PRELIMINARY PROXY STATEMENT
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
ON MAY 4, 2000
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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant To Section 14(a) of the
Securities Exchange Act of 1934.
Filed by the Registrant [__]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[__] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6 (e) (2))
[__] Definitive Proxy Statement
[__] Definitive Additional Materials
[__] Soliciting Material Under Rule 14a-12
DEXTER CORPORATION
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
INTERNATIONAL SPECIALTY PRODUCTS INC.
ISP INVESTMENTS INC.
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(NAME OF PERSON (S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(I) (1) and
0-11.
1) Title of each class of securities to which transaction
applies:
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2) Aggregate number of securities to which transaction
applies:
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3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how
it was determined):
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NY2:\881389\21\54104.0016
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4) Proposed maximum aggregate value of transaction:
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[_] Check box if any part of the fee is offset as provided by Exchange Act
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PRELIMINARY PROXY MATERIALS DATED MAY 4, 2000
SUBJECT TO COMPLETION
[The information included herein is as it is expected to be when the definitive
proxy statement is mailed to shareholders of Dexter Corporation. This proxy
statement will be revised to reflect actual facts at the time of the filing of
the definitive proxy statement.]
No GOLD Proxy Card is included with these materials.
PROXY STATEMENT
OF INTERNATIONAL SPECIALTY PRODUCTS INC.
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2000 ANNUAL MEETING OF THE SHAREHOLDERS
OF DEXTER CORPORATION
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We are sending this proxy statement to you as one of the holders of
common stock, par value $1.00 per share, of Dexter Corporation, a Connecticut
corporation, in connection with our solicitation of your proxy for use at the
2000 Annual Meeting of the Shareholders of Dexter scheduled for 10:00 A.M.,
local time, on Friday, June 30, 2000, at The Hartford Club, 46 Prospect Street,
Hartford, Connecticut and at any adjournments or postponements thereof. We are
International Specialty Products Inc. and its wholly owned subsidiary ISP
Investments Inc., each a Delaware corporation, and beneficially own
approximately 9.97% of Dexter's outstanding shares of common stock.
On December 14, 1999, we proposed to Dexter a business combination
(the "ISP Proposal") in which all Dexter shareholders would receive at least $45
per share in cash, subject to the execution of a mutually acceptable merger
agreement. Although we indicated a willingness to pay more if Dexter provided us
with additional information that justified an increased price, Dexter's Board
rejected our proposal without negotiation. Soon thereafter, Dexter offered to
purchase our shares of Life Technologies, Inc., a majority-owned subsidiary of
Dexter, which offer we rejected. We believe that Dexter made its offer in an
attempt to deter us from pursuing the ISP Proposal.
Following the public announcement of our proxy solicitation, Dexter
announced that it would allow us to review certain non-public information
concerning Dexter and Life Technologies to determine whether we would be willing
to increase our $45 per share proposal, but stated that "we have made no
decision to sell the Company and no one else will be invited into the data
room." Less than three weeks later, on February 28, 2000, Dexter issued a press
release in which it announced that it would "institute a process in which we
will survey all of the Company's available options" and invite other parties
into the data room, but again emphasized that its Board "has made no decision to
sell the Company at this time."
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On March 23, 2000, we announced an increase in the ISP Proposal to
$50 per share in cash and further indicated that we had obtained a commitment
from The Chase Manhattan Bank to provide credit facilities to finance the
business combination contemplated by the ISP Proposal. On that same day, Dexter
announced that 29 third parties, including ISP, had signed confidentiality
agreements with the Company, which would permit such parties to review
non-public information contained in the data room and receive management
presentations. On April 2, 2000, Dexter postponed the 2000 Annual Meeting,
originally scheduled for April 27, to June 30, stating that "We are very pleased
with the results of the first stage of our sale process...", it had received
"several indications of interest in acquiring the entire company and . . .
multiple indications of interest in Dexter's various constituent businesses" and
that "we expect to be in a position to make a definitive announcement in the
next few weeks or so."
On April 20, 2000, in response to a deadline for final bids from
Lehman Brothers Inc., Dexter's financial advisor ("Lehman"), we submitted a
proposal to acquire all of the outstanding common stock of Dexter for a price
per share of $50 plus one "contingent value right." The contingent value rights
were intended to allow Dexter shareholders to participate in the proceeds from a
subsequent sale by ISP of Dexter's shares in Life Technologies. The proposal, by
its own terms, expired on April 24, 2000. On that same day, Dexter announced
that its Board met to review proposals received, but "reached no conclusions."
Dexter further stated that it "authorized management and its advisors to proceed
with next steps in the process," but did not specify what they were. After
Dexter rejected our proposal, on May 1, 2000, we terminated discussions with
Dexter and restated our commitment to continue our proxy contest so that Dexter
shareholders can decide for themselves how to best realize shareholder values.
The ISP Proposal still stands at $50 per share in cash, while Dexter
has yet to provide Dexter shareholders with a credible alternative to the ISP
Proposal. ISP's $50 per share price represents a 53% premium over Dexter's
closing price immediately prior to our initial $45 per share proposal made on
December 14, 1999 (Dexter's share price has increased since we made our initial
$45 per share proposal, and closed on the NYSE at $_____ per share on May
______, 2000, the most recent trading day prior to the printing of this proxy
statement). You can obtain a current quotation for Dexter's share price prior to
voting at the 2000 Annual Meeting or granting your proxy. We are now asking you
to elect our nominees and approve several proposals intended to facilitate the
ISP Proposal or a superior proposal. You should note that there can be no
assurance that the adoption of our proposals will ensure the consummation of
such a transaction.
OUR NOMINEE ELECTION PROPOSALS:
We are proposing to amend the Dexter Bylaws to increase the size of
Dexter's Board to seventeen directors and are nominating ten persons for
election as directors. Our nominees are committed to pursue the ISP Proposal or
a superior proposal and, if elected, would constitute a majority of Dexter's
Board. Our nominees, if elected, and Dexter's incumbent directors, if
re-elected, would each owe the same fiduciary duties to Dexter shareholders.
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OUR SHAREHOLDER RIGHTS PROPOSALS:
We believe that Dexter shareholders - the owners of the corporation -
should be permitted to consider the merits of any offer for their shares.
Accordingly, we are proposing that the Dexter Bylaws be amended to require
Dexter's Board to implement any special resolution passed by Dexter shareholders
directing Dexter's Board to redeem the rights issued under Dexter's "poison
pill" shareholder rights plan (the "Rights Agreement") or to amend the Rights
Agreement to render it inapplicable to types of offers or transactions specified
in any such resolution. Furthermore, in connection with this Bylaw amendment, we
seek your approval of a special resolution directing Dexter's Board to amend the
Rights Agreement promptly to make it inapplicable to any offer to purchase all
shares of Dexter for at least $45 per share in cash. Although we have increased
the price of the ISP Proposal to $50 per share in cash, we have not similarly
amended our proposed special resolution because Dexter has refused to assure us
that such amendment would be deemed timely made under Dexter's bylaws.
Accordingly, if each of our Shareholder Rights Proposals is adopted, the Rights
Agreement will not provide shareholder protection for proposals to acquire all
Dexter shares for at least $45 per share in cash, including certain offers that
are lower than our $50 per share proposal. The Shareholder Rights Proposals, if
adopted, will also allow the Dexter shareholders to decide whether Dexter's
Board can adopt any future "poison pill" shareholder rights plans.
OUR VOTING RIGHTS PROPOSALS:
In order to minimize any attempt by Dexter's Board to frustrate the
consideration or implementation of our proposals, we are also proposing to
repeal any Bylaw amendments that may be unilaterally adopted by Dexter's Board
between February 26, 1999 and the date of the 2000 Annual Meeting. Finally, we
are proposing a resolution to set the order in which our proposals will be voted
upon at the 2000 Annual Meeting.
[THIS PROXY STATEMENT AND THE GOLD PROXY CARD ARE FIRST BEING FURNISHED TO
SHAREHOLDERS ON OR ABOUT MAY __, 2000].
WE URGE YOU TO SIGN, DATE AND RETURN THE GOLD PROXY CARD IN FAVOR OF THE
ELECTION OF OUR NOMINEES AND THE ADOPTION OF THE PROPOSALS DESCRIBED IN THIS
PROXY STATEMENT.
IF YOU HAVE ALREADY SENT A WHITE PROXY CARD TO THE DEXTER DIRECTORS, YOU MAY
REVOKE THAT PROXY AND VOTE AGAINST THE ELECTION OF DEXTER'S NOMINEES AND
PROPOSALS BY SIGNING, DATING AND RETURNING THE ENCLOSED GOLD PROXY CARD. THE
LATEST DATED PROXY IS THE ONLY ONE THAT COUNTS. ANY PROXY MAY BE REVOKED AT ANY
TIME PRIOR TO THE 2000 ANNUAL MEETING BY DELIVERING A WRITTEN NOTICE OF
REVOCATION OR A LATER DATED PROXY FOR THE 2000 ANNUAL MEETING TO INNISFREE M&A
INCORPORATED OR TO THE SECRETARY OF DEXTER, OR BY VOTING IN PERSON AT THE 2000
ANNUAL MEETING. SEE "VOTING PROCEDURES" ON PAGE 55.
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QUESTIONS AND ANSWERS ABOUT THIS PROXY SOLICITATION
Q: WHO IS SOLICITING YOUR PROXY?
A: We are International Specialty Products Inc. ("ISP") and its wholly
owned subsidiary ISP Investments Inc. As of the date of this proxy
statement, we beneficially own 2,299,200 shares of Dexter's common
stock, representing approximately 9.97% of the outstanding shares. In
addition, on such date we, together with our reporting "group" for
Schedule 13D purposes, beneficially own 5,417,991 shares of common stock
of Life Technologies, representing approximately 21.7% of the
outstanding shares of Life Technologies. We are a multinational
manufacturer of specialty chemicals and mineral products. For more
information on participants in our proxy solicitation, please see
"Certain Information Concerning the Participants" on page 59.
Q: WHY ARE WE SOLICITING YOUR PROXY?
A: As Dexter's largest shareholder and an investor in the company's shares
since September 1998, we have been dissatisfied with Dexter's share
price performance and the recent conduct of Dexter's Board described
below. This has led us to engage in this proxy fight to protect the
value of our and your investment in Dexter. Although subsequent to the
public announcement of our initial $45 per share proposal and our proxy
solicitation, Dexter's Board appears to have moderated somewhat its
previous hard-line stance, Dexter's directors -- unlike our nominees --
have not committed to pursue the ISP Proposal or a superior proposal.
(1) On October 4, 1999, one week after we announced that we
had acquired approximately 9.98% of the outstanding common
stock of Dexter, Dexter's Board amended the company's
poison pill Rights Agreement to lower the threshold of
beneficial ownership that will automatically trigger the
defensive provisions of the Rights Agreement from 20% to
11%.
(2) On December 3, 1999, we discussed with Dexter's
representatives our view that Life Technologies, with its
higher growth and higher margins, can better fulfill its
potential as an independent entity, or in combination with
another similarly strategically situated company, rather
than in combination with Dexter. We therefore recommended
that it would be in the best interests of both companies
and their respective shareholders if Dexter and Life
Technologies were independent corporate entities. Dexter
did not respond to our recommendation.
(3) After Dexter failed to respond to our recommendation, we
proposed a business combination in which all holders of
Dexter common stock would receive at least $45 per share
in cash, subject to the execution of a mutually acceptable
merger agreement. Although we indicated a willingness to
pay more if Dexter provided us with additional information
that justified an increased price, Dexter's Board rejected
our initial proposal without negotiation. By not approving
the ISP Proposal, Dexter's Board has effectively deprived
you of the right to consider for yourself whether or not
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to accept our acquisition proposal. It would be
uneconomical for us or any other person to make an offer
directly to the Dexter shareholders, due to the "poison
pill" rights (the "Rights") which would be automatically
triggered by a purchase of shares under such an offer
unless, under a recently-created exception described
below, Dexter's Board or its financial advisors take
action. In addition, under Connecticut law, in the absence
of Board approval, a person who acquires more than 10% of
the outstanding voting stock of a Connecticut corporation
in a tender offer is prohibited from effecting a merger to
acquire the shares not tendered for a five year period.
(4) On January 27, 2000, we informed Dexter that we believed
that the failure of Dexter's Board to encourage
negotiation of the ISP Proposal left us "with no choice
but to take our proposal directly to our fellow
shareholders," and announced our intention to present the
proposals contained in this proxy statement at the 2000
Annual Meeting.
(5) Following the public announcement of the ISP Proposal and
our proxy solicitation, on February 9, 2000, Dexter's
Board took the following actions:
(a) Dexter announced that it had amended its Rights
Agreement to make the poison pill Rights
inapplicable to any offer which is for all
shares, is substantially unconditional, remains
available to shareholders for 60 days, is
supported by firm financing commitments and is
for a price which is, in the opinion of Dexter's
financial advisor, fair from a financial point of
view; and
(b) Dexter announced that it would allow us to review
certain non-public information concerning Dexter
and Life Technologies to determine whether we
would be willing to increase our initial $45 per
share proposal, but stated, "we have made no
decision to sell the company or to explore a sale
of the company or to test the market ... and no
one else will be invited into the data room."
(6) On February 28, 2000, Dexter announced that it would
"institute a process in which we will survey all of the
Company's available options" and invite other parties into
the data room. However, Dexter again emphasized that its
Board "has made no decision to sell the Company at this
time."
(7) On March 23, 2000, we announced an increase in the ISP
Proposal to $50 per share in cash and further indicated
that we had obtained a commitment from The Chase Manhattan
Bank to provide credit facilities to finance the business
combination contemplated by the ISP Proposal. On that same
day, Dexter announced that 29 third parties, including
ISP, had signed confidentiality agreements with the
Company, which would permit such parties to review
non-public information contained in the data room and
receive management presentations.
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(8) On April 2, 2000, Dexter postponed the 2000 Annual Meeting
originally scheduled for April 27, to June 30, stating
that "We are very pleased with the results of the first
stage of our sale process...", it had received "several
indications of interest in acquiring the entire company
and . . . multiple indications of interest in Dexter's
various constituent businesses" and that "we expect to be
in a position to make a definitive announcement in the
next few weeks or so."
(9) On April 20, 2000, in response to a deadline for final
bids from Lehman, we submitted a proposal to acquire all
of the outstanding common stock of Dexter for a price per
share of $50 plus one "contingent value right." The
contingent value rights were intended to allow Dexter
shareholders to participate in the proceeds from a
subsequent sale by ISP of Dexter's shares in Life
Technologies. The proposal, by its own terms, expired on
April 24, 2000. On that same day, Dexter announced that
its Board met to review proposals received, but "reached
no conclusions." Dexter further stated that it "authorized
management and its advisors to proceed with next steps in
the process," but did not specify what they were. After
Dexter rejected our proposal, on May 1, 2000, we
terminated discussions with Dexter and restated our
commitment to continue our proxy contest so that Dexter
shareholders can decide for themselves how to best realize
shareholder values.
(10) The ISP Proposal still stands at $50 per share in cash,
while Dexter has yet to provide the Dexter shareholders
with a credible alternative to the ISP Proposal. ISP's $50
per share price represents a 53% premium over Dexter's
closing price immediately prior to our initial $45 per
share proposal made on December 14, 1999 (Dexter's share
price has increased since we made our initial $45 per
share proposal, and closed on the NYSE at $_____ per share
on May ___, 2000, the most recent trading day prior to the
printing of this proxy statement). You can obtain a
current quotation for Dexter's share price prior to voting
at the 2000 Annual Meeting or granting your proxy.
In short, we believe that the actions taken by Dexter's Board described
above were taken only under the pressure of our proxy solicitation and
underscore the urgent need for the adoption of our proposals. In our
opinion, the changes to Dexter's poison pill are not satisfactory in
that they still do not permit shareholder choice, but leave the decision
as to whether shareholders should be permitted to consider an offer in
the hands of Dexter's Board or its hand-picked financial advisors. In
addition, Dexter's Board, to date, has made no determination to sell the
Company. We are seeking your proxy to vote in favor of the adoption of
our Nominee Election Proposals, Shareholder Rights Proposals and Voting
Rights Proposals described in this document, because we believe that
each of these proposals will facilitate the ISP Proposal or a superior
proposal. If you grant us your proxy, we will also be entitled to vote
your shares in our discretion on matters incident to the conduct of the
2000 Annual Meeting and on other matters brought to a vote at the
meeting for which we have not yet been given notice.
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Q: WHY ARE WE ASKING YOU TO INCREASE THE SIZE OF DEXTER'S BOARD AND ELECT
OUR NOMINEES?
A: We are soliciting your proxy in favor of increasing the size of Dexter's
Board so that you will have the opportunity to elect, as a majority of
Dexter's Board of Directors, persons who are committed to pursue the ISP
Proposal or a superior proposal. Dexter is currently proposing that only
three of the ten current directors will stand for election at the 2000
Annual Meeting. We are proposing to increase the number of directors
from its current number of ten to seventeen, so that a total of ten
directors will be elected by Dexter shareholders at the 2000 Annual
Meeting. If all of our nominees are elected, a majority of Dexter's
directors would not be continuing incumbents and a lack of continuity in
Dexter's corporate policy and governance may occur. However, our
nominees, if elected, and Dexter's incumbent directors, if re-elected,
would each owe the same fiduciary duties to Dexter shareholders.
Q: WHO ARE THE NOMINEES?
A: Our nominees include eight independent persons who are not affiliated
with ISP and two persons who are affiliates of ISP, all of whom are
well-respected members of the business and legal community. Our
nominees, unlike Dexter's incumbent directors, are committed to pursue
the ISP Proposal or a superior proposal. Two of our nominees, Samuel J.
Heyman and Sunil Kumar, are affiliates of ISP. Mr. Heyman is the
Chairman of the Board of ISP and Mr. Kumar is President and Chief
Executive Officer of ISP. If elected to Dexter's Board, Messrs. Heyman
and Kumar would not participate in any Board action relating to the ISP
Proposal or any other business combination transaction while our
acquisition proposal remains in effect, and would act in accordance with
their fiduciary duties to Dexter shareholders with respect to any action
they do take as directors. We have no reason to believe that any of our
nominees will be disqualified or unable or unwilling to serve if
elected. However, if any of our nominees are unable to serve or for good
cause will not serve, proxies may be voted for another person nominated
by ISP to fill the vacancy.
Q: WHY SHOULD SHAREHOLDERS DETERMINE IF THE POISON PILL RIGHTS AGREEMENT
SHOULD BE AMENDED OR REDEEMED?
A: In 1996, Dexter's Board adopted the Rights Agreement, dated as of August
23, 1996, by and between Dexter and ChaseMellon Shareholder Services,
L.L.C. The poison pill Rights issued under the Rights Agreement permit
Dexter shareholders to purchase shares of Dexter common stock, or shares
of an acquiring company's common stock, at less than market prices, if,
among other things, persons not approved by Dexter's Board acquire
beneficial ownership of 11% or more of Dexter's common stock, unless the
offer falls within the recently-created exception requiring a fairness
determination by Dexter's financial advisor. No action is required to
trigger the exercisability of the Rights, once the threshold of
ownership has been passed. Currently, any person or group who acquires
beneficial ownership of 11% or more of Dexter's outstanding shares of
common stock without Board approval or a fairness determination by
Dexter's financial advisor and who cannot, like institutional investors
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and certain other parties, take advantage of an exception in the Rights
Agreement applicable to "passive investors," will experience immediate
and substantial economic and voting power dilution, because the poison
pill rights issued to each other holder of Dexter common stock under the
Rights Agreement would become automatically exercisable to purchase
additional shares of common stock for each share then outstanding, at
one-half the current market price, from and after the date of such
threshold acquisition.
In its current form, we believe that the Rights Agreement is harmful to
your interests as a shareholder because it is a device that provides
Dexter's Board with the power to block a transaction which could be
economically beneficial to you, unless the offer falls within a limited,
recently-created exception requiring, among other things, a fairness
determination by Dexter's financial advisors. Our proposed Bylaw
amendment would require Dexter's Board to follow the direction of a
majority of Dexter shareholders by redeeming the Rights or amending the
Rights Agreement to render it inapplicable to types of offers or
transactions specified by Dexter shareholders. In addition, Dexter's
Board would be required to seek shareholder approval prior to adopting a
new "poison pill" shareholder rights plan. As discussed below, we are
also proposing that you direct Dexter's Board to amend the Rights
Agreement now.
We believe that you should be permitted to consider for yourself the
merits of offers for your shares. However, we note that proponents of
poison pills claim that plans such as the Rights Agreement provide
boards of directors with time to respond to unsolicited bids in an
orderly manner and provide incentives for a potential bidder to
negotiate with the board, thereby potentially leading to a higher price
for shareholders. If our Bylaw proposal and the shareholder resolution
described below are adopted, the potential benefits of the Rights
Agreement will no longer apply to any proposal for all shares for at
least $45 in cash.
Q: WHY DO WE WANT DEXTER'S BOARD TO AMEND DEXTER'S POISON PILL RIGHTS
AGREEMENT NOW?
A: On December 14, 1999, we proposed a business combination in which Dexter
shareholders would receive at least $45 per share in cash, subject to
the execution of a mutually acceptable merger agreement. Dexter's Board
rejected our initial $45 per share proposal without negotiation. On
March 23, 2000, we increased our proposal to $50 per share in cash.
Because Dexter's poison pill rights would be triggered by most
acquisitions of 11% or more of Dexter's shares, it would be uneconomical
for us or any third party to make an offer directly to Dexter
shareholders over the current Board's refusal, unless the offer falls
within a limited, recently-created exception requiring, among other
things, a fairness determination by Dexter's financial advisors.
It should be noted that Dexter's Board rejected our initial $45 per
share proposal as inadequate, we have subsequently increased our
proposal to $50 per share, and Dexter has not disclosed what price
Dexter's financial advisors would deem fair. We have not amended our
proposed shareholder resolution to reflect our increased $50 per share
bid because Dexter has refused to assure us that such amendment would be
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deemed timely made under Dexter's bylaws. Accordingly, if each of our
Shareholder Rights Proposals is adopted, the Rights Agreement will not
provide shareholder protection for proposals to acquire all Dexter
shares for at least $45 per share in cash, including certain offers that
are lower than our $50 per share proposal. However, we believe that the
shareholder resolution we propose, which would require Dexter's Board to
amend the Rights Agreement to make it inapplicable to any offer for all
outstanding shares of Dexter for at least $45 per share in cash, would
send a clear message to Dexter's Board that it should pursue offers of
at least $45 per share and would end the uncertainty as to the minimum
bid required to make the poison pill Rights inapplicable.
Q: WHAT WILL HAPPEN IF THE POISON PILL RIGHTS AGREEMENT IS INVALIDATED IN
COURT?
A: We have commenced litigation seeking to invalidate the Rights Agreement
under Connecticut law. If the Rights Agreement is invalidated, it will
no longer be an obstacle to stock accumulations or offers at any price
and no longer would provide the protections referred to above, as
advocated by poison pill proponents. If there was a final adjudication
prior to the 2000 Annual Meeting holding the Rights Agreement invalid,
we would not need to present our Shareholder Rights Proposals at the
2000 Annual Meeting.
Q: IS ISP PREPARED TO ACQUIRE DEXTER?
A: We are prepared to promptly negotiate and execute a mutually acceptable
merger agreement with Dexter. We have obtained a commitment from The
Chase Manhattan Bank to provide senior credit facilities in the
aggregate amount of $1,825,000,000 to, among other things, finance the
acquisition of Dexter, refinance certain existing indebtedness and
provide working capital following the acquisition. See "Description of
Credit Facilities."
Q: WHY ARE YOU PROPOSING TO REPEAL BYLAWS ADOPTED BY DEXTER'S BOARD?
A: We propose to repeal any Bylaw amendments adopted by Dexter's Board
between February 26, 1999 and the date of the 2000 Annual Meeting. We
are not aware of any amendments made between February 26 and now. We
believe that any Bylaw amendments adopted by Dexter's Board prior to the
2000 Annual Meeting are likely to be aimed at frustrating our proposals
and therefore are not likely to be in the best interests of the Dexter
shareholders. Any Bylaw amendments validly adopted by Dexter's Board
prior to the Annual Meeting would remain in effect unless and until our
proposal to repeal such Bylaws is adopted. If Dexter's Board adopts any
such Bylaw amendments before the 2000 Annual Meeting, it will have an
opportunity to inform shareholders of the benefits of these amendments
and to attempt to persuade shareholders to vote against this proposal.
Q: WHO CAN VOTE AT THE 2000 ANNUAL MEETING?
A: If you owned Dexter shares on ____________, 2000 (the "Record Date"),
you have the right to vote at the 2000 Annual Meeting. We believe that
as of the close of business on the Record Date, there were ___________
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shares of common stock of Dexter issued and outstanding and entitled to
vote. Shareholders have one vote for each share of common stock they own
with respect to all matters to be considered at the 2000 Annual Meeting.
Q: HOW MANY SHARES MUST BE VOTED IN FAVOR OF THE PROPOSALS TO EFFECT THEM?
A: Assuming that a quorum, defined as holders of not less than a majority
of the shares of Common Stock outstanding and entitled to vote, is
present in person or by proxy at the 2000 Annual Meeting, our proposals
can be adopted by the following votes:
Nominee Proposals -- Election of our nominees will require the
affirmative vote of a plurality of the votes cast. The election of our
nominees for seven newly-created directorships will not be effective
unless our proposed Bylaw amendment increasing the size of Dexter's
Board is adopted.
Proposals Requiring Bylaw Amendments -- We believe that our proposals
involving amendments to the Dexter Bylaws will be approved if the votes
cast for each respective proposal exceed the votes cast against the
respective proposal. Accordingly, our Bylaw amendment proposals could be
approved by less than a majority of the issued and outstanding shares of
common stock once a quorum is present at the 2000 Annual Meeting. We
have received the opinion of our Connecticut counsel, Levett Rockwood
P.C., that, to the extent the Dexter Bylaws may require a two-thirds
supermajority shareholder vote for an amendment, such provision is
invalid under Connecticut law. Levett Rockwood P.C. has consented to the
use of its name and the reference to its opinion in this Proxy
Statement. We have also instituted litigation seeking to have any such
supermajority amendment requirement held ineffective. See "Certain
Litigation." If the Bylaws are held to contain an effective
supermajority shareholder voting requirement, our proposals involving
Bylaw amendments would each require the affirmative vote of the holders
of two-thirds of the issued and outstanding shares of common stock.
Proposals Not Requiring Bylaw Amendments -- Adoption of our shareholder
resolution requiring Dexter's Board to amend the Rights Agreement and
our Omnibus Proposal providing the order for voting at the 2000 Annual
Meeting will be approved if the votes cast for the respective proposals
exceed the votes cast against the respective proposals. Accordingly,
these proposals could be adopted by less than a majority of the issued
and outstanding shares of common stock once a quorum is present at the
2000 Annual Meeting. The shareholder resolution as to the Rights
Agreement will not be effective unless our related Bylaw amendment is
adopted.
Dexter has not included our Board Size Bylaw Proposal and Additional
Directors Election Proposal on its proxy cards and has stated that no
action will be taken on them at the 2000 Annual Meeting. A proxy will be
counted as present for purposes of a quorum on each matter for which
such proxy confers the right to vote. Dexter has stated that its
representatives intend to exercise discretionary authority to vote
proxies submitted on the Dexter proxy card even with respect to
proposals that are omitted from the cards. If Dexter takes such an
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action, we plan to challenge through litigation the validity of such
proxies with respect to such proposals.
Q: WHAT WILL HAPPEN IF DEXTER SUCCESSFULLY INVALIDATES CERTAIN OF OUR
PROPOSALS IN COURT?
A: Dexter has asserted that our proposals to increase the size of Dexter's
Board and elect seven additional directors at the 2000 Annual Meeting
are invalid. Dexter also has asserted that our Shareholder Rights
Proposals are invalid, and that it will not implement these proposals
even if they are adopted by the Dexter shareholders. In connection with
our proposals, we have filed a complaint with the United States District
Court for the District of Connecticut in which we are seeking, among
other things, a declaratory judgment that our Nominee Election
Proposals, Shareholder Rights Proposals and Voting Rights Proposals are
valid under Connecticut law. See "Certain Litigation." Insofar as there
is a lack of direct Connecticut case law to either substantiate or
contradict the validity of the proposals challenged by Dexter, the
courts will ultimately determine the legality and enforceability of such
proposals under Connecticut law. We intend to present all of our
proposals at the 2000 Annual Meeting. If, after the 2000 Annual Meeting,
any of our proposals were to be finally adjudicated as invalid under
Connecticut law, such proposal, even if adopted, would then not be
effective. If there was a final adjudication prior to the 2000 Annual
Meeting holding that any proposal was invalid, we would not present such
proposal at the 2000 Annual Meeting.
Q: WHAT SHOULD YOU DO TO VOTE?
A: Sign, date and return the enclosed GOLD Proxy card TODAY in the envelope
provided. For more information on how to vote your shares, please see
"Voting Procedures" on page 55.
Q: WHO DO YOU CALL IF YOU HAVE QUESTIONS ABOUT THE SOLICITATION?
A: Please call Innisfree M&A Incorporated toll free at (888) 750-5834.
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IMPORTANT
PLEASE REVIEW THIS DOCUMENT AND THE ENCLOSED MATERIALS CAREFULLY. YOUR
VOTE IS VERY IMPORTANT, NO MATTER HOW MANY OR HOW FEW SHARES YOU OWN.
1. If your shares are registered in your own name, please sign, date and
mail the enclosed GOLD Proxy Card to Innisfree M&A Incorporated in the
postage-paid envelope provided today.
2. If you have previously signed and returned a WHITE proxy card to
Dexter, you have every right to change your vote. Only your latest
dated card will count. You may revoke any WHITE proxy card already sent
to Dexter by signing, dating and mailing the enclosed GOLD Proxy Card
in the postage-paid envelope provided. Any proxy may be revoked at any
time prior to the 2000 Annual Meeting by delivering a written notice of
revocation or a later dated proxy for the 2000 Annual Meeting to
InnisFree M&A Incorporated or the Secretary of Dexter, or by voting in
person at the 2000 Annual Meeting.
3. If your shares are held in the name of a brokerage firm, bank nominee
or other institution, only it can sign a GOLD Proxy Card with respect
to your shares and only after receiving your specific instructions.
Accordingly, please sign, date and mail the enclosed GOLD Proxy Card in
the postage-paid envelope provided, and to ensure that your shares are
voted, you should also contact the person responsible for your account
and give instructions for a GOLD Proxy Card to be issued representing
your shares.
4. After signing the enclosed GOLD Proxy Card, do not sign or return the
WHITE proxy card unless you intend to change your vote, because only
your latest dated proxy card will be counted.
If you have any questions about giving your proxy or require assistance,
please call:
Innisfree M&A Incorporated
501 Madison Avenue, 20th Floor
New York, New York 10022
Call Toll-Free: (888) 750-5834
Banks and Brokerage Firms Call Collect: (212) 750-5833
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REASONS FOR THE SOLICITATION
The purpose of our proposals is to facilitate the ISP Proposal or a
superior proposal, in which you would receive at least $50 per share in cash,
although there can be no assurance that the adoption of our proposals will
result in the consummation of such a transaction. Please note that we are not
soliciting your proxy to vote on a merger or other business combination
transaction in which you would exchange your Dexter shares for cash. The
adoption of our proposals would facilitate our ability to effect the ISP
Proposal by making a tender offer directly to you for your shares. In the event
that ISP chooses to proceed by making a tender offer, a shareholder vote would
not be required. Our nominees to Dexter's Board, unlike Dexter's incumbent
directors, are committed to pursue the ISP Proposal or a superior proposal.
Another reason for our proposals is to permit Dexter shareholders to consider,
on their own, the merits of offers for their shares by permitting them to issue
instructions to Dexter's Board as to the manner in which the Rights Agreement
will be applied to particular offers. We intend to mail this proxy statement,
together with our proxy card, to all holders of Dexter common stock.
As the largest Dexter shareholder and an investor in the company's
shares since September 1998, we have been dissatisfied with the share price
performance of Dexter's common stock. Specifically, on December 3, 1999, we
discussed with representatives of Dexter our view that Life Technologies, with
its higher growth and higher margins, can better fulfill its potential as an
independent entity or in combination with another similarly strategically
situated company, rather than in combination with Dexter. We therefore
recommended that it would be in the best interests of both companies and their
respective shareholders if Dexter and Life Technologies were independent
corporate entities. Dexter did not respond to our recommendation. Therefore, on
December 14, 1999, we proposed to Dexter a business combination in which Dexter
shareholders would receive at least $45 per share in cash, subject to the
negotiation of a mutually acceptable merger agreement. Although we indicated a
willingness to pay more if Dexter provided us with additional information that
justified an increased price, Dexter's Board rejected our initial proposal
without negotiation. Then, on January 20, 2000, Dexter, in what we believe was
an attempt to deter us from pursuing the ISP Proposal, offered to purchase our
shares of Life Technologies for $49 per share, which offer we rejected. Finally,
on January 27, 2000, we informed Dexter that we believed that the failure of
Dexter's Board to encourage negotiation of the ISP Proposal left us "with no
choice but to take our proposal directly to our fellow shareholders," and
announced our intention to present the proposals contained in this proxy
statement at the 2000 Annual Meeting.
Following the public announcement of our proxy solicitation, Dexter's
Board announced on February 9, 2000 that it would allow us to review certain
non-public information concerning Dexter and Life Technologies to determine
whether we would be willing to increase our $45 proposal. Dexter stated "[d]o
not misread the Board's decision or its intentions: we have made no decision to
sell the Company or to explore a sale of the Company or to test the market for a
possible sale of the Company, and no one else will be invited into the data
room." Less than three weeks later, on February 28, 2000, Dexter announced that
it would "institute a process in which we will survey all of the Company's
available options" and that "third parties will be invited to sign
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confidentiality agreements, review comprehensive data room materials and receive
Dexter management presentations." However, Dexter emphasized that its Board "has
made no decision to sell the Company at this time."
On March 23, 2000, we increased our proposal to $50 per share in
cash. On that same day, Dexter announced that 29 third parties, including ISP,
had signed confidentiality agreements with the Company. On April 2, 2000, Dexter
postponed the 2000 Annual Meeting, originally scheduled for April 27, to June
30, stating that, "We are very pleased with the results of the first stage of
our sale process...", it had received "several indications of interest in
acquiring the entire company and . . . multiple indications of interest in
Dexter's various constituent businesses" and that "we expect to be in a position
to make a definitive announcement in the next few weeks or so."
On April 20, 2000, in response to a deadline for final bids from
Lehman, we submitted a proposal to acquire all of the outstanding common stock
of Dexter for a price per share of $50 plus one "contingent value right." The
contingent value rights were intended to allow Dexter shareholders to
participate in the proceeds from a subsequent sale by ISP of Dexter's shares in
Life Technologies. The proposal, by its own terms, expired on April 24, 2000. On
that same day, Dexter announced that its Board met to review proposals received,
but "reached no conclusions." Dexter further stated that it "authorized
management and its advisors to proceed with next steps in the process," but did
not specify what they were. After Dexter rejected our proposal, on May 1, 2000,
we terminated discussions with Dexter and restated our commitment to continue
our proxy contest so that Dexter shareholders can decide for themselves how to
best realize shareholder values.
The ISP Proposal still stands at $50 per share in cash, while Dexter
has yet to provide the Dexter shareholders with a credible alternative to the
ISP Proposal. ISP's $50 per share price represents a 53% premium over Dexter's
closing price immediately prior to our initial $45 per share proposal made on
December 14, 1999 (Dexter's share price has increased since we made our initial
$45 per share proposal, and closed on the NYSE at $_____ per share on May ___,
2000, the most recent trading day prior to the printing of this proxy
statement). You can obtain a current quotation for Dexter's share price prior to
voting at the 2000 Annual Meeting or granting your proxy.
We are now asking you to elect our nominees and approve several
proposals intended to facilitate the ISP Proposal or a superior proposal. All
determinations made by our nominees, if elected, as well as those made by
Dexter's incumbent directors, if re-elected, will be subject to their fiduciary
duties to Dexter shareholders. Two of our nominees, Samuel J. Heyman and Sunil
Kumar, are affiliated with ISP and, if elected to Dexter's Board, would not
participate in any Board action relating to the ISP Proposal or any other
business combination transaction while our acquisition proposal remains in
effect, and would act in accordance with their fiduciary duties to Dexter
shareholders with respect to any action they do take as directors.
We are prepared to promptly negotiate and execute a mutually
acceptable merger agreement with Dexter. We have obtained a commitment from The
Chase Manhattan Bank to provide senior credit facilities in the aggregate amount
of $1,825,000,000 to, among other things, finance the acquisition of Dexter,
refinance certain existing indebtedness and provide working capital following
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the acquisition. See "Description of Credit Facilities." We have also engaged
Chase Securities Inc. to serve as our financial advisor in connection with any
business combination transaction involving Dexter.
In connection with our proposals, we have filed a complaint with the
United States District Court for the District of Connecticut in which we are
seeking, among other things, (1) a declaratory judgment that our Nominee
Election Proposals, Shareholder Rights Proposals and Voting Rights Proposals are
valid under Connecticut law, that any supermajority voting requirement contained
in Dexter's Bylaws is invalid, and that the Rights Agreement is invalid, and (2)
an order requiring that the 2000 Annual Meeting be held no later than April 30,
2000. Insofar as there is a lack of direct Connecticut case law to either
substantiate or contradict the validity of the proposals challenged by Dexter,
the courts will ultimately determine the legality and enforceability under
Connecticut law of such proposals. See "Certain Litigation." We intend to
present all of our proposals at the 2000 Annual Meeting. If, after the 2000
Annual Meeting, any of our proposals were to be finally adjudicated as invalid
under Connecticut law, such proposal, if adopted, would then not be effective.
If there was a final adjudication prior to the 2000 Annual Meeting holding that
any proposal was invalid, we would not present such proposal at the 2000 Annual
Meeting.
We are soliciting your proxy to vote in favor of the following
proposals at the 2000 Annual Meeting:
THE NOMINEE ELECTION PROPOSALS
(1) The election of our slate of nominees to replace the three
directors whose terms expire at the 2000 Annual Meeting
(the "Director Election Proposal");
(2) A Bylaw amendment that would increase the size of Dexter's
Board to permit our nominees for directorships, if
elected, to constitute a majority of Dexter's Board (the
"Board Size Bylaw Proposal");
(3) The election of our slate of nominees to fill the
vacancies created by the increased number of directorships
(the "Additional Directors Election Proposal");
THE SHAREHOLDER RIGHTS PROPOSALS
(4) A Bylaw amendment that would require Dexter's Board to
make certain amendments to Dexter's "Poison Pill" Rights
Agreement or redeem the Rights issued thereunder if Dexter
shareholders instruct Dexter's Board to do so by majority
vote, and not to adopt a new rights agreement without
shareholder approval (the "Poison Pill Bylaw Proposal");
(5) A shareholder resolution directing Dexter's Board to amend
the Rights Agreement promptly to make it inapplicable to
any offer for all outstanding shares of Dexter for at
least $45 per share in cash (the "Poison Pill Amendment
Proposal");
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THE VOTING RIGHTS PROPOSALS
(6) A shareholder resolution repealing any and all amendments
made by Dexter's Board of Directors to the Bylaws after
February 26, 1999 (the "Bylaw Repeal Proposal"); and
(7) A resolution providing the order for voting at the 2000
Annual Meeting (the "Omnibus Proposal").
EACH OF OUR PROPOSALS IS SEPARATE AND DISTINCT FROM EACH OTHER
PROPOSAL. YOU MAY APPROVE OR VOTE SEPARATELY ON ANY OR ALL OF THE PROPOSALS, BUT
THE ADDITIONAL DIRECTORS ELECTION PROPOSAL WILL NOT BE EFFECTIVE UNLESS THE
BOARD SIZE BYLAW PROPOSAL IS ADOPTED AND THE POISON PILL AMENDMENT PROPOSAL WILL
NOT BE EFFECTIVE UNLESS THE POISON PILL BYLAW PROPOSAL IS ADOPTED. DEXTER HAS
ASSERTED THAT CERTAIN OF OUR PROPOSALS ARE INVALID. IF ANY PROPOSAL IS ADJUDGED
INVALID UNDER CONNECTICUT LAW, IT WILL THEN NOT BE EFFECTIVE. SEE "CERTAIN
LITIGATION."
BY ADOPTING OUR PROPOSALS YOU WILL BE GIVEN THE OPPORTUNITY TO ELECT
NOMINEES TO FORM A MAJORITY OF DEXTER'S BOARD WHO ARE COMMITTED TO PURSUE THE
ISP PROPOSAL OR A SUPERIOR PROPOSAL, AND YOU WILL BE GIVEN THE RIGHT TO DECIDE
WHETHER DEXTER'S POISON PILL RIGHTS AGREEMENT SHOULD APPLY TO SUCH A
TRANSACTION. YOU SHOULD NOTE THAT THERE CAN BE NO ASSURANCE THAT THE ADOPTION OF
OUR PROPOSALS WILL ENSURE THE CONSUMMATION OF SUCH A TRANSACTION. WE RECOMMEND
THAT YOU SIGN, DATE AND RETURN THE GOLD PROXY CARD TODAY IN FAVOR OF OUR
PROPOSALS.
CERTAIN LITIGATION
On January 27, 2000, we commenced a lawsuit against Dexter and seven
members of Dexter's Board of Directors in the United States District Court for
the District of Connecticut. International Specialty Products Inc. and ISP
Investments Inc. v. Dexter Corporation, et al., Civil Action No. 3:00 CV 157
(SRU). The Dexter directors who are named as defendants are K. Grahame Walker,
Henrietta Holsman Fore, Robert M. Furek, Edgar G. Hotard, Peter G. Kelly,
Jean-Francois Saglio and George M. Whitesides.
Count I of the Complaint alleges that Article X of the Dexter bylaws,
to the extent it requires a two-third supermajority vote of Dexter shareholders
to amend Dexter's bylaws, is invalid under ss. 33-807 of the Connecticut
Business Corporation Act, which permits supermajority voting provisions only if
expressly authorized by the certificate of incorporation. The Complaint alleges
that Dexter's certificate of incorporation does not authorize a supermajority
provision in the bylaws and therefore any two-thirds voting requirement in
Article X constitutes an ultra vires act of the board of directors and may not
be enforced. Accordingly, the Complaint seeks a declaratory judgment that: (i)
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if Article X of the Dexter bylaws imposes a supermajority voting requirement,
then it is invalid, void and of no effect under Connecticut law; and (ii)
Dexter's shareholders may alter, amend or repeal any Dexter bylaw or bylaws
without a supermajority vote. The Complaint also seeks preliminary and permanent
injunctive relief barring enforcement of a supermajority voting requirement in
Article X of Dexter bylaws.
Count II of the Complaint alleges that Dexter's poison pill
shareholder rights plan violates ss. 33-665(a) of the Connecticut Business
Corporation Act, which states, in relevant part, that "[a]ll shares of a class
shall have preferences, limitations and relative rights identical with those of
other shares of the same class." The Complaint alleges that Dexter's poison pill
violates ss. 33-665 because it impermissibly discriminates among shares of the
same class of stock by entitling all holders of Dexter common stock, except
shareholders owning 11 percent or more of Dexter's outstanding shares who do not
file a Schedule 13G with the SEC stating that their ownership position has been
acquired without any intent to change or influence control of Dexter, to
exercise the right under certain circumstances to obtain additional shares of
Dexter common stock in exchange for one-half of the then current market price of
Dexter common stock. Accordingly, the Complaint seeks a declaratory judgment
that Dexter's poison pill violates Connecticut law and is ultra vires, invalid,
void and of no effect. The Complaint also seeks preliminary and permanent
injunctive relief barring enforcement of Dexter's poison pill.
Counts III, IV and V of the Complaint allege that ISP's Nominee
Election Proposals, Shareholder Rights Proposals and Voting Rights Proposals are
each valid under Connecticut law, consistent with Dexter's certificate of
incorporation and may be voted upon at Dexter's 2000 annual meeting. The
gravamen of these claims is that Dexter's shareholders have the authority to:
(i) amend the bylaws in order to create (and then elect directors to fill) new
directorships; (ii) amend the bylaws to require directors to modify poison pills
and prevent the board from adopting a new poison pill without shareholder
approval; and (iii) amend or repeal bylaws and bar directors from vetoing
shareholder determinations to amend or repeal bylaws.
Accordingly, the Complaint seeks a declaratory judgment that: (i)
Dexter's shareholders have the lawful right to increase the size of Dexter's
Board by amending the bylaws and to fill all newly created directorships by
majority vote at the 2000 annual meeting; (ii) that Dexter's shareholders have
the lawful right to amend the bylaws to require that Dexter's Board amend the
poison pill or redeem the rights issued under the rights plan and to prevent the
board from adopting further poison pills without shareholder approval; and (iii)
that the Nominee Election Proposals, Shareholder Rights Proposals and Voting
Rights Proposals are valid under Connecticut law and consistent with Dexter's
certificate of incorporation, are the proper subjects for action by Dexter's
shareholders and may be voted upon by shareholders at Dexter's 2000 annual
meeting. The Complaint also seeks preliminary and permanent injunctive relief
permitting a shareholder vote on these proposals at Dexter's 2000 annual
meeting.
Count VI of the Complaint alleges that Dexter's directors have
breached their fiduciary and other legal obligations to the company and its
shareholders, including ISP, by, among other things, amending Dexter's poison
pill in October 1999 to apply to 11 percent shareholders who do not file a
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Schedule 13G with the SEC stating that their ownership position has been
acquired without any intent to change or influence control of Dexter, refusing
to consider with the care, loyalty and good faith required by law ISP's proposal
to purchase all of Dexter's shares at a price of $45 per share, seeking to
entrench themselves in office and failing to pursue opportunities and
transactions that would benefit Dexter's shareholders and which are in the
company's best interests.
The Complaint seeks a declaratory judgment that Dexter's directors
may not breach their fiduciary obligations by acting to impede or block an offer
for Dexter shares at a price of $45 per share or more in cash either by
utilizing Dexter's poison pill or refusing to approve the transaction under ss.
33-844 of the Connecticut Business Corporation Act (which prohibits certain
transactions with interested shareholders for a five-year period unless approved
by the board). The Complaint also seeks preliminary and permanent injunctive
relief barring Dexter's directors from acting to impede or block such an offer
for Dexter's shares either by utilizing the poison pill or refusing to approve
the transaction under ss. 33-844 of the Connecticut Business Corporation Act. In
addition, the Complaint seeks injunctive and declaratory relief preventing
Dexter's directors from conducting Dexter's 2000 annual meeting of Dexter's
shareholders after April 30, 2000. Furthermore, the Complaint seeks money
damages arising from the directors' breach of their legal obligations.
On or about March 9, 2000, Dexter and the individual director
defendants filed a motion for partial summary judgment seeking dismissal of
Count III of ISP's Complaint, which concerns ISP's proposed bylaw amendment to
increase the size of Dexter's board of directors. ISP has filed a brief in
opposition to this motion.
Dexter has stated that it will refuse to bring our Board Size Bylaw
Proposal and Additional Directors Election Proposal before the 2000 Annual
Meeting, and that even though the Poison Pill Bylaw Proposal and the Poison Pill
Amendment Proposal will be brought before the 2000 Annual Meeting, such
proposals will not be implemented by Dexter, even if adopted. If our proposals
are adopted at the 2000 Annual Meeting and this litigation is still pending, we
will seek appropriate relief to require Dexter to implement any proposals which
have received the requisite affirmative vote. Because the issue of whether
certain proposals are entitled to be voted upon at the 2000 Annual Meeting may
not be resolved by the time of the 2000 Annual Meeting, we will present each of
our proposals at the 2000 Annual Meeting together with the proxies we have
collected to vote in favor of such proposals. Ultimately, a court will be
required to decide whether any disputed proposals were properly presented to and
adopted at the 2000 Annual Meeting.
None of ISP's nominees are named parties to the litigation. Two of
ISP's nominees, Samuel J. Heyman and Sunil Kumar, however, are affiliated with
ISP and ISP Investments Inc., which are the named plaintiffs in the litigation.
Mr. Heyman is also the beneficial owner (as defined in Rule 13d-3) of
approximately 76% of the capital stock of ISP.
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DESCRIPTION OF CREDIT FACILITIES
We have obtained a commitment from The Chase Manhattan Bank to
provide senior credit facilities in the aggregate amount of $1,825,000,000 in
order to finance the acquisition of Dexter, to refinance certain existing
indebtedness of ISP's subsidiaries, Dexter and its subsidiaries, to provide
working capital for the combined companies following the acquisition and to pay
certain related fees and expenses. The facilities consist of a seven year
revolving credit facility, a seven year term loan and an 18 month term loan,
each in amounts to be specified in the definitive documentation for the
facilities. The commitment provides that obligations under the facilities will
be guaranteed by all of the domestic wholly owned subsidiaries of ISP and, if
the acquisition is completed, by Dexter and its wholly owned subsidiaries. The
commitment further provides that the facilities will be secured by the capital
stock of certain ISP subsidiaries, and all of the capital stock of Dexter and
Life Technology to be owned by us following the consummation of a transaction.
The collateral will be released upon the occurrence of certain events to be
agreed upon in the definitive documentation regarding the facilities. The
commitment is subject to customary conditions, including the absence of a
material adverse change in the business, operations or financial condition of
the borrower or Dexter, and the execution of definitive documentation with
respect to the facilities on or before December 31, 2000 (or on or before
October 31, 2000 if the acquisition of Dexter is financed through the tender
offer facility contemplated therein or if Chase has not syndicated the
facilities prior to such date). You should note that although the adoption of
our proposals would facilitate our ability to effect the ISP Proposal by making
a tender offer directly to you for your shares, we are not soliciting your proxy
to vote on a merger or other business combination in which you would exchange
your Dexter shares for cash. In the event that ISP chooses to proceed by making
a tender offer, a shareholder vote would not be required.
The facilities will require, under certain circumstances, mandatory
prepayments and commitment reductions and we will be permitted to make optional
prepayments and commitment reductions. Borrowings under the facilities will bear
interest at either a base rate or a eurodollar rate, plus an applicable margin
based, under certain circumstances, upon our consolidated leverage ratio (which
margin will not exceed 1.50% for base rate loans or 2.50% for eurodollar rate
loans).
The definitive loan documents for the facilities will contain certain
customary covenants that, among other things, will restrict our ability to
dispose of assets, incur additional indebtedness, repay indebtedness or amend
debt instruments, pay dividends, create liens on assets, make investments, make
acquisitions, engage in mergers or consolidations, or engage in certain
transactions with affiliates. In addition, the facilities will require us to
comply with certain financial ratios and maintenance tests.
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BACKGROUND AND RECENT EVENTS
We began purchasing shares of Dexter and Life Technologies common
stock in September 1998 because we believed that the shares of both companies
were substantially undervalued. As the largest Dexter shareholder and an
investor in the company's shares since September 1998, we have been dissatisfied
with the share price performance of Dexter's common stock. Specifically, we have
discussed with representatives of Dexter a recommendation with respect to the
separation of Life Technologies and Dexter. Dexter rejected our recommendation.
Therefore, on December 14, 1999, we proposed a business combination in which
Dexter shareholders would receive at least $45 per share in cash, subject to the
negotiation of a mutually acceptable merger agreement. On March 23, 2000, we
increased our proposal to $50 per share in cash. Set forth below is a summary of
events leading up to and following our proposal.
Life Technologies is the surviving corporation of a merger in 1983 of
Bethesda Research Laboratories, Inc. with a Dexter-owned subsidiary. Dexter
owned approximately 52% of the outstanding stock of Life Technologies in 1998.
On July 7, 1998, Dexter proposed to purchase the remaining 48% of the
outstanding shares of Life Technologies that it did not already own, at a
purchase price of $37 per share in cash. The proposal was made subject to, among
other things, the approval of the Board of Directors of Life Technologies, and,
since a majority of the Life Technologies Board was affiliated with Dexter, the
approval of the Life Technologies Board's unaffiliated directors. Following
receipt of Dexter's proposal, Life Technologies's Board of Directors formed a
special committee of independent directors (the "Special Committee") to consider
and respond to the proposal. Thomas H. Adams, Ph.D., Frank F. Samuel, Jr. and
Iain C. Wylie were appointed as the members of the Special Committee, with Dr.
Adams to act as chairman. The Special Committee retained outside counsel and a
nationally recognized investment banking firm to assist in their analysis of
Dexter's proposal.
After a comprehensive valuation of Life Technologies and its
prospects by the Special Committee and its advisors, on October 27, 1998, the
Special Committee reported to the Life Technologies Board that it would be
unable to recommend that Life Technologies shareholders accept Dexter's offer of
$37 per share of Life Technologies stock. Among its findings, the Special
Committee reported that:
A. it did not believe that Dexter's proposal adequately
reflected the value of the prospects of Life Technologies;
in particular, the Special Committee noted that Dexter's
proposal did not adequately address the value of Life
Technologies's research and development pipeline;
B. it had received inquiries from a third party interested in
acquiring all of Life Technologies at a price in excess of
Dexter's $37 per share offer, but was unable to respond to
such offer because Dexter had advised that it was not
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interested in disposing of its controlling block of Life
Technologies shares; and
C. Dexter's proposed purchase price of $37 per share of Life
Technologies common stock was substantially below the $50+
range which the Special Committee considered an appropriate
price range for shares of Life Technologies at that time.
In response to the Special Committee's findings, K. Grahame Walker,
Chairman and Chief Executive Officer of Dexter and Chairman of the Board of Life
Technologies, proposed that the Life Technologies Board disband the Special
Committee. Mr. Walker also announced that Dexter was withdrawing its original
proposal and would make an offer directly to the shareholders of Life
Technologies to tender their shares for $37 per share in cash. All five of the
directors affiliated with Dexter, representing a majority of the Life
Technologies Board, voted in favor of a resolution to disband the Special
Committee, while all three members of the Special Committee voted against the
resolution. A few days thereafter, two of the three independent Life
Technologies directors who served on the Special Committee (Messrs. Samuel and
Wylie) resigned as directors of Life Technologies in protest of the disbanding
of the Special Committee.
In his resignation letter, dated November 3, 1998, to the Life
Technologies Board, Frank E. Samuel, Jr. stated that Dexter's proposal "ignored
important components of Life Technologies's overall value, including the value
of the products in Life Technologies's R&D Pipeline." Mr. Samuel further
characterized Dexter's Proposal as "heavyhanded" and as a "coercive attempt to
buy out the [Life Technologies] public stockholders at a price which, I believe,
deprives these stockholders of the significant inherent values to which they are
rightfully entitled." Iain C. Wylie, in his resignation letter to the Life
Technologies Board, echoed Mr. Samuel's concerns with respect to Dexter's
proposal.
Despite the Special Committee's findings, on November 2, 1998, Dexter
commenced a tender offer for the outstanding shares of Life Technologies at $37
per share. Dexter also announced its intention to acquire any shares not
purchased in the tender offer through a second-step merger in which the
remaining shareholders would receive the same share price paid in the tender
offer.
On November 16, 1998, Life Technologies filed a Schedule 14D-9
Solicitation/Recommendation Statement in which Life Technologies disclosed that
the Life Technologies Board would remain neutral and express no opinion with
respect to Dexter's tender offer, since a majority of the Life Technologies
Board was affiliated with Dexter. However, Life Technologies included in the
Schedule 14D-9 the view of the Special Committee that the shareholders should
reject Dexter's tender offer and not tender their shares, along with the
analysis by the investment banking firm hired by the Special Committee which
detailed its finding that Dexter's offer price was inadequate to Life
Technologies shareholders.
On December 7, 1998, Dexter amended its tender offer by increasing
the purchase price from $37 per share to $39.125 per share and dropping the
condition that Dexter acquire at least 80% of the outstanding shares of Life
Technologies following the consummation of the tender offer. Upon the completion
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of the tender offer, Dexter owned approximately 71% of the outstanding shares of
Life Technologies.
Shortly after the commencement of Dexter's tender offer, in November
1998, we filed a Schedule 13D with respect to our beneficial ownership of shares
of Life Technologies. On November 25, 1998, we signed an agreement with Bear,
Stearns & Co. Inc., The Frederick R. Adler Intangible Asset Management Trust,
The Cohen Revocable Trust and Annie Chang, each of whom is a shareholder of Life
Technologies, to form a group (the "Life Technologies Group") for purposes of
Section 13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). The agreement was for a term of six months and provided for, among other
things, each party not to sell or otherwise dispose of its Life Technologies
shares without the consent of the other parties to the agreement. Thereafter,
we, together with the other members of the Life Technologies Group, filed an
amendment to our Schedule 13D reporting our group ownership of Life Technologies
shares. On December 2, 1998, each of York Capital Management, L.P., JGD
Management Corp. and York Investment Limited became members of the Life
Technologies Group, and on December 18, 1998, each of Idoya Partners, Prescott
Associates, Prescott International Partners, L.P., Thomas W. Smith as Trustee
for the Jack McKenzie Trust Under Agreement Dated April 12, 1992, Thomas W.
Smith as Trustee for the Leo Carroll Wolfensohn Trust Under Agreement Dated
March 9, 1994 and Thomas W. Smith (collectively, the "Prescott Entities") joined
the Life Technologies Group, in each case by entering into similar agreements
with the other existing members of the Life Technologies Group. Additional
amendments to our Schedule 13D were filed to reflect the additional members of
the Life Technologies Group, so that, as of December 23, 1998 we, together with
the other members of the Life Technologies Group, owned approximately 26.2% of
the outstanding shares of Life Technologies. On that date, ISP individually
owned approximately 14.75% of the outstanding shares of Life Technologies.
On February 1, 1999, the common stock of Life Technologies was
delisted from the Nasdaq Stock market because of Life Technologies's inability
to remain in compliance with certain maintenance standards required for
continued listing, including the number of shareholders and public float
requirements, as a result of Dexter's completed tender offer for Life
Technologies's stock. Life Technologies currently remains a reporting company
under the Securities and Exchange Commission rules and its common stock is
available for quotation on the OTC Bulletin Board.
On July 26, 1999, Life Technologies announced that its Board had
decided to discontinue regular quarterly dividends on its common stock.
On September 27, 1999, pursuant to an amended Schedule 13D filing, we
disclosed that we beneficially owned approximately 9.98% of the outstanding
common stock of Dexter. Soon thereafter, on October 4, 1999, Dexter's Board
amended the Company's Rights Agreement to lower the threshold of beneficial
ownership that will trigger the defensive provisions of the Rights Agreement
from 20% to 11% of the outstanding common stock of Dexter, applicable to any
shareholder who does not file a Schedule 13G with the SEC stating that its
ownership position has been acquired without any intent to change or influence
control of Dexter.
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On December 3, 1999, representatives of ISP and Dexter met to discuss
our dissatisfaction with Dexter's share price performance. At such meeting, we
expressed our belief that Life Technologies, with its higher growth and higher
margins, can better fulfill its potential as an independent entity or in
combination with another similarly strategically situated company, rather than
in combination with Dexter, for reasons detailed in Mr. Heyman's letter to Mr.
Walker on December 14, 1999. Our representatives noted that there are no
apparent synergies between Dexter and Life Technologies that would justify
Dexter's continued control of Life Technologies and, as an independent company,
Life Technologies would likely have greater access to the capital markets and
receive a higher level of analyst coverage. We therefore recommended that it
would be in the best interests of both companies and their respective
shareholders if Dexter and Life Technologies were independent corporate
entities. We further offered to work with Dexter to try to develop a tax
efficient strategy (i.e. - a strategy which minimizes tax costs to investors and
the respective companies), subject to a proper business purpose, to separate
Dexter and Life Technologies.
On December 6, 1999, pursuant to an amended Life Technologies 13D
filing, we disclosed that our initial group agreements with other Life
Technologies shareholders, which had been renewed and extended on May 10, 1999,
had been further extended until September 30, 2000 by all of the members of the
Life Technologies Group other than the Prescott Entities. Currently, the
continuing members of the Life Technologies Group beneficially own approximately
21.7% of the outstanding shares of Life Technologies.
After receiving no response to our proposal made during the December
3, 1999 meeting, on December 14, 1999, Samuel J. Heyman, Chairman of the Board
of ISP, sent the following letter to Mr. Walker proposing to acquire all of the
shares of Dexter not owned by ISP for a price of $45 per share:
Dear Grahame:
It was nice meeting with you, John Thompson, and Bruce
Beatt on December 3rd.
As Kumar Shah and I indicated to you, our interest is in
the realization of shareholder values for all Dexter Corporation and
Life Technology shareholders. In this connection, based on our
analysis, we believe that Life Technologies, with its higher growth
and higher margins, can better fulfill its potential as an
independent entity, or in combination with another similarly
strategically situated company, rather than in combination with
Dexter Corporation. We also believe that it will be in the best
interests of both companies and their respective shareholders if
Dexter Corporation and Life Technologies were separate corporate
entities.
The overriding reason for this conclusion stems primarily
from the fact that there are practically no overlaps and the
companies add no value to each other. Specifically, Dexter
Corporation's R&D, product development and manufacturing technology
have no interface, and lack any synergy, with Life Technologies.
Furthermore, we believe that Dexter Corporation has restrained Life
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Technologies' growth by limiting Life Technologies' R&D expenditures,
new product development and new product introductions. Marketing,
sales and distribution likewise provide no crossover benefits for the
two companies. In addition to the operational issues, we note that
Dexter Corporation management has little or no experience in the life
science field.
From a financial perspective, as an independent company,
Life Technologies would have much greater access to the capital
markets, without the constraints of Dexter Corporation's financial
profile. Life Technologies, as a pure play on which analysts and
shareholders can more clearly and easily focus, would attract a high
level of Wall Street coverage, providing the opportunity to achieve
P/E multiples similar to those achieved by others, who serve the same
market. This would enable Life Technologies to consummate attractive
stock acquisitions and mergers in the emerging life science field,
which you acknowledge has been constrained under your ownership.
Finally, as an independent company, or as part of a high
technology company serving the biotechnology industry, Life
Technologies would be in a position to provide greater incentives for
its executives. Through making available stock options with a
significant upside potential to all key-operating employees, Life
Technologies would be providing a better opportunity to attract,
hire, and most importantly, retain quality personnel to insure and
maximize its continued profitable growth.
As a substantial shareholder of both Dexter Corporation and
Life Technologies, it is our position that, for the foregoing
reasons, there is value to be realized in the separate corporate
existence of these two entities. At our meeting, while I was pleased
that you appeared to share our view that there are few, if any,
synergies between Dexter Corporation and Life Technologies, I had
hoped that you would be more receptive to our proposal. However,
since that time, by your lack of response and your recent comments to
security analysts, it appears that you disagree with our approach to
maximizing shareholder value nor do you appear to have in mind any
alternative strategy for accomplishing the same goal.
As long term shareholders of both Dexter and Life
Technologies, we think we have been more than patient. Our Board has
therefore decided to propose acquiring all of the Dexter Corporation
common stock not owned by ISP and its affiliates for a price of
$45.00 per share subject to the execution of a mutually acceptable
merger agreement. Such a price represents a 38% premium over where
Dexter Corporation closed last night (32-9/16), and is higher than
the stock has ever traded. In addition, if you would provide us
additional information on Dexter Corporation and Life Technologies
that justifies an increased price we would be willing to pay more. We
would be willing to enter into a confidentiality agreement in
connection therewith (but not any such agreement that would limit our
rights as shareholders).
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We and our advisors are available to move quickly to
consummate this transaction. Grahame, please let me know how you and
your Board would like to proceed.
Sincerely,
/s/ Samuel J. Heyman
On December 14, 1999, Dexter issued a press release indicating that
it has received ISP's December 14 letter and that Dexter's Board would consider
ISP's proposed offer, but noting that the December 14th letter did not mention a
source of funds for ISP's cash offer.
In response to Dexter's press release, on December 16, 1999, Mr.
Heyman sent the following letter to Mr. Walker:
Dear Grahame:
I note from Dexter's news release yesterday your mention
that our letter "contained no information concerning the source of
funds for its proposal."
In this regard, we intend to finance with bank borrowings
and will provide commitments for such financing as appropriate.
As I indicated in yesterday's letter, we stand ready with
our advisors to meet with you as soon as possible regarding all
aspects of the proposed merger agreement.
All the best.
Sincerely,
/s/ Samuel J. Heyman
On December 23, 1999, Mr. Walker sent the following letter to ISP
rejecting ISP's offer to purchase the outstanding shares of Dexter:
Dear Mr. Heyman:
On behalf of Dexter's Board of Directors, I am replying to
your letter of December 14.
The Board has carefully considered your proposal to
negotiate an acquisition of Dexter at a price of $45 per share. It
has discussed the proposal as well as the strategic initiatives
mentioned in your letter with the company's management and its
advisors - Lehman Brothers and Skadden, Arps. The Board has received
an opinion from Lehman Brothers that $45 per share is inadequate from
a financial point of view to the stockholders of Dexter. It is the
unanimous view of the Board of Directors that your proposal is both
inadequate and contrary to the best interests of the stockholders of
Dexter. Accordingly, it is hereby rejected.
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We noted with interest the research comment on your
proposal published by Merrill Lynch the same day you made it. Merrill
Lynch said, "... the bid is too low. It appears that ISP could be
just trying to put Dexter in play." The comment also noted:
"Interestingly, ISP's total bid for Dexter is only slightly larger
than Dexter's bid for Life Technologies - an offer that was deemed as
too low by ISP management." New Vernon Associates, an institutional
research firm, was even more definitive in its characterization of
the ISP proposal. "Mr. Heyman is clearly playing the role of
arbitrageur here. There is little or no strategic fit between ISP and
either Dexter or Life Technologies." Yet a third report published by
Schroders on December 15 was to a similar effect.
The Board has thoroughly reviewed the company's present
circumstances in light of your public proposal to acquire Dexter for
an inadequate price, ostensibly to separate Dexter and Life
Technologies. In consequence of that review, they have asked me to
share the following additional thoughts with you.
The Dexter Board is committed to its business strategy of
maximizing the long-term growth of Dexter through its investment in
Life Technologies. It will continue these efforts, despite any
attempt on your part to divert their benefits for ISP's short-term
interests, as you have done in numerous other cases in which you
purchased shares of a company - purporting to espouse stockholder
interests - and subsequently sold out your position at a profit.
Last year, in pursuit of its shareholder value growth
strategy, Dexter decided to strengthen its focus on life sciences.
Among other initiatives, it sought to acquire the public minority
shares of Life Technologies. Your company opportunistically
intervened to frustrate this objective and bought 15% of the
outstanding shares in the open market, while Dexter was proceeding
with its tender offer at a price that was available to every LTI
stockholder. Our Board's plan was to realize synergistic benefits and
cost savings from 100% ownership of LTI, in addition to securing our
platform for growth in life sciences. The Dexter stockholders have
been denied those benefits and the related stockholder value
enhancement by your actions, not by any inadequacy in our basic
strategy.
The second phase of your opportunistic strategy was an
open-market purchase program in Dexter shares which purported to be
"for investment purposes only." Immediately after you assembled a 10%
block, you dropped your pretense of being a passive investor. You
invited yourself to a meeting with management, asserted Dexter and
Life Technologies should be separated, waited 11 days and then made a
public unsolicited acquisition proposal at an inadequate price
benefiting only ISP and not all Dexter stockholders. Your disregard
for the interests - indeed welfare - of Dexter stockholders is
especially exemplified by the fact that both Moody's and Standard &
Poor's have now put Dexter on credit watch with negative implications
expressly as a result of the apprehension that ISP will over-leverage
in order to combine with Dexter.
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You have also made some factual assertions about Dexter and
Life Technologies which are simply wrong and which are potentially
damaging to one or both companies. Dexter has not been a restraining
influence on LTI's R&D spending. Indeed, you sought to elicit such a
statement from the Life Technologies management in your meeting with
them but they declined to provide it. Nor is there any basis for your
claim that Dexter's ownership of LTI shares makes it difficult to
attract, hire and retain quality management. Quite simply, that has
not been the case. Your contention further implies that the current
management of LTI is not first rate, a similarly baseless suggestion.
You have mischaracterized the relationship between Dexter
and Life Technologies, and your position is internally inconsistent.
You affirmatively asserted in our conversation on December 3 that
Life Technologies has no place with ISP. We agree. However, it is
illogical and self-contradictory for you to suggest that you wish to
acquire Dexter in order to spin off Life Technologies in some
unspecified transaction likely to have adverse tax consequences to
all participants. Second, and more important by far, we are convinced
that both Dexter and Life Technologies have bright future prospects
which justify a valuation of Dexter shares significantly in excess of
what is reflected in the current market price. We fervently hope (and
strongly recommend) that you return your managerial focus to your own
companies, leaving the stewardship of Dexter and LTI where it belongs
- with their respective Boards.
Sincerely
/s/ K. Grahame Walker
In a complaint filed in Connecticut Superior Court dated January 18,
2000, Lee Brennan and Ellis Investments LTD. asserted claims on behalf of
themselves and a putative class consisting of all Dexter shareholders (other
than the defendants and any person or entity affiliated with them) against
Dexter, Mr.Walker and the directors of Dexter, asserting claims which were
previously brought separately in the Delaware courts. In their complaint, such
shareholders allege, among other things, that "[i]n rejecting the ISP offer,
reducing the threshold for activation of the shareholder rights plan and failing
to make any attempts to negotiate with ISP, [Dexter, Mr. Walker and Dexter's
Board] have acted wrongfully to the detriment of Dexter public stockholders."
On January 20, 2000, Dexter announced that it had sent a letter to
Life Technologies proposing to acquire for $49.00 per share the 28.5% of Life
Technologies that Dexter does not own in a merger transaction. Dexter asked for
"appropriate indications of support" for the merger from ISP and the other
members of the 13D group.
On January 27, 2000, Mr. Heyman sent the following letter to Mr.
Walker:
Dear Grahame:
In view of ISP's $45 all cash offer and our stated
willingness to pay more if additional information justified a higher
price, I was disappointed that your Board did not decide to encourage
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negotiations with a view toward increasing shareholder value for
Dexter shareholders. Its refusal to do so leaves us no choice but to
take our proposal directly to our fellow shareholders.
We are today delivering to your Corporate Secretary a
notice of our intention to present a series of resolutions at your
April Annual Meeting. The effect of the resolutions is to elect ten
of our nominees to the Dexter Board, including eight directors
independent of ISP, who are committed to considering and pursuing
ISP's offer or a superior proposal. We are also proposing a by-law
amendment and a resolution requiring Dexter's Board to remove its
"poison pill" in favor of offers for all shares of at least $45 per
share in cash. We intend to solicit proxies in favor of these
resolutions.
Your December 23rd letter questioned the seriousness of
ISP's intent. First, as you know, ISP currently holds a stake in
Dexter which is more than five times that held by Dexter's entire
Board. Second, so that there should be no doubt as to our ability to
finance the acquisition, Chase Securities Inc. advised us, confirmed
in writing, that they are highly confident in their ability to
arrange the credit facilities for this acquisition.
There are so many inaccuracies and mischaracterizations in
your letter that I find it difficult to know where to start. By way
of just one example, your heavy reliance upon security analysts to
defend your rejection of our proposal is misplaced. For instance, in
comparing ISP's offer to Dexter's bid last year for Life
Technologies, the Merrill Lynch report contained an error of almost
$300 million by ignoring the value of the minority interests. Also,
you failed to quote a relevant section of the New Vernon Associates
report you cited, which states the following: "there is little or no
interplay between the company's [Dexter's] industrial and life
sciences businesses," "we do find merit in his [Mr. Heyman's]
initiative to separate the company's [Dexter's] disparate assets,"
and "in our view Dexter's ownership of LTEK is constraining the
latter company's ability to recruit and retain key employees." With
regard to the last point, it should be made clear that we indeed view
the management of Life Technologies as first rate. However, your
attempted squeeze-out of the minority shareholders more than a year
ago resulted in the elimination of meaningful stock incentives for
Life Technologies executives, which ultimately impacts the ability to
retain and recruit key personnel.
As you know, Life Technologies' shareholders have rejected
Dexter's recent belated $49 per share offer. Parenthetically, it
should be noted that Dexter's own shareholders appear to have
rejected its business strategy as well, as Dexter's stock price has
declined substantially since the company's rejection of our offer and
its decision to attempt to acquire 100% of Life Technologies. It is
apparent from the timing of Dexter's offer for our Life Technologies
shares, coming on the heels of ISP's $45 per share offer for Dexter,
upon which many of Dexter's shareholders have relied, seeks to divert
ISP from a course of action designed to maximize shareholder values
for all Dexter shareholders. In this connection, we believe that
Dexter's attempt to deter us by providing benefits to ISP not
available to other Dexter shareholders is simply not appropriate.
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Grahame, I just do not think it would be productive at this
time to respond to your mischaracterizations and attempts to impugn
our motives - which by the way I do not appreciate. The real issue
here, however, is the maximization of shareholder value for all
Dexter shareholders, and I believe that shareholders will more likely
benefit from a dialogue along this line. In fact, I would be willing
to appear with you before any group of Dexter shareholders to discuss
the merits of Dexter's proposed course of action vs. ISP's offer.
All the best.
Sincerely,
/s/ Samuel J. Heyman
Also on January 27, 2000, we gave formal written notice to Dexter of
our intention to bring our proposals before the 2000 Annual Meeting. On that
same day, we filed a complaint against Dexter and seven members of Dexter's
Board in the United States District Court for the District of Connecticut. The
Dexter directors who are named as defendants are K. Grahame Walker, Henrietta
Holsman Fore, Robert M. Furek, Edgar G. Hotard, Peter G. Kelly, Jean-Francois
Saglio and George M. Whitesides. See "Certain Litigation." These developments
were reflected in an amended 13D filing with respect to our Dexter shares on the
same day.
On January 28, 2000, we, together with the other members of the Life
Technologies Group, amended our 13D filing to reflect the group's rejection of
Dexter's offer to purchase shares of Life Technologies. Also on January 28, we
demanded a copy of Dexter's shareholder list and certain other corporate
information to which we are entitled under the Connecticut Business Corporation
Act, by no later than February 7, 2000.
On February 4, 2000, Dexter acknowledged its receipt of our written
notice to bring our proposals before the 2000 Annual Meeting. Shortly
thereafter, by letter dated February 7, 2000, Dexter's counsel, Skadden, Arps,
Slate, Meagher & Flom LLP, acknowledged its receipt of our demand for a copy of
Dexter's shareholder list and certain other corporate information. In its
February 7 letter, Dexter's counsel stated that ISP needed to provide Dexter
with a certified check in the amount of $1,454.86 to cover expenses incurred by
Dexter in providing the requested materials before such materials would be made
available, and a check was forwarded by ISP to Dexter promptly thereafter.
Certain, but not all, of the materials requested were received on February 11,
2000.
On February 8, 2000, Dexter's Board amended the Rights Agreement,
causing the poison pill Rights to be inapplicable to any offer which is for all
shares, is substantially unconditional, remains available to shareholders for 60
days, is supported by firm financing commitments and is for a price which is, in
the opinion of Dexter's financial advisor, fair from a financial point of view.
On February 9, 2000, Mr. Walker sent the following letter to ISP
responding to ISP's notice of its intention to present its proposals and
director nominations at the 2000 Annual Meeting:
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Dear Mr. Heyman:
Just last month ISP disclosed that your company's 4th
quarter operating results would be 40% to 57% below analysts'
estimates and that full fiscal year operating results would be 19% to
20% below analysts' estimates. You publicly attributed ISP's
disappointing performance to "substantial unabsorbed manufacturing
costs" and to "competitive pressures." With evidence of this kind of
managerial dereliction so recently emerging, we are incredulous that
you have apparently launched a campaign that deflects the focus from
concentrating on improving your own poor results to one that will
inevitably harass and distract Dexter's Board and its management at
this crucial time in our company's history. We think ISP's
stockholders have a right to expect undivided and more effective
attention to ISP's obvious strategic and operational deficiencies. We
think they are entitled to expect that you would not spend hundreds
of thousands of dollars - to say nothing of the time, effort and
managerial distraction ISP will devote to matters unrelated to its
immediate business problems - to run a spurious and legally defective
proxy campaign in support of your invitation to negotiate that has
been rejected.
However, since you are anxious to pursue a course of action
that can be harmful to our shareholders and to yours, you leave us
with no reasonable alternative but to deal with you in the most
responsible manner that we can. To that end, our Board has authorized
the following actions:
1. Specifically to address your claim of "[ISP's] stated
willingness to pay more [than $45 per share] if additional
information justified a higher price," we are prepared to make
available a due diligence data room containing detailed and
comprehensive information relating to both Dexter and Life
Technologies. Because our Board and its advisors believe that your
offer is inadequate from a financial point of view, we are inviting
ISP to send representatives into the data room for the purpose of
ascertaining whether you are indeed willing to pay more. If you wish,
you are welcome to bring representatives of your lender Chase
Securities Inc. with you. We are prepared to respond to reasonable
requests for additional information and we will make appropriate
members of senior management available for presentations and
question/answer sessions that should provide you with more than
adequate "additional information." We accept your offer of a
confidentiality agreement in this connection. We accept in principle
your limitation that the agreement not "limit your rights as
shareholders" by which we mean one which will not prevent you from
making a tender offer to Dexter stockholders, proceeding with your
proxy campaign or making a proposal to the Board of Dexter.
Do not misread the Board's decision or its intentions: we
have made no decision to sell the company or to explore a sale of the
company or to test the market for a possible sale of the company, and
no one else will be invited into the data room. It is simply the
Board's firm belief that Dexter's stockholders should not be
victimized by your disingenuous suggestion that your price could be
higher but for reasons beyond your control. We offer you the
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opportunity to conduct a reasonable due diligence so that you can
honestly, forthrightly and candidly tell our stockholders what your
proposal is - not that it might be higher if . . .
2. Our Board has amended Dexter's stockholder rights plan.
As a consequence of the amendment, the rights will not be triggered
by and the plan will pose no obstacle for any offer to our
stockholders for all shares which Dexter's financial advisor opines
is fair from a financial point of view, is supported by liquid funds
on hand or by fully committed financing, is substantially
unconditional and has been open to Dexter stockholders for at least
60 calendar days. Although we believe your rights plan proposals for
our stockholder meeting are illegal and unenforceable, we have
elected to preempt this issue. We believe our stockholders' interests
will be better served if we relieve them of the burden of a lot of
rhetorical sound and fury from ISP designed to obfuscate its plan and
intention to seize control of Dexter without paying a fair price for
the company.
3. We will address your proposals for Dexter's 2000 Annual
Meeting of Stockholders separately. However, on the subject of
electing directors, Dexter accepts the nomination of yourself, Mr.
Kumar and Mr. Peller as timely in accordance with the By-laws.
You claim Chase Securities Inc. has advised ISP in writing
"that they are highly confident in their ability to arrange credit
facilities for this acquisition." If that were true, we think ISP
owes it to the Dexter stockholders to make an honest, forthright and
candid public disclosure of the letter text. We think ISP's failure
to do so is yet another instance of its disregard for the federal
securities laws which we believe required disclosure of ISP's
contracts, arrangements, understandings and relationships with Chase
Securities promptly after it received their assurances. We also think
ISP's disclosure is legally deficient for failing to describe the
transactions in which the funds will be borrowed and the names of the
parties thereto.
In December you said that the impetus for your takeover
proposal was, among other things, your belief that it was in the best
interests of both Dexter and Life Technologies and their stockholders
"if Dexter Corporation and Life Technologies were separate corporate
entities." In our meeting you stated that you would support a
pro-rata spinoff of the LTI shares owned by Dexter to Dexter
stockholders and you stated that such a transaction could be effected
on a tax-free basis. We are advised to the contrary. We should
provide our stockholders an honest, forthright and candid assessment
of this issue. In order to achieve that, we invite you to help us
arrange a meeting among our respective tax advisors to reach a common
analytical conclusion. We think the Dexter stockholders are entitled
to know whether or not there is any possibility that such a
transaction could be effected without incurring material tax
liabilities at Dexter or for the account of the stockholder
recipients of the spinoff.
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There is another allegation in your letter relating to LTI
which I feel I must briefly address. You keep talking about Dexter's
ability to retain and recruit key personnel at LTI. We have been a
majority stockholder of LTI for nearly two decades without any
problems either in recruiting or retaining key personnel, and if it
were not for the uncertainty that your tactics have introduced we are
confident that would continue. I think it particularly telling on the
subject of executive retention that, in contract to ISP, LTI has
retained its entire senior management team (except the CFO who
retired to teach and remains a director of LTI).
Your letter claims "[a]s you know, Life Technologies'
shareholders have rejected Dexter's recent belated $49 per share
offer." As you know, this statement is false. First, as of this very
moment, neither you nor any other member of your current 13D group
has spoken or written a word to Dexter in response to our good faith
$49 proposal. Second, a former member of your 13D group who owned
more than 825,000 shares (about 3.3% of LTI and over 13% of the
shares owned by your former 13D group) responded favorably to our
proposal, and we acquired those shares for $49 each. Moreover, you
also know our offer was in no way an attempt to provide benefits to
ISP not available to other Dexter stockholders - it was an offer to
buy LTI shares from LTI stockholders, whether or not they were Dexter
stockholders. In fact, it was an honest, forthright and candid
attempt to resolve a difficult situation created by ISP solely for
its own selfish purposes. Although obvious from the terms of our
offer, we repeat here for the record there was no condition
associated with ISP's reaction to our proposal. As we clearly stated,
we were perfectly willing to discuss our proposal with any other
stockholders of Life Technologies who wished to do so, and we in fact
did that very thing.
Mr. Heyman, your campaign to anoint yourself as the savior
of Dexter stockholders is misleading because, ultimately, it is ISP's
own selfish interests which drive your program. The shareholders will
understand that. Moreover, it appears that your hand-picked nominees
lack the necessary experience in corporate governance and in our
industry and none owns a single share of Dexter stock. By contrast,
the Dexter Board has demonstrated its independence and commitment to
serving the Dexter shareholders. We will continue to forthrightly and
clearly articulate our program for value enhancement for our
stockholders to consider. I am confident that our stockholders will
understand it, agree with it and act accordingly.
Sincerely,
/s/ K. Grahame Walker
On February 9, 2000, Mr. Heyman sent the following letter to Mr.
Walker in response to Dexter's offer to allow ISP to conduct a due diligence
review of the business, finances and operations of Dexter and its subsidiaries:
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Dear Grahame:
We are in receipt of your letter today and, while not
commenting on the host of ancillary issues raised, we agree that the
central focus should be whether Dexter's shareholders are able to
maximize the value of their investment. We take at face value your
statement that Dexter is willing to enter into substantive
discussions with us regarding ISP's proposal and are delighted that
you have taken this step. I have asked our legal counsel to prepare a
confidentiality agreement and advise you that we are in a position to
move very promptly.
All the best.
Sincerely,
/s/ Samuel J. Heyman
On February 9, 2000, Mr. Walker sent the following letter to Mr.
Heyman in response to Mr. Heyman's letter of the same date:
Dear Mr. Heyman:
Your letter this afternoon suggests that you need to reread
my letter of this morning. Please have your counsel contact ours on
the subject of a confidentiality agreement. I believe they are
well-acquainted.
Sincerely,
/s/ K. Grahame Walker
On February 23, 2000, ISP and Dexter entered into a confidentiality
agreement which provided for ISP to conduct a review of non-public information
relating to the business, finances and operations of Dexter and its subsidiaries
and which did not contain any standstill provisions. On February 24, 2000, ISP
commenced a review of certain information made available by Dexter in a data
room.
On February 28, 2000, Dexter issued a press release in which it
announced that it would "institute a process in which we [Dexter] will survey
all of the Company's available options." Dexter stated in its press release that
although Dexter's Board "has made no decision to sell the Company at this time,"
it would explore "every available alternative - including a merger or sale of
the Company, a financial restructuring, or a spin-off or sale of one or more of
the Company's businesses." Dexter further stated in its press release that
"third parties will be invited to sign confidentiality agreements, review
comprehensive data room materials and receive Dexter management presentations."
On March 1, 2000, Dexter filed its preliminary proxy statement with
the SEC. Mr. Heyman sent the following letter to Mr. Walker addressing Dexter's
February 28 press release and the filing:
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Dear Grahame:
With regard to your February 28th announcement that your
Board "has decided to institute a process in which we will survey all
of the Company's options," we would hope that this move was indeed
designed with the view toward maximizing shareholder value for all
Dexter shareholders as we have been urging for quite some time now.
As you know, while your Board has made no decision to sell Dexter at
this time, our nominees are committed to pursue ISP's $45 per share
merger proposal or a superior proposal.
We also note Dexter's statement that it will consider a
"spin-off or sale of one or more of the Company's businesses." In
this connection, we would remind you that ISP's interest continues to
be in the acquisition of Dexter as a whole and therefore trust that,
before considering any such dismemberment, Dexter will enter into
discussions with ISP concerning our acquisition proposal.
Although we are pleased that you have started to provide us
with information, we will need certain additional technical,
financial and operating data. We are compiling a separate list
concerning these requirements which we will furnish shortly to your
representatives, and I would very much appreciate your cooperation
with regard to these requests.
Finally, we have just received your preliminary proxy
statement that was filed with the SEC for the first time today. We
were shocked and surprised by your decision to selectively choose
among the ISP proposals to be presented to Dexter shareholders at
this year's Annual Meeting scheduled for April 27 - and especially by
your attempt to deny Dexter shareholders the right to vote on our
proposal to increase the size of the Dexter Board. We believe this
proposal is legal, appropriate, and was timely made, and ISP intends
to present this proposal at the Annual Meeting and take all necessary
legal action to cause its implementation if passed. We also do not
understand your position that Dexter will refuse to follow the wishes
of its shareholders in the event that they adopt ISP's Rights Plan
proposals.
All the best.
Sincerely,
/s/ Samuel J. Heyman
On March 9, 2000, in response to Mr. Heyman's March 1 letter, Mr.
Walker sent a letter to Mr. Heyman in which he reiterated Dexter's rejection of
the ISP Proposal, stating that "[t]here is nothing to discuss or negotiate." Mr.
Walker also stated that Dexter is continuing to conduct its previously announced
process to explore its alternatives. Finally, Mr. Walker defended Dexter's
refusal to present at the 2000 Annual Meeting ISP's proposals to increase the
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size of Dexter's Board and elect additional directors to fill the vacancies
created by such increase.
ISP and Dexter exchanged further correspondence in March relating to
ISP's additional requests for documents and information to assist ISP in its
assessment of Dexter and Life Technologies. Dexter has not yet provided certain
items requested by ISP.
On March 23, 2000, Mr. Heyman sent the following letter to Mr. Walker
in which the ISP Proposal was increased to $50 per share in cash:
Dear Grahame:
Based upon our evaluation to date, ISP's Board has
authorized an increase in the price of ISP's cash merger proposal to
$50 per share. If we receive the proper cooperation from Dexter in
connection with the balance of the due diligence process and Dexter
can demonstrate that the value of the Company would justify a higher
price, we would consider increasing this price as well.
You should know that ISP has, on this date, executed a
commitment letter in which Chase has committed to raise all the
financing necessary for the acquisition, a copy of which I have
attached. You should note that Chase's commitment for $1.825 billion
contains provision for a tender facility so that Dexter shareholders
can receive cash payments promptly.
Grahame, we are most interested in concluding this
transaction and are prepared to proceed promptly. However, should
Dexter be inclined to proceed on a different course, I sincerely hope
that it will allow the Company's shareholders to make the ultimate
decision as to what is in their best interests.
We are still awaiting the due diligence information which
we requested in our March 8th letter.
Sincerely,
/s/ Samuel J. Heyman
On that same day, Dexter announced that 29 third parties, including
ISP, had signed confidentiality agreements with the Company, and that "every
available alternative will be examined and the one that will maximize the value
of the Dexter shareholders' investment will be aggressively pursued."
Also on March 23, 2000, ISP's counsel, Weil, Gotshal & Manges LLP,
sent a letter to Dexter's counsel, Skadden, Arps, Slate, Meagher & Flom LLP,
requesting that the Poison Pill Amendment Proposal be amended to provide that
offers or transactions in which Dexter shareholders would receive at least $50
per share in cash (rather than $45) will not trigger the defensive provisions of
the Rights Agreement. Dexter has refused to assure us that such amendment would
be deemed timely made under Dexter's bylaws.
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On April 2, 2000, Dexter announced that it had postponed the 2000
Annual Meeting, originally scheduled for April 27, 2000, until June 30, 2000,
stating that it had received "several indications of interest in acquiring the
entire company and . . . multiple indications of interest in Dexter's various
constituent businesses." In connection with this postponement, Mr. Walker stated
that "we are very pleased with the results of the first stage of our sale
process . . .", that "its is our objective to present a definitive transaction
to our shareholders well before [June 30, 2000]" and that "we expect to be in a
position to make a definitive announcement in the next few weeks or so."
On April 3, 2000, ISP reiterated its $50 per share proposal and
stated that "[w]e trust that Dexter shareholders will hold Dexter's Board
accountable for its promise to `present a definitive transaction to [its]
shareholders well before' June 30."
On April 20, 2000, in response to a deadline for final bids from
Lehman, ISP submitted a proposal to acquire all of the outstanding common stock
of Dexter for a price per share of $50 plus one "contingent value right." The
contingent value rights were intended to allow Dexter shareholders to
participate in the proceeds from a subsequent sale by ISP of Dexter's shares in
Life Technologies. The proposal also included an amendment to the financing
commitment from The Chase Manhattan Bank that would allow for the issuance of
the contingent value rights by ISP. The proposal, by its own terms, expired on
April 24, 2000.
Dexter announced that on April 24, 2000 its Board met to review
proposals received, but "reached no conclusions." Dexter further stated that it
"authorized management and its advisors to proceed with next steps in the
process," but did not specify what they were.
After Dexter rejected ISP's proposal, on May 1, 2000, Mr. Heyman sent
the following letter to Mr. Walker in which ISP terminated discussions with
Dexter and restated its commitment to continue the proxy contest:
Dear Grahame,
This is to advise you that ISP is terminating further
discussions with Dexter and continuing its proxy contest so that
Dexter shareholders can decide for themselves how to best realize
shareholder values.
The reasons for this are as follows:
First, your representatives have indicated that ISP's most
recent offer is unacceptable, both as to price and a number of
contract terms. As you know, we consider our recent offer (which by
its own terms has expired) to have been a very fair and full one and
tried to meet with your advisors and lawyers over the April 22-23
weekend to try and consummate a transaction, but your people refused
to meet;
Second, despite the continued optimistic, public
prognostications of Dexter and its representatives -- 29 interested
parties, results of first stage of sale program "very positive," and
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"we expect to be in a position to make a definitive announcement in
the next few weeks or so" (April 2nd statement) -- Dexter has failed
over the last four months to provide shareholders with a creditable
alternative to our proposals for the Company; and
Finally, although ISP suggested that Dexter demonstrate
additional value, if it could, by providing information with respect
to third party interest in Life Technologies, no such information has
been forthcoming. While it was constructive for Dexter to have
facilitated our contact with a third party interested in acquiring
Life Technologies, presumably with a view toward assisting us in
creating additional value for Dexter shareholders, based upon the
most preliminary of discussions with the third party's advisors,
there is little reason to believe that this avenue will prove
fruitful. You should know that we intend now to deal directly with
interested parties for Life Technologies, with a view toward
determining what makes the most sense, while at the same time
continuing our proxy contest.
Sincerely,
/s/ Samuel J. Heyman
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
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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.
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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
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THE PROPOSALS
We are soliciting your proxy in favor of adopting the following three
sets of proposals at the 2000 Annual Meeting, in opposition to Dexter's Board of
Directors: (1) the Nominee Election Proposals, (2) the Shareholder Rights
Proposals and (3) the Voting Rights Proposals. The full text of shareholder
resolutions to effect each proposal are contained in the respective Annexes to
this proxy statement.
EACH OF OUR PROPOSALS IS SEPARATE AND DISTINCT FROM EACH OTHER PROPOSAL. YOU MAY
APPROVE OR VOTE SEPARATELY ON ANY OR ALL OF THE PROPOSALS, BUT THE ADDITIONAL
DIRECTORS ELECTION PROPOSAL WILL NOT BE EFFECTIVE UNLESS THE BOARD SIZE BYLAW
PROPOSAL IS ADOPTED, AND THE POISON PILL AMENDMENT PROPOSAL WILL NOT BE
EFFECTIVE UNLESS THE POISON PILL BYLAW PROPOSAL IS ADOPTED.
If each of our proposals is adopted, the overall result would be that
the intended effect of certain of Dexter's anti-takeover measures - the
classified board of directors and the "poison pill" Rights Agreement - could be
neutralized. In addition, you should know that our nominees are committed to
pursue the ISP Proposal or a superior proposal. If our nominees are elected as a
majority of Dexter's Board, the anti-takeover measures mentioned above, as well
as the Connecticut statutory anti-takeover devices described in the discussion
of Proposal No. 4 below, could be potentially removed by Dexter's Board in
connection with any approval of the ISP Proposal or a superior proposal -
regardless of the outcome of the vote on our Shareholder Rights Proposals. Any
action taken by our nominees, if elected as directors, will be subject to their
fiduciary duties to you. In addition, note that we are seeking to have the
Rights Agreement judicially invalidated. See "Certain Litigation." If the Rights
Agreement is judicially invalidated prior to the 2000 Annual Meeting, we will
withdraw our Shareholder Rights Proposals.
In connection with our proposals, we have filed a complaint with the
United States District Court for the District of Connecticut in which we are
seeking, among other things, (1) a declaratory judgment that our Nominee
Election Proposals, Shareholder Rights Proposals and Voting Rights Proposals are
valid under Connecticut law, that any supermajority voting requirement contained
in Dexter's Bylaws is invalid, and that the Rights Agreement is invalid, and (2)
an order requiring that the 2000 Annual Meeting be held no later than April 30,
2000. Insofar as there is a lack of direct Connecticut case law to either
substantiate or contradict the validity of the proposals challenged by Dexter,
the courts will ultimately determine the legality and enforceability under
Connecticut law of such proposals. See "Certain Litigation." We intend to
present all of our proposals at the 2000 Annual Meeting. If, after the 2000
Annual Meeting, any of our proposals were to be finally adjudicated as invalid
under Connecticut law, such proposal, if adopted, would then not be effective.
If there was a final adjudication prior to the 2000 Annual Meeting holding that
any proposal was invalid, we would not present such proposal at the 2000 Annual
Meeting.
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THE NOMINEE ELECTION PROPOSALS
PROPOSAL NO. 1: THE DIRECTOR ELECTION PROPOSAL
According to publicly available information, Dexter currently has ten
directors, divided into three classes having staggered terms of three years
each. The terms of one class of incumbent directors, consisting of Charles H.
Curl, Peter G. Kelly and Jean Francois Saglio, will expire at the 2000 Annual
Meeting. Accordingly, at the 2000 Annual Meeting, you will be asked to elect
three persons to fill the directorships in this class for a three-year term
continuing until the 2003 Annual Meeting and the election and qualification of
each person's respective successor. The following persons are our nominees for
election as directors in such class:
<TABLE>
<CAPTION>
Name and Business
Address Age Present Principal Occupation and Five Year Employment History Class
- ------- --- ------------------------------------------------------------- -----
<S> <C> <C>
Samuel J. Heyman 61 Mr. Heyman has been a director and Chairman of ISP since its 2003
1361 Alps Road formation and served as its Chief Executive Officer from its
Wayne, New Jersey 07470 formation until June 1999. He has also been a director, Chairman and
Chief Executive Officer of GAF Corporation ("GAF"), and certain of
its subsidiaries for more than five years. GAF's primary business is
conducted through Building Materials Corporation of America ("BMCA"),
an indirect, approximately 97%-owned subsidiary of GAF which is
primarily engaged in the commercial and residential roofing business.
Mr. Heyman has been a director and Chairman of BMCA since its
formation, and has served as Chief Executive Officer of BMCA since
June 1999, a position he also held from June 1996 to January 1999. He
is also the Chief Executive Officer, Manager and General Partner of a
number of closely held real estate development companies and
partnerships whose investments include commercial real estate and a
portfolio of publicly traded securities.
Sunil Kumar 50 Mr. Kumar has been a director, President and Chief Executive Officer 2003
1361 Alps Road of ISP since June 1999. Mr. Kumar has also been President and Chief
Wayne, New Jersey 07470 Executive Officer of certain subsidiaries of ISP, including ISP
Investments Inc., since June 1999. Mr. Kumar was a director,
President and Chief Executive Officer of BMCA from May 1995, July
1996 and January 1999, respectively, until June 1999. He was Chief
Operating Officer of BMCA from March 1996 to January 1999. Mr. Kumar
also was President, Commercial Roofing Products Division, and Vice
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President of BMCA from February 1995 to March 1996. From 1992 to
February 1995, he was Executive Vice President of
Bridgestone/Firestone, Inc., a retail distributor and manufacturer of
tires and provider of automobile services.
Philip Peller 60 Mr. Peller has been a director of MSC Industrial Direct, a direct 2003
marketer of various industrial products, since April 1999. Prior to
November 30, 1999, Mr. Peller was a partner of Andersen Worldwide
S.C. and Arthur Andersen LLP, a role he had held since 1970. He
served as Managing Partner - Practice Protection and Partner Affairs
for Andersen Worldwide during the period 1998 to 1999 and as Managing
Partner - Practice Protection from 1996 to 1998. During the period
1995 to 1996, he was the Managing Director - Quality, Risk Management
and Professional Competence for Arthur Andersen's global audit
practice.
</TABLE>
Each of the nominees has consented to serve as a director until the
expiration of his respective term and until such nominee's successor has been
elected and qualified or until the earlier resignation or removal of such
nominee. We have no reason to believe that any of the nominees named above will
be disqualified or unable or unwilling to serve if elected. However, if any of
the nominees are unable to serve or for good cause will not serve, proxies may
be voted for another person nominated by ISP to fill the vacancy.
The nominees understand that, if elected as directors of Dexter, each
of them will have an obligation under Connecticut law to discharge his duties as
a director in good faith, consistent with his fiduciary duties to Dexter and its
shareholders.
WE STRONGLY RECOMMEND THAT YOU VOTE
"FOR" THE ELECTION OF OUR NOMINEES
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PROPOSAL NO. 2: THE BOARD SIZE BYLAW PROPOSAL
We are proposing a Bylaw amendment that would require additional
directors to be elected at the 2000 Annual Meeting so that Dexter's Board will
consist of seventeen directorships, rather than its current ten directorships.
If our Board Size Bylaw Proposal is adopted, Dexter shareholders would be
entitled to elect, in addition to the three directors under Proposal No. 1
above, seven additional directors, for a total of ten directors at the 2000
Annual Meeting. The Board Size Bylaw Proposal would allow Dexter shareholders to
elect a majority of Dexter's Board at the 2000 Annual Meeting.
The Board Size Bylaw Proposal provides that the seven additional
directorships proposed will be allocated to the classes with terms expiring at
the 2001 Annual Meeting and the 2002 Annual Meeting, unless the additional
nominees are allocated to the class with a term expiring at the 2003 Annual
Meeting by Dexter's Board, consistent with its duties under Connecticut law to
allocate directors among the three classes so that all classes are equal in size
to the extent possible. We believe, based on our interpretation of Connecticut
law and the Dexter Certificate of Incorporation, that either the current Dexter
Board could make such an allocation, contingent on the approval of Proposal Nos.
2 and 3 by the shareholders, or the new Dexter Board could make such an
allocation following the 2000 Annual Meeting.
The Board Size Bylaw Proposal will allow you to elect a majority of
Dexter's Board of Directors at the 2000 Annual Meeting. The adoption of our
Board Size Bylaw Proposal would have the effect of neutralizing the impact of
Dexter's classified Board of Directors, which is divided into three classes
serving staggered, three-year terms. Opponents of classified boards, like
Dexter's, believe that they help entrench the incumbency of the current board
and therefore deter change in control transactions which may be beneficial to
shareholders, because ordinarily at least two annual meetings - rather than one
- - would be required before a change in control of the board could be effected.
However, proponents of classified boards argue that the device encourages a
party seeking to obtain control of a company to negotiate with the board, and
that it provides continuity and stability to a company and its business and
operational strategies. If all of our nominees are elected, a majority of
Dexter's directors would not be current incumbents and a lack of continuity in
Dexter's corporate policy and governance may occur. However, our nominees, if
elected, and Dexter's incumbent directors, if reelected, would owe the same
fiduciary duties to Dexter shareholders. Given the refusal of Dexter's current
board to commit to pursue the ISP Proposal or a superior proposal - we believe
now is an appropriate time to create a new majority on Dexter's Board.
The proposed Bylaw amendment provides that the new Bylaw provision
cannot be unilaterally repealed or altered by Dexter's Board. This means that a
shareholder vote - with the votes cast "for" exceeding the votes cast "against"
- - will be required to amend or repeal the Bylaw provision, if it is adopted.
Ordinarily, Dexter's Board can unilaterally amend, adopt or repeal Bylaws.
Connecticut law permits the board's rights to amend or repeal bylaws to be
limited if so provided by the shareholders in connection with adopting any Bylaw
amendment. If the Board Size Bylaw is adopted, Dexter's Board elected at the
2000 Annual Meeting will still be able to change the size of Dexter's Board from
and after the date of the meeting. The full text of the Bylaw amendment to
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effect the Board Size Bylaw Proposal is contained in Annex I to this proxy
statement.
Dexter has asserted that our Board Size Bylaw Proposal and Additional
Directors Election Proposal are invalid. Dexter bases its assertion on its
belief that Article VII of its certificate of incorporation gives the Board of
Directors the exclusive power to fix the number of directors and its belief that
our proposal violates a requirement under Connecticut law that each class of
directors should contain "approximately the same percentage of the total, as
near as may be." Dexter's Connecticut counsel, Day, Berry & Howard LLP, has
provided Dexter's Board with an opinion letter which states that, subject to the
qualifications contained in the letter, "it is our opinion that, although there
are no controlling Connecticut cases directly on point, a Connecticut court
presented with the questions of the validity of the Board Size Bylaw Proposal
and the Additional Directors Election Proposal, would hold that they are invalid
and unenforceable under Connecticut law."
We disagree with Dexter's assertion that our proposals are invalid.
In connection with our proposals, we have filed a complaint with the United
States District Court for the District of Connecticut in which we are seeking,
among other things, a declaratory judgment that our Nominee Election Proposals
are valid under Connecticut law. On or about March 9, 2000, Dexter and the
individual director defendants filed a motion for partial summary judgment
seeking dismissal of this portion of our complaint. We intend to oppose this
motion. See "Certain Litigation." The legal analysis in the following paragraphs
is the basis for ISP's belief that its Board Size Bylaw Proposal and Additional
Directors Election Proposal are valid under Dexter's certificate of
incorporation and Connecticut law.
Section 33-737 of the Connecticut Business Corporation Act explicitly
provides that a shareholder adopted bylaw may fix the number of directors unless
the corporation's certificate of incorporation provides otherwise. Nothing in
Dexter's certificate fixes the number of directors on Dexter's board or states
that only Dexter's board can determine the total number of directors.
Accordingly, ISP believes that shareholders can, under Connecticut law, increase
or decrease the number of directors through an amendment to the bylaws.
Furthermore, the only provision in Dexter's certificate relating to the issue of
increasing the size of the board appears in Article VII of the certificate,
which states that Dexter's board "may from time to time by resolution increase
or decrease the number of directorships." Courts applying the law of other
states have held that the use of the word "may" rather then "shall" in a
provision of this type means that both the board and the shareholders have the
authority to increase board size. See Homac Corp. v. DSA Fin. Corp., 661 F.
Supp. 776 (E.D. Mich. 1987) (applying Delaware Law). A court applying
Connecticut law may, but is not required to, follow the analogous case law of
other jurisdictions. In contrast, the provision in Article VII upon which Dexter
has relied to support its opposition to ISP's proposed bylaw (which states that
the "number of directorships within each class shall be determined by the board
of directors") governs only the allocation of directors within classes and not
the total number of directors.
ISP believes that this statutory analysis under CBCA Section 33-737
is confirmed by judicial decisions, both in Connecticut and other states,
holding that shareholders have the inherent authority to create and fill new
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directorships. See, e.g., Gold Bluff Mining & Lumber Corp. v. Whitlock, 55 A.
175 (Conn. 1903); Moon v. Moon Motor Car Corp., 151 A. 298 (Del. Ch. 1930);
Automatic Steel Prods., Inc. v. Johnston, 64 A.2d 416 (Del. 1949); DiEleuterio
v. Cavaliers of Del., Inc., 1987 WL 6338 (Del. Ch. Feb. 9, 1987). This inherent
authority can be taken away from shareholders only if shareholders explicitly
are asked to give up this power and only if shareholders knowingly agree to do
so in clear and unambiguous language. Dexter's certificate lacks the "strong"
language the cases have required to prevent shareholders from exercising their
inherent authority. In addition, Dexter has not cited any applicable Connecticut
or other case law to support the position that Dexter's shareholders can be
prevented from exercising this authority. Finally, ISP believes that its
proposal complies withss. 33-740(a) of the Connecticut Business Corporation Act,
which provides that each class of directors shall contain "approximately the
same percentage of the total, as near as may be," because it expressly
authorizes Dexter's board to determine the classes in which the new directors
are placed.
Finally, our Connecticut counsel, Levett Rockwood P.C., has provided
us with a response to Dexter's counsel's letter, but for the reasons described
below, has not given a legal opinion or statement as to whether it believes the
Board Size Bylaw Proposal and the Additional Directors Election Proposal are
legal and valid under Connecticut law. First, Levett Rockwood notes that under
professional guidelines, lawyers should normally refrain from issuing judgments
or predictions as to the outcome of litigation, due to the inherent
uncertainties. (The guidelines noted are contained in the American Bar
Association's Statement of Policy Regarding Lawyers' Responses to Auditors'
Requests for Information, which are incorporated in professional guidance as to
legal opinions more generally by the TriBar Opinion Committee and in the
American Bar Association's Third-Party Legal Opinion Report, Including the Legal
Opinion Accord, of the Section of Business Law) . Second, Levett Rockwood notes
that neither it nor Dexter's counsel have located any Connecticut case law
directly on point. Third, Levett Rockwood believes that, in accordance with
these guidelines, it would be inappropriate to issue an opinion regarding the
validity of the Board Size Bylaw Proposal and Additional Directors Election
Proposal while the issue of such validity is subject to pending litigation,
especially where there is no Connecticut case law directly on point, because any
such opinion could reasonably be considered a judgment or prediction as to the
outcome of such litigation, which would first establish such case law. Finally,
Levett Rockwood asserts that "[w]e believe that ISP's arguments in support of
the validity of the Board Size Bylaw Proposal and the Additional Directors
Election Proposal are strong and persuasive."
Insofar as there is a lack of direct Connecticut case law to either
substantiate or contradict the validity of the proposals challenged by Dexter,
the courts will ultimately determine the legality and enforceability under
Connecticut law of such proposals. See "Certain Litigation." We intend to
present all of our proposals at the 2000 Annual Meeting. If, after the 2000
Annual Meeting, our Board Size Bylaw and Additional Directors Election Proposal
were to be finally adjudicated as invalid under Connecticut law, such proposals,
even if adopted at the 2000 Annual Meeting, would then not be effective. If
there was a final adjudication prior to the 2000 Annual Meeting holding that any
proposal was invalid, we would not present such proposal at the 2000 Annual
Meeting.
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WE STRONGLY RECOMMEND THAT YOU VOTE
"FOR" THE BOARD SIZE BYLAW PROPOSAL
PROPOSAL NO. 3: THE ADDITIONAL DIRECTORS ELECTION PROPOSAL
If the Board Size Bylaw Proposal is adopted, we nominate the
following persons to Dexter's Board to fill the newly-created directorships. Our
proposal provides that our nominees will be assigned to classes as indicated
below, unless the additional nominees are allocated to the class with a term
expiring at the 2003 Annual Meeting by Dexter's Board, consistent with its
duties under Connecticut law.
<TABLE>
<CAPTION>
Name and Business
Address Age Present Principal Occupation and Five Year Employment History Class
- ------- --- ------------------------------------------------------------- -----
<S> <C> <C>
Alan Meckler 54 Mr. Meckler has been the Chairman and Chief Executive Officer of 2002
501 Fifth Avenue Internet.com Corp., a provider of global real-time news and
New York, NY information resources for the internet industry, since December
10017 1998. He was Chairman and Chief Executive Officer of Mecklermedia
Corp., a provider of internet information, from June 1971 to
November 30, 1998.
Dan Ogden 52 Mr. Ogden has been the President and Chief Operating Officer of 2002
Yokohama Tire Yokohama Tire Corporation, the North American marketing arm of
Corporation Yokohama Rubber Company, a worldwide tire manufacturer, since August
601 S. Acacia 1997. From September 1996 until August 1997, Mr. Ogden was engaged
Fullerton, CA 92834-4550 in private investment activities. He was President and Chief
Operating Officer of EMCO Enterprises, Inc., a diversified
manufacturer primarily of storm and screen doors, from December 1992
until August 1996.
Morrison DeSoto Webb 52 Mr. Webb has been an attorney in private practice since January 2000. 2002
120 Rye Ridge Road He was Executive Vice President - External Affairs and Corporate
Harrison, NY 10528 Communications at Bell Atlantic Corporation from August 1997 until
December 1999. From May 1995 until August 1997, Mr. Webb was
Executive Vice President, General Counsel and Secretary of NYNEX
Corporation. He was Vice President - General Counsel of New England
Telephone and Telegraph Company, a subsidiary of NYNEX Corporation,
from 1991 until 1995 and Vice President - General Counsel of New York
48
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Telephone Company, a subsidiary of NYNEX Corporation from 1994 until
1995.
Robert Englander 57 Mr. Englander has been the Chairman of the Board and Chief Executive 2002
75 Holly Hill Lane Officer of Belvoir Publications, a publisher of aviation, marine,
Greenwich, CT 06830 electronic, equestrian and other special interest books, videos and
publications, since February 1973.
John Droney 53 Mr. Droney has been an attorney with Levy & Droney, P.C. since 2001
74 Batterson Park Road February 1988. Mr. Droney was also Chairman of the Democratic State
Farmington, CT 06032 Central Committee of Connecticut and a member of the Democratic
National Committee from 1986 to 1992.
Anthony T. Kronman 54 Mr. Kronman has been Dean and Professor of Law at Yale Law School 2001
127 Wall Street since 1994 and 1978, respectively.
New Haven, CT 06511
Vincent Tese 56 Mr. Tese has been the Chairman of Wireless Cable International Inc., 2001
Wireless Cable a cable television and wireless communications service provider,
International, since April 1995. Mr. Tese was Chairman of Cross Country Wireless
Inc. c/o Bear Inc., also a cable television and wireless communications service
Stearns & Co. provider, from October 1994 to July 1995. Mr. Tese was the Director
Inc. of Economic Development for the State of New York from June 1987 to
245 Park Avenue December 1994 and also served as the Chairman of the Urban
New York, NY Development Corporation in New York from 1985 to 1994. Mr. Tese
10167 currently serves as a director of Allied Waste Industries, Inc.,
Bear Stearns Companies Inc., Bowne & Co., Inc., Cablevision Systems
Corp., Keyspan Corp. and Mack-Cali Realty Corp.
</TABLE>
Each of the nominees has consented to serve as a director until the
expiration of his respective term and until such nominee's successor has been
elected and qualified or until the earlier resignation or removal of such
nominee. We have no reason to believe that any of the nominees named above will
be disqualified or unable or unwilling to serve if elected. However, if any of
the nominees are unable to serve or for good cause will not serve, proxies may
be voted for another person nominated by ISP to fill the vacancy.
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The nominees understand that, if elected as directors of Dexter, each
of them will have an obligation under Connecticut law to discharge his duties as
a director in good faith, consistently with his fiduciary duties to Dexter and
its shareholders. The full text of a shareholder resolution to effect the
Additional Directors Election Proposal is contained in Annex II to this proxy
statement.
WE STRONGLY RECOMMEND THAT YOU VOTE
"FOR" THE ELECTION OF OUR ADDITIONAL NOMINEES
TO FILL THE NEWLY-CREATED DIRECTORSHIPS
THE SHAREHOLDER RIGHTS PROPOSALS
PROPOSAL NO. 4: THE POISON PILL BYLAW PROPOSAL
We are proposing an amendment to the Bylaws which would require
Dexter's Board to redeem the Rights, or to amend the Rights Agreement to make
the Rights inapplicable to transactions or offers specified by Dexter
shareholders, if shareholders adopt a special resolution requiring Dexter's
Board to do so. Such a resolution could be adopted at any duly organized
shareholder's meeting where a quorum is present if the votes cast for the
resolution exceed the votes cast against the resolution. In addition, our
proposed amendment would require Dexter's Board to obtain shareholder approval
prior to adopting any new shareholder rights plan, rights agreement or any other
form of "poison pill" which is designed to or has the effect of making
acquisitions of large holdings of Dexter's shares of stock more difficult or
expensive. The complete text of our proposed Bylaw amendment to effect the
Poison Pill Bylaw Proposal is included as Annex III to this proxy statement.
Our Poison Pill Bylaw Proposal would allow Dexter shareholders to
make their own decision with respect to proposed offers or transactions, by
requiring that Dexter's Board follow the direction of Dexter shareholders with
respect to the amendment or replacement of the Rights Agreement or the
redemption of the Rights issued thereunder. If our proposed Bylaw amendment is
adopted, in order for Dexter shareholders to mandate Dexter's Board to redeem
the Rights or amend the Rights Agreement, Dexter shareholders will, in instances
where an annual meeting is not pending, face the procedural necessity of calling
a special meeting of shareholders, an action which requires the written request
of the holders of not less than 35% of the issued and outstanding shares of
Dexter common stock. As described below, our Poison Pill Amendment Proposal
proposes the adoption of a special shareholder resolution requiring Dexter's
Board to amend the Rights Agreement to make it inapplicable to any offer for all
outstanding Dexter shares of common stock at a price of at least $45 per share
in cash. Our Poison Pill Bylaw Proposal and Poison Pill Amendment Proposal,
taken together, will cause the Rights Agreement to remain in effect to deter
unsolicited proposals for less than $45 per share in cash for all shares, for
partial offers, and for non-cash transactions. However, if our proposals are
adopted, the Rights Agreement will no longer apply to any proposal for all
shares at a price of at least $45 per share. As described in "Certain
Litigation" we are seeking to have the Rights Agreement invalidated in its
entirety. If the Rights Agreement is invalidated, it will no longer be an
obstacle to stock accumulations or offers at any price. If the Rights Agreement
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is judicially invalidated prior to the 2000 Annual Meeting, we will withdraw our
Shareholder Rights Proposals.
Dexter's Certificate of Incorporation and Connecticut law provide
significant impediments to many forms of unsolicited offers for Dexter, in
addition to the Rights Agreement. The Certificate provides that: (1) directors
serve staggered terms, preventing any independent shareholder or group of
shareholders from gaining a majority of the seats on Dexter's Board in a single
year, absent an amendment to the Bylaws approved by Dexter shareholders, and (2)
Dexter has authorized for issuance a "blank check" preferred stock that can be
used to dilute the ownership or voting power of a bidder not approved by
Dexter's Board. Connecticut law provides that: (a) certain transactions with a
beneficial owner of more than 10% of Dexter's voting stock, including mergers,
are subject to approval by Dexter's Board, 80% of the voting power of the
outstanding shares and 66-2/3% of voting power of the disinterested
shareholders, unless certain "fair price" requirements are met and (b) business
combinations with a beneficial owner of more than 10% of Dexter's voting stock
are prohibited for five years, unless approved by Dexter's Board. In addition,
Connecticut law requires directors in exercising their fiduciary duties to
consider, in addition to the interests of shareholders, the interests of the
corporation, its employees, customers, creditors and suppliers, and the
interests of the community and society. Our nominees are committed to pursue the
ISP Proposal or a superior proposal. If our nominees are elected as a majority
of Dexter's Board, they could potentially neutralize these anti-takeover devices
by participating in Dexter's Board's approval of the ISP Proposal or a superior
proposal.
Poison pills are considered extremely potent corporate takeover
defense mechanisms, and Dexter's existing Rights Agreement may be viewed as
being aligned with shareholder interests. Proponents of poison pills assert that
rights plans, such as the Rights Agreement, enable the board to respond in an
orderly manner to unsolicited bids by providing sufficient time to carefully
evaluate the fairness of an unsolicited offer and the credibility of the bidder,
and thereby giving the board the flexibility to explore alternative strategies
for maximizing shareholder value. It has been argued that poison pills deter
abusive takeover tactics. Proponents of poison pills also assert that rights
plans provide incentives for a potential bidder to negotiate in good faith with
the board, and that such negotiations are likely to maximize value for
shareholders by soliciting the highest possible price from the bidder. Removal
of a poison pill could make the accomplishment of a given transaction, such as a
tender offer, easier even if it is unfavorable to the interests of shareholders
and could make the removal of management easier, even if such removal would be
generally detrimental to shareholders. Our Poison Pill Bylaw Proposal and Poison
Pill Amendment Proposal, taken together, would in effect remove Dexter's poison
pill with respect to any offer for all outstanding Dexter shares for at least
$45 per share in cash.
Shareholders have opposed poison pills on the grounds that poison
pills force potential investors to negotiate potential acquisitions with
management, instead of making their offer directly to the shareholders. Such
opponents to poison pills assert that poison pills can pose such an obstacle to
a takeover that management becomes entrenched. We believe that such entrenchment
and the consequential lack of management accountability to shareholders
adversely affects shareholder value and that poison pills can deter desirable
acquisition offers that would be in the shareholders' best interests. We believe
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that poison pills insulate management from the threat of a change in control
because they provide a board, which is generally advised by and includes
representatives of management, with veto power over change in control bids, even
when shareholders believe that such bids are in their best interests.
The proposed Bylaw amendment provides that the new Bylaw provision
cannot be unilaterally repealed or altered by Dexter's Board. This means that a
shareholder vote - with the votes cast "for" exceeding the votes cast "against"
- - will be required to amend or repeal the Bylaw provision, if it is adopted.
Ordinarily, Dexter's Board can unilaterally amend, adopt or repeal Bylaws.
Connecticut law permits the board's rights to amend or repeal bylaws to be
limited if so provided by the shareholders in connection with adopting any bylaw
amendment. The full text of the Bylaw amendment to effect the Poison Pill Bylaw
Proposal is contained in Annex III to this proxy statement.
Dexter has asserted that our Poison Pill Bylaw Proposal and our
Poison Pill Amendment Proposal are invalid. In connection with our proposals, we
have filed a complaint with the United States District Court for the District of
Connecticut in which we are seeking, among other things, a declaratory judgment
that our Shareholder Rights Proposals are valid under Connecticut law. We
recognize that the Connecticut courts have not considered the validity of our
proposed amendment or any similar bylaw amendment. See "Certain Litigation."
While there is a lack of case law in Connecticut to either directly substantiate
or directly contradict the validity of our Shareholder Rights Proposals under
Connecticut state law, the following legal analysis supports ISP's position that
its shareholders right bylaw proposal is valid under Connecticut law.
First, shareholders have broad powers under the Connecticut Business
Corporation Act ("CBCA") to amend or repeal bylaws with respect to any matter
concerning the corporation's "business" or "affairs." See ss. 33-640(b) (a
corporation's bylaws "may contain any provision for managing the business and
regulating the affairs of the corporation that is not inconsistent with law or
the certificate of incorporation"); ss. 33-806(b) (a "corporation's shareholders
may amend or repeal the corporation's bylaws even though the bylaws may also be
amended or repealed by its board of directors"). The CBCA imposes no
restrictions on the right of shareholders to amend or repeal the bylaws with
respect to such matters, including those otherwise within the board's general
authority over the corporation's business operations. Thus, ISP believes that
board action in adopting a poison pill is subject to any bylaws the shareholders
may enact regulating the exercise of that poison pill.
Second, neither the CBCA nor the Dexter certificate of incorporation
grant directors the exclusive authority to adopt and implement a poison pill
plan or preclude shareholders from modifying that plan provided they act through
appropriate governance procedures. Connecticut does not have an enabling statute
which expressly authorizes directors to enact such an anti-takeover measure. The
Dexter certificate of incorporation is silent with respect to a board's ability
to adopt a poison pill and does not contain any provision barring shareholders
from amending the bylaws to modify a board-adopted rights plan. ISP believes
that the absence of any such language in either the Connecticut statute or the
Dexter certificate of incorporation strongly supports the validity of its
proposed bylaw amendment.
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Third, the only judicial decision which directly addresses the issue
has held, under a comparable statutory scheme, that "shareholders may propose
bylaws which restrict board implementation of shareholder rights plans, assuming
the certificate of incorporation does not provide otherwise" on the ground that
"there is no exclusive authority granted boards of directors to create and
implement shareholder rights plans, where shareholder objection is brought and
passed through official channels of corporate governance." International
Brotherhood of Teamsters General Fund v. Fleming, 975 P.2d 907, 908 (Okla.
1999). ISP believes that a court construing Connecticut law is likely to follow
Fleming.
We have neither requested nor received a written opinion of
Connecticut counsel on the validity of our Shareholders Rights Proposals under
Connecticut law. We believe that, in view of the lack of Connecticut case law
directly on point, any such opinion of counsel would be of limited value. We
recognize that Dexter has stated in its proxy materials that it has obtained an
opinion of its Connecticut counsel to the effect that such proposals are not
valid. We intend to present all of our proposals at the 2000 Annual Meeting. If
our Poison Pill Bylaw Proposal and our Poison Pill Amendment Proposal are
finally adjudicated as invalid under Connecticut law, the proposals, even if
adopted at the 2000 Annual Meeting, would then not be effective. If there was a
final adjudication prior to the 2000 Annual Meeting holding that any proposal
was invalid, we would not present such proposal at the 2000 Annual Meeting.
WE STRONGLY RECOMMEND THAT YOU VOTE
"FOR" THE POISON PILL BYLAW PROPOSAL.
PROPOSAL NO. 5: THE POISON PILL AMENDMENT PROPOSAL
In connection with the Bylaw amendment in Proposal No. 4 above, we
are proposing the adoption of a special shareholder resolution. The resolution
will require Dexter's Board to amend the Rights Agreement to make it
inapplicable to any offer for all outstanding Dexter shares of common stock at a
price of at least $45 per share in cash. The effect of our Poison Pill Bylaw
Proposal and our Poison Pill Amendment Proposal, if each is adopted, would be to
render the Rights Agreement inapplicable to any offer for at least $45 per share
in cash for all shares. The Rights Agreement would remain in full force and
effect with respect to all offers for less than $45 per share, offers for less
than all shares and non-cash offers, unless we are successful in having the
Rights Agreement judicially invalidated.
We are proposing a $45 per share threshold solely because our initial
proposal was for at least $45 per share. You should be aware that Dexter has
rejected our $45 per share proposal as being inadequate, and we have
subsequently increased our proposal to $50 per share. We have not amended the
Poison Pill Amendment Proposal to reflect our increased $50 per share proposal
because Dexter has refused to assure us that such amendment would be deemed
timely made under Dexter's bylaws. Accordingly, if each of our Shareholder
Rights Proposals is adopted, the Rights Agreement will not provide shareholder
protection for proposals to acquire all Dexter shares for at least $45 per share
in cash, including certain offers that are lower than our $50 per share
proposal. It can be argued that a $45 level is inappropriate because the value
of a company is constantly changing, or you could conclude that you believe that
53
<PAGE>
the minimum premium for control of Dexter should be higher. However, we believe
that the adoption of our Poison Pill Amendment Proposal would send a clear
message to Dexter's Board that it should pursue offers of at least $45 and would
end the uncertainty as to the minimum bid required to make the defensive
provisions of the Rights Agreement inapplicable. The full text of a resolution
implementing the Poison Pill Amendment Proposal is included as Annex IV to this
proxy statement.
WE STRONGLY RECOMMEND THAT YOU VOTE
"FOR" THE POISON PILL AMENDMENT PROPOSAL.
THE VOTING RIGHTS PROPOSALS
PROPOSAL NO. 6: THE BYLAW REPEAL PROPOSAL.
Article X of the Dexter Bylaws provides that Bylaws may be repealed
by Dexter shareholders. We propose to repeal any Bylaw amendments adopted by
Dexter's Board between February 26, 1999 and the date of the 2000 Annual
Meeting. The purpose of this proposal is to prevent Dexter's Board from
interfering with the implementation of the proposals being acted upon by Dexter
shareholders pursuant to this proxy solicitation. The complete text of our
proposed shareholder resolution to effect the Bylaw Repeal Proposal is included
as Annex V to this proxy statement.
We believe that any Bylaw amendments adopted by Dexter's Board prior
to the 2000 Annual Meeting are likely to be aimed at frustrating our proposals
and therefore are not likely to be in the best interests of the Dexter
shareholders. We are not aware of any Bylaw amendments adopted by Dexter's Board
since February 26, 1999. Any Bylaw amendments validly adopted by Dexter's Board
prior to the Annual Meeting would remain in effect unless and until our proposal
to repeal such Bylaws is adopted. If Dexter's Board adopts any such Bylaw
amendments before the 2000 Annual Meeting, it will have an opportunity to inform
shareholders of the benefits of these amendments and to attempt to persuade
shareholders to vote against this proposal.
WE STRONGLY RECOMMEND THAT YOU VOTE
"FOR" THE BYLAW REPEAL PROPOSAL.
PROPOSAL NO. 7: THE OMNIBUS PROPOSAL
In addition, Dexter shareholders will be asked at the 2000 Annual
Meeting to consider the Omnibus Proposal, which sets forth the following order
in which our proposals will be voted upon by Dexter shareholders:
1. The Omnibus Proposal;
2. The Bylaw Repeal Proposal;
3. The Director Election Proposal;
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4. The Board Size Bylaw Proposals;
5. The Additional Directors Election Proposal;
6. The Poison Pill Bylaw Proposal; and
7. The Poison Pill Amendment Proposal.
The full text of a shareholder resolution to effect the Omnibus
Proposal is contained in Annex VI to this proxy statement.
WE STRONGLY RECOMMEND THAT YOU
VOTE "FOR" THE OMNIBUS PROPOSAL.
OTHER MATTERS TO BE CONSIDERED
AT THE 2000 ANNUAL MEETING
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
As set forth in Dexter's Proxy Statement, at the 2000 Annual Meeting,
Dexter shareholders will be asked to ratify the appointment by Dexter's Board of
PricewaterhouseCoopers LLP as Dexter's independent auditors for the year 2000.
We are not making any recommendation on this proposal.
OTHER PROPOSALS
Except as set forth above, we are not aware of any proposals to be
brought before the 2000 Annual Meeting. However, we have notified Dexter of our
intention to bring before the 2000 Annual Meeting such business as may be
appropriate, including without limitation nominating additional persons for
directorships, or making other proposals as may be appropriate to address any
action of Dexter's Board not publicly disclosed prior to the date of this proxy
statement. Should other proposals be brought before the 2000 Annual Meeting, the
persons named as proxies in the enclosed GOLD proxy card will vote on such
matters in their discretion.
VOTING PROCEDURES
In order to ensure that your views on the proposals are heard by
Dexter and your vote represented at the 2000 Annual Meeting, we urge you to sign
and date the enclosed GOLD Proxy Card and return it to Innisfree M&A
Incorporated, 501 Madison Avenue, 20th Floor, New York, New York 10022, in the
enclosed postage paid envelope TODAY. Execution of the GOLD Proxy Card will not
affect your right to attend the 2000 Annual Meeting and to vote in person.
You are eligible to execute a GOLD Proxy only if you owned the Common
Stock on the Record Date. Dexter's Board has set _____________, 2000 as the
Record Date for determining those shareholders who will be entitled to notice of
and to vote at the 2000 Annual Meeting. You will retain the right to execute a
proxy card in connection with this proxy solicitation even if you sell your
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<PAGE>
shares after the Record Date. Accordingly, it is important that you vote the
Shares held by you on the Record Date, or grant a proxy to vote such Shares on
the GOLD proxy card, even if you sell such shares after the Record Date.
We believe that as of the close of business on the Record Date, there
were _____________ shares of common stock of Dexter issued and outstanding and
entitled to vote. Shareholders will have one vote for each share of common stock
they own with respect to all matters to be considered at the 2000 Annual
Meeting.
In order for your views on the above-described proposals to be
represented at the 2000 Annual Meeting, please sign and date the enclosed GOLD
proxy card and return it to Innisfree M&A Incorporated in the enclosed prepaid
envelope TODAY. Execution of the GOLD proxy card will not affect your right to
attend the 2000 Annual Meeting and to vote in person. Any proxy may be revoked
at any time prior to the 2000 Annual Meeting by delivering a written notice of
revocation or a later dated proxy for the 2000 Annual Meeting to Innisfree M&A
Incorporated or the Secretary of Dexter, or by voting in person at the 2000
Annual Meeting. Note that the Connecticut Business Corporation Act does not
address whether a later dated proxy given to Dexter will revoke an earlier ISP
proxy with respect to the proposals not specifically covered by Dexter's proxy
- -- our Board Size Bylaw Proposal and Additional Directors Election Proposal.
Subject to the foregoing, only your latest dated proxy will count.
Unless otherwise indicated, the GOLD Proxy authorizes the persons
named in the proxy to vote, and such persons will vote, properly executed and
duly returned proxies FOR the Nominee Election Proposals, FOR the Shareholder
Rights Proposals and FOR the Voting Rights Proposals, all of which are described
in this proxy statement. If no marking is made on your GOLD Proxy with respect
to the ratification of the appointment of Dexter's independent auditors, you
will be deemed to have given a direction to abstain from voting on such matter.
VOTE REQUIRED
Based on currently available public information, a quorum will exist
at the 2000 Annual Meeting if holders of not less than a majority of the shares
of Dexter common stock outstanding and entitled to vote at the 2000 Annual
Meeting are present in person or by proxy. If a quorum is present, our proposals
can be adopted by the following vote:
o NOMINEE PROPOSALS: Election of nominees for directorships
will require the affirmative vote of a plurality of the
votes cast. Consequently, only shares that are voted in
favor of a particular nominee will be counted toward such
nominee's attaining a plurality of votes. The election of
our nominees for the seven newly-created directorships
will not be effective unless our Board Size Bylaw Proposal
is adopted.
o PROPOSALS REQUIRING BYLAW AMENDMENTS: We believe that our
proposals involving amendments to the Dexter Bylaws,
namely our Board Size Bylaw Proposal, Poison Pill Bylaw
Proposal and Bylaw Repeal Proposal, will be approved if
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the votes cast for the respective proposal exceed the
votes cast against the respective proposal. Accordingly,
our Bylaw amendment proposals could each be approved by
less than a majority of the issued and outstanding shares
of common stock once a quorum is present at the 2000
Annual Meeting. We have received the opinion of Levett
Rockwood P.C., our Connecticut counsel, that, to the
extent the Dexter Bylaws may require a supermajority
shareholder vote for an amendment, such provision is
invalid under Connecticut law. Levett Rockwood P.C. has
consented to the use of its name and the reference to its
opinion in this Proxy Statement. We have also instituted
litigation seeking to have any such supermajority
amendment requirement held ineffective. See "Certain
Litigation." If the Dexter Bylaws are held to contain an
effective supermajority provision, our Board Size Bylaw
Proposal, Poison Pill Bylaw Proposal and Bylaw Repeal
Proposal would each require the affirmative vote of the
holders of two-thirds of the issued and outstanding shares
of common stock.
o PROPOSALS NOT REQUIRING BYLAW AMENDMENTS: Adoption of our
Poison Pill Amendment Proposal and Omnibus Proposal will
be approved if the votes cast for the respective proposal
exceed the votes cast against the respective proposal at
the 2000 Annual Meeting. Accordingly, these proposals
could be adopted by less than a majority of the issued and
outstanding shares of common stock once a quorum is
present at the 2000 Annual Meeting. Our Poison Pill
Amendment Proposal will not be effective unless our Poison
Pill Bylaw Proposal is adopted.
Dexter has refused to include our Board Size Bylaw Proposal and
Additional Directors Election Proposal on its proxy cards and has stated that no
action will be taken on them at the 2000 Annual Meeting. A proxy will be counted
as present for purposes of a quorum on each matter for which such proxy confers
the right to vote. Dexter has stated that it intends to exercise discretionary
authority to vote its proxies against our Board Size Bylaw Proposal and
Additional Directors Election Proposal, even though Dexter has not sought voting
instructions on these proposals. If Dexter takes such an action, we may
challenge in court the validity of Dexter's proxies with respect to such
proposals. If a court were to find that our Board Size Bylaw Proposal and
Additional Directors Election Proposal were duly presented at the 2000 Annual
Meeting, a quorum was present to vote on such proposals, and Dexter's proxies
did not lawfully confer discretionary authority for Dexter to vote against such
proposals, the proposals could be held to have been adopted at the 2000 Annual
Meeting if our proxies represented the requisite vote described above.
WE STRONGLY RECOMMEND THAT YOU
VOTE IN FAVOR OF EACH OF THE PROPOSALS DESCRIBED
IN THIS PROXY STATEMENT.
METHOD OF COUNTING VOTES
The holders of not less than a majority of the number of shares of
Dexter common stock outstanding and entitled to vote at the 2000 Annual Meeting
must be represented in person or by proxy in order to constitute a quorum for
the transaction of business. Abstentions will be included for purposes of
determining whether a quorum exists, but broker non-votes will not. After a
quorum is determined to exist at the 2000 Annual Meeting, abstentions or broker
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non-votes with respect to particular proposals brought to a vote or nominees
proposed for election will have no effect on the outcome of the vote on such
proposal or election. Broker non-votes occur when brokers do not receive voting
instructions from their customers on non-routine matters and consequently have
no discretion to vote on those matters. Accordingly, if your Dexter shares are
held in the name of a brokerage firm, bank nominee or other institution, you
should contact the person responsible for your account and give instructions for
a proxy card to be issued so that your shares will be represented at the 2000
Annual Meeting.
ADDITIONAL INFORMATION
The principal executive offices of Dexter Corporation are at One Elm
Street, Windsor Locks, Connecticut 06096-2334. Dexter is a global specialty
materials supplier, principally serving the worldwide aerospace, electronics,
food packaging and medical markets. Except as otherwise noted herein, the
information concerning Dexter has been taken from or is based upon documents and
records on file with the SEC and other publicly available information. Although
we do not have any knowledge that would indicate that any statement contained
herein based upon such documents and records is untrue, we do not take any
responsibility for the accuracy or completeness of the information contained in
such documents and records, or for any failure by Dexter to disclose events that
may affect the significance or accuracy of such information.
The principal executive offices of ISP are at 300 Delaware Avenue,
Wilmington, Delaware 19801. We are a leading manufacturer of specialty chemicals
and mineral products.
We are subject to the informational requirements of the Exchange Act,
and, in accordance with the Exchange Act, file reports, proxy statements and
other documents with the SEC relating to our business, financial condition and
other matters. These reports, proxy statements and other documents can be
inspected and copied at the public reference facilities of the SEC at 450 Fifth
Street, N.W., Washington, DC 20549, and at the regional offices of the SEC
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of ISP's filings with the SEC can also be obtained by mail for a fee by
writing to the SEC's principal office at 450 Fifth Street, N.W., Washington, DC
20549. You can also get electronic copies of our filings with the SEC for free
on the SEC's Internet web site at http://www.sec.gov. Copies of our filings with
the SEC are also be available for inspection at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
PROXY SOLICITATION; EXPENSES
This proxy statement and the accompanying GOLD Proxy Card are first
being furnished to shareholders on or about May ___, 2000. Executed proxies may
be solicited in person, by mail, advertisement, telephone, telecopier, telegraph
or similar means. Solicitation may be made by directors, officers, investor
relations personnel and other employees of ISP and their affiliates, none of
whom will receive additional compensation for such solicitation. Proxies will be
solicited from individuals, brokers, banks, bank nominees and other
institutional holders. We have requested banks, brokerage houses and other
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custodians, nominees and fiduciaries to forward all solicitation materials to
the beneficial owners of the shares they hold of record. We will reimburse these
record holders for their reasonable out-of-pocket expenses.
In addition, ISP has retained Innisfree M&A Incorporated to provide
consulting and analytic services in connection with any proposal by us to
acquire Dexter in opposition to Dexter's Board. Among other things, Innisfree
has agreed to solicit proxies on our behalf in connection with the 2000 Annual
Meeting. Innisfree will employ approximately 75 people in its efforts. We have
agreed to reimburse Innisfree for its reasonable expenses and to pay to
Innisfree fees not to exceed $130,000.
Chase Securities, Inc. is acting as our financial advisor in
connection with any proposed business combination transaction involving Dexter,
and is assisting us in connection with the financing of any such transaction.
For its financial advisory services, Chase Securities will receive from ISP a
fee of $1 million upon the consummation of any such transaction, plus an
additional amount based on Chase Securities' performance, to be determined by
ISP and paid in ISP's sole discretion. Chase will also receive reimbursement of
its reasonable and documented expenses. In addition, ISP has agreed to indemnify
Chase Securities and related persons against certain liabilities arising out of
the engagement. In its capacity as our financial advisor, Chase Securities has
agreed, among other things, to assist us at our request in contacting (in
person, by telephone or otherwise) shareholders of Dexter identified to Chase
Securities by us and in soliciting their proxies in favor of such a transaction
on our behalf. Chase Securities will not receive any separate or additional fee
for, or in connection with, any such solicitation activities. Chase Securities
and its affiliates are engaged in providing a full range of banking, securities
trading, market making and brokerage services to institutional and individual
clients. In the normal course of its business Chase Securities and its
affiliates may have provided, and may in the future provide, subject to certain
contractual and conflict of interest limitations, financial advisory, investment
banking or other such services to Dexter, ISP or their respective affiliates,
and may trade securities of Dexter, ISP or their respective affiliates for its
own account and the accounts of its customers and, accordingly, may at any time
hold a long or short position in such securities.
The entire expense of our proxy solicitation is being borne by ISP.
In the event that our nominees are elected to Dexter's Board, we may seek
reimbursement of such expenses from Dexter. ISP does not intend to seek
reimbursement for the stipend it pays to its nominees and does not intend to
seek shareholder approval of reimbursement of its other expenses. In addition to
the engagement of Innisfree and Chase Securities described above, costs related
to the solicitation of proxies include expenditures for printing, postage, legal
and related expenses and are expected to be approximately $1,250,000. Total
payment of costs to date in furtherance of our proxy solicitation is
approximately $900,000.
CERTAIN INFORMATION CONCERNING THE PARTICIPANTS
ISP, ISP Investments, our nominees for directorships and the
following officers of ISP may be deemed to be "participants" (as defined in
Instruction 3 to Item 4 of Rule 14a-101 of the Exchange Act) in this proxy
solicitation: Randall Lay, Executive Vice President and Chief Financial Officer;
Kumar Shah, Senior Vice President-Corporate Development; Susan B. Yoss, Senior
59
<PAGE>
Vice President and Treasurer; Christopher Nolan, Vice President-Corporate
Development and Investor Relations; Jared Landaw, Vice President-Law; and Ben
Stoller, Manager-Corporate Finance. Information relating to the beneficial
ownership of common stock of Dexter by the participants in this solicitation and
certain other information relating to the participants is contained in Annex VII
to this proxy statement and is incorporated in this proxy statement by
reference. In addition, see "Certain Litigation" for a description of legal
proceedings in which ISP and ISP Investments have a material interest adverse to
Dexter. None of the participants in this solicitation are party to any
commercial dealings with Dexter or its subsidiaries required to be discussed
pursuant to Schedule 14A promulgated under the Exchange Act, which governs the
disclosure contained in this proxy statement. As described below under "Certain
Interests in the Proposals and with Respect to Securities of Dexter", ISP and
its affiliates beneficially own shares of Life Technologies, Dexter's majority
owned subsidiary. We have no knowledge of any commercial dealings between Life
Technologies and Dexter, other than information that may be disclosed in the
public filings of Life Technologies and Dexter.
CERTAIN INTERESTS IN THE PROPOSALS AND
WITH RESPECT TO SECURITIES OF DEXTER
To the knowledge of ISP, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) among ISP or its associates
with respect to any securities of Dexter.
Between November 25, 1998 and December 18, 1998, ISP entered into agreements
(the "Group Agreements") with Bear, Stearns & Co. Inc., The Frederick R. Adler
Intangible Asset Management Trust, The Cohen Revocable Trust, Annie Chang, York
Capital Management, L.P., JGD Management Corp., York Investment Limited and the
Prescott Entities with respect to such parties' ownership of common stock of
Life Technologies, a majority owned subsidiary of Dexter. Pursuant to the terms
of the Group Agreements, ISP and the other parties thereto agreed (i) not to
sell or otherwise dispose of any shares of Life Technologies common stock unless
all of the parties mutually agreed (subject to certain exceptions), (ii) to bear
its own costs and expenses incurred in connection with its ownership of Life
Technologies shares, the Group Agreements or any transactions entered into
pursuant to the Group Agreement (subject to certain exceptions for expenses
incurred for the benefit of all the parties thereto), (iii) to join with ISP in
a Schedule 13D filing and any required amendments thereto and (iv) not to enter
into any other contract, arrangement, understanding or relationship with any
other person with respect to the equity securities of Life Technologies. The
initial Group Agreements provided for a term of six months, but subsequent
agreements were entered into ultimately extending the term through September 30,
2000 for all but the Prescott Entities. As of January 27, 2000, ISP owned
beneficially 3,506,270 Life Technologies shares which represented approximately
14.05% of the outstanding shares of common stock of Life Technologies. As of
such date, the continuing parties to the Group Agreement (including ISP)
beneficially owned, in the aggregate, 5,417,991 Life Technologies shares,
representing approximately 21.7% of the outstanding shares of common stock of
Life Technologies.
Each of our nominees (other than Messrs. Heyman and Kumar) will
receive a stipend of $50,000 from ISP for his service as a nominee. This stipend
is not refundable in any manner in connection with the outcome of our proxy
60
<PAGE>
solicitation or otherwise. The Nominees are each party to an indemnity agreement
with ISP (the "Director Indemnity Agreements"). In accordance with the terms of
the Director Indemnity Agreements, ISP has agreed to indemnify and hold harmless
each of the nominees from and against, among other things, all expenses,
liabilities and losses, including reasonable attorney's fees, related to any
action, suit or proceeding to which such nominee is made a party or threatened
to be made a party by reason of such nominee's action or inaction while serving
as a nominee.
61
<PAGE>
SECURITY OWNERSHIP OF DIRECTORS
AND MANAGEMENT OF DEXTER
The following table presents, as of December 31, 1999, based solely
on information contained in Dexter's 2000 Proxy Statement, the common stock
beneficially owned (as that term is defined by the SEC) by all directors and
named executive officers of Dexter, and the directors and executive officers of
Dexter as a group. This beneficially owned common stock includes shares of
common stock which they had a right to acquire within 60 days of such date by
the exercise of options granted under Dexter's stock option plans.
Except as otherwise noted in a footnote below, each director, nominee
and executive officer has sole voting and investment power with respect to the
number of shares of common stock set forth opposite his or her name in the
table.
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
COMMON STOCK COMMON
BENEFICIALLY STOCK
SHAREHOLDERS OWNED(1) OUTSTANDING(1)
- ------------ -------- --------------
<S> <C> <C>
K. Grahame Walker.............................................. 229,681 *
Kathleen Burdett............................................... 63,668 *
John D. Thompson............................................... 38,241 *
Bruce H. Beatt................................................. 34,744 *
David G. Gordon................................................ 42,579 *
Charles H. Curl................................................ 4,165 *
Henrietta Holsman Fore......................................... 5,626 *
Bernard M. Fox................................................. 4,973 *
Robert M. Furek................................................ 4,510 *
Martha Clark Goss.............................................. 4,274 *
Edgar G. Hotard................................................ 3,148 *
Peter G. Kelly................................................. 8,301 *
Jean-Francois Saglio........................................... 3,201 *
George M. Whitesides........................................... 4,381 *
All Directors and Executive Officers of Dexter as
a Group (24
persons)....................................................... 638,727 2.77
</TABLE>
- ------------------------------------------
(1) The shares reported above as beneficially owned by the following persons
include vested stock options granted under the Dexter's stock option plans.
The shares reported above also include shares of restricted stock issued to
the following persons pursuant to the 1994 Long Term Incentive Plan (the
"1994 Plan") and the 1999 Long Term Incentive Plan (the "1999 Plan"): K.
Grahame Walker - 51,434; Kathleen Burdett - 21,142; John D. Thompson -
14,976; Bruce H. Beatt - 13,972; David G. Gordon - 11,460; and "All
Directors and Executive Officers of Dexter as a Group" - 171,233. Shares of
restricted stock issued pursuant to the 1994 Plan and the 1999 Plan are
subject to forfeiture, but may be voted by the holders thereof unless and
until forfeited. Percentages of common stock of less than 1% are indicated
by an asterisk.
62
<PAGE>
PRINCIPAL SHAREHOLDERS OF DEXTER
The following table sets forth, based solely, except as otherwise
described herein, on information contained in Dexter's 2000 Proxy Statement, the
number and percentage of outstanding shares of common stock beneficially owned
by each person known to ISP (other than ISP) as of such date to be the
beneficial owner of more than five percent of the outstanding shares of common
stock. The information with respect to ISP has been provided by the members
thereof as of ____ __, 2000.
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
COMMON STOCK COMMON
BENEFICIALLY STOCK
SHAREHOLDERS OWNED OUTSTANDING
- ------------ ----- -----------
<S> <C> <C>
ISP
ISP Investments Inc.
ISP Opco Holdings Inc.
c/o ISP Management Company, Inc.
1361 Alps Road, Wayne, New Jersey 07470........................ 2,299,200 9.97(1)
FMR Corp., 82 Devonshire Street Boston, Massachusetts 02109
(Fidelity Managed Funds)....................................... 1,703,300 9.8(2)
Mary K. Coffin, c/o Dexter Corporation, One Elm Street, Windsor
Locks, Connecticut 06096....................................... 1,290,000 5.6(3)
</TABLE>
(1) ISP Investments Inc. (through ISP Investments Grantor Trust) has the
sole power to vote, direct the voting of, dispose of and direct the
disposition of the shares. ISP Opco Holdings Inc., by virtue of its
indirect ownership of all of the outstanding capital stock of ISP
Investments Inc., may be deemed to own beneficially (solely for
purposes of Rule 13d-3) the shares. ISP, by virtue of its ownership
of all of the outstanding common stock of ISP Opco Holdings Inc., may
be deemed to own beneficially (solely for purposes of Rule 13d-3) the
shares. Samuel J. Heyman, by virtue of his beneficial ownership (as
defined in Rule 13d-3) of approximately 76% of the capital stock of
ISP, may be deemed to own beneficially (solely for purposes of Rule
13d-3) the shares.
(2) Share holdings as of December 31, 1999, as reported on the Schedule
13G most recently filed by such shareholder.
(3) Of the 1,290,000 shares shown in the table as owned by Mary K.
Coffin, 990,000 are held by Fleet Bank, N.A., trustee of a trust the
beneficiary of which is Dexter D. Coffin, Jr. Mary K. Coffin is a
trustee of this trust and shares the power to vote and dispose of
shares owned by the trust. The power to vote and dispose of the
shares owned by this trust is held by a majority of its three
individual trustees. The remaining shares shown in the table are held
by Mary K. Coffin through a living trust.
63
<PAGE>
SHAREHOLDERS' PROPOSALS IN DEXTER'S PROXY STATEMENT
The Dexter's Bylaws require that notice of nominations to Dexter's
Board of Directors proposed by shareholders be received by the Secretary of the
Dexter, along with certain other specified material, not less than 75 nor more
than 125 days prior to the first anniversary of the prior year's annual meeting;
provided, however, that in the event that the date of the annual meeting is
advanced by more than seventy five days from such anniversary date, notice by
the shareholder to be timely must be so delivered not later than the fifteenth
day following the day on which public announcement of the date of such meeting
is first MADE. Any shareholder who wishes to nominate a candidate for election
to Dexter's Board should obtain a copy of the relevant section of the Bylaws
from the Secretary of the Dexter.
Pursuant to Rule 14a-8(e)(2) under the Exchange Act, any proposal by
a shareholder at the 2000 Annual Meeting, to be included in the Dexter's proxy
statement, must be received in writing at the Dexter's principal executive
offices not less than 120 calendar days in advance of the date of the Dexter's
proxy statement was released to security holders in connection with its 1999
Annual Meeting of Shareholders. However, if the date of the meeting is changed
by more than 30 days from the date of the previous year's meeting, then the
deadline is a reasonable time before the Dexter begins to print and mail its
proxy materials.
Proposals should be addressed to the Corporate Secretary, Dexter
Corporation, One Elm Street, Windsor Locks, Connecticut 06096.
WE URGE YOU TO SIGN, DATE AND RETURN THE GOLD PROXY CARD IN FAVOR OF THE
ELECTION OF OUR NOMINEES AND THE ADOPTION OF THE PROPOSALS DESCRIBED IN THIS
PROXY STATEMENT.
Dated: May __, 2000
Sincerely,
Your Fellow Shareholders:
INTERNATIONAL SPECIALTY PRODUCTS INC.
ISP INVESTMENTS INC.
64
<PAGE>
ANNEX I
BOARD SIZE BYLAW PROPOSAL
RESOLVED, that the Bylaws of Dexter Corporation be, and they hereby
are, amended, effective at the time this resolution is approved by the
shareholders of Dexter Corporation, by:
(i) deleting the fourth sentence of Article III, Section 1,
which reads "[e]ach class of directorships shall consist
of not less than one nor more than five directorships", in
its entirety;
(ii) adding a new fourth and fifth sentence of Article III,
Section 1 as follows:
"At the annual meeting of the shareholders of the
corporation held in 2000, additional directors shall be
elected so that the Board of Directors shall consist of
seventeen directorships. The additional directorships
thereby created shall be allocated to the classes with
terms expiring at the annual meeting of the shareholders
of the corporation to be held in 2001 or 2002, unless
otherwise allocated by the Board of Directors consistent
with Section 33-740 of the Connecticut Business
Corporation Act"; and
(iii) adding a new final sentence of Article III, Section 1 as
follows:
"The fourth sentence of this Section 1 may be altered,
amended or repealed only with the approval of the
shareholders of the corporation entitled to vote thereon
in the manner set forth in Section 33-709(c) of the
Connecticut Business Corporation Act."
A-1
<PAGE>
ANNEX II
THE ADDITIONAL DIRECTORS ELECTION PROPOSAL
RESOLVED, that each of the following persons be elected a director of
Dexter Corporation to fill the new directorships on the Board of Directors of
Dexter Corporation resulting from the adoption of the resolution amending
Article III, Section 1 of the Bylaws to increase the size of the Board, for a
term commencing at the time this resolution is adopted by the shareholders of
Dexter Corporation and shall be allocated into classes with terms continuing
until the annual meeting of the shareholders of Dexter Corporation to be held in
the year indicated below, and until the election and qualification of his
respective successor or until his earlier resignation or removal:
Alan Meckler 2002
Dan Ogden 2002
Morrison DeSoto Webb 2002
Robert Englander 2002
John Droney 2001
Anthony T. Kronman 2001
Vincent Tese 2001
; provided, that the Board of Directors may instead allocate certain of such
directorships to a different class, consistent with Section 33-740 of the
Connecticut Business Corporation Act.
A-2
<PAGE>
ANNEX III
THE POISON PILL BYLAW PROPOSAL
RESOLVED, that the Bylaws of Dexter Corporation be, and they hereby
are, amended, effective at the time this resolution is approved by the
shareholders of Dexter Corporation, by adding the following Section 7 to the end
of Article II:
"Section 7. Rights Agreements.
-----------------
The Board of Directors, in exercising its rights
and duties with respect to the administration of the Rights
Agreement, dated as of August 23, 1996, as amended, by and
between the corporation and Chase Mellon Shareholder
Services L.L.C., as Rights Agent (the "Rights Agreement")
will carry out a resolution authorizing (i) the partial or
complete redemption of the rights issued pursuant to the
Rights Agreement (the "Rights"), or (ii) an amendment to
the Rights Agreement making the Rights inapplicable to
offers or transactions or types of offers or transactions
specified in such resolution, if such resolution is
authorized and approved by the shareholders of the
corporation entitled to vote thereon in the manner set
forth in Section 33-709(c) of the Connecticut Business
Corporation Act. In addition, the Board of Directors shall
not adopt any new shareholder rights plan, rights agreement
or any other form of "poison pill" which is designed to or
has the effect of making acquisitions of large holdings of
the corporation's shares of stock more difficult or
expensive, unless such plan is first approved by the
shareholders of the corporation entitled to vote thereon in
the manner set forth in Section 33-709(c) of the
Connecticut Business Corporation Act. This Section 7 may be
altered, amended or repealed only with the approval of the
shareholders of the corporation entitled to vote thereon in
the manner set forth in Section 33-709(c) of the
Connecticut Business Corporation Act."
A-3
<PAGE>
ANNEX IV
THE POISON PILL AMENDMENT PROPOSAL
RESOLVED, that the shareholders of Dexter Corporation hereby exercise
their right under Article II, Section 7 of the Bylaws of Dexter Corporation, as
amended on the date hereof, to require the Board of Directors to promptly amend
the Rights Agreement, dated as of August 23, 1996, as amended, by and between
Dexter Corporation and ChaseMellon Shareholder Services, L.L.C. (the "Rights
Agreement") to provide that the acquisition of beneficial ownership of shares of
common stock, par value $1.00 per share, of Dexter Corporation ("Common Stock")
pursuant to any offer for all outstanding shares of Common Stock for
consideration of at least $45 per share net to the seller in cash shall
constitute a "Qualifying Offer" within the meaning of Sections 11(a)(ii) and
13(d) of the Rights Agreement.
A-4
<PAGE>
ANNEX V
THE BYLAW REPEAL PROPOSAL
RESOLVED, that any and all amendments made by the Board of Directors
of Dexter Corporation to the Bylaws of Dexter Corporation on or after February
26, 1999, be, and the same hereby are, repealed, and that, without the approval
of the shareholders of Dexter Corporation, the Board of Directors may not
thereafter amend any section of the Bylaws affected by such repeal or adopt any
new Bylaw provision which serves to reinstate any repealed provisions or any
similar provisions.
A-5
<PAGE>
ANNEX VI
THE OMNIBUS PROPOSAL
RESOLVED, that each of the proposals of International Specialty
Products Inc. and ISP Investments Inc. shall be voted upon by the shareholders
of Dexter Corporation at the 2000 Annual Meeting in the following order:
1. This Omnibus Proposal;
2. The Bylaw Repeal Proposal;
3. The Director Election Proposal;
4. The Board Size Bylaw Proposals;
5. The Additional Directors Election Proposal;
6. The Poison Pill Bylaw Proposal; and
7. The Poison Pill Amendment Proposal.
A-6
<PAGE>
ANNEX VII
INFORMATION CONCERNING INTERNATIONAL SPECIALTY
PRODUCTS INC. AND OTHER PARTICIPANTS
IN THE SOLICITATION
Information is being given herein for (i) International Specialty
Products Inc., a Delaware corporation ("ISP"), (ii) ISP Investments Inc., a
Delaware corporation ("ISP Investments"), (iii) Samuel J. Heyman, a natural
person and nominee for the Board of Directors of the Company, (iv) Sunil Kumar,
a natural person and nominee for the Board of Directors of the Company, (v)
Philip Peller, a natural person and nominee for the Board of Directors of the
Company, (vi) Alan Meckler, a natural person and nominee for the Board of
Directors of the Company, (vii) Dan Ogden, a natural person and nominee for the
Board of Directors of the Company, (viii) Morrison DeSoto Webb, a natural person
and nominee for the Board of Directors of the Company, (ix) Robert Englander, a
natural person and nominee for the Board of Directors of the Company, (x) John
Droney, a natural person and nominee for the Board of Directors of the Company,
(xi) Anthony T. Kronman, a natural person and nominee for the Board of Directors
of the Company, (xii) Vincent Tese, a natural person and nominee for the Board
of Directors of the Company, (xiii) Randall Lay, Executive Vice President and
Chief Financial Officer of ISP ("Lay"), (xiv) Kumar Shah, Senior Vice
President-Corporate Development of ISP ("Shah"), (xv) Susan B. Yoss, Senior Vice
President and Treasurer of ISP ("Yoss"), (xvi) Christopher Nolan, Vice
President-Corporate Development and Investor Relations of ISP ("Nolan"), (xvii)
Jared Landaw, Vice President-Law of ISP ("Landaw"), and (xviii) Ben Stoller,
Manager-Corporate Finance of ISP ("Stoller" and together with Lay, Shah, Yoss,
Nolan and Landaw, the "ISP Participants"), who are each a "participant in a
solicitation" as defined under the proxy rules (collectively, the
"Participants").
Information is also given for each of the entities listed on Schedule
A to this Annex VII, each of which is an "associate", as defined under the proxy
rules, of the Proponents.
Each of ISP and ISP Investments is a Delaware corporation. Each of
ISP and ISP Investments has its principal place of business at 300 Delaware
Avenue, Wilmington, Delaware 19801. The business address of each of the ISP
Participants is c/o ISP Management Company, Inc., 1361 Alps Road, Wayne, New
Jersey 07470. The address of each of the entities listed on Schedule A to this
Annex VII is c/o ISP Management Company, Inc., 1361 Alps Road, Wayne, New Jersey
07470.
The Participants may be deemed to have beneficial ownership of the
Company's Common Stock and the common stock, par value $.01 per share ("LTI
Common Stock"), of Life Technologies, Inc. ("LTI") as set forth immediately
below. Except as set forth below, no associates of any of the Participants owns
any Common Stock or LTI Common Stock.
A-7
<PAGE>
<TABLE>
<CAPTION>
APPROXIMATE MARGIN
NUMBER OF SHARES OF THE NUMBER OF SHARES INDEBTEDNESS WITH RESPECT
NAME COMPANY'S COMMON STOCK OF LTI'S COMMON STOCK TO COMMON STOCK
- ---- ---------------------- --------------------- ---------------
<S> <C> <C> <C>
ISP Investments Inc. 2,299,200 3,384,600 (5)
(direct ownership)(1) (direct/indirect ownership)(2)(3)
ISP Opco Holdings Inc. 2,299,200 3,384,600 (5)
(indirect ownership)(1) (indirect ownership)(2)(3)
ISP Ireland 0 452,000 (5)
(direct ownership)(3)
International Specialty 2,299,200 3,506,270 (5)
Products Inc. (indirect ownership)(1) (direct/indirect ownership)(2)(3)(4)
Samuel J. Heyman 2,299,200 3,506,270 (5)
(indirect ownership)(1) (indirect ownership)(2)(3)(4)
Sunil Kumar 0 0 $ 0
Philip Peller 0 0 $ 0
Alan Meckler 0 0 $ 0
Dan Ogden 0 0 $ 0
Morrison DeSoto Webb 0 0 $ 0
Robert Englander 0 0 $ 0
John Droney 0 0 $ 0
Anthony T. Kronman 0 0 $ 0
Vincent Tese 0 0 $ 0
A-7-1
<PAGE>
Randall Lay 0 0 $0
Kumar Shah 0 0 $0
Susan B. Yoss 0 0 $0
Christopher Nolan 0 0 $0
Jared Landaw 0 0 $0
Ben Stroller 0 0 $0
</TABLE>
(1) ISP Investments (through ISP Investments Grantor Trust) has the sole
power to vote, direct the voting of, dispose of and direct the
disposition of the Common Stock. ISP Opco Holdings Inc. ("ISP Opco"),
by virtue of its indirect ownership of all of the outstanding capital
stock of ISP Investments, may be deemed to own beneficially (solely
for purposes of Rule 13d-3) the Common Stock owned by ISP
Investments. International Specialty Products Inc. ("ISP"), by virtue
of its ownership of all of the outstanding common stock of ISP Opco,
may be deemed to own beneficially (solely for purposes of Rule 13d-3)
the Common Stock owned by ISP Investments. Mr. Heyman, by virtue of
his beneficial ownership (as defined in Rule 13d-3) of approximately
76% of the capital stock of ISP, may be deemed to own beneficially
(solely for purposes of Rule 13d-3) the Common Stock owned by ISP
Investments.
(2) ISP Investments (directly and through ISP Investments Grantor Trust)
has the sole power to vote, direct the voting of, dispose of and
direct the disposition of 2,932,600 shares of LTI Common Stock. ISP
Opco, by virtue of its indirect ownership of all of the outstanding
capital stock of ISP Investments, may be deemed to own beneficially
(solely for purposes of Rule 13d-3) all of the LTI Common Stock owned
by ISP Investments. ISP, by virtue of its ownership of all of the
outstanding common stock of ISP Opco, may be deemed to own
beneficially (solely for purposes of Rule 13d-3) the LTI Common Stock
owned by ISP Investments. Mr. Heyman, by virtue of his beneficial
ownership (as defined in Rule 13d-3) of approximately 76% of the
capital stock of ISP, may be deemed to own beneficially (solely for
purposes of Rule 13d-3) the LTI Common Stock owned by ISP
Investments.
(3) ISP Ireland has the sole power to vote, direct the voting of, dispose
of and direct the disposition of 452,000 shares of LTI Common Stock.
ISP Investments, by virtue of its indirect ownership of all of the
outstanding capital stock of ISP Ireland, may be deemed to own
beneficially (solely for purposes of Rule 13d-3) all of the LTI
Common Stock owned by ISP Ireland. ISP Opco, by virtue of its
indirect ownership of all of the outstanding capital stock of ISP
Investments, may be deemed to own beneficially (solely for purposes
of Rule 13d-3) all of the LTI Common Stock owned by ISP Ireland. ISP,
by virtue of its ownership of all of the outstanding common stock of
ISP Opco, may be deemed to own beneficially (solely for purposes of
Rule 13d-3) the LTI Common Stock owned by ISP Ireland. Mr. Heyman, by
virtue of his beneficial ownership (as defined in Rule 13d-3) of
approximately 76% of the capital stock of ISP, may be deemed to own
beneficially (solely for purposes of Rule 13d-3) the LTI Common Stock
owned by ISP Ireland.
(4) ISP has the sole power to vote, direct the voting of, dispose of and
direct the disposition of 121,670 shares of LTI Common Stock. Mr.
Heyman, by virtue of his beneficial ownership (as defined in Rule
13d-3) of approximately 76% of the capital stock of ISP, may be
deemed to own beneficially (solely for purposes of Rule 13d-3) the
LTI Common Stock owned by ISP.
(5) In the ordinary course of its business, ISP Investments Inc.
purchases securities for its investment portfolio with funds obtained
from the working capital of ISP Investments, loans from affiliates
A-7-2
<PAGE>
and borrowings pursuant to standard margin arrangements. Because the
securities from multiple investments are pooled in one account, the
amount of margin indebtedness incurred by ISP in connection with its
purchases of Dexter Common Stock, which purchases were numerous and
made over many months, is impossible to determine with any degree of
certainty.
Other than as set forth immediately below, to the best of the
knowledge of the Participants and their associates, none has been, within the
past year, a party to any contract, arrangement or understanding with any person
with respect to any securities of the Company, including but not limited to
joint ventures, loan or option arrangements, puts or calls, guarantees against
loss or guarantees of profits, division of losses or profits, or the giving or
withholding of proxies:
On November 25, 1998, ISP entered into an agreement (the "Group
Agreement") with certain other persons with respect to such parties' ownership
of LTI Common Stock. Pursuant to the terms of the Group Agreement, ISP and the
other parties thereto agreed (i) not to sell or otherwise dispose of any shares
of LTI Common Stock unless all of the parties mutually agreed (subject to
certain exceptions), (ii) to bear its own costs and expenses incurred in
connection with its ownership of LTI Common Stock, the Group Agreement or any
transactions entered into pursuant to the Group Agreement (subject to certain
exceptions for expenses incurred for the benefit of all the parties thereto),
(iii) to join with ISP in a Schedule 13D filing and any required amendments
thereto and (iv) not to enter into any other contract, arrangement,
understanding or relationship with any other person with respect to the equity
securities of LTI. The initial Group Agreement provided for a term of six
months, but subsequent agreements were entered into ultimately extending the
term through September 30, 2000 for all but one of the original members of the
group.
No Participant or associate owns any securities of the Company of
record but not beneficially.
Neither ISP nor ISP Investments has any special arrangements with any
of the ISP Participants in connection with this proxy solicitation.
None of the Participants and none of their associates has any
arrangement or understanding with any person with respect to (i) any future
employment with the Company or (ii) any future transactions to which the Company
or any of its affiliates may be a party, except as set forth in the letter,
dated December 14, 1999, from Mr. Heyman to the Company's Chairman and Chief
Executive Officer, in which ISP proposed to purchase all of the Company's
outstanding Common Stock for $45 per share in a merger transaction, which
proposal was subsequently rejected by the Company's Board by correspondence
dated December 23, 1999. No family relationships exist among the Proponent's
Nominees or between any Company director or executive officer and any of the
Proponent's Nominees.
The following is a summary of all transactions in Company securities
by the Participants over the last two years.
A-7-3
<PAGE>
DATE OF TRANSACTION NATURE OF TRANSACTION NUMBER OF SHARES
- -------------------------------------------------------------------------------
09/15/98 Buy 37,000
09/17/98 Buy 440,000
09/21/98 Buy 64,700
09/23/98 Buy 5,400
09/25/98 Buy 10,000
09/30/98 Buy 10,600
10/01/98 Buy 100
10/02/98 Buy 25,000
10/05/98 Buy 600
10/06/98 Buy 14,200
10/07/98 Buy 18,400
10/09/98 Buy 55,500
10/16/98 Buy 169,100
10/19/98 Buy 75,000
11/11/98 Buy 47,500
11/12/98 Buy 69,600
12/01/98 Sell (50,000)
12/02/98 Sell (25,000)
12/04/98 Buy 106,500
12/09/98 Buy 11,600
12/10/98 Buy 15,600
12/11/98 Buy 18,500
12/14/98 Buy 14,000
12/15/98 Buy 6,000
02/17/99 Buy 5,000
03/31/99 Buy 7,500
05/07/99 Sell (25,000)
05/13/99 Buy 10,000
05/14/99 Buy 20,000
05/17/99 Buy 17,100
05/18/99 Buy 21,600
05/19/99 Buy 2,500
05/21/99 Buy 10,000
05/24/99 Buy 11,400
05/25/99 Buy 20,500
05/26/99 Buy 20,000
05/27/99 Buy 19,000
05/28/99 Buy 2,000
06/01/99 Buy 19,000
06/02/99 Buy 22,500
06/03/99 Buy 6,200
06/07/99 Buy 5,500
A-7-4
<PAGE>
06/08/99 Buy 1,900
06/09/99 Buy 31,500
06/10/99 Buy 1,300
06/15/99 Buy 10,000
06/24/99 Sell (25,000)
07/13/99 Sell (2,900)
07/22/99 Buy 9,600
07/23/99 Buy 5,000
07/26/99 Buy 4,700
07/28/99 Buy 7,700
08/03/99 Sell (6,300)
08/05/99 Buy 3,500
08/06/99 Sell (3,500)
08/09/99 Buy 248,400
08/10/99 Buy 11,400
08/11/99 Buy 12,700
08/19/99 Sell (5,300)
08/20/99 Buy 56,000
08/23/99 Buy 94,900
08/24/99 Buy 28,900
08/25/99 Buy 12,300
08/27/99 Buy 12,000
08/30/99 Buy 13,000
08/31/99 Buy 7,500
09/03/99 Buy 84,300
09/07/99 Buy 48,600
09/08/99 Buy 9,900
09/13/99 Sell (1,000)
09/14/99 Sell (1,400)
09/15/99 Sell (2,000)
09/17/99 Buy 46,300
09/20/99 Buy 76,000
09/21/99 Buy 31,400
09/22/99 Buy 15,000
09/23/99 Buy 34,000
09/24/99 Buy 47,600
09/27/99 Buy 46,500
----------------------
2,299,200
======================
A-7-5
<PAGE>
SCHEDULE A TO ANNEX VII
Associates of International Specialty Products Inc.
---------------------------------------------------
ISP Opco Holdings Inc.
Belleville Realty Corp.
ISP Alginates Inc.
ISP Management Company, Inc.
ISP Chemicals Inc.
ISP Minerals Inc.
ISP Technologies Inc.
ISP Mineral Products Inc.
ISP Environmental Services Inc.
Bluehall Incorporated
ISP Realty Corporation
ISP Real Estate Company, Inc.
International Specialty Products Funding Corporation
ISP Newark Inc.
ISP Van Dyk Inc.
ISP Fine Chemicals Inc.
ISP Freetown Fine Chemicals Inc.
Verona Inc.
ISP Global Technologies Inc.
ISP International Corp.
ISP Marl Holdings GmbH
ISP Holdings (U.K.) Ltd.
ISP Ireland
ISP (Puerto Rico) Inc.
ISP Marl Gmbh
ISP Acetylene Gmbh
ISP Alginates (U.K.) Ltd.
ISP (Great Britain) Co. Ltd.
ISP Andina, C.A.
ISP Argentina S.A.
ISP Asia Pacific Pte Ltd.
ISP (Australasia) Pte Ltd.
ISP (Belgium) N.V.
ISP (Belgium) International N.V.
ISP do Brasil Ltda.
ISP (Canada) Inc.
ISP Ceska Republika Spol S.R.O.
ISP (China) Limited
ISP Colombia Ltda.
ISP Freight Service N.V.
A-7-6
<PAGE>
ISP Global Operations (Barbados) Inc.
ISP Global Technologies (Belgium) S.A.
ISP Global Technologies (Germany) Holding Gmbh
ISP Customer Service Gmbh
ISP Global Technologies Deutschland Gmbh
International Specialty Products ISP (France) S.A.
ISP (Hong Kong) Limited
ISP (Italia) S.r.l.
ISP (Japan) Ltd.
ISP (Korea) Limited
ISP Mexico, S.A. de C.V.
ISP (Norden) A.B.
ISP (Osterreich) G.m.b.h.
ISP (Polska) Sp.z. o.p.
ISP Sales (Barbados) Inc.
ISP Sales (U.K.) Limited
ISP (Singapore) Pte Ltd.
ISP (Switzerland) A.G.
ISP (Thailand) Co., Ltd.
Chemfields Pharmaceuticals Private Limited
Kelp Industries Pty Ltd
Arramara Teoranta
Thorverk Hf
A-7-7
<PAGE>
[PRELIMINARY COPY]
PROXY
DEXTER CORPORATION
PROXY SOLICITED ON BEHALF OF INTERNATIONAL SPECIALTY
PRODUCTS INC., ISP INVESTMENTS INC. AND THE OTHER PARTICIPANTS IDENTIFIED IN
THE PROXY STATEMENT FURNISHED HEREWITH ("ISP") FOR THE ANNUAL MEETING OF
SHAREHOLDERS, APRIL 27, 2000 AT 10:00 A.M.
The undersigned shareholder of Dexter Corporation ("Dexter") hereby appoints
Samuel J. Heyman and Sunil Kumar and each of them, as attorneys and proxies,
each with power of substitution and revocation, to represent the undersigned at
the Annual Meeting of Shareholders of Dexter Corporation to be held at The
Hartford Club, 46 Prospect Street, Hartford, Connecticut on April 27, 2000 at
10:00 A.M., local time, and at any adjournment or postponement thereof, with
authority to vote all shares held or owned by the undersigned in accordance with
the directions indicated herein.
Receipt of the Proxy Statement furnished herewith is hereby
acknowledged.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE
UNDERSIGNED SHAREHOLDER. ON MATTERS FOR WHICH YOU DO NOT SPECIFY A CHOICE, YOUR
SHARES WILL BE VOTED IN ACCORDANCE WITH THE RECOMMENDATION OF ISP. YOU MAY
APPROVE OR VOTE SEPARATELY ON ANY OR ALL OF THE PROPOSALS, BUT PROPOSAL NO. 3
WILL NOT BE EFFECTIVE UNLESS PROPOSAL NO. 2 IS ADOPTED, AND PROPOSAL NO. 5 WILL
NOT BE EFFECTIVE UNLESS PROPOSAL NO. 4 IS ADOPTED.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C>
ISP RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED BELOW.
---
1. Election of Directors
FOR all nominees listed on the right (except WITHHOLD AUTHORITY to vote for NOMINEES: Samuel J. Heyman, Sunil Kumar, Philip
as marked to the contrary hereon). all nominees listed to the Peller (Instructions: To withhold authority to
right. vote for any individual nominee, write that
nominee's name in the space provided below.)
[-] [-]
--------------------------------------------
ISP RECOMMENDS A VOTE "FOR" PROPOSAL 2.
---
FOR AGAINST ABSTAIN
2. THE BOARD SIZE BYLAW PROPOSAL [_] [_] [_]
ISP RECOMMENDS A VOTE "FOR" THE NOMINEES LISTED BELOW.
---
3. Election of ADDITIONAL Directors TO FILL VACANCIES FROM INCREASED BOARD SIZE
FOR all nominees listed on the right (except WITHHOLD AUTHORITY to vote for NOMINEES: Alan Meckler, Dan Ogden, Morrison
as marked to the contrary hereon). all nominees listed to the DeSoto Webb, Robert Englander, John Droney,
right. Anthony T. Kronman, Vincent Tese.
[_] [_] (Instructions: To withhold authority to vote
for any individual nominee, write that
nominee's name in the space provided below.)
--------------------------------------------
ISP RECOMMENDS A VOTE "FOR" PROPOSALS 4, 5, 6 and 7.
FOR AGAINST ABSTAIN
4. THE POISON PILL BYLAW PROPOSAL [_] [_] [_]
FOR AGAINST ABSTAIN
5. THE POISON PILL AMENDMENT PROPOSAL [_] [_] [_]
FOR AGAINST ABSTAIN
6. THE BYLAW REPEAL PROPOSAL [_] [_] [_]
FOR AGAINST ABSTAIN
7. THE OMNIBUS PROPOSAL [_] [_] [_]
ISP MAKES NO RECOMMENDATION ON
THE FOLLOWING MATTER TO BE VOTED ON
AT THE 2000 ANNUAL MEETING
<PAGE>
FOR AGAINST ABSTAIN
RATIFICATION OF INDEPENDENT AUDITORS [_] [_] [_]
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY BE PRESENTED TO THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.
P Dated: _____________, 2000
R -----------------------------------------
(Signature)
O
-----------------------------------------
(Signature if held jointly)
X
-----------------------------------------
Title:
Y
Please sign exactly as name appears hereon.
When shares are held by joint tenants, both
should sign. When signing as attorney,
executor, administrator, trustee, or guardian,
please give full title as such. If a
corporation, please sign in full corporate name
by president or other authorized officer. If a
partnership, please sign in partnership name by
authorized person.
</TABLE>
