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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-1
(Amendment No. 5)
Tender Offer Statement
(Pursuant to Section 14(d)(1) of the Securities Exchange Act of 1934)
CBI Industries, Inc.
(Name of Subject Company)
Praxair, Inc.
PX Acquisition Corp.
(Bidders)
Common Stock, $2.50 par value per share (and the associated Rights)
(Title of Class of Securities)
124800-10-3
(CUSIP Number of Class of Securities)
David H. Chaifetz
Vice President, General Counsel
and Secretary
Praxair, Inc.
39 Old Ridgebury Road
Danbury, Connecticut 06810-5113
(203) 837-2000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
Copies to:
Neil T. Anderson, Esq.
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
(212) 558-4000
This Amendment No. 5 amends and supplements the Tender Offer
Statement on Schedule 14D-1, as amended (the "Schedule 14D-1"), originally
filed by Praxair, Inc., a Delaware corporation ("Praxair"), and PX
Acquisition Corp., a Delaware corporation (the "Purchaser"), on November 3,
1995 relating to the tender offer disclosed therein to purchase all of the
outstanding Shares (including any associated Rights) upon the terms and
subject to the conditions set forth in the Offer to Purchase, dated
November 3, 1995, and the related Letter of Transmittal. Capitalized terms
used and not defined herein shall have the meanings set forth in the
Schedule 14D-1.
Item 10. Additional Information
Item 10 is hereby amended and supplemented by adding thereto the
following:
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(e) On November 17, 1995, Praxair and the Purchaser filed an amended
complaint in the Delaware Court of Chancery seeking, among other things,
injunctive and/or declaratory relief (a) to compel the Company's Board of
Directors to render the Rights inapplicable to the Offer and to the Second
Step Cash Merger, to render the restrictions contained in Section 203 of
the DGCL inapplicable to the Second Step Cash Merger, and to render the
supermajority provisions of the Articles Tenth and Fifteenth of the
Company's Restated Certificate of Incorporation inapplicable to the Second
Step Cash Merger; (b) enjoining the Company from taking any action to
interfere with the Offer; (c) declaring the Company's Board of Directors in
breach of their fiduciary duty to the Company's stockholders by continuing
to deploy the Rights and other defensive measures; and (d) compelling the
Company's Board of Directors to include Praxair and the Purchaser in the
Company's alleged efforts to maximize value for the Company's stockholders
and to provide Praxair all information that the Company provides to any
other third party in connection with its exploration of alternatives to the
Offer. A copy of the Amended Complaint is attached hereto as Exhibit
(a)(15) and is incorporated herein by reference.
Item 11. Material to be Filed as Exhibits.
Item 11 is hereby amended and supplemented by adding thereto the
following:
(a)(15) Amended complaint in Praxair, Inc. and PX Acquisition Corp. v. CBI
Industries, Inc., filed in the Delaware Court of Chancery on
November 17, 1995.
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete
and correct.
Dated: November 20, 1995
PRAXAIR, INC.
By: /s/ David H. Chaifetz
Name: David H. Chaifetz
Title: Vice President, General
Counsel and Secretary
PX ACQUISITION CORP.
By: /s/ David H. Chaifetz
Name: David H. Chaifetz
Title: President-Secretary<PAGE>
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
<C> <S> <S>
Sequentially
Exhibit Numbered
No. Description Pages
(a)(15) Amended complaint in Praxair, Inc. and PX Acquisition Corp. v. CBI Industries, Inc.,
filed in the Delaware Court of Chancery on November 17, 1995.
</TABLE>
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COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
PRAXAIR, INC. and PX ACQUISITION CORP., )
)
Plaintiffs, )
) C.A. No. 14648
v. )
)
CBI INDUSTRIES, INC., JOHN E. )
JONES, LEWIS E. AKIN, WILEY N. )
CALDWELL, E.H. CLARK, JR., )
JOHN F. RIORDAN, GARY E. MACDOUGAL, )
JOHN T. HORTON, STEPHANIE PACE )
MARSHALL, ROBERT T. STEWART, )
EDWARD J. MOONEY, ROBERT J. )
DAY and ROBERT G. WALLACE, )
)
Defendants. )
AMENDED COMPLAINT
Plaintiffs, Praxair, Inc. ("Praxair") and PX Acquisition Corp.
("PX"), by their attorneys, as and for their complaint herein, allege upon
knowledge with respect to themselves and their own acts, and upon
information and belief as to all other matters, as follows:
NATURE OF THE ACTION
1. Plaintiffs bring this action for injunctive and/or
declaratory relief to prevent defendant CBI Industries, Inc. ("CBI") and
its Board of Directors from deploying a Rights Agreement (the "poison
pill") and other anti-takeover defenses in violation of fiduciary duties
owed to CBI's stockholders and to compel CBI to include Praxair in the
exploration of strategic alternatives that the CBI Board is currently
pursuing with certain unidentified third parties in response to Praxair's
offer to purchase all of CBI's outstanding common stock.
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2. CBI has experienced an extended period of poor
performance and disappointing earnings. This poor performance has been
reflected in a decline in its stock price from $30 in September 1994 (the
last time the stock even traded as high as $30 per share) to a level of
$20 1/8 on October 27, 1995. Despite this steep and consistent decline --
and perhaps because of it -- CBI's board has chosen to insulate itself
against any takeover attempts by adopting an array of takeover defense
measures, including a poison pill with an extremely low 10% threshold.
3. Fortunately for CBI's stockholders, a means of escape has
emerged. On October 29, 1995, Praxair announced that it had proposed to
the Board of Directors of CBI a merger in which stockholders of CBI would
receive consideration of $32 per common share of CBI, either in Praxair
stock or in cash (the "Proposal"). On November 3, 1995, after CBI's Board
failed to act on the merger proposal, Praxair, through its wholly-owned
subsidiary PX, commenced a tender offer for all of CBI's outstanding common
shares at a price of $32 per share in cash (the "Tender Offer"). Praxair's
Tender Offer represents a substantial premium over the market price for CBI
shares prior to Praxair's announcement of the Proposal.
4. In response to the Tender Offer, CBI announced on
November 16, 1995, that it was rejecting Praxair's offer as inadequate and
refusing to redeem the poison pill, thus effectively precluding Praxair and
CBI shareholders from consummating the Tender Offer. Furthermore, the CBI
Board
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announced that it has been "actively explor[ing] alternatives to maximize
stockholder value" with certain third parties, but has steadfastly refused
to negotiate either the Proposal or Tender Offer with Praxair -- the only
third party that has to date been willing to step forward and publicly
offer value to CBI's shareholders.
5. The Tender Offer does not pose any threat to the
interests of CBI's stockholders or to CBI's corporate policy and
effectiveness. To the contrary, it will provide CBI's stockholders with a
substantial premium to the market price that has resulted from current
management's stewardship of the company. The CBI Board's stonewalling of
the Praxair offer contradicts its stated intention to "explore alternatives
to maximize stockholder value" and is a breach of its fiduciary duties to
Praxair and its other stockholders.
6. The CBI Board should not be allowed to use the poison
pill and other anti-takeover defenses to prevent Praxair's valid non-
coercive offer from being presented to its stockholders while it
simultaneously pursues "strategic alternatives" with other third parties.
If CBI is sincere in its efforts to explore alternatives to maximize value,
it must include Praxair in those efforts either by rendering its anti-
takeover defenses inapplicable to the Tender Offer and open negotiations
with Praxair and provide Praxair equal access to information it is giving
other third parties.
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THE PARTIES
7. Plaintiff Praxair is a Delaware corporation with its
principal place of business in Danbury, Connecticut. Praxair is a supplier
of various industrial gases, with 1994 sales of $2.7 billion. Praxair is
beneficial owner of approximately 79,200 shares of CBI common stock.
8. Plaintiff PX is a Delaware corporation, a wholly-owned
subsidiary of Praxair, and beneficial owner of 100 shares of CBI common
stock.
9. Defendant CBI is a Delaware corporation with its
principal place of business in Oak Brook, Illinois. CBI is a supplier of
various industrial gases and is also engaged in construction and (through
investments) terminal operation.
10. Defendant John E. Jones is Chairman and Chief Executive
Officer, President, and a director of CBI. The remaining individual
defendants are all directors of CBI.
BACKGROUND
11. CBI's earnings have consistently failed to meet consensus
projections by market analysts -- a problem that has resulted in a
continued downward slide in its share price and underperformance relative
to leading market indicators. For example, while the S&P Specialty
Chemical Index rose 20.7% between January 1, 1995 and October 27, 1995,
CBI's stock price declined 21.5% during the same period. CBI's market
performance fares even worse when compared with the S&P 500 Index, which
increased 26.2% between January 1, 1995 and October 27, 1995. Management
has done nothing to reverse this decline. "CBI's
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management has shown total disregard for shareholders and absolutely no
interest in enhancing shareholder value," observed Anthony Orphanos, a
managing director of Warburg Pincus Counselors and manager or co-manager of
funds that, at the time, held 1.5 million CBI shares (about 4% of the
shares outstanding), as quoted in the Chicago Sun Times on October 31,
1995.
12. In December 1994, H. William Lichtenberger, Chairman and
Chief Executive Officer of Praxair, contacted Mr. Jones to advise him of
Praxair's willingness to consider a variety of possible transactions with
CBI involving its industrial gas business. Mr. Jones indicated he would
contact Praxair if he wished to pursue such a transaction.
13. On May 19, 1995, Mr. Lichtenberger and Mr. Jones met in
Chicago, Illinois and Mr. Lichtenberger raised with Mr. Jones a variety of
possible transactions between Praxair and CBI, including the possibility of
a business combination between Praxair and CBI. Mr. Jones indicated he
would consider Mr. Lichtenberger's ideas and respond after such
consideration.
14. Having heard no response from Mr. Jones, on August 28,
1995, Mr. Lichtenberger telephoned Mr. Jones to solicit a response
regarding the possible transactions discussed at the May 19, 1995 meeting.
During that call Mr. Jones agreed to travel to New York on August 31, 1995
to meet with Mr. Lichtenberger to disucss a possible transaction.
15. On August 31, 1995, Mr. Lichtenberger and Mr. John A.
Clerico, Vice President and Chief Financial Officer of Praxair, met with
Mr. Jones and Mr. A.J. Schneider, Chief
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Financial Officer of CBI, and discussed further a possible business
combination between Praxair and CBI. At the conclusion of the meeting, Mr.
Jones indicated he would contact Mr. Lichtenberger after the Labor Day
holiday. On September 5, 1995, Mr. Jones called Mr. Lichtenberger to
discuss further the possible business combination that had been the subject
of the August 31 meeting. Mr. Jones indicated on that call that he wanted
to consider the matter further and they should talk further on Mr.
Lichtenberger's return from a scheduled overseas trip.
16. On October 20, 1995, Mr. Jones telephoned Mr.
Lichtenberger to indicate that CBI had decided to discontinue their
discussions relating to a business combination between Praxair and CBI.
17. On October 27, Mr. Lichtenberger sent the Proposal to Mr.
Jones, stating in pertinent part (a copy of the full letter is annexed
hereto as Exhibit A):
As you know, over the past six months you and
I have had several discussions regarding a possible
transaction to effect a merger of our respective
companies. Based on our conversations, I think we
both realize that significant benefits could be
realized by both our companies from such a
transaction. Therefore, I was greatly disappointed
when you told me on October 20 that you had decided
not to continue our discussions.
As I told you during that telephone conversa-
tion, in recent weeks we at Praxair have continued
to carefully study the dynamics and potential
advantages of a business combination of Praxair and
CBI. As a result, we now feel even more strongly
that such a business combination of our companies
would result in significant strategic
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benefits for both our companies and our respective
shareholders. In light of your current position
which you communicated to me on October 20, and
given what we continue to view as the compelling
rationale for a business combination, we have
decided that the best way to proceed is for Praxair
to submit a specific proposal to your Board of
Directors for its formal consideration.
Accordingly, on behalf of the Board of
Directors of Praxair, I am pleased to propose
herewith the merger of Praxair and CBI pursuant to
which your shareholders would receive $32.00 for
each share of CBI common stock, which we would
propose to pay in either cash or Praxair common
stock. Our proposal to effect a merger of Praxair
and CBI is subject to the negotiation of a mutually
satisfactory definitive merger agreement containing
customary terms and closing conditions.
* * *
While we would very much prefer that a
business combination of our companies be effected
pursuant to the negotiation of a merger on the
terms we have proposed, you and your Board should
appreciate that if your Board rejects our proposal
to negotiate a merger, we reserve the right to
propose directly to the shareholders of CBI a cash
offer for CBI by Praxair.
18. On November 3, 1995, after CBI's Board failed to act on
Praxair's merger proposal, PX commenced the Tender Offer for all
outstanding shares of CBI's Common Stock, at a price of $32 per share in
cash. The Offer to Purchase disseminated in connection with the Tender
Offer states that if the Offer is consummated, as soon as practicable
thereafter, PX will seek to consummate a merger between CBI and PX or
another direct or indirect wholly-owned subsidiary of Praxair (the "second
step merger") at a price equal to the price per share paid in the Tender
Offer. The Tender Offer is scheduled to expire on
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December 4, 1995, unless extended, and is conditioned on, inter alia, (a)
the tendering of at least a majority of CBI's outstanding Common shares,
measured on a fully-diluted basis, on the date of purchase; (b) CBI's
redemption of its poison pill (discussed below, at paragraphs 25 to 30) or
the pill having been invalidated by the Court or otherwise rendered
inapplicable to the Tender Offer and the second-step merger; (c) Praxair
being satisfied that no supermajority vote will be required by Articles
Tenth and Fifteenth of CBI's Restated Certificate of Incorporation
(discussed below, at paragraphs 31 to 40) to approve the second-step
merger; and (d) Praxair being satisfied that section 203 of the Delaware
General Corporate Law will not apply to a second-step merger.
19. On November 6, 1995, Praxair obtained commitments of $1.5
billion for a credit facility that will total $3.0 billion in lender
commitments, of which $1.5 billion will be used by Praxair to advance funds
to PX to consummate the Tender Offer. An additional $1 billion will be
used to refinance existing CBI debt.
20. In a filing pursuant to Section 14 of the Securities
Exchange Act of 1934 on November 16, 1995 (the "Schedule 14D-9 filing") (a
copy of which is annexed hereto as "Exhibit B"), CBI's Board announced that
it was recommending that its stockholders reject the Tender Offer because,
according to the Board, the $32 price is inadequate. The "inadequacy"
characterization comes despite the fact that the $32 price represents a
premium of $11.85 per share (or 59%) over the market
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price of CBI shares on the day prior to Praxair's announcement of the
merger proposal, and $9.625 per share (or 43%) over the average of the
market price of CBI shares ($22.375 per share) for the thirty days
immediately prior to such announcement.
21. CBI's Board has made its "recommendation" a self-
executing mandate by also failing to remove the poison pill and other anti-
takeover devices that effectively prevent Praxair from consummating the
Tender Offer.
22. In its Schedule 14D-9 filing, CBI's Board also stated
"that the interests of the Company's stockholders would be best served if
the Company were to actively explore alternatives to maximize stockholder
value", and claimed that "the Company is in the preliminary stages of
discussion or negotiation concerning a possible transaction involving the
Company . . ., having entered into confidentiality and standstill
agreements concerning the furnishing of confidential information to parties
indicating an interest in such a transaction and having responded to due
diligence inquiries. In addition, the Company has had preliminary
discussions with other parties regarding their potential interest in such a
transaction."
23. In contrast to its apparent dealings with other third
parties, CBI continues to refuse to negotiate with Praxair.
24. Praxair is entitled to be treated as an equal suitor for
CBI so that the goal expressed by CBI -- to maximize stockholder value --
can truly be attained. The CBI Board's continued failure to negotiate with
Praxair, provide equal access to all information provided to other
potential suitors for CBI
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and remove the poison pill while simultaneously exploring alternative
transactions with other third parties constitutes a breach of CBI Board's
fiduciary duties.
CBI's ANTI-TAKEOVER DEFENSES
25. CBI has a battery of "state-of-the-art" takeover defenses
which combine to effectively prevent the takeover of the Company absent
board approval.
The Poison Pill
26. On March 4, 1986, the Board of Directors of CBI entered
into a Rights Agreement (the "poison pill"), pursuant to which Rights were
issued to holders of Common Stock. The Rights are not exercisable and
trade with the Common Stock until occurrence of a Distribution Date.
27. Under the poison pill as originally adopted, "flip-in"
rights were triggered when any person acquired 20% or more of CBI's common
stock. The 20% trigger was reduced to 10% by an amendment to the poison
pill effective as of December 20, 1994. The reduction in the pill
threshold was apparently intended to discourage the efforts of Airgas Inc.
to purchase CBI's industrial gas unit. The measure achieved the desired
result: Airgas dropped its bid four weeks after the poison pill was
amended.
28. The poison pill makes prohibitively expensive any
acquisition of more than 10% of CBI's Common Stock. The most important
deterrent features of the poison pill are its flip-in and exchange
provisions. The flip-in is a pure "status" flip-in based on the 10%
trigger. It does not require any self-dealing
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conduct. If any person or entity acquires beneficial ownership of 10% of
CBI's outstanding common stock, all other holders get the right to buy
additional shares at half price. The number of additional shares that can
be purchased will cause massive dilution of the 10% stockholder. For
example, with the common stock trading at approximately $20 1/8 (as it was
when Praxair proposed a merger at $32 per share), the flip-in would have
given stockholders the right to receive, for half price, about 7.5 shares
of CBI common stock for each CBI share already held.
29. Under the exchange provision, the CBI Board can cause the
same type of dilution caused by the flip-in regardless of whether the
stockholders actually exercise their flip-in rights. If a stockholder
reaches the 10% ownership level, the CBI Board can simply distribute one
share of CBI common stock for each share held by every stockholder except
the 10% stockholder. The resulting dilution would deter any rational
stockholder from crossing the 10% line.
30. The only way for a stockholder to avoid the dilution
caused by the poison pill is to receive the approval of the CBI Board prior
to reaching the 10% ownership level. The Board can give this approval
directly by approving a "permitted tender offer," or indirectly by
redeeming the rights (which must be done within 20 days after a stockholder
crosses the 10% level) or, prior to the time the 10% level is crossed, by
amending the terms of the poison pill.
31. Thus, by adopting the poison pill the CBI Board has given
itself complete power to prevent any stockholder from
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acquiring 10% of CBI's stock. The poison pill effectively allows the Board
to preclude any attempt to acquire more than 10% of CBI, even acquisition
attempts that provide substantial benefits to CBI's stockholders. Given
the current circumstances of CBI and the attractive offer made by Praxair,
the CBI Board's fiduciary duties require them to either redeem the Rights
or render them inapplicable to the Tender Offer.
CBI's Restated Certificate of Incorporation
32. The poison pill does not exist in a vacuum. Rather, it
stands beside and works with CBI's Restated Certificate of Incorporation
and By-Laws.
33. Article Tenth of CBI's Restated Certificate of
Incorporation prohibits an entity from effecting a merger or consolidation
with CBI unless such transaction is approved by an affirmative vote of the
holders of at least two-thirds of the outstanding Common Stock entitled to
vote and at least two-thirds of each series of shares of Preferred Stock
entitled to vote as a class on such issue. However, if the Board of
Directors has recommended the merger, then such a merger can be consummated
after the approval of a simple majority of the outstanding shares of each
class of stock entitled to vote on such issue.
34. Article Fifteenth of CBI's Restated Certificate of
Incorporation, entitled "Business Combinations," prohibits, except upon the
affirmative vote of at least 80% of all outstanding shares of Common Stock
entitled to vote and at least 80% of each series of Preferred Stock
entitled to vote as a class on the issue, certain business combinations,
including mergers
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and consolidations, between CBI and any "Interested Stockholder" (defined
as, inter alia, any person, including all affiliates and associates of such
person, who is the beneficial owner, or has the right to acquire, exercise
or direct the exercise of votes, of more than 10% of the voting power of
CBI's outstanding Voting Stock).
35. An Interested Stockholder proposing a merger or
consolidation can avoid the 80% stockholder approval requirement only if
either (i) the transaction has been approved by a majority of the
"Continuing Directors" (defined as directors who are unaffiliated with the
Interested Stockholder and were members of the Board prior to the time that
the Interested Stockholder became an Interested Stockholder), or (ii)
certain "price and procedure requirements" have been met.
36. Thus, even if the poison pill were redeemed or enjoined,
Articles Tenth and Fifteenth raise the vote level necessary for a business
combination to be approved to excessive levels and raise unreasonable
roadblocks to an acquisition of CBI. Given the current circumstances of
CBI and the attractive offer made by Praxair, the CBI Board's fiduciary
duties require them to render these Articles inapplicable to the Tender
Offer and second-step merger.
37. Other provisions of CBI's Restated Certificate of
Incorporation and By-Laws sharply limit the ability of shareholders to
remove or otherwise influence directors. Article Fourteenth of the
Certificate eliminates the shareholders' right to act by written consent
without a meeting. The By-Laws
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prohibit the shareholders from calling special meetings. Together, these
provisions prevent the shareholders from exercising their franchise except
at an annual meeting.
38. Once the annual meeting comes, other provisions limit the
effect of the stockholders' vote. Article Sixth of the Certificate creates
a classified ("staggered") board, and thus only one-third of the incumbent
directors face an election at the annual meeting. The stockholders cannot
avoid this provision by modifying the size of the board because the
Certificate reserves this power to the incumbent directors. Moreover the
incumbents will run for re-election unopposed unless stockholders wishing
to nominate an alternative slate provide a detailed notice of their
intention at least sixty days prior to the meeting, as the By-Laws require.
39. The shareholders' ability to assert their rights by
amending these provisions is also limited. Article Tenth of the
Certificate provides that any charter amendment not "recommended" by the
CBI Board requires the approval of at least two-thirds of the outstanding
voting stock, and under the By-Laws notice of an intention to propose an
amendment to the Certificate must be given sixty days before the annual
meeting. The business combination provisions of Article Fifteenth of the
Certificate cannot be amended without 80% approval. The stockholders
cannot approve the By-Laws without two-thirds approval.
40. In sum, CBI's Restated Certificate of Incorporation and
By-Laws work together to limit the stockholders' ability to approve
acquisition transactions and
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severely limit the effectiveness of the stockholder franchise and the
stockholders' ability to assert their will in a proxy contest.
Delaware General Corporation Law, Section 203
41. Section 203 of the Delaware General Corporation Law
applies to any Delaware corporation that has not opted out of the statute's
coverage. CBI has not opted out of the statute's coverage.
42. The statute provides that if a person acquires 15% or
more of a corporation's voting stock (thereby becoming an "interested
stockholder"), such interested stockholder may not engage in a "business
combination" (defined to include a merger or consolidation) with the
corporation for three years after the interested stockholder becomes such,
unless (i) prior to such stockholder's crossing the 15% threshold, the
corporation's board of directors has approved either the acquisition of
stock or the business combination, or (ii) the interested stockholder
acquires at least 85% of the corporation's voting stock in the same
transaction in which it crosses the 15% threshold, or (iii) on or
subsequent to the date that the stockholder crosses the 15% threshold, the
business combination is approved by the corporation's board of directors
and is authorized at an annual or special meeting of the corporation's
stockholders, and not by written consent, by the affirmative vote of at
least 66-2/3% of the outstanding voting stock which is not owned by the
interested stockholder.
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43. Section 203 was intended to impede coercive tender
offers. The Tender Offer is not coercive. Thus no justification exists
for CBI's Board's refusal to take action that would render Section 203
inapplicable to the Tender Offer and second-step merger.
IRREPARABLE INJURY
44. Plaintiffs do not have an adequate remedy at law. In
light of the defendants' decision to preclude the Tender Offer through the
use of the poison pill and other defensive measures and to exclude Praxair
from their purported exploration of strategic alternatives, only the
exercise of this Court's equitable powers will permit plaintiffs to fairly
present the Tender Offer to CBI's stockholders. Absent such relief, CBI's
shareholders will suffer immediate and irreparable injury.
AS AND FOR A FIRST CAUSE OF ACTION
(Injunctive Relief)
45. Plaintiffs repeat and reallege each and every allegation
contained in paragraphs 1 through 44 above, as if fully set forth herein.
46. CBI's Board's use of the poison pill and other anti-
takeover defenses in the current circumstances is a violation of their
fiduciary duties because they (i) deter acquisition proposals, including,
but not limited to, the attractive proposal made by Praxair, (ii) shelter a
poor-performing management from a change in control, and (iii) deprive CBI
stockholders of the opportunity to achieve value for their shares. This
ongoing violation of their fiduciary duties, and
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the resulting irreparable injury to CBI's shareholders, will continue
unless enjoined.
47. Plaintiffs do not have an adequate remedy at law.
AS AND FOR A SECOND CAUSE OF ACTION
(Declaratory Judgment)
48. Plaintiffs repeat and reallege each and every allegation
contained in paragraphs 1 through 47 above, as if fully set forth herein.
49. An actual dispute exists as to whether the CBI Board of
Directors is acting in accordance with its fiduciary duties by continuing
to employ the poison pill and other anti-takeover devices to deter attempts
to acquire CBI notwithstanding the poor performance by CBI's management and
the attractive proposal by Praxair. A declaratory judgment should be
entered determining that the fiduciary obligations of CBI's Board require
it to take such actions as are necessary to render the poison pill and
other anti-takeover defenses inapplicable to the Tender Offer.
50. Plaintiffs do not have an adequate remedy at law.
AS AND FOR A THIRD CAUSE OF ACTION
(Injunctive Relief)
51. Plaintiffs repeat and reallege each and every allegation
contained in paragraphs 1 through 50 above, as if fully set forth herein.
52. CBI's exploration of alternatives with other unidentified
parties while deliberately and purposefully excluding Praxair from that
process is a violation of the Board's fiduciary duties because it precludes
Praxair from competitively
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bidding for CBI and, thus, prevents a true maximization of shareholder
value. This ongoing violation of the CBI Board's fiduciary duties will
continue unless the Court enters an injunction ordering CBI to include
Praxair in CBI's search for possible alternatives and to provide to
plaintiffs equal access to all information and individuals that CBI
provides to other third parties in connection with a possible alternative
transaction to the Tender Offer.
53. Plaintiffs do not have an adequate remedy at law.
WHEREFORE, plaintiffs respectfully request that this Court
enter an order and judgment:
(a) compelling CBI's Board of Directors to take such
actions as are required to render CBI's poison pill, Articles Tenth and
Fifteenth of CBI's Restated Certificate of Incorporation, and Section 203
of the Delaware General Corporation Law inapplicable to the Praxair's
Tender Offer and second-step merger, and preliminarily and permanently
enjoining CBI, its directors, officers, successors, agents, servants,
subsidiaries, employees and attorneys, and all persons acting in concert or
participating with them, from taking any action to interfere with the
Praxair's Tender Offer;
(b) declaring that CBI's Board of Directors is in
breach of their fiduciary duty to stockholders of CBI by continuing to
deploy the poison pill and other anti-takeover devices;
(c) compelling CBI's Board of Directors to include
Praxair and PX in CBI's alleged efforts to maximize CBI
<PAGE>
<PAGE> 19
stockholder value and providing to Praxair access to all information and
CBI individuals that CBI provides to any other third party in connection
with its exploration of alternatives to the Tender Offer; and
(d) granting such other relief as the Court may deem
just and proper.
MORRIS, NICHOLS, ARSHT & TUNNELL
________________________________
Martin P. Tully
Elaine C. Reilly
1201 North Market Street
P.O. Box 1347
Wilmington, Delaware 19899-1347
(302) 658-9200
Attorneys for Plaintiffs
Praxair, Inc. and
PX Acquisition Corp.
OF COUNSEL:
John L. Hardiman
William L. Farris
Tariq Mundiya
Neil L. Glazer
SULLIVAN & CROMWELL
125 Broad Street
New York, New York 10004
(212) 558-4000
November 17, 1995
<PAGE>
<PAGE> 1
COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
PRAXAIR, INC. and PX ACQUISITION )
CORP., )
)
Plaintiffs, )
)
v. ) C.A. No. 14648
)
CBI INDUSTRIES, INC., JOHN E. )
JONES, LEWIS E. AKIN, )
WILEY N. CALDWELL, E.H. )
CLARK, JR., JOHN F. RIORDAN, )
GARY E. MACDOUGAL, JOHN T. )
HORTON, STEPHANIE PACE )
MARSHALL, ROBERT T. STEWART, )
EDWARD J. MOONEY, ROBERT J. )
DAY and ROBERT G. WALLACE, )
)
Defendants. )
PLAINTIFFS' SECOND REQUEST
FOR PRODUCTION OF DOCUMENTS
Plaintiffs request pursuant to Rule 34 of the Rules of the
Court of Chancery that defendants produce the following documents for
inspection and copying at the offices of Morris, Nichols, Arsht & Tunnell,
1201 N. Market Street, Wilmington, Delaware 19899 on or before December 17,
1995.
DEFINITIONS
(i) "Praxair" shall mean Praxair, Inc., a Delaware corporation.
(ii) "CBI" shall mean CBI Industries, Inc., a Delaware
corporation.
(iii) "Board" shall mean the board of directors of CBI.
<PAGE>
<PAGE> 2
(iv) "Rights Plan" shall mean the Rights Agreement adopted by
CBI's Board of Directors in 1986, amended and restated in 1989, and further
amended in 1994 and 1995.
(v) "Rights" shall mean the rights issued to CBI stockholders
pursuant to the Rights Plan.
(vi) "Proposal" shall mean the proposal for a merger of Praxair
and CBI set forth in the letter dated October 27, 1995 from H.W.
Lichtenberger to John E. Jones, a copy of which is annexed as Exhibit A to
the Complaint.
(vii) "Offer" shall mean the tender offer for all outstanding
shares of common stock of CBI at $32.00 per share commenced by PX
Acquisition Corp. on November 3, 1995.
(viii) The "14D-9 Filing" shall mean the November 16, 1995 filing
by CBI pursuant to Section 14D-9 of the Securities Exchange Act of 1934,
a copy of which is annexed as Exhibit B to the Complaint.
(ix) "Document" shall mean and include all written or graphic
matter or other means of preserving thought or expression, however produced
or reproduced, encompassed by Court of Chancery Rule 34.
(x) The terms "reflecting," "referring to," or "relating to"
shall mean directly or indirectly mentioning, discussing, constituting or
describing, pertaining to or being connected with, a stated subject matter.
(xi) In construing this request: (a) the singular shall include
the plural and the plural shall include the singular; (b) the masculine,
feminine or neuter pronoun shall not exclude the
<PAGE>
<PAGE> 3
other genders; (c) the conjunctions "and" and "or" shall be read either
disjunctively or conjunctively so as to bring within the scope of this
request all information that might otherwise be construed to be outside its
scope; and (d) the word "any" shall be read to mean each and every.
INSTRUCTIONS
A. Each document is to be produced, with all non-identical
copies and drafts thereof, in its entirety, without abbreviation or
redaction.
B. The documents requested herein are those dated or
prepared on or after January 1, 1994, unless otherwise specified.
C. In the event that any document called for by this Request
is not produced under claim of privilege or other immunity from discovery,
such document shall be identified by stating (i) its author; (ii) each
addressee; (iii) each person who has seen or received a copy of the
document or with whom the document was discussed; (iv) the document's date,
subject matter, number of pages, attachments and appendices; (v) present
custodian of the document; and (vi) the nature of the privilege or immunity
asserted. If the document is not produced under claim of attorney-client
privilege, then the name of the attorneys, the name of the clients, and the
basis of the alleged privilege shall also be identified.
D. This request shall be deemed continuing so as to require
further and supplemental production as the defendants receive or generate
additional documents between the time of original production and the time
of decision in this matter.
<PAGE>
<PAGE> 4
Documents Requested
1. All documents reflecting, referring or relating to the
Proposal or the Offer.
2. All documents reflecting, referring or relating to any
evaluation of the Proposal or the Offer by or for CBI or any of its
officers, directors, or financial or legal advisors.
3. All documents reflecting, referring or relating to any
deliberation by any officer or director of CBI concerning the Proposal or
the Offer or any contemplated or possible response thereto.
4. All documents reflecting, referring or relating to any
advice received by any director of CBI concerning the Proposal or the Offer
or any contemplated or possible response thereto.
5. All documents reflecting, referring or relating to any
communication between any shareholder of CBI and any representative of CBI
concerning the Offer or the Proposal.
6. All documents reflecting, referring or relating to the
14D-9 Filing.
7. All documents reflecting, referring or relating to any
information (including without limitation any financial projections)
provided by CBI to any financial advisor in connection with such advisor's
evaluation of the Proposal or the Offer.
8. All documents reflecting, referring or relating to any
discussion or deliberation during any meeting of CBI's Board
<PAGE>
<PAGE> 5
of Directors concerning the Proposal, the Offer, or any possible business
combination between CBI and Praxair.
9. All minutes of any meetings of the Board or any meeting
of any subcommittees of the Board.
10. All documents provided to the Board reflecting, referring
or relating to any valuation of CBI, its assets or its shares.
11. All financial projections prepared by or for CBI and all
documents reflecting, referring or relating to any changes in such
projections.
12. All documents relating to any communication between any
representative of CBI and any representative of Praxair concerning any
possible business combination involving Praxair and CBI.
13. All documents reflecting, referring or relating to any
deliberation by CBI's Board of Directors concerning whether to approve the
Offer as a "permitted tender offer" under the Rights Plan or to redeem the
Rights or amend the Rights Plan in response to the Offer.
14. All documents reflecting, referring or relating to any
deliberation by CBI's Board of Directors concerning whether to approve the
Offer for purposes of Articles Tenth or Fifteenth of CBI's Certificate of
Incorporation or Section 203 of the Delaware General Corporation Law.
15. All documents reflecting, referring or relating to the
opinions of Lehman Brothers Inc. or Merrill Lynch & Co. referred to in the
14D-9 Filing.
<PAGE>
<PAGE> 6
16. All documents reflecting, relating or referring to the
right to vote or to direct disposition of CBI securities held by or for the
CBI Salaried Employee Stock Ownership Plan.
17. All documents concerning any communication between
representatives of CBI and representatives of the trustee for the CBI
Salaried Employees Stock Ownership Plan relating to the Proposal or the
Offer.
18. The confidentiality and standstill agreements with third
parties referred to in Item 7 of the 14D-9 Filing.
19. All documents provided to third parties pursuant to the
confidentiality and standstill agreements with third parties referred to in
Item 7 of the 14D-9 Filing.
20. All documents reflecting, referring or relating to any
information provided to third parties pursuant to the confidentiality and
standstill agreements with third parties referred to in Item 7 of the 14D-9
Filing.
21. All documents reflecting, referring or relating to any
discussions or negotiations concerning the possible transactions involving
CBI described in Item 7 of the 14D-9 Filing.
<PAGE>
<PAGE> 7
MORRIS, NICHOLS, ARSHT & TUNNELL
_________________________________
Martin P. Tully
Elaine C. Reilly
1201 N. Market Street
P.O. Box 1347
Wilmington, DE 19899
(302) 658-9200
Attorneys for Plaintiffs
Praxair, Inc. and
PX Acquisition Corp.
OF COUNSEL:
John L. Hardiman
William L. Farris
Tariq Mundiya
Neil L. Glazer
SULLIVAN & CROMWELL
125 Broad Street
New York, New York 10004
(212) 558-4000
November 17, 1995
<PAGE>
<PAGE> 8
CERTIFICATE OF SERVICE
I hereby certify that on this 17th day of November, 1995, I
caused two copies of PLAINTIFFS' SECOND REQUEST FOR PRODUCTION OF DOCUMENTS
to be served on counsel for the parties as indicated below:
VIA HAND DELIVERY
Todd C. Schiltz, Esquire
Richards, Layton & Finger
One Rodney Square
P. O. Box 551
Wilmington, DE 19899
_______________________
Elaine C. Reilly
<PAGE>
<PAGE> 1
COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
PRAXAIR, INC. and PX ACQUISITION )
CORP., )
)
Plaintiffs, )
)
v. ) C.A. No. 14648
)
CBI INDUSTRIES, INC., JOHN E. )
JONES, LEWIS E. AKIN, )
WILEY N. CALDWELL, E.H. )
CLARK, JR., JOHN F. RIORDAN, )
GARY E. MACDOUGAL, JOHN T. )
HORTON, STEPHANIE PACE )
MARSHALL, ROBERT T. STEWART, )
EDWARD J. MOONEY, ROBERT J. )
DAY and ROBERT G. WALLACE, )
)
Defendants. )
NOTICE OF SERVICE
I hereby certify that on this 17th day of November, 1995, I
caused copies of PLAINTIFFS' SECOND REQUEST FOR PRODUCTION OF DOCUMENTS to
be served on the defendants CBI INDUSTRIES, INC., JOHN E. JONES, LEWIS E.
AKIN, WILEY N. CALDWELL, E.H. CLARK, JR., JOHN F. RIORDAN, GARY E.
MACDOUGAL, JOHN T. HORTON, STEPHANIE PACE MARSHALL, ROBERT T. STEWART,
EDWARD J. MOONEY, ROBERT J. DAY and ROBERT G. WALLACE as indicated below:
VIA HAND DELIVERY
c/o The Corporation Trust Co.
1209 Orange Street
Wilmington, DE 19801
<PAGE>
<PAGE> 2
MORRIS, NICHOLS, ARSHT & TUNNELL
_________________________________
Martin P. Tully
Elaine C. Reilly
1201 N. Market Street
P.O. Box 1347
Wilmington, DE 19899
(302) 658-9200
Attorneys for Plaintiffs
Praxair, Inc. and
PX Acquisition Corp.
OF COUNSEL:
John L. Hardiman
William L. Farris
Tariq Mundiya
Neil L. Glazer
SULLIVAN & CROMWELL
125 Broad Street
New York, New York 10004
(212) 558-4000
November 17, 1995
<PAGE>
<PAGE> 3
CERTIFICATE OF SERVICE
I hereby certify that on this 17th day of November, 1995, I
caused copies of the foregoing AMENDED COMPLAINT to be served on the
defendants CBI INDUSTRIES, INC., JOHN E. JONES, LEWIS E. AKIN, WILEY N.
CALDWELL, E.H. CLARK, JR., JOHN F. RIORDAN, GARY E. MACDOUGAL, JOHN T.
HORTON, STEPHANIE PACE MARSHALL, ROBERT T. STEWART, EDWARD J. MOONEY,
ROBERT J. DAY and ROBERT G. WALLACE as indicated below:
VIA HAND DELIVERY
c/o The Corporation Trust Co.
1209 Orange Street
Wilmington, DE 19801
_______________________
Elaine C. Reilly
