. Based solely on a review of the copies of those
reports furnished to the Company, the Company believes that, during 1999,
its directors, executive officers and holders of more than 10% of the
Company's Common stock complied with all applicable Section 16(a) filing
requirements.
PROPOSAL (2) RATIFICATION OF SELECTION OF AUDITOR
The Board of Directors, upon recommendation of its Audit
Committee, has selected the firm of PricewaterhouseCoopers LLC
("PricewaterhouseCoopers"), independent certified public accountants, to
audit the accounts of the Company for the year 2000, and it is proposed
that the selection of such firm be ratified by the shareholders at the
annual meeting.
PricewaterhouseCoopers audited the accounts of the Company and
certain employee benefit plans for the year 1999. In connection with its
audit function, PricewaterhouseCoopers reviewed the Company's 1999
quarterly and annual reports to its shareholders and certain filings with
the SEC. In addition, during 1999, PricewaterhouseCoopers provided other
professional services to the Company.
The Audit Committee approved in advance the nature of the
professional services for which the Company retained the firm of
PricewaterhouseCoopers, considering the possible effect of such retention
on the independence of such firm, and has determined that the services
provided were within the scope of such approval. PricewaterhouseCoopers has
no interest, financial or otherwise, direct or indirect, in the Company
other than as independent accountants.
Representatives of PricewaterhouseCoopers are expected to be
present at the meeting and will have an opportunity to make a statement if
they desire to do so and will be available to respond to questions.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR
THE PROPOSAL TO RATIFY THE SELECTION OF PRICEWATERHOUSECOOPERS AS AUDITOR
OF THE ACCOUNTS OF THE COMPANY FOR THE YEAR 2000.
PROPOSAL (3) RIGHTS PLAN BYLAW PROPOSAL
Summary of ISP Proposal
ISP is proposing that shareholders approve a resolution to amend
the Company's Bylaws to require the Board of Directors to amend the Rights
Agreement, dated as of August 23, 1996, between the Company and ChaseMellon
Shareholder Services, L.L.C., as rights agent, as amended (the "Rights
Agreement") to make the Rights inapplicable to any offers meeting the
criteria set forth in the Rights Plan Amendment Proposal, provided such
proposal is approved by the shareholders, or redeem the rights issued under
the agreement if shareholders adopt a special resolution requiring the
Board to do so. In addition, the proposed Bylaw amendment would require the
Board of Directors 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 make or has the effect of making acquisitions of
large holdings of the Company's shares of stock more difficult or
expensive. By its terms the Rights Plan Bylaw Amendment would also require
shareholder approval to alter, amend or repeal the Bylaw amendment, and
under applicable Connecticut law, if validly adopted, the Bylaw amendment
would not be able to be altered, amended or repealed by the Dexter Board of
Directors. Proposal (4), the Rights Plan Amendment Proposal, is conditioned
on the approval of the Rights Plan Bylaw Proposal. The complete text of
ISP's resolution implementing the Rights Plan Bylaw Proposal is attached to
this Proxy Statement as Annex I.
Your Company's Response
Your Board of Directors has received the opinion of Day, Berry &
Howard LLP, its Connecticut counsel, that, although there are no
controlling Connecticut cases directly on point, a Connecticut court
presented with the questions of the appropriateness of shareholder action
of the Rights Plan Bylaw Proposal (and Proposal (4) Rights Plan Amendment
Proposal ) and their validity would hold that they are invalid and
unenforceable under Connecticut law and are not proper subjects for
shareholder vote. The opinion states:
o The Proposal is not a proper subject for action by the
shareholders of the Company because it would violate both
Section 33-640(b)of the Connecticut Business Corporation
Act, which sets forth the permitted content of bylaws,
and also Section 33-735(b), which requires that a limit
on the authority of a corporation's board of directors
must appear in its certificate of incorporation or in an
agreement to which all of its shareholders have
subscribed.
o The Proposal also negates the power over the terms, form
and content of rights which Section 33- 675 of the
Connecticut Business Corporation Act (authorizing
Connecticut corporations to issue rights for the purchase
of their shares), clearly grants to the Company's Board
of Directors and specifies that the Board shall exercise.
o By conflicting with the Board's authority under Section
33-675, the Proposal would be "inconsistent with law" and
thus is invalid under Section 33-640(b) of the
Connecticut Business Corporation Act.
In addition to its belief that this Proposal is illegal, the Board
of Directors believes that adoption of the Bylaw amendment relating to the
Rights Agreement proposed by ISP would not be in the best interests of the
Company or its shareholders, and would, in fact, expose shareholders to
coercive tender offers and undervalued takeover bids without adequate
protection. The legality of ISP's proposals is currently being litigated
and their validity and enforceability under Connecticut law will ultimately
be determined by the courts.
As ISP correctly stated in its proxy statement:
"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 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 PROVIDED 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."
(Emphasis added.)
It is precisely for these reasons that Dexter adopted a rights
agreement and has caused it to remain in place. The Company believes that
the current Board is in the best position to evaluate and negotiate on
behalf of all shareholders any potential offer and to develop alternatives
to maximize shareholder value. The Rights Agreement is designed to
encourage prospective acquirors to negotiate directly with the Board of
Directors, and in the Board's view, the Rights Agreement provides the Board
necessary flexibility in such negotiations. The Rights Agreement protects
shareholders against abusive takeover tactics that do not treat all
shareholders fairly and equally, such as partial and two-tiered tender
offers and creeping stock accumulation programs.
Dexter's shareholders are also protected from abusive takeover
practices by Dexter's Certificate of Incorporation, Bylaws and the
Connecticut Business Corporation Law. Dexter's Certificate of Incorporation
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, and (2) Dexter is authorized
to issue "blank check" preferred stock which can be used to dilute the
ownership or voting power of a bidder not approved by the Board. Dexter's
Bylaws provide that a special meeting of shareholders may be called by the
chief executive officer, the Board of Directors and at the written request
of 35% of the outstanding common stock. The Connecticut Business
Corporation Law provides that: (1) certain transactions, including mergers,
with a beneficial owner of more than 10% of a company's voting stock are
subject to approval by the company'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, (2)
business combinations with a beneficial owner of more than 10% of a
company's voting stock are prohibited for five years, unless, prior to the
date on which the party became a 10% beneficial owner, either the business
combination or the share purchase making such person a 10% beneficial owner
was approved by the company's board, (3) action may be taken without a
meeting if consent in writing is signed by all of the persons who would be
entitled to vote upon such action at a meeting, and (4) in deciding on
mergers and other business combinations, directors must consider the
long-term and short-term interests of the corporation and its shareholders,
the interests of employees, customers, creditors and suppliers, and
community and societal considerations.
ISP's proxy statement states:
"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."
The Dexter Board determined in December of 1999 that ISP's original offer
of $45 per share was inadequate. More importantly, on March 23, 2000, Mr.
Heyman increased the price of ISP's cash merger proposal from $45.00 to
$50.00 per share. Also, on March 23, 2000, Dexter's counsel, Skadden, Arps,
Slate, Meagher & Flom LLP, received a letter from ISP's counsel, Weil,
Gotshal & Manges LLP, requesting an amendment to the Rights Plan Amendment
Proposal to reflect the increase in the price of ISP's acquisition proposal
from $45.00 to $50.00 per share. Dexter's counsel responded to such letter
by reiterating Dexter's belief that ISP's Rights Plan Amendment Proposal is
illegal and not a proper subject for action by Dexter's shareholders and
suggesting that ISP consider withdrawing its Rights Plan Amendment Proposal
in order to eliminate the necessity for explaining why it is advancing an
amendment and resolution with a $45.00 per share floor when ISP's proposal
is at $50.00 and may be some other number in the future. WE BELIEVE THAT
ISP'S COUNSEL'S LETTER EXHIBITS QUITE CLEARLY AND SIMPLY ONE OF THE
PROBLEMS WITH THE RIGHTS PLAN BYLAW PROPOSAL AND THE RIGHTS PLAN AMENDMENT
PROPOSAL -- THAT IS, INCLUDING A SPECIFIC PRICE IN THE RIGHTS PLAN
AMENDMENT PROPOSAL CAUSES THESE PROPOSALS AT ANY GIVEN TIME NOT TO PROTECT
THE BEST INTERESTS OF THE DEXTER SHAREHOLDERS. Notwithstanding all the
positive attributes that the Company's rights plan afforded the Dexter
shareholders prior to its amendment on February 8, 2000, the Board of
Directors decided to address in what it believes to be a fair and
constructive manner the concerns raised by Mr. Heyman about the
applicability of the Company's Rights Agreement to certain offers or
transactions.
Poison pills tend to be criticized generally on the grounds that
they force potential investors to negotiate potential acquisitions with
management, instead of making their offer directly to the shareholders.
Poison pills can pose an obstacle to a takeover such that management
becomes entrenched, which adversely affects shareholder value and can deter
acquisition offers that would be in the best interests of shareholders. The
effect of a rights plan is to render more difficult the assumption of
control by a principal shareholder, and thus make more difficult the
removal of management, even if such removal would be beneficial to
shareholders. In order to ensure that you receive what the Board believes
would be the maximum value for your Dexter shares, the Board authorized,
among other things, an amendment to the Company's Rights Agreement causing
the rights to be inapplicable to any tender or exchange offer that:
o is for all outstanding Dexter shares,
o is fully financed,
o is, in the Board's reasonable judgment, substantially
unconditional,
o remains available to Dexter shareholders for 60 days, and
o assuming all of the foregoing conditions are met,
Dexter's investment banker opines is at a price that is
fair to the Dexter shareholders.
An acquisition of 11% of the common shares of Dexter that does not
meet the criteria listed above would trigger the rights under Dexter's
Rights Agreement, except in the case where the acquiring party is the
beneficial owner of less than 20% of the outstanding shares of the Company
and is entitled to report its ownership on Schedule 13G under the federal
securities laws.
DEXTER BELIEVES THAT THE FEBRUARY AMENDMENT TO ITS RIGHTS PLAN IS
IN YOUR BEST INTERESTS AND APPROPRIATELY ADDRESSED ANY CONCERNS THAT ISP
MAY HAVE REGARDING YOUR BOARD NOT ACTING IN YOUR BEST INTERESTS WITH
RESPECT TO AN ACQUISITION PROPOSAL THAT MAXIMIZES SHAREHOLDER VALUE. We
believe that any objections that Mr. Heyman has to this action are nothing
more than self-serving complaints because ISP may not be able to acquire
your company on terms and conditions that Mr. Heyman sets and that he
believes are best for him and the shareholders of ISP. We believe Mr.
Heyman has an inherent conflict of interest, being a shareholder in both
Dexter and Life Technologies and being the Chairman of the Board of ISP. By
virtue of ISP's larger percentage ownership interest in Life Technologies
than in Dexter, we believe Mr. Heyman's primary interest is in maximizing
the value of his Life Technologies investment rather than maximizing the
value of the Dexter shares -- particularly when you consider the conflict
Mr. Heyman has as Chairman of ISP and his fiduciary obligation to act in
the best of interests of the ISP shareholders. Mr. Heyman's proxy materials
recite that neither he nor Sunil Kumar would participate in any Dexter
Board action relating to an ISP acquisition proposal or any other business
combination transaction while an ISP proposal is in effect and would act in
accordance with their fiduciary duties to the Dexter shareholders with
respect to any action they take as Dexter directors. However, we cannot
understand how Mr. Heyman and ISP can act in your best interests with all
the other constituencies they have to serve.
Dexter believes that the Rights Plan Bylaw Proposal is invalid
under Connecticut law because it is an impermissible attempt to
circumscribe the authority of Dexter's Board to determine the terms and
conditions of the Company's Rights Agreement. Under the relevant provision
of the Connecticut Business Corporation Act, Section 33-735, the
fundamental power to run a corporation rests with its board of directors,
and the only permissible limitations on this authority are provisions that
are set forth in the Company's certificate of incorporation. Despite this
clear mandate, Dexter believes ISP is attempting to impose such a
restriction on the Dexter Board through an impermissible bylaw amendment.
Moreover, the Connecticut Business Corporation Act, Section 33-675, grants
the Board exclusive statutory authority to determine the details regarding
the Company's Rights Agreement. For these reasons, Dexter does not plan to
implement the actions contemplated by the Rights Plan Bylaw Proposal,
whatever the outcome of the vote is. However, in order to give shareholders
the opportunity to moot the issue by voting this proposal down, Dexter will
present it to the annual meeting. The legality of ISP's proposals is
currently being litigated and their validity and enforceability under
Connecticut law will ultimately be determined by the courts.
Finally, we would like to re-emphasize one particularly important
fact in this context. The Board of Dexter has clearly and unambiguously
declared that it is exploring alternatives to maximize shareholder value in
the short term. This declaration necessarily excludes any attempt to
utilize the Rights Plan to keep Dexter independent in the face of a
business combination proposal that is fair and capable of being
consummated. It is equally exclusive of any effort to discriminate among
bidders on any basis except what is in your best interests as a group.
However, no assurance can be given that our program will maximize
shareholder value. Please remember that ISP is a bidder in the Board's
value maximization process; ISP is not a fiduciary with the highest duty of
care and loyalty to you charged with protecting your interests exclusively.
It is important to understand what this means: ISP's Rights Plan proposals
with respect to the Rights Plan are not only illegal -- more significantly,
we believe, they are self-serving because they could eliminate one of the
tools your Board could use to make sure you get the best price for your
shares. YOU CAN BE ASSURED THAT WHEN THE NEW CONDITIONS OF THE RIGHTS PLAN
ARE SATISFIED -- OFFER FOR 100% OF THE SHARES, FULLY FINANCED,
UNCONDITIONAL AND OPEN FOR 60 DAYS SO NO ONE MISSED OUT -- YOUR BOARD WILL
BE ASKING LEHMAN BROTHERS INC. FOR AN OPINION THAT THE OFFER IS FAIR.
No assurance can be given that shareholder value will be increased
if the ISP Proposals are rejected and the Board of Directors' proposal to
elect the Company's slate of nominees is adopted. In addition, no assurance
can be given that shareholder value will be increased if the ISP Proposals
are adopted and the Board of Directors' proposal to elect the Company's
slate of nominees is rejected.
YOUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE AGAINST THE
RIGHTS PLAN BYLAW PROPOSAL (PROPOSAL 3) .
PROPOSAL (4) RIGHTS PLAN AMENDMENT PROPOSAL
Summary of ISP Proposal
In connection with the Rights Plan Bylaw Proposal, ISP is
proposing the adoption of a special shareholder resolution. The resolution
will require the Board to amend the Rights Agreement to make it
inapplicable to any offer for all outstanding shares of Common Stock at a
price of at least $45.00 per share in cash. The Rights Plan Amendment
Proposal is conditioned on the approval of Proposal (3), the Rights Plan
Bylaw Proposal. The complete text of ISP's resolution implementing the
Rights Plan Amendment Proposal is attached to this Proxy Statement as Annex
II.
Your Company's Response
As discussed above under "Proposal (3) Rights Plan Bylaw
Proposal--Your Company's Response," we believe that the ISP Proposals,
including the Rights Plan Amendment Proposal, were designed to ensure that
ISP would succeed in acquiring your Company at a price and on terms that
were acceptable to it but that did not represent the maximum value
obtainable for all Dexter shareholders. The Rights Plan Amendment Proposal
is designed to cause the Company to amend the Rights Agreement to make the
rights inapplicable to any offer for all of the Company's outstanding
shares for consideration of at least $45.00 in cash--a price that your
Board has previously determined to be inadequate. Dexter's counsel,
Skadden, Arps, Slate, Meagher & Flom LLP, received a letter from ISP's
counsel, Weil, Gotshal & Manges LLP, requesting an amendment to the Rights
Plan Amendment Proposal to reflect the increase in the price of ISP's
acquisition proposal from $45.00 to $50.00 per share. Dexter's counsel
responded to such letter by reiterating Dexter's belief that ISP's Rights
Plan Amendment Proposal is illegal and not a proper subject for action by
Dexter's shareholders and suggesting that ISP consider withdrawing its
Rights Plan Amendment Proposal in order to eliminate the necessity for
explaining why it is advancing an amendment and resolution with a $45.00
per share floor when ISP's proposal is at $50.00 and may be some other
number in the future. Moreover, as discussed above, the Company amended the
Rights Agreement to address the concerns raised by ISP about the
applicability of the Rights Agreement to certain offers or transactions in
what the Board believes is a fair and constructive manner. No assurance can
be given that shareholder value will be increased if the ISP Proposals are
rejected and the Board of Directors' proposal to elect the Company's slate
of nominees is adopted. In addition, no assurance can be given that
shareholder value will be increased if the ISP Proposals are adopted and
the Board of Directors' proposal to elect the Company's slate of nominees
is rejected.
You should also be aware that the Company received the opinion of
Day, Berry & Howard LLP, its Connecticut counsel, that, although there are
no controlling Connecticut cases directly on point, a Connecticut court
presented with the questions of the appropriateness of shareholder action
of this proposal and its validity would hold that it is invalid and
unenforceable under Connecticut law. The opinion states that the Rights
Plan Amendment Proposal would seek to control the judgment and
decision-making authority which the Dexter Board has under Section
33-735(b) of the Connecticut Business Corporation Act in a manner not
authorized under such Section of the Connecticut statute, and would
diminish the mandated authority of the Dexter Board under Section 33-675 of
the Connecticut Business Corporation Act to determine the terms, form and
content of rights.
As also discussed above under "Proposal (3) Rights Plan Bylaw
Proposal -- Your Company's Response," it is Dexter's position that ISP's
Rights Plan Amendment Proposal is an impermissible attempt to circumscribe
the authority of Dexter's Board to determine the terms and conditions of
the Company's Rights Agreement. Under the relevant provision of the
Connecticut Business Corporation Act, Section 33-735, the fundamental power
to run a corporation rests with its board of directors, and the only
permissible limitations on this authority are provisions that are set forth
in the Company's certificate of incorporation. Despite this clear mandate,
Dexter believes ISP is attempting to impose such a restriction on the
Dexter Board through an impermissible bylaw amendment and resolution.
Moreover, the Connecticut Business Corporation Act, Section 33-675, grants
the Board exclusive statutory authority to determine the details regarding
the Company's Rights Agreement. For these reasons, Dexter does not plan to
implement the actions contemplated by the Rights Plan Amendment Proposal,
whatever the outcome of the vote is. However, in order to give shareholders
the opportunity to moot the issue by voting this proposal down, Dexter will
present it to the annual meeting. The legality of ISP's proposals is
currently being litigated and their validity and enforceability under
Connecticut law will ultimately be determined by the courts.
FOR THESE REASONS THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE AGAINST THE RIGHTS PLAN AMENDMENT PROPOSAL (PROPOSAL 4).
PROPOSAL (5) BYLAW REPEAL PROPOSAL
Summary of ISP Proposal
ISP is proposing to repeal any Bylaw amendments adopted by the
Board between February 26, 1999 and the date of the 2000 annual meeting.
The complete text of ISP's resolution implementing the Bylaw Repeal
Proposal is attached to this Proxy Statement as Annex III.
Your Company's Response
The Company's Bylaws provide that the directors may alter, amend
or repeal any bylaw other than bylaws adopted by the Dexter shareholders
that expressly provide they may not be altered, amended or repealed by the
directors. The Dexter Board has neither adopted nor amended or repealed any
provisions of its Bylaws since February 26, 1999. In addition, the Board
has not taken any other action during this time period with respect to the
Bylaws. Moreover, the Board does not intend to take any action in
connection with its Bylaws that would frustrate any third party proposal
that the Board believes will maximize the value of your shares.
Accordingly, this proposal is illusory and any vote cast for this proposal
will be of no effect.
FOR THESE REASONS THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
VOTE AGAINST THE BYLAW REPEAL PROPOSAL (PROPOSAL 5).
COMPENSATION OF EXECUTIVE OFFICERS
The following table contains information concerning compensation
paid or to be paid to the chief executive officer ("CEO") and the other
four most highly compensated executive officers of the Company for services
rendered to the Company and its subsidiaries during the past three
completed fiscal years.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
NAME, AGE,
PRINCIPAL POSITION ALL OTHER
AND EXPERIENCE OTHER ANNUAL(1) RESTRICTED STOCK OPTIONS COMPENS-
WITH THE COMPANY YEAR SALARY($) BONUS($) COMPENSATION($) AWARDS($)(2) (#) ATION($)(3)
- ---------------- ---- --------- -------- --------------- -------------- ---- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
K. Grahame Walker, 62 1999 692,500 539,630 10,010 363,600 55,000 192,171
Chairman and
Chief Executive Officer 1998 660,000 164,835 9,239 384,100 64,000 130,894
since 1993, President 1997 615,563 461,670 9,025 373,438 55,000 168,321
from 1993 to Sept. 1999
Kathleen Burdett, 44 1999 275,500 180,330 762 170,438 17,500 54,411
Vice President and
Chief Financial Officer, 1998 261,250 57,420 692 183,700 16,000 46,535
since 1995 1997 247,000 156,730 789 164,313 10,000 63,057
David G. Gordon, 48 1999 256,333 124,537 1,051 132,563 15,000 46,645
President and Chief
Operating Officer since 1998 223,750 39,774 580 125,250 15,000 30,739
September 1999
(Vice President and 1997 211,000 83,084 44,271 119,500 10,000 45,760
President, Nonwoven
Materials Business 1996
to Sept. 1999; President
of D&S Plastics
International from
prior to 1995 to 1996)
John D. Thompson, 50 1999 219,750 143,840 927 124,988 15,000 43,191
Senior Vice President, 1998 211,000 44,270 0 125,250 15,000 36,588
Strategic and Business
Development since 1995 1997 203,125 122,050 1,020 119,500 6,000 47,531
Bruce H. Beatt, 47 1999 220,250 114,420 929 124,988 9,000 40,195
Vice President, General 1998 209,875 36,690 857 125,250 8,000 32,424
Counsel and Secretary 1997 201,625 106,730 608 119,500 6,000 42,399
since 1992
- ----------
(1) The other annual compensation reported above includes the
amounts paid by the Company to the executive officers for
reimbursement of income taxes incurred by the executive
officers in connection with the term life insurance premiums
paid by the Company on the executive officers' behalf. For
David G. Gordon, the other annual compensation reported above
also includes relocation expenses of $43,356 in 1997.
(2) The restricted stock awards reported above, which were made
pursuant to the 1999 Plan in 1999, show the dollar value of
such awards on the date of grant. As of December 31, 1999, the
aggregate number and value of restricted shares held by the
named executive officers are as follows: K. Grahame Walker --
51,434 shares, $2,044,502; Kathleen Burdett -- 21,142 shares,
$840,395; David G. Gordon -- 11,460 shares, $455,535; John D.
Thompson - 14,796 shares, $588,141 and Bruce H. Beatt --
13,972 Shares, $555,387. Unless and until the restricted
shares are forfeited, dividends will be paid on such shares.
Additional information regarding the restricted shares issued
to the named executive officers is set forth below under the
heading "Long Term Incentive Plan -- Awards in Last Fiscal
Year."
(3) The other compensation reported above for all executive
officers is composed of five principal components: (a) the
contribution payable under the Dexter ESPRIT Plan, (b) the
benefit payable under the Amended and Restated Retirement
Equalization Plan, and (c) term life insurance premiums. The
respective amounts for each of the named executive officers
are as follows: K. Grahame Walker -- $19,378, $160,820 and
$11,966; Kathleen Burdett -- $19,232, $34,319 and $860; David
G. Gordon -- $19,286, $26,103 and $1,256; John D. Thompson --
$19,259, $22,824 and $1,108; and Bruce H. Beatt -- $19,151,
$19,934 and $1,110.
</TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table discloses information concerning
individual grants of stock options made during the last completed fiscal
year to the executive officers named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED
NUMBER OF % OF TOTAL ANNUAL RATES OF STOCK
SECURITIES OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED TO EXERCISE FOR OPTION TERM
OPTIONS EMPLOYEES IN PRICE EXPIRATION 5% 10%
NAME GRANTED (#) FISCAL YEAR ($/SHARE) DATE ($)(A) ($)(A)
<S> <C> <C> <C> <C> <C> <C>
K. Grahame Walker 18,333 7.7% $37.7188 April 22, 2005 $235,176 $533,533
18,333 7.7% $37.7188 April 22, 2006 $281,509 $656,037
18,334 7.7% $37.7188 April 22, 2007 $330,178 $790,833
Kathleen Burdett 5,833 2.4% $37.7188 April 22, 2005 $ 74,826 $169,754
5,833 2.4% $37.7188 April 22, 2006 $ 89,586 $208,731
5,834 2.4% $37.7188 April 22, 2007 $105,065 $251,648
David G. Gordon 5,000 2.1% $37.7188 April 22, 2005 $ 64,140 $145,512
5,000 2.1% $37.7188 April 22, 2006 $ 76,777 $178,922
5,000 2.1% $37.7188 April 22, 2007 $ 90,045 $215,674
John D. Thompson 3,000 1.3% $37.7188 April 22, 2005 $ 38,484 $ 87,307
3,000 1.3% $37.7188 April 22, 2006 $ 46,066 $107,353
3,000 1.3% $37.7188 April 22, 2007 $ 54,027 $129,404
Bruce H. Beatt 3,000 1.3% $37.7188 April 22, 2005 $ 38,484 $ 87,307
3,000 1.3% $37.7188 April 22, 2006 $ 46,066 $107,353
3,000 1.3% $37.7188 April 22, 2007 $ 54,027 $129,404
- ----------
(a) The five percent and ten percent rates of appreciation were
set by the Securities and Exchange Commission and are not
intended to forecast future appreciation of the Company's
common stock.
</TABLE>
The option grants described in the foregoing table were made pursuant to
the 1999 Plan. On April 22, 1999, three grants of stock options were made
to each of the above-named executive officers. The first grant will vest on
April 22, 2000, the second grant will vest on April 22, 2001, and the third
grant will vest on April 22, 2002. All grants become exercisable without
regard to any performance-based conditions upon vesting. All options expire
five years after vesting. The exercise price for all options granted in
1999 under the 1999 Plan is the fair market value per share of the
Company's common stock on the date of grant and is not subject to change.
The 1999 Plan permits the grant of stock appreciation rights in tandem with
options or as freestanding awards.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES
The table set forth below discloses certain information concerning
the exercise of stock options during the last completed fiscal year by the
executive officers named in the Summary Compensation Table as well as
certain information concerning the number and value of unexercised options.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AND SARS
OPTIONS AND SARS AT FY-END($)(A)
AT FY-END(#)
SHARES
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED UNEXERCISABLE UNEXERCISABLE
<S> <C> <C> <C> <C> <C> <C>
K. Grahame Walker..... 21,666 $ 196,869 101,500 / 116,001 $1,003,634 / $291,618
Kathleen Burdett...... 4,000 $ 16,167 19,333 / 31,501 $174,212 / 68,261
David G. Gordon....... 414 $ 4,428 29,586 / 28,334 $300,610 / $63,183
John D. Thompson...... 2,000 $ 10,062 13,000 / 16,334 $132,427 / $37,906
Bruce H. Beatt........ 2,666 $ 21,434 12,834 / 16,334 $130,041 / $37,906
- ----------
(a) The value of unexercised options was determined using the
closing price of the Company's common stock as of December 31,
1999.
</TABLE>
LONG TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
The table set forth below discloses certain information concerning
the grant of restricted shares of the Company's common stock during the
last completed fiscal year to the executive officers named in the Summary
Compensation Table. The grants were made pursuant to the 1999 Plan.
LONG TERM INCENTIVE PLAN -- AWARDS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERFORMANCE
SHARES, OR OTHER
UNITS PERIOD UNTIL
OR OTHER MATURATION OR ESTIMATED FUTURE PAYOUTS UNDER
NAME RIGHTS PAYOUT(A) NON-STOCK PRICE-BASED PLANS
-------- ----------
--------------------------------------------------------------
THRESHOLD(B) TARGET(C) MAXIMUM(C)
(# OF SHARES) (# OF SHARES) (# OF SHARES)
<S> <C> <C> <C> <C> <C>
K. Grahame Walker 9,600 April 22, 2002 2,400 9,600 9,600
Kathleen Burdett 4,500 April 22, 2002 1,125 4,500 4,500
David G. Gordon 3,500 April 22, 2002 875 3,500 3,500
John D. Thompson 3,300 April 22, 2002 825 3,300 3,300
Bruce H. Beatt 3,300 April 22, 2002 825 3,300 3,300
- ----------
(a) The restricted shares reported in this table were granted to the
named executive officers on April 22, 1999, and are subject to two
types of restrictions: (a) restrictions based on the achievement by
the Company of certain financial targets during the three year
period commencing on January 1, 1999 and ending on December 31,
2001 ("performance target restrictions"), and (b) restrictions
based on continuous employment by the Company over specified
periods of time ("time-lapse restrictions"). Seventy-five percent
of the restricted shares granted to each executive officer are
subject to both performance target restrictions and time-lapse
restrictions. The remaining twenty-five percent are subject solely
to time-lapse restrictions, which will lapse if the executive
officer remains in the Company's employment through the date set
forth in this column.
(b) If the Company fails to achieve at least 85% of the financial
targets established for the performance target restrictions, then
all the shares subject to performance target restrictions will be
forfeited. Thus, the "Threshold" amount shown in this column is
the number of restricted shares which are subject solely to
time-lapse restrictions.
(c) The "Target" amount reflects the number of shares for which the
performance restrictions will lapse if the Company achieves 100%
of the financial targets. No additional shares will be awarded if
the Company achieves more than 100% of the financial targets.
Accordingly, the "Maximum" amount is the same as the "Target"
amount.
</TABLE>
PENSION PLANS
The Company maintains the Dexter Pension Plan for the employees of
certain business units. Employees are eligible to participate in the
pension plan after one year of service and after attaining age 21 and
become fully vested after five years of service. The annual benefit payable
upon normal retirement is equal to the sum of: (i) 1.5% of a participant's
average compensation times the participant's years of service prior to
January 1, 1976; (ii) 1% of the participant's average annual compensation
times the participant's years of service after December 31, 1975; and (iii)
.5% of the participant's average annual compensation in excess of Social
Security covered compensation times the participant's years of service
after December 31, 1975. For purposes of calculating the annual benefit, a
participant shall be credited with no more than 35 years of service. The
annual benefit payable upon normal retirement (age 65) is reduced or
increased, respectively, if the participant elects an early or postponed
retirement. Mr. Walker, while employed by a business unit of the Company,
participated in the pension plan. The estimated annual benefit payable
under the pension plan to Mr. Walker upon normal retirement is $47,018. Ms.
Burdett, Mr. Gordon, Mr. Thompson and Mr. Beatt are not participants in the
Company's pension plan.
John D. Thompson, while an employee of Life Technologies, Inc.
("LTI"), participated in the LTI Pension Plan. Mr. Thompson is fully vested
in the LTI Pension Plan. Under the LTI Pension Plan, normal retirement age
is 65, and actuarially reduced benefits are available to participants who
are age 55 and have ten years of service. In general, under the LTI Pension
Plan, the participant accrues an annual retirement benefit equal to 1% of
the participant's final five-year average LTI compensation times the number
of years of service credited after October 31, 1975. Eligible compensation
is defined as salary, hourly wages, bonus and commissions. The estimated
annual benefit payable to Mr. Thompson under the LTI Pension Plan upon
normal retirement is $23,201.
The Company has a supplemental retirement plan intended to provide
retirement benefits, supplementing those provided under other plans, to
certain executive officers and key employees. The executive officers named
in the Summary Compensation Table are participants in the supplemental
retirement plan. Upon retirement, participants are entitled to receive an
annual benefit equal to 55% of their average final compensation (the annual
average of (a) salaries, and (b) cash incentive payments, during the
highest 60 consecutive calendar months of a participant's last ten years as
a participant in the plan) less all other retirement benefits received
(including the full primary Social Security benefit and all retirement
benefits from other Company-related plans and plans of other employers).
Unless otherwise stipulated by the Board of Directors, such annual benefit
will be reduced ratably for employment of less than, and will not be
increased for employment of more than, 20 years of service with the
Company.
The following table shows the estimated annual benefit (prior to
an offset for other retirement benefits received) which participants are
entitled to receive under the supplemental retirement plan, on a straight
life annuity basis assuming retirement at age 65 in the indicated
compensation classification with certain years of service. If the annual
retirement benefits payable to a participant under other Company-related
plans and plans of other employers (plus his or her primary Social Security
benefit) exceed the annual retirement benefit shown in the table, the
participant will instead receive the benefits payable under those other
plans.
AVERAGE
FINAL YEARS OF SERVICE
COMPENSATION 15 20 25 30 35
------------
$125,000 $51,563 $68,750 $68,750 $68,750 $68,750
150,000 61,875 82,500 82,500 82,500 82,500
175,000 72,188 96,250 96,250 96,250 96,250
200,000 82,500 110,000 110,000 110,000 110,000
225,000 92,813 123,750 123,750 123,750 123,750
250,000 103,125 137,500 137,500 137,500 137,500
300,000 123,750 165,000 165,000 165,000 165,000
350,000 144,375 192,500 192,500 192,500 192,500
400,000 165,000 220,000 220,000 220,000 220,000
450,000 185,625 247,500 247,500 247,500 247,500
500,000 206,250 275,000 275,000 275,000 275,000
The number of credited years of service as of December 31, 1999 is
34 for K. Grahame Walker, 18 for Kathleen Burdett, 24 for David G. Gordon,
21 for John D. Thompson and 9 for Bruce H. Beatt.
SEVERANCE AGREEMENTS
The Company has entered into agreements with the executive
officers named in the Summary Compensation Table and with certain other
executive officers and key employees of the Company which, in the event of
a change of control, as such term is defined in the agreements, provide for
certain benefits. Agreements entered into by the Company and the executive
officers named in the Summary Compensation Table provide for benefits in
the following circumstances:
o involuntary termination of the individual's employment
within 395 days of the occurrence of the change in
control for reasons other than death, permanent
disability, attainment of age 65 or cause;
o resignation within 395 days of the occurrence of the
change of control for good reason; and
o resignation for any reason during the thirty-day period
immediately preceding the expiration of the severance
period.
In such circumstances, the employee shall be entitled to a severance
payment equal to a certain percentage (200% in the case of the executive
officers named in the Summary Compensation Table) of (i) the employee's
base salary at the time of termination or resignation, and (ii) the highest
annual incentive compensation paid in any of the three full years
immediately prior to the change of control. In addition, the employee will
be entitled to a continuation of certain employee welfare benefits for a
certain period (two years in the case of the executive officers named in
the Summary Compensation Table) provided by the Company on the date of the
change in control, and the employee will be credited with a certain number
of additional years of service (two in the case of the executive officers
named in the Summary Compensation Table) for retirement income plan
purposes. The employees are also entitled to receive additional payments,
if necessary, to reimburse the employee for (i) any legal expenses, plus
interest thereon, incurred in enforcing or defending a severance agreement,
and (ii) any excise tax liability that may be imposed by reason of Section
4999 of the Internal Revenue Code. For purposes of the severance
agreements, the term "change of control" generally means:
o a person acquires beneficial ownership of 19% or more of
the Company's common stock;
o certain changes in the composition of a majority of the
Company's board of directors from such composition on
September 20, 1999, except such changes approved by
two-thirds of such directors;
o except as otherwise specifically provided for in the
agreements the Company is reorganized, merged,
consolidated or sells, or otherwise disposes of
substantially all of its assets; or
o approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
The provisions of the severance agreements will therefore be
triggered if the Connecticut District Court were to uphold the validity of
the Board Size Bylaw Proposal and the Additional Directors Election
Proposal and each such proposal were to receive the legally requisite vote
for approval by the Dexter shareholders. See the discussion under the
headings "Proxy Statement" and "Certain Litigation."
REPORT OF COMPENSATION & ORGANIZATION COMMITTEE
ON EXECUTIVE COMPENSATION
The Compensation & Organization Committee ("Compensation
Committee") is responsible for, among other things, establishing the
compensation policies applicable to executive officers of the Company. The
Compensation Committee is composed exclusively of outside directors. There
are presently five members: Robert M. Furek, Chairman, Henrietta Holsman
Fore, Bernard M. Fox, Martha Clark Goss and Edgar G. Hotard.
OVERALL POLICY
The Company's executive compensation program is designed to be
linked to corporate performance and return to shareholders. Of particular
importance to the Company is its ability to grow and enhance its long-term
competitiveness. Shorter term performance, although scrutinized by the
Compensation Committee, stands behind the issue of furthering the Company's
strategic goals. To this end, the Company has developed an overall
compensation strategy and specific compensation plans that tie a
significant portion of executive compensation to the Company's success in
meeting specified performance goals and to growth of the Company's stock
price. The overall objectives of this strategy are to attract and retain
the best possible executive talent, to motivate these executives to achieve
the goals inherent in the Company's business strategy, to link executive
and shareholder interests through equity-based plans and to provide a
compensation package that recognizes individual contributions as well as
overall business results.
Each year the Compensation Committee conducts a full review of the
Company's executive compensation program. This review includes a
comprehensive evaluation, based on compensation surveys prepared by
independent compensation consultants, of the competitiveness of the
Company's compensation program and a comparison of the Company's executive
compensation to a peer group of public corporations (the "Compensation Peer
Group") which, in the view of the Compensation Committee, represent the
Company's most direct competitors for executive talent. There are currently
17 companies in the Compensation Peer Group, which is subject to occasional
change as the Company or its competitors change their focus, merge or are
acquired, or as new competitors emerge. It is the Compensation Committee's
policy to target overall compensation for executive officers of the Company
at a level which is at the median paid for such positions by the
Compensation Peer Group. A variety of other factors, however, including
position and time in position, experience, and both company performance and
individual performance, will have an impact on individual compensation
amounts.
The Compensation Committee believes that the Compensation Peer
Group represents the group of companies for which remuneration data is
available that compete most directly with the Company for executive talent.
It should be noted that, while there are overlaps, the Compensation Peer
Group is composed of a different group of companies than is contained in
either of the indices used in the performance graph contained in this proxy
statement.
The Compensation Committee approves the compensation of the
executive officers of the Company, including the individuals whose
compensation is detailed in this proxy statement, and reviews the
compensation policies and pay practices employed with respect to all the
Company's other executive-level employees. This is designed to ensure
consistency throughout the executive compensation program.
The key elements of the Company's executive compensation program
in 1999 consisted of base salary, annual incentive compensation and long
term incentive compensation in the form of stock options and restricted
stock awards. The Compensation Committee's policies with respect to each of
these elements, including the basis for the compensation awarded to the
CEO, are discussed below. In addition, while the elements of compensation
described below are considered separately, the Compensation Committee takes
into account the full compensation package afforded by the Company to the
individual, including pension benefits, supplemental retirement benefits,
severance plans, insurance and other benefits, as well as the programs
described below.
BASE SALARIES
Base salaries for executive officers are established by
evaluating, on an annual basis, the performance of such individuals (which
evaluation involves management's consideration of such factors as
responsibilities of the position held, contribution toward achievement of
the strategic plan, attainment of specific individual objectives,
interpersonal managerial skills and civic involvement), and by reference to
the marketplace for executive talent, including a comparison to base
salaries for comparable positions at companies within the Compensation Peer
Group.
In establishing the CEO's base salary, the Compensation Committee
took into account the salaries of chief executive officers at companies
within the Compensation Peer Group and the CEO's leadership in shaping and
implementing the strategy of the Company to become focused on the
technologies and markets that will generate future earnings growth. Based
upon this evaluation, the Compensation Committee established a base salary
of $700,000 for the period commencing April 1, 1999 and ending March 31,
2000, an increase of 4.5% over the $670,000 base salary paid to him during
the immediately preceding 12 month period.
ANNUAL INCENTIVE COMPENSATION
Annual incentive compensation accounts for a significant
percentage of each executive officer's compensation. Executive officers of
the Company (other than the CEO) participate in the Company's Executive
Incentive Compensation Plan, and the CEO participates in the Company's
Senior Management Executive Incentive Plan, which was designed to conform
with the requirements of Internal Revenue Code Section 162(m). (These plans
are collectively referred to herein as the EIC Plans.) The EIC Plans are
designed to compensate executives for performance that increases
shareholder value over time, and are reviewed annually by the Compensation
Committee.
Each of the EIC Plans has two performance components: (1)
corporate and/or business unit financial performance and (2) an assessment
of the executive's individual performance. Each year the Compensation
Committee reviews the specific financial measures to be used and approves
the target payout amounts for all executive officers of the Company. The
target payouts are determined by reference to each executive's job
classification as determined pursuant to a Hay point system. The Hay point
system evaluates jobs according to the knowledge required to do the job,
the intensity of thinking needed to solve the problems commonly faced, and
the accountability of the position. In 1999, the sole financial measure for
corporate financial performance, which was approved by the Compensation
Committee, was earnings per share. The financial measures used in 1999 for
individual businesses, on the other hand, included several from a variety
of factors, such as sales growth, growth in operating earnings, and return
on investment. These factors were weighted differently for each business to
reflect the corporate management's assessment of those issues that were in
need of emphasis, all in accordance with the Company's strategic plan.
The four most highly compensated executive officers other than the
CEO were eligible to receive incentive compensation payouts in 1999 of
specified amounts of their base salaries in the event that financial
performance targets were fully achieved. Such payouts were subject to
further adjustment, up or down, based upon management's assessment of
individual performance. Based upon these factors, the actual payout amounts
for these individuals ranged from approximately 49% to approximately 65% of
their base salaries. The assessment of management as to the performance of
these individuals did not result in a significant (over 10%) reduction or
increase in the amount of the payout.
The CEO was eligible to receive an incentive compensation payout
in 1999 equal to 75% of his base salary in the event that financial
performance targets were fully achieved (or more if they were exceeded).
There was no reduction or increase in the CEO's incentive compensation
payout based on an assessment of the CEO's individual performance. Because
earnings per share slightly exceeded the targeted amount established by the
Compensation Committee for 1999, a target that, in the opinion of the
Compensation Committee, was aggressive and required significant efforts on
the part of the CEO, the CEO's actual payout was approximately 78% of his
base salary, or $539,630. This represents an increase from the $164,835 of
incentive compensation paid to the CEO in 1998, when the targeted goals
were not met.
It should be emphasized that the Company's EIC Plans are
pay-for-performance plans and, as a result, payments under such plans vary
from year to year depending upon the Company's financial performance. In
years in which performance targets have been met, such as 1999, there has
been a full payout of incentive compensation to the CEO. In years in which
the targets have not been met, on the other hand, such as 1998, such
payouts have been reduced.
Because the purpose of the EIC Plans is to reward performance that
increases shareholder value over time, the Compensation Committee requires
that the overall corporate return to shareholders, apart from unusual
items, exceeds the cost of capital for the Company as a whole before any
executive incentive compensation is paid. There are also minimum thresholds
established for payouts to corporate and business unit employees.
STOCK OPTIONS
The third component of executive compensation is the Company's
stock option program, pursuant to which the Company has granted to
executive officers and other senior management options to purchase shares
of its common stock. Stock options are granted with an exercise price equal
to the market price of the common stock on the date of grant, vest over
three years and expire five years from the date of vesting.
A total of 240,000 options were granted to executive officers and
other senior management in 1999 under the 1999 Long Term Incentive Plan
("1999 Plan"), 55,000 of which were granted to the CEO and 50,500 of which
were granted (in the aggregate) to the four other executive officers named
in the Summary Compensation Table. The number of stock options granted in
1999 were determined by reference to the long term compensation for
comparable positions at companies within the Compensation Peer Group and
based upon an assessment of individual performance.
RESTRICTED STOCK AWARDS
The final component of executive compensation is restricted stock,
which the Company granted in 1999 to executive officers and other senior
management under the 1999 Plan.
A total of 60,000 shares of restricted stock were granted to
executive officers and other senior management in 1999, 9,600 of which were
granted to the CEO and 14,600 of which were granted (in the aggregate) to
the four other executive officers named in the Summary Compensation Table.
The number of restricted stock awards granted in 1999 were determined by
reference to the long term compensation for comparable positions at
companies within the Compensation Peer Group and based upon an assessment
of individual performance.
Restricted stock awards are intended to align the interests of
executives with those of the shareholders. The shares of restricted stock
issued to executive officers and other senior management in 1999 are
subject to two types of restrictions: (a) restrictions based on the
achievement by the Company of certain financial performance targets during
the three year period commencing on January 1, 1999 and ending on December
31, 2001 ("performance target restrictions") and (b) restrictions based on
continuous employment of the recipient over a specified period of time
("time-lapse restrictions"). Seventy-five percent of the restricted shares
issued in 1999 are subject to both performance target restrictions and
time-lapse restrictions. The remaining 25 percent of the restricted shares
are subject solely to time-lapse restrictions. This approach is intended to
incentivize the creation of shareholder value over the long term.
In 1995, the Compensation Committee established guidelines for
ownership of Dexter common stock by executive officers. Under these
guidelines, each executive officer is expected to own, within three years
of becoming an executive officer, Dexter common stock with a value of
between two to four times his or her base salary, depending upon the
individual's position with the Company. As of December 31, 1999, these
ownership guidelines have been met.
DEDUCTIBILITY OF COMPENSATION
Internal Revenue Code Section 162(m), which was added to the
Internal Revenue Code by the Omnibus Budget Reconciliation Act of 1993,
limits the amount of compensation a corporation may deduct as a business
expense. That limit, which applies to up to five executives individually,
is $1 million per individual, per year, subject to certain specified
exceptions. All compensation payments in 1999 to the five executive
officers named in the Summary Compensation Table will be fully deductible.
The Company has procedures in place to assure that compensation paid to
executive officers continues to be fully deductible in the future.
CONCLUSION
Through the programs described above, a very significant portion
of the Company's executive compensation is linked directly to individual
and corporate performance and stock price appreciation over the long term.
The Compensation Committee intends to continue and strengthen the policy of
linking executive compensation to corporate performance and returns to
shareholders, recognizing that the fluctuations of the business cycle from
time to time may result in an imbalance for a particular period.
Compensation & Organization Committee
Robert M. Furek, Chairman
Henrietta Holsman Fore
Bernard M. Fox
Martha Clark Goss
Edgar G. Hotard
PERFORMANCE GRAPH
The following graph shows how an initial investment of $100 in the
Company's common stock would have compared to an equal investment in the
S&P 500 Index or in the S&P Specialty Chemicals Index over the five-year
period beginning December 31, 1994 and ending December 31, 1999. The graph
reflects reinvestment of all dividends.
NOTE: The total shareholder return shown on the graph below is not
necessarily indicative of future returns on the Company's common stock.
COMPARISON OF FIVE YEAR
CUMULATIVE TOTAL SHAREHOLDER RETURN
(ASSUMING AN INVESTMENT OF $100 ON DECEMBER 31, 1993)
DEXTER CORPORATION PERFORMANCE GRAPH
S&P Specialty
Dexter Corporation S&P 500 Index Chemicals Index
1994 $100.00 $100.00 $100.00
1995 $112.73 $137.58 $131.44
1996 $156.70 $169.17 $134.81
1997 $218.11 $225.60 $166.94
1998 $164.05 $290.08 $142.17
1999 $213.33 $351.12 $157.37
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee is composed of five members: Robert M.
Furek, Chairman, Henrietta Holsman Fore, Bernard M. Fox, Martha Clark Goss,
and Edgar G. Hotard. None of the members of the Compensation Committee is
an officer, employee or former officer or employee of the Company or its
subsidiaries. In 1999, none of the members of the Compensation Committee
had any relationship requiring disclosure in accordance with Item 402(j)(3)
of Regulation S-K of the SEC.
CERTAIN LITIGATION
ISP ACTION
On January 27, 2000, ISP commenced a lawsuit against Dexter and
certain members of Dexter's Board of Directors in the United States
District Court for the District of Connecticut entitled INTERNATIONAL
SPECIALTY PRODUCTS INC. AND ISP INVESTMENTS INC. V. DEXTER CORPORATION, ET
AL., Civil Action No. 3:00 CV 157 (JBA). The complaint alleges, among other
things, that Article X of Dexter's Bylaws (insofar as it may provide for a
two-thirds supermajority vote of the shareholders to amend the bylaws)
violates Section 33-807 of the Connecticut Business Corporation Act and is
therefore invalid; that Dexter's poison pill violates Section 33-665 of the
Connecticut Business Corporation Act and is therefore invalid; that
shareholders have the right to vote on the Nominee Election Proposals,
Shareholder Rights Proposals and Voting Rights Proposals, as such terms are
defined therein, at the 2000 Annual Meeting; and that the directors have
breached their fiduciary obligations to Dexter and its shareholders. The
complaint also asks the Court to order that the 2000 Annual Meeting be held
no later than April 30, 2000. The complaint requests declaratory and
injunctive relief as well as money damages.
On March 10, 2000 Dexter filed a motion for summary judgment to
dismiss Count III of the complaint, in which ISP seeks a judicial
determination that Dexter's Bylaws can lawfully be amended to increase the
total number of directorships from 10 to 17 and to elect seven additional
nominees to fill the seven newly created seats, on the grounds that these
proposals violate Dexter's certificate of incorporation as well as
Connecticut law and are therefore invalid. Dexter's summary judgment motion
was submitted for decision on March 23, 2000 and the parties have been
informed by the court that it will endeavor to issue a ruling on Dexter's
summary judgment motion by the end of May, 2000.
On May 8, 2000, ISP filed a motion requesting the court's
permission to move for a preliminary injunction (i) requiring Dexter to set
a new record date for the June 30, 2000 annual meeting; and (ii) preventing
Dexter's Board of Directors from approving any further postponement of the
annual meeting. By this motion, ISP also seeks permission to file an
amended complaint. ISP advised the court that one reason for this requested
amendment was to include a claim that the meeting must not be postponed. On
May 11, 2000, Dexter filed an opposition in response to ISP's motion, and a
conference on ISP's motion is scheduled for May 12, 2000.
Dexter and its General Counsel continue to believe that ISP's
lawsuit is wholly without merit and Dexter intends to defend vigorously
against it.
SHAREHOLDER ACTION
On January 18, 2000, a purported shareholder class action was
filed in Connecticut Superior Court for the Judicial District of Waterbury,
entitled LEE BRENNAN AND ELLIS INVESTMENTS, LTD. V. DEXTER CORPORATION, ET
AL., X01-CV-00-0595892-S (CLD). On April 10, 2000, Dexter filed a motion to
strike the complaint in its entirety for failure to state a claim upon
which relief may be granted. Plaintiffs did not file a response to Dexter's
motion, and on April 28, 2000, plaintiffs informed Dexter that they intend
to voluntarily withdraw the complaint in this action without prejudice.
BENEFICIAL OWNERSHIP OF STOCK
The following table sets forth information, as of December 31,
1999, with respect to the beneficial ownership of shares of the common
stock of the Company by (1) beneficial owners of more than five percent of
the Common Stock of the Company, (2) each director and nominee for director
of the Company, (3) each of the executive officers named in the Summary
Compensation Table set forth below, and (4) all directors, nominees and
executive officers of the Company as a group. Such beneficial ownership is
reported in accordance with the rules of the SEC, under which a person may
be deemed to be the beneficial owner of shares of such common stock if such
person has or shares the power to vote or dispose of such shares or has the
right to acquire beneficial ownership of such shares within 60 days (for
example, through the exercise of an option). Accordingly, the shares shown
in the table as beneficially owned by certain individuals may include
shares owned by certain members of their respective families. Because of
such rules, more than one person may be deemed to be the beneficial owner
of the same shares. The inclusion of the shares shown in the table is not
necessarily an admission of beneficial ownership of those shares by the
person indicated.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK PERCENTAGE OF
BENEFICIALLY COMMON STOCK
Shareholders: OWNED(1) OUTSTANDING(1)
<S> <C> <C> <C>
ISP OPCO Holdings Inc. and related entities, 1361 Alps Road, Wayne,
New Jersey 07470................................................... 2,299,200 9.98(2)
FMR Corp., 82 Devonshire Street, Boston, Massachusetts 02109
(Fidelity Managed Funds)................................................ 1,703,300 7.39(3)
Mary K. Coffin, c/o Dexter Corporation, One Elm Street, Windsor
Locks, Connecticut 06096........................................... 1,290,000 5.59(4)
Directors, Nominees and Executive Officers:
K. Grahame Walker....................................................... 229,681 *
Kathleen Burdett........................................................ 63,668 *
David G. Gordon......................................................... 42,579 *
John D. Thompson........................................................ 38,241 *
Bruce H. Beatt.......................................................... 34,744 *
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, Nominees and Executive Officers
as a Group (22 persons)................................................. 638,727 2.77%
- ----------
(1) The shares reported above as beneficially owned by the following
persons include vested stock options granted under the Company'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") as more fully described above under
the heading "Long Term Incentive Plan -- Awards in Last Fiscal Year":
K. Grahame Walker -- 51,434; Kathleen Burdett -- 21,142; David G.
Gordon -- 11,460; John D. Thompson -- 14,976; Bruce H. Beatt --
13,972; and "All Directors, Nominees and Executive Officers 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.
(2) Share holding as of December 31, 1999, as reported on Amendment No. 6
to the Schedule 13D filed by such shareholder.
(3) Share holdings as of December 31, 1999, as reported on the Schedule
13G most recently filed by such shareholder.
(4) 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.
As of December 31, 1999, two of Dexter's directors beneficially owned
shares of common stock of Life Technologies, Inc., a Dexter subsidiary.
Peter G. Kelly owned 4,500 shares, which consists of 4,500 shares of common
stock which Mr. Kelly may acquire upon the exercise of the stock options.
George M. Whitesides owned 4,650 shares, which consists of 150 shares of
common stock owned by Dr. Whitesides and 4,500 shares of common stock which
Dr. Whitesides may acquire upon the exercise of stock options. Mr. Kelly
and Dr. Whitesides each own less than one percent of the outstanding common
stock of Life Technologies, Inc.
OTHER MATTERS
The Board of Directors of the Company is not aware of any matters,
other than the aforementioned matters, that will be presented for
consideration at the Annual Meeting. If other matters properly come before
the Annual Meeting, it is the intention of the persons named in the
enclosed proxy to vote thereon in accordance with their best judgment.
PROPOSALS OF SHAREHOLDERS
In order to be considered for inclusion in the Company's proxy
statement and form of proxy relating to next year's annual meeting of
shareholders, proposals of shareholders intended to be presented for action
at that meeting must be received at the principal executive offices of
Dexter Corporation, One Elm Street, Windsor Locks, Connecticut 06096-2334,
marked for the attention of the Secretary, by [Date].
Under the Company's Bylaws, notice of any other matter intended to
be presented by a shareholder for action at next year's annual meeting must
be addressed to the principal executive offices of Dexter Corporation, One
Elm Street, Windsor Locks, Connecticut 06096-2334, marked for the attention
of the Secretary, and must contain the information required by the Bylaws.
The notice must be received at the principal executive offices during the
period from February 25, 2001 through April 16, 2001, unless next year's
annual meeting is called for a date prior to April 16, 2001, in which case
notice must be received within fifteen days of when notice of the annual
meeting is given.
ANNUAL REPORT ON FORM 10-K
A copy of the Company's Annual Report containing audited financial
statements for the year ended December 31, 1999, prepared in conformity
with generally accepted accounting principles, is being delivered to
shareholders concurrently with this Proxy Statement.
The Company's Annual Report on Form 10-K to the Securities and
Exchange Commission for 1999 will be sent without charge to any shareholder
upon written request directed to:
Dexter Corporation
Attention: Secretary
One Elm Street
Windsor Locks, CT 06096-2334
METHOD AND COST OF PROXY SOLICITATION
Proxies may be solicited, without additional compensation, by
directors, officers or employees of the Company by mail, telephone,
telegram, in person or otherwise. The Company will bear the costs of the
solicitation of proxies, which may include the cost of preparing, printing
and mailing the proxy materials. In addition, the Company will request
banks, brokers and other custodians, nominees and fiduciaries to forward
proxy materials to the beneficial owners of common stock and obtain their
voting instructions. The Company will reimburse those firms for their
expenses in accordance with the rules of the SEC and the New York Stock
Exchange. In addition, the Company has retained MacKenzie Partners, Inc.,
156 Fifth Avenue, New York, NY 10010, to assist in soliciting proxies, for
which services the Company will pay a fee estimated at $ , plus handling,
postage and out-of-pocket expenses. MacKenzie will employ approximately 35
persons in connection with its solicitation of proxies.
Expenses related to the solicitation of shareholders, in excess of
those normally spent for an annual meeting and excluding the costs of
litigation, are expected to aggregate approximately $ , of which
approximately $ has been spent to date. APPENDIX A SETS FORTH CERTAIN
INFORMATION RELATING TO THE COMPANY'S DIRECTORS, NOMINEES, OFFICERS AND
OTHER EMPLOYEES OF THE COMPANY WHO WILL BE SOLICITING PROXIES ON THE
COMPANY'S BEHALF ("PARTICIPANTS").
YOUR VOTE AT THIS YEAR'S ANNUAL MEETING IS ESPECIALLY IMPORTANT.
PLEASE SIGN AND DATE THE ENCLOSED WHITE PROXY CARD AND RETURN IT IN THE
ENCLOSED ENVELOPE PROMPTLY.
WE URGE YOU NOT TO SIGN OR RETURN ANY PROXY CARD THAT MAY BE SENT
TO YOU BY ISP, EVEN AS A PROTEST VOTE AGAINST ISP. IF YOU PREVIOUSLY VOTED
ON AN ISP GOLD PROXY CARD, YOU HAVE EVERY LEGAL RIGHT TO CHANGE YOUR VOTE.
YOU CAN DO SO SIMPLY BY SIGNING, DATING AND RETURNING THE ENCLOSED WHITE
PROXY CARD. A PERSON GIVING ANY PROXY HAS THE POWER TO REVOKE IT (WHETHER
SUCH PROXY WAS SOLICITED BY THE BOARD OF DIRECTORS OR BY ISP) AT ANY TIME
BEFORE THE VOTING BY SUBMITTING TO DEXTER OR TO ISP A WRITTEN REVOCATION OR
DULY EXECUTED PROXY CARD BEARING A LATER DATE. ONLY YOUR LATEST DATED PROXY
CARD WILL COUNT. PLEASE REFER TO "VOTING AND REVOCABILITY OF PROXIES" ON
PAGE 3 FOR A DISCUSSION OF HOW TO REVOKE YOUR PROXY.
IMPORTANT: If your shares of the Company's stock are held in the
name of a brokerage firm, bank, nominee or other institution, only it can
sign a WHITE proxy card with respect to your shares and only upon specific
instructions from you. Please contact the person responsible for your
account and give instructions for a WHITE proxy card to be signed
representing your shares of the Company's stock. We urge you to confirm in
writing your instructions to the person responsible for your account and to
provide a copy of such instructions to the Company's proxy solicitor,
MacKenzie Partners, Inc., at the address indicated below so that MacKenzie
Partners can attempt to ensure that your instructions are followed.
If you have any questions about executing your proxy or require
assistance, please contact:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
Call Toll Free: (800) 322-2885
Banks and Brokerage Firms please call collect: (212) 929-5500
APPENDIX A
INFORMATION CONCERNING THE DIRECTORS AND CERTAIN OFFICERS
OF THE COMPANY WHO MAY ALSO SOLICIT PROXIES
The following table sets forth the name, principal business
address and the present office or other principal occupation or employment,
and the name, principal business and the address of any corporation or
other organization in which their employment is carried on, of the
directors and certain officers of the Company ("Participants") who may also
solicit proxies from shareholders of the Company. Unless otherwise
indicated, the principal occupation refers to such person's position with
the Company and the business address is Dexter Corporation, One Elm Street,
Windsor Locks, Connecticut 06096.
DIRECTORS
The principal occupations of the Company's directors who are
deemed Participants in the solicitation are set forth under "Proposal (1)
Election of Directors" in this Proxy Statement. The principal business
address of Mr. Walker is that of the Company. The name, business and
address of the director-Participants' organization of employment are as
follows:
</TABLE>
<TABLE>
<CAPTION>
NAME ADDRESS
- ---- -------
<S> <C>
Charles H. Curl.................................................. Curl & Associates
4101 Parkglen Court, N.W.
Washington, D.C. 20007
Peter G. Kelly................................................... Updike, Kelly & Spellacy, P.C.
One State Street
Suite 2400
Hartford, Connecticut 06103
Jean-Francois Saglio............................................. ERSO
c/o Dexter Corporation
One Elm Street
Windsor Locks, Connecticut 06096
Henrietta Holsman Fore .......................................... Holsman International
2600 Virginia Ave., N.W.
Washington, D.C. 20037
Bernard M. Fox................................................... Dignitas Partners
c/o Shipman & Goodwin
One American Row
Hartford, Connecticut 06103
George M. Whitesides ............................................ Harvard University
12 Oxford Street
Cambridge, Massachusetts 02138
Robert M. Furek.................................................. State Board of Trustees
c/o Shipman & Goodwin
One American Row
Hartford, Connecticut 06103
Martha Clark Goss ............................................... The Capital Markets Company
120 Broadway, 29th Floor
New York, New York 10271
Edgar G. Hotard.................................................. c/o Dexter Corporation
One Elm Street
Windsor Locks, Connecticut 06096
EXECUTIVE OFFICERS AND CERTAIN CORPORATE OFFICERS
NAME PRINCIPAL OCCUPATION
K. Grahame Walker................................................ Chairman and Chief Executive Officer
David G. Gordon.................................................. President and Chief Operating Officer
Kathleen Burdett................................................. Vice President and Chief Financial Officer
John D. Thompson................................................. Senior Vice President, Strategic and Business
Development
Bruce H. Beatt................................................... Vice President, General Counsel and
Secretary
Ronald C. Benham................................................. Vice President and President -
Electronic Materials
John B. Blatz.................................................... Vice President, Environmental and Process
Management
John B. Lockwood................................................. Vice President, Taxes
Jeffrey W. McClelland............................................ Vice President and President -
Adhesive and Coating Systems
Lawrence D. McClure.............................................. Vice President - Human Resources
A. Duncan Middleton.............................................. Vice President and President -
Nonwoven Materials
Roseanne Potter.................................................. Vice President and Treasurer
Dale Ribaudo..................................................... Vice President and Controller
INFORMATION REGARDING OWNERSHIP OF THE COMPANY'S SECURITIES BY PARTICIPANTS
None of the Participants owns any of the Company's securities of
record but not beneficially. The number of shares of Common Stock held by
directors and the named executive officers is set forth on page 42 of this
proxy statement. The number of shares of Common Stock held by the other
Participants as of February 1, 2000 is set forth below. The information
includes shares that may be acquired by the exercise of stock options
within 60 days of May 11, 2000:
NAME SHARE OWNERSHIP
- ---- ---------------
Ronald C. Benham................................ 60,291
John B. Blatz................................... 12,299
John B. Lockwood................................ 7,337
Jeffrey W. McClelland........................... 24,601
Lawrence D. McClure............................. 26,854
A. Duncan Middleton............................. 9,480
Roseanne Potter................................. 2,519
Dale Ribaudo.................................... 15,647
INFORMATION REGARDING TRANSACTIONS IN THE COMPANY'S SECURITIES BY PARTICIPANTS
The following table sets forth purchases and sales of the
Company's securities by the Participants listed below during the past two
years. Unless otherwise indicated, all transactions are in the public
market.
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK
NAME DATE PURCHASED OR (SOLD) NOTE
DIRECTORS
<S> <C> <C> <C>
Charles H. Curl 12/31/99 300 (2)
4/22/99 621 (1)
12/31/98 200 (2)
Peter G. Kelly 12/31/99 300 (2)
4/22/99 310 (1)
3/8/99 1,500
12/31/98 200 (2)
Jean-Francois Saglio 12/31/99 300 (2)
4/22/99 310 (1)
12/31/98 200 (2)
Henrietta Holsman Fore 12/31/99 300 (2)
4/22/99 621 (1)
3/2/99 1,000
12/31/98 200 (2)
Bernard M. Fox 12/31/99 300 (2)
4/22/99 621 (1)
12/31/98 200 (2)
George M. Whitesides 12/31/99 300 (2)
4/22/99 310 (1)
12/31/98 200 (2)
Robert M. Furek 12/31/99 300 (2)
4/22/99 621 (1)
12/31/98 200 (2)
Martha Clark Goss 12/31/99 300 (2)
4/22/99 310 (1)
12/31/98 200 (2)
Edgar G. Hotard 12/31/99 300 (2)
4/22/99 621 (1)
12/31/98 200 (2)
EXECUTIVE OFFICERS
K. Grahame Walker 4/17/00 8,334 (7)
4/17/00 8,333 (7)
4/17/00 (7,917) (4)
4/17/00 (2,969) (3)
2/7/00 6,166 (7)
2/7/00 (4,926) (4)
5/3/99 (848) (3)
4/22/99 9,600 (6)
4/9/99 (18,486) (4)
4/9/99 5,000 (7)
4/9/99 8,333 (7)
4/9/99 8,333 (7)
David G. Gordon 6/3/99 80 (7)
6/3/99 (63) (4)
5/3/99 (325) (4)
4/22/99 3,500 (6)
4/13/99 334 (7)
4/13/99 (269) (4)
Kathleen Burdett 3/9/00 1,667 (7)
3/9/00 1,333 (7)
2/4/00 1,000 (7)
4/22/99 4,500 (6)
2/12/99 4,000 (7)
John D. Thompson 2/18/00 2,000 (7)
2/7/00 1,000 (7)
4/22/99 3,300 (6)
1/21/99 2,000 (7)
Bruce H. Beatt 3/9/00 834 (7)
3/9/00 1,167 (7)
2/14/00 1,000 (7)
4/22/99 3,300 (6)
4/1/99 (1,363) (4)
4/1/99 1,166 (7)
4/1/99 833 (7)
4/1/99 667 (7)
Ronald C. Benham 3/15/00 2,000 (7)
3/15/00 1,667 (7)
2/18/00 1,333 (7)
2/18/00 (1,034) (4)
4/21/99 3,000 (6)
4/21/99 3,667 (7)
Jeffrey W. McClelland 4/20/00 1,000 (7)
4/20/00 2,000 (7)
4/20/00 3,333 (7)
4/20/00 3,333 (7)
4/19/00 (666)
4/19/00 (9,000)
2/18/00 333 (7)
2/18/00 (258) (4)
5/3/99 (220) (3)
4/22/99 2,500 (6)
4/21/99 3,000 (7)
Lawrence D. McClure 5/3/99 (678) (3)
4/22/99 2,800 (6)
A. Duncan Middleton 12/2/99 (688) (3)
Rosanne Potter 2/28/00 24
1/25/00 29
12/20/99 25
11/22/99 29
10/15/99 400
7/1/99 1,000 (6)
Dale Ribaudo 2/24/00 250 (7)
2/24/00 333 (7)
2/24/00 334 (7)
5/3/99 (254) (3)
4/22/99 2,200 (6)
4/16/99 666 (7)
John B. Blatz 4/22/99 2,000 (6)
John B. Lockwood 2/17/00 250 (7)
2/17/00 (195) (4)
- ---------------
(1) Acquisition of shares pursuant to the Company's 1996 Non-Employee Directors' Stock Plan.
(2) Shares obtained pursuant to the Company's 1994 Stock Plan for Outside Directors, as amended.
(3) Surrender of shares to pay withholding tax on restricted shares whose restrictions lapsed.
(4) Shares surrendered on exercise of options.
(5) Acquired under the Company's 1994 Long Term Incentive Plan.
(6) Acquired under the Company's 1999 Long Term Incentive Plan.
(7) Acquired upon exercise of options.
</TABLE>
MISCELLANEOUS INFORMATION CONCERNING PARTICIPANTS
Except as described in this Appendix A or in the proxy statement,
none of the Participants nor any of their respective affiliates or
associates (together, the "Participant Affiliates"), (i) directly
beneficially owns any shares of Common Stock of the Company or any
securities of any subsidiary of the Company or (ii) has had any
relationship with the Company in any capacity other than as a shareholder,
employee, officer or director. Furthermore, except as described in this
Appendix A or in the proxy statement, no Participant or Participant
Affiliate is either a party to any transaction or series of transactions
since February 1, 1998, or has knowledge of any currently proposed
transaction or series of transactions, (i) to which the Company or any of
its subsidiaries was or is to be a party, (ii) in which the amount involved
exceeds $60,000, and (iii) in which any Participant or Participant
Affiliate had or will have, a direct or indirect material interest. Except
as described in this Appendix A or in the proxy statement, no participant
or Participant Affiliate has any arrangement or understanding with any
person (i) with respect to any future employment by the registrant or its
affiliates; or (ii) with respect to any future transactions to which the
registrant or any of its affiliates will or may be a party.
ANNEX I
PROPOSAL (3) RIGHTS PLAN 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.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
ANNEX II
PROPOSAL (4) RIGHTS PLAN 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.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
ANNEX III
PROPOSAL (5) 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.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE AGAINST THIS PROPOSAL.
DEXTER CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY FOR THE ANNUAL MEETING TO BE HELD ON JUNE 30, 2000.
K. Grahame Walker, George M. Whitesides and Bernard M. Fox, or any
of them, each with power of substitution, are hereby authorized to vote the
shares of the undersigned at the Annual Meeting of Shareholders of Dexter
Corporation, to be held on Friday, June 30, 2000, at 10:00 A.M., local
time, at The Hartford Club, 46 Prospect Street, Hartford, Connecticut, and
at any adjournment or postponement thereof, upon the matters set forth in
the Dexter Corporation Proxy Statement and upon such other matters as may
properly come before the Annual Meeting, voting as specified on the reverse
side of this card with respect to the matters set forth in the Proxy
Statement, and voting in the discretion of the above-named persons on such
other matters as may properly come before the Annual Meeting. If you
specify a different choice on the proxy card, your shares will be voted as
specified.
SIGNING AND DATING DEXTER'S PROXY CARD WILL HAVE THE EFFECT OF
REVOKING ANY ISP PROXY CARD YOU SIGNED ON AN EARLIER DATE, AND WILL
CONSTITUTE A REVOCATION OF ALL PREVIOUSLY GRANTED AUTHORITY TO VOTE FOR
EVERY PROPOSAL INCLUDED ON THE ISP PROXY CARD, NOTWITHSTANDING THAT THE
COMPANY'S PROXY CARD DOES NOT INCLUDE THREE ISP PROPOSALS, TWO OF WHICH THE
COMPANY BELIEVES ARE ILLEGAL AND AS A RESULT THE THIRD IS UNNECESSARY. The
issue of the legality of ISP's proposals is currently being litigated and
their validity and enforceability under Connecticut law will eventually be
determined by the courts.
PROPOSAL (1) ELECTION OF DIRECTORS.
Nominees for Terms Expiring at the Annual Meeting in 2003: Charles H. Curl,
Peter G. Kelly and Jean-Francois Saglio.
PLEASE SIGN AND DATE THE REVERSE SIDE OF THIS PROXY CARD AND PROMPTLY
RETURN IT IN THE ENCLOSED ENVELOPE.
YOU MAY SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES, SEE REVERSE
SIDE, BUT YOU NEED NOT MARK ANY BOX IF YOU WISH TO VOTE IN ACCORDANCE WITH
THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PERSONS NAMED ABOVE AS PROXIES
CANNOT VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.
(continued on reverse side)
(Reverse Side)
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1
AND 2 AND AGAINST PROPOSALS 3, 4 AND 5.
DIRECTORS RECOMMEND A VOTE "FOR" PROPOSALS 1 AND 2
FOR WITHHELD
(1) ELECTION OF [ ] [ ]
DIRECTORS
(see reverse side)
FOR, except vote withheld from the following nominee(s):
- -------------------------------------------------------
FOR AGAINST ABSTAIN
(2) APPOINTMENT OF INDEPENDENT ACCOUNTANTS [ ] [ ] [ ]
DIRECTORS RECOMMEND A VOTE "AGAINST" PROPOSALS 3, 4 AND 5
(3) ISP PROPOSAL TO AMEND DEXTER'S BYLAWS REQUIRING
THE DEXTER BOARD TO MAKE CERTAIN AMENDMENTS FOR AGAINST ABSTAIN
TO THE DEXTER RIGHTS PLAN FOLLOWING ADOPTION OF
CERTAIN SHAREHOLDER RESOLUTIONS - PROPOSAL 4 IS [ ] [ ] [ ]
CONDITIONED ON THE APPROVAL OF PROPOSAL 3.
FOR AGAINST ABSTAIN
(4) ISP PROPOSAL TO AMEND THE RIGHTS PLAN - PROPOSAL 4
IS CONDITIONED ON THE APPROVAL OF PROPOSAL 3. [ ] [ ] [ ]
FOR AGAINST ABSTAIN
(5) ISP PROPOSAL TO REPEAL CERTAIN BYLAWS [ ] [ ] [ ]
I plan to attend the meeting. [ ]
SIGNATURE(S):
___________________________ Date: ______________, 2000 NOTE: Please sign
exactly as name appears hereon. Joint owners should each sign. When signing
as attorney, executor, administrator, trustee or guardian, give full title
as such. If signing on behalf of a corporation, sign the full corporate
name by authorized officer. The signer hereby revokes all proxies
heretofore given by the signer to vote at the 2000 Annual Meeting of
Shareholders of Dexter Corporation and any adjournment or postponement
thereof.
