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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
AMERICAN CYANAMID COMPANY
(Name of Subject Company)
AC ACQUISITION CORP.
AMERICAN HOME PRODUCTS CORPORATION
(Bidder)
COMMON STOCK, $5.00 PAR VALUE PER SHARE
(Title of Class of Securities)
025321100
(CUSIP Number of Class of Securities)
LOUIS L. HOYNES, JR.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
AMERICAN HOME PRODUCTS CORPORATION
FIVE GIRALDA FARMS
MADISON, NEW JERSEY 07940
TELEPHONE: (201) 660-5000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
COPY TO:
CHARLES I. COGUT, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
TELEPHONE: (212) 455-2000
CALCULATION OF FILING FEE
<TABLE>
<S> <C>
TRANSACTION VALUATION* AMOUNT OF FILING FEE**
$9,070,442,965.00 $1,814,088.60
</TABLE>
* Based on the offer to purchase all of the outstanding shares of Common Stock
of the Subject Company and the associated Rights at $95.00 cash per share,
the number of Shares outstanding as reported in the Quarterly Report on Form
10-Q of the Subject Company for the quarter ended March 31, 1994, and the
number of options outstanding as reported in the Annual Report on Form 10-K
of the Subject Company for the year ended December 31, 1993.
** 1/50 of 1% of Transaction Valuation.
/ / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid:
Form or Registration No.:
Filing Party:
Date Filed:
PAGE 1 OF PAGES
THE EXHIBIT INDEX IS LOCATED ON PAGE
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This Tender Offer Statement on Schedule 14D-1 relates to the offer by AC
Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned
subsidiary of American Home Products Corporation, a Delaware corporation (the
"Parent"), to purchase all of the outstanding shares of Common Stock, $5.00 par
value per share (the "Shares"), of American Cyanamid Company, a Maine
corporation (the "Company"), and (unless and until the Purchaser declares that
the Rights Condition as defined in the Offer to Purchase referred to below is
satisfied) the associated Preferred Stock Purchase Rights (the "Rights") issued
pursuant to the Rights Agreement dated as of March 10, 1986, as amended as of
April 29, 1986 and as of April 21, 1987, between the Company and Mellon Bank,
N.A., as successor Rights Agent, at a purchase price of $95.00 per Share (and
associated Right), net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
August 10, 1994 (the "Offer to Purchase"), a copy of which is attached hereto as
Exhibit (a)(1), and in the related Letter of Transmittal (which, together with
the Offer to Purchase, constitute the "Offer"), a copy of which is attached
hereto as Exhibit (a)(2).
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is American Cyanamid Company. The
information set forth in Section 7 ("Certain Information Concerning the
Company") of the Offer to Purchase is incorporated herein by reference.
(b) The exact title of the class of equity securities being sought in the
Offer is Common Stock, $5.00 par value per share, including the associated
Preferred Stock Purchase Rights, of the Company. The information set forth in
the Introduction (the "Introduction") of the Offer to Purchase is incorporated
herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is filed by the Purchaser and the Parent.
The information set forth in Section 8 ("Certain Information Concerning the
Purchaser and the Parent") of the Offer to Purchase and in Schedule I thereto is
incorporated herein by reference.
(e) and (f) During the last five years, neither the Purchaser nor the
Parent nor, to the best knowledge of the Purchaser or the Parent, any of the
persons listed in Schedule I to the Offer to Purchase (i) has been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth in Section 8 ("Certain Information Concerning
the Purchaser and the Parent") of the Offer to Purchase is incorporated herein
by reference. Except as set forth in Section 8 of the Offer to Purchase, since
January 1, 1991, there have been no transactions which would be required to be
disclosed under this Item 3(a) between either the Purchaser or the Parent or, to
the best knowledge of the Purchaser and the Parent, any of the persons listed in
Schedule I to the Offer to Purchase and the Company or any of its executive
officers, directors or affiliates.
(b) The information set forth in Section 8 ("Certain Information Concerning
the Purchaser and the Parent") and Section 10 ("Background of the Offer;
Contacts with the Company") of the Offer to Purchase is incorporated herein by
reference. Except as set forth in Section 8 and Section 10 of the Offer to
Purchase, since January 1, 1991, there have been no contacts, negotiations or
transactions
2
<PAGE>
which would be required to be disclosed under Item 3(b) between either the
Purchaser or the Parent or any of their respective subsidiaries or, to the best
knowledge of the Purchaser and the Parent, any of those persons listed in
Schedule I to the Offer to Purchase and the Company or its affiliates concerning
a merger, consolidation or acquisition, a tender offer or other acquisition of
securities, an election of directors or a sale or other transfer of a material
amount of assets.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 9 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(g) The information set forth in the Introduction, Section 10
("Background of the Offer; Contacts with the Company"), Section 11 ("Purpose of
the Offer; the Merger; Plans for the Company"), Section 12 ("Dividends and
Distributions") and Section 13 ("Effect of the Offer on the Market for the
Shares, Stock Exchange Listing and Exchange Act Registration") of the Offer to
Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) The information set forth in the Introduction and Section 8 ("Certain
Information Concerning the Purchaser and the Parent") of and Schedule I to the
Offer to Purchase is incorporated herein by reference. Except as set forth in
the Introduction and Section 8 of and Schedule I to the Offer to Purchase,
neither the Purchaser nor the Parent nor, to the best knowledge of the Purchaser
or the Parent, any of the persons listed in Schedule I to the Offer to Purchase
or any associate or majority-owned subsidiary of either the Purchaser or the
Parent or any of the persons so listed beneficially owns or has any right to
acquire, directly or indirectly, any Shares.
(b) The information set forth in the Introduction and Section 8 ("Certain
Information Concerning the Purchaser and the Parent") of and Schedule I to the
Offer to Purchase is incorporated herein by reference. Except as set forth in
the Introduction and Section 8 of and Schedule I to the Offer to Purchase,
neither the Purchaser nor the Parent nor, to the best knowledge of the Purchaser
or the Parent, any of the persons or entities referred to above or any executive
officer, director or subsidiary of any of the foregoing has effected any
transactions in the Shares during the past sixty days.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 8 ("Certain
Information Concerning the Purchaser and the Parent"), Section 9 ("Source and
Amount of Funds"), Section 10 ("Background of the Offer; Contacts with the
Company"), Section 11 ("Purpose of the Offer; the Merger; Plans for the
Company") and Section 16 ("Fees and Expenses") of the Offer to Purchase is
incorporated herein by reference. Except as set forth in the Introduction and
Sections 8, 9, 10, 11 and 16 of the Offer to Purchase, neither the Purchaser nor
the Parent, nor, to the best knowledge of the Purchaser or the Parent, any of
the persons listed in Schedule I to the Offer to Purchase, has any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of the Company (including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or the voting
of any such securities, joint ventures, loans or option arrangements, puts or
calls, guarantees of loans, guarantee agreements or any giving or withholding of
proxies).
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ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction, Section 9 ("Source and
Amount of Funds") and Section 16 ("Fees and Expenses") of the Offer to Purchase
is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 ("Certain Information Concerning the
Purchaser and the Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) None.
(b) and (c) The information set forth in the Introduction and Section 15
("Certain Legal Matters and Regulatory Approvals") of the Offer to Purchase is
incorporated herein by reference.
(d) The information set forth in Section 9 ("Source and Amount of Funds")
and Section 15 ("Certain Legal Matters and Regulatory Approvals") of the Offer
to Purchase is incorporated herein by reference.
(e) The information set forth in the Introduction and Section 11 ("Purpose
of the Offer; the Merger; Plans for the Company") of the Offer to Purchase is
incorporated herein by reference. The complaint filed in the Defensive Tactics
Litigation (as defined in the Offer to Purchase) is filed herewith.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated August 10, 1994.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter from the Dealer Manager to Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees.
(a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Advertisement as published on August 10, 1994.
(a)(8) Press Release issued by the Parent on August 9, 1994.
(a)(9) Press Release issued by the Parent on August 10, 1994.
(b)(1) Commitment Letter dated August 9, 1994 to Parent from Chemical
Bank.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g) Complaint in American Home Products Corporation and AC Acquisition
Corp. v. American Cyanamid Company, et al, U.S. District Court
for the District of Maine.
4
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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.
AMERICAN HOME PRODUCTS CORPORATION
By: /s/ ROBERT G. BLOUNT
..................................
Name: Robert G. Blount
Title: Executive Vice President
and Chief Financial Officer
AC ACQUISITION CORP.
By: /s/ ROBERT G. BLOUNT
.................................
Name: Robert G. Blount
Title: Vice President
Date: August 10, 1994
5
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EXHIBIT INDEX
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EXHIBIT PAGE
NO. DESCRIPTION NO.
- ---------- ------------------------------------------------------------------------------------------ -------------
<S> <C> <C>
11(a)(1) Offer to Purchase dated August 10, 1994...................................................
11(a)(2) Letter of Transmittal.....................................................................
11(a)(3) Notice of Guaranteed Delivery.............................................................
11(a)(4) Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks, Trust Companies and
Nominees..................................................................................
11(a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and
Nominees..................................................................................
11(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9.....
11(a)(7) Summary Advertisement as published on August 10, 1994.....................................
11(a)(8) Press Release issued by the Parent on August 9, 1994......................................
11(a)(9) Press Release issued by the Parent on August 10, 1994.....................................
11(b)(1) Commitment Letter dated August 9, 1994 to Parent from Chemical Bank.......................
11(g) Complaint in American Home Products Corporation and AC Acquisition Corp. v. American
Cyanamid Company, et al, U.S. District Court for the District of Maine....................
</TABLE>
6
Exhibit 11(a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
AMERICAN CYANAMID COMPANY
AT
$95.00 NET PER SHARE
BY
AC ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
AMERICAN HOME PRODUCTS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, SEPTEMBER 7, 1994,
UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS: (1) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A
NUMBER OF SHARES OF COMMON STOCK OF THE COMPANY WHICH CONSTITUTES AT LEAST 80%
OF THE VOTING POWER (DETERMINED ON A FULLY DILUTED BASIS), ON THE DATE OF
PURCHASE, OF ALL SECURITIES OF THE COMPANY ENTITLED TO VOTE GENERALLY IN THE
ELECTION OF DIRECTORS OR IN A MERGER; (2) THE COMPANY'S PREFERRED STOCK PURCHASE
RIGHTS HAVING BEEN REDEEMED BY THE COMPANY'S BOARD OF DIRECTORS, OR THE
PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT SUCH PREFERRED STOCK
PURCHASE RIGHTS HAVE BEEN INVALIDATED OR ARE OTHERWISE INAPPLICABLE TO THE OFFER
AND THE PROPOSED MERGER DESCRIBED HEREIN; (3) THE PURCHASER BEING SATISFIED, IN
ITS SOLE DISCRETION, THAT THE RESTRICTIONS ON BUSINESS COMBINATIONS CONTAINED IN
SECTION 611-A OF THE MAINE BUSINESS CORPORATION ACT (OR ANY SIMILAR PROVISION)
ARE INVALID OR OTHERWISE INAPPLICABLE TO THE PROPOSED MERGER (AS A RESULT OF
ACTION BY THE COMPANY'S BOARD OF DIRECTORS, FINAL JUDICIAL ACTION OR OTHERWISE);
AND (4) THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE
PURCHASER HAS OBTAINED SUFFICIENT FINANCING TO ENABLE IT TO CONSUMMATE THE OFFER
AND THE PROPOSED MERGER DESCRIBED HEREIN AND TO PAY RELATED FEES AND EXPENSES.
THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE THE INTRODUCTION
AND SECTIONS 1, 9 AND 14.
(Continued on next page)
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THE DEALER MANAGER FOR THE OFFER IS:
GLEACHER & CO. INC.
August 10, 1994
<PAGE>
(Continued from previous page)
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
shares of Common Stock, $5.00 par value per share (the "Shares"), and the
associated Preferred Stock Purchase Rights (the "Rights"), of the Company should
either (1) complete and sign the Letter of Transmittal (or a facsimile thereof)
in accordance with the instructions in the Letter of Transmittal, mail or
deliver the Letter of Transmittal (or such facsimile) and any other required
documents to the Depositary (as defined herein), and either deliver the
certificates representing the tendered Shares and, if separate, the certificates
representing the associated Rights and any other required documents to the
Depositary or tender such Shares (and Rights, if applicable) pursuant to the
procedure for book-entry transfer set forth in Section 3 or (2) request such
shareholder's broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for such shareholder. Shareholders having Shares (and
Rights, if applicable) registered in the name of a broker, dealer, commercial
bank, trust company or other nominee must contact such broker, dealer,
commercial bank, trust company or other nominee if they desire to tender Shares
(and Rights, if applicable) so registered. Unless and until the Purchaser
declares that the Rights Condition (as defined herein) is satisfied, holders of
Shares will be required to tender one-half of one Right for each Share tendered
in order to effect a valid tender of such Share.
A shareholder who desires to tender Shares and Rights and whose
certificates representing such Shares (and Rights, if applicable) are not
immediately available, or who cannot comply with the procedure for book-entry
transfer on a timely basis, may tender such Shares (and Rights, if applicable)
by following the procedures for guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to Gleacher & Co.
Inc. (the "Dealer Manager") or to D.F. King & Co., Inc. (the "Information
Agent"), at their respective addresses and telephone numbers set forth on the
back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
also be obtained from the Information Agent or from brokers, dealers, commercial
banks or trust companies.
<PAGE>
TABLE OF CONTENTS
<TABLE><CAPTION>
PAGE
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INTRODUCTION.................................................................................................. 1
THE TENDER OFFER.............................................................................................. 7
1. Terms of the Offer; Expiration Date................................................................ 7
2. Acceptance for Payment and Payment for Shares...................................................... 8
3. Procedure for Tendering Shares and Rights.......................................................... 10
4. Withdrawal Rights.................................................................................. 13
5. Certain Federal Income Tax Consequences............................................................ 14
6. Price Range of Shares; Dividends................................................................... 14
7. Certain Information Concerning the Company......................................................... 15
8. Certain Information Concerning the Purchaser and the Parent........................................ 17
9. Source and Amount of Funds......................................................................... 20
10. Background of the Offer; Contacts with the Company................................................. 22
11. Purpose of the Offer; the Merger; Plans for the Company............................................ 25
12. Dividends and Distributions........................................................................ 35
13. Effect of the Offer on the Market for the Shares, Stock Exchange Listing and Exchange Act
Registration....................................................................................... 35
14. Certain Conditions of the Offer.................................................................... 36
15. Certain Legal Matters and Regulatory Approvals..................................................... 40
16. Fees and Expenses.................................................................................. 45
17. Miscellaneous...................................................................................... 45
</TABLE>
<TABLE>
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Schedule I -- Directors and Executive Officers of the Purchaser and the Parent.......................... I-1
</TABLE>
i
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To the Holders of Common Stock
(including the associated Preferred
Stock Purchase Rights) of
AMERICAN CYANAMID COMPANY
INTRODUCTION
AC Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly
owned subsidiary of American Home Products Corporation, a Delaware corporation
(the "Parent"), hereby offers to purchase all of the outstanding shares of
Common Stock, $5.00 par value per share (the "Shares"), of American Cyanamid
Company, a Maine corporation (the "Company"), and (unless and until the
Purchaser declares that the Rights Condition (as defined below) is satisfied)
the associated Preferred Stock Purchase Rights (the "Rights") issued pursuant to
the Rights Agreement, dated as of March 10, 1986, as amended as of April 29,
1986 and as of April 21, 1987 (the "Rights Agreement"), between the Company and
Mellon Bank, N.A., as successor Rights Agent (the "Rights Agent"), at a purchase
price of $95.00 per Share (and associated Right), net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in this Offer to Purchase and in the related Letter of Transmittal (which
together constitute the "Offer"). Unless the context requires otherwise, all
references in this Offer to Purchase to "Shares" shall be deemed to refer also
to the associated Rights, and all references to "Rights" shall be deemed to
include all benefits that may inure to the shareholders of the Company or to
holders of the Rights pursuant to the Rights Agreement. Based on publicly
available information, the Purchaser believes that one-half of one Right is
currently associated with each Share as a result of a stock split by the Company
on June 12, 1987.
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the transfer and sale of Shares and Rights pursuant to the
Offer. The Purchaser will pay all fees and expenses of Gleacher & Co. Inc.,
which is acting as Dealer Manager for the Offer (in such capacity, the "Dealer
Manager"), Chemical Bank (the "Depositary") and D.F. King & Co., Inc. (the
"Information Agent") incurred in connection with the Offer. See Section 16.
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. The Purchaser intends to propose, and to seek to have
the Company consummate as soon as practicable after consummation of the Offer, a
merger or similar business combination (the "Merger") with the Purchaser or
another direct or indirect subsidiary of the Parent, pursuant to which each then
outstanding Share (other than Shares held by the Parent, the Purchaser or any
other wholly owned subsidiary of the Parent, Shares held in the treasury of the
Company and Shares held by shareholders who properly exercise appraisal rights
under Maine law) would be converted into the right to receive in cash the price
per Share paid by the Purchaser pursuant to the Offer.
Although the Purchaser will seek to have the Company consummate the Merger
as soon as practicable after consummation of the Offer, if the Board of
Directors of the Company opposes the Offer and the Merger, certain terms of the
Rights and certain provisions of the Maine Business Corporation Act (the
"MBCA"), the Company's Restated Articles of Incorporation (the "Articles") and
the Company's By-Laws (the "By-Laws") may affect the ability of the Purchaser to
obtain control of the Company and to effect the Merger. Accordingly, the timing
and details of the Merger will depend on a variety of factors and legal
requirements, the actions of the Board of Directors of the Company, the number
of Shares acquired by the Purchaser pursuant to the Offer, and whether the
Minimum Condition, the Rights Condition, the Maine Takeover Statute Condition
and/or the Financing Condition (each as defined below) is satisfied or waived.
Depending upon the Company's response to the Offer and other factors that the
Purchaser may deem relevant, the Purchaser presently intends to seek to have a
shareholders meeting called and to obtain proxies from shareholders for the
purpose of adopting resolutions of shareholders or taking other actions (which
may be non-binding) instructing the Board of
1
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Directors to approve and effectuate the consummation of the Offer and the Merger
and/or removing the current Board of Directors of the Company from office and
electing new directors nominated by the Purchaser, in order that such new Board
of Directors would take all such actions necessary or appropriate to approve and
effectuate the consummation of the Offer and the Merger. Upon consummation of
the Offer, assuming the Minimum Condition, the Rights Condition, the Maine
Takeover Statute Condition and the Financing Condition, and the other conditions
to the Offer set forth in Section 14, are satisfied, the Parent and the
Purchaser will own sufficient Shares, subject to the procedures described in
Section 11, ultimately to remove and/or replace the Company's Board of Directors
and to approve the Merger without the vote of any other shareholder. For a
discussion of certain appraisal rights available to shareholders upon
consummation of each of the Offer and the Merger, see Section 11.
THE OFFER IS CONDITIONED, AMONG OTHER THINGS, UPON SATISFACTION, IN THE
PURCHASER'S SOLE DISCRETION, OF THE FOLLOWING CONDITIONS: (1) THE MINIMUM
CONDITION, (2) THE RIGHTS CONDITION, (3) THE MAINE TAKEOVER STATUTE CONDITION
AND (4) THE FINANCING CONDITION, EACH OF WHICH IS DESCRIBED BELOW. CERTAIN OTHER
CONDITIONS TO THE OFFER ARE DESCRIBED IN SECTION 14.
The Purchaser has commenced a lawsuit in the United States District Court
for the District of Maine (the "Defensive Tactics Litigation") against the
Company and certain of its directors in connection with the Offer, which, if
successful, would permit certain conditions of the Offer to be satisfied. See
"Defensive Tactics Litigation" below and Section 15.
The Minimum Condition. The Offer is subject to the condition (the "Minimum
Condition") that there shall have been validly tendered and not properly
withdrawn on or prior to the Expiration Date (as defined below) a number of
Shares which constitutes at least 80% of the voting power (determined on a fully
diluted basis), on the date of purchase, of all securities of the Company
entitled to vote generally in the election of directors or in a merger.
According to the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1994 (the "March 1994 Form 10-Q"), at March 31, 1994, 89,754,355
Shares were outstanding. According to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993 (the "1993 Form 10-K"), at December
31, 1993, options covering a total of 5,723,992 Shares were outstanding under
the Company's various stock option plans (collectively, the "Company Option
Plans"). The Parent currently beneficially owns an aggregate of 10,000 Shares,
representing less than .1 percent of the Shares outstanding, based on the number
of Shares outstanding at March 31, 1994. See Section 8. Based on this
information and assuming exercise of all outstanding options under the Company
Option Plans, the Purchaser believes that the Minimum Condition will be
satisfied if approximately 76,480,000 Shares are validly tendered pursuant to
the Offer and not properly withdrawn.
The Articles provide that, in addition to any affirmative vote required by
applicable law (currently, the affirmative vote of holders of at least a
majority of the outstanding Shares), the affirmative vote of the holders of at
least 80% of the outstanding Shares is required to approve certain business
combinations (including mergers) between the Company and a person who or which
is the beneficial owner of more than 15% of the outstanding Shares (an
"Interested Stockholder"), unless either (i) the business combination is
approved by a majority of the directors who are not affiliated with or nominees
of the Interested Stockholder and who were directors prior to the time the
Interested Stockholder became an Interested Stockholder or (ii) certain price
and procedural requirements are satisfied, some of which are beyond the control
of the Purchaser and the Parent in the context of the Offer and the Merger (the
"80% Charter Provision"). The acquisition of in excess of 15% of the outstanding
Shares by the Purchaser in the Offer would make the Purchaser an "Interested
Stockholder" for purposes of the 80% Charter Provision. As such, the Purchaser
and the Parent could be prohibited from consummating the Merger without the
approval of the current Board of Directors of the Company. See Section 11.
2
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The Minimum Condition is included, among other reasons, so that the
Purchaser will be able to satisfy the provisions of the Articles described above
and other provisions of the Articles, By-Laws and applicable law that might
adversely affect the Purchaser's ability to consummate the Offer and the Merger.
In the event that such provisions of the Articles, the By-Laws and applicable
law would no longer require or make advisable the ownership of the percentage of
Shares required to satisfy the Minimum Condition in order to approve or take
necessary steps in furtherance of the Offer or the Merger or any other
transactions contemplated hereby, then the Purchaser reserves the right, at its
option (but in compliance with the rules of the Securities and Exchange
Commission (the "Commission")), to reduce the minimum number of Shares required
to be validly tendered and not properly withdrawn to a lower percentage (but not
below a majority) deemed advisable by the Purchaser, taking into account that
percentage which is necessary (without any affirmative vote of any other Shares
or other securities of the Company) under the Articles, the By-Laws and
applicable law to cause, under circumstances then present, nominees of the
Purchaser to be elected as a majority of the Board of Directors (including by
calling a meeting of shareholders, removal and/or replacement or otherwise) and
to approve the Offer and the Merger.
The Purchaser is hereby requesting that the Company's Board of Directors
approve the Offer and the Merger for purposes of the 80% Charter Provision. The
Purchaser believes that, under the circumstances of the Offer and under
applicable law, the Board of Directors of the Company is obligated by its
fiduciary responsibilities to approve the Offer and the Merger in order to
permit the Offer and the Merger to be consummated. However, there can be no
assurance that the Board will do so. Upon consummation of the Offer and assuming
the Minimum Condition is satisfied, the Purchaser will own sufficient Shares to
enable it to effect shareholder approval of the Merger (subject to the
requirements of the Maine Takeover Statute described below) with the affirmative
vote of at least 80% of the Shares outstanding, thereby satisfying the 80%
Charter Provision.
The Rights Condition. The Offer is subject to the condition (the "Rights
Condition") that the Rights shall have been redeemed by the Company's Board of
Directors, or the Purchaser shall be satisfied, in its sole discretion, that
such Rights have been invalidated or are otherwise inapplicable to the Offer and
the Merger. The Rights are described in the Company's Registration Statement on
Form 8-A filed with the Commission on March 19, 1986, as amended by the
Company's amendment on Form 8 filed with the Commission on May 1, 1986 (the "May
1 Form 8"), as further amended by the Company's amendment on Form 8 filed with
the Commission on May 19, 1987 (as so amended, the "Form 8-A"). A more detailed
description of the Rights is contained in Section 11. To the Purchaser's
knowledge, the publicly available information regarding the Rights and Rights
Agreement is incomplete in that the May 1 Form 8 was filed with the Commission
without including Exhibit A of the amendment to the Rights Agreement (which
included the substantive modifications made to the Rights Agreement by such
amendment). Accordingly, the descriptions herein of the Rights and the Rights
Agreement are qualified to the extent that information relating thereto is not
publicly available. The following discussion is based on information contained
in the Form 8-A.
In the event that at any time following the Distribution Date (as defined
in Section 11), (i) the Company is the surviving corporation in a merger with an
Acquiring Person (as defined in Section 11) and the Shares are not changed or
exchanged, (ii) a person becomes the beneficial owner of 50% or more of the then
outstanding Shares (the "Ownership Flip-in") or (iii) during such time as there
is an Acquiring Person, certain other events occur, provision shall be made so
that each holder of one-half of a Right will thereafter have the right to
receive, upon exercise thereof, two Shares (or, in certain circumstances, a
combination of cash, other property, Shares and/or other securities) at 25% of
the then per share market price of the Shares. In the event that at any time
following the Distribution Date, the Company is acquired in a merger or other
business combination transaction or (within a two-year period) more than 50% of
its assets or earning power is sold, provision will be made so that each holder
of a Right will thereafter have the right to receive, upon the exercise thereof
at the then current Purchase Price (as defined in the Rights Agreement) of such
one-half of a Right (as defined in the
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Rights Agreement), common stock of the acquiring entity which has a value of two
times the Purchase Price of such one-half of a Right. Following the occurrence
of any of the events described above in this paragraph, any Rights that are or
were beneficially owned by an Acquiring Person or affiliates or associates of
any Acquiring Person will immediately become null and void. The Purchaser
believes that the consummation of the Offer likely would trigger the Ownership
Flip-in and, as a result, cause significant dilution to the Purchaser's interest
in the Company and render the Offer and the Merger economically unattractive for
the Purchaser.
Based on the Company's filings with the Commission, at any time until 30
days following the Stock Acquisition Date (as defined in the Rights Agreement),
the Company may redeem the Rights in whole, but not in part, at a price of $.02
per Right, subject to adjustment. Until the Distribution Date, the Rights will
be transferred with and only with the Shares. Until the Distribution Date, the
surrender for transfer of any of the certificates representing Shares (the
"Share Certificates") will also constitute the surrender for transfer of the
Rights associated with the Shares represented by such Share Certificates. As
soon as practicable following the Distribution Date, separate certificates
evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of Shares as of the close of business on the Distribution Date; after the
Distribution Date, such separate Rights Certificates alone will evidence the
Rights.
The Purchaser believes that, as of August 9, 1994, the Rights were not
exercisable, Rights Certificates had not been issued and the Rights were
evidenced by the Share Certificates. The Purchaser believes that, under the
Rights Agreement, as a result of the commencement of the Offer, the Distribution
Date will be as early as August 23, 1994, unless prior to such date the
Company's Board of Directors redeems the Rights or takes action to delay the
Distribution Date.
Unless and until the Purchaser declares that the Rights Condition is
satisfied, holders of Shares will also be required to tender one-half of one
Right for each Share tendered in order to effect a valid tender of such Share.
If separate certificates for the Rights are not issued, a tender of Shares will
also constitute a tender of associated Rights.
The Purchaser further believes that, under the circumstances of the Offer
and under applicable law, the Board of Directors of the Company is obligated by
its fiduciary responsibilities to redeem the Rights in order to permit the Offer
and the Merger to be consummated. However, there can be no assurance that the
Board will do so. In the Defensive Tactics Litigation, the Purchaser has
requested the court to require that the Board of Directors redeem the Rights.
The Purchaser is hereby requesting that the Company's Board of Directors
redeem the Rights.
The Maine Takeover Statute Condition. The Offer is subject to the condition
(the "Maine Takeover Statute Condition") that the Purchaser shall be satisfied,
in its sole discretion, that the restrictions on business combinations contained
in Section 611-A (the "Maine Takeover Statute") of the MBCA (or any similar
provision) are invalid or otherwise inapplicable to the Merger (as a result of
action by the Company's Board of Directors, final judicial action or otherwise).
In general, the Maine Takeover Statute prohibits any person who is the
beneficial owner of 25% or more of the outstanding voting stock of a corporation
(a "Statutory Interested Shareholder") from engaging in certain business
combinations with such corporation for a period of five years following the date
on which such person became a Statutory Interested Shareholder, unless the
business combination is (i) approved by the board of directors of the
corporation prior to the date on which such person became a Statutory Interested
Shareholder or (ii) approved, subsequent to the date on which such person became
a Statutory Interested Shareholder, by the board of directors of the corporation
and authorized by the affirmative vote, at a meeting called for that purpose, of
at least a majority of the outstanding voting stock not beneficially owned by
that Statutory Interested Shareholder or any affiliate or associate of that
Statutory Interested Shareholder or by persons who are either directors or
officers and also employees of that corporation. Consequently, under the Maine
Takeover Statute, unless the
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Board of Directors of the Company approves the Offer and the Merger in advance
of the consummation of the Offer, the Merger could not occur for five years
unless it is approved by a majority vote of the Shares that were not tendered in
the Offer. This requirement fundamentally interferes with the practical ability
of the Purchaser to acquire Shares in light of the severe financial and
operational burdens that would be placed on the Parent if it were to consummate
the Offer, but be unable to consummate the Merger. A more detailed description
of the Maine Takeover Statute is contained in Section 11.
The Purchaser believes that, in light of this interference with its ability
to consummate the Offer, the Maine Takeover Statute is unconstitutional under
the United States Constitution. Whether or not invalidated by the court in the
Defensive Tactics Litigation, under the circumstances of the Offer and under
applicable law, the Purchaser believes that the Board of Directors of the
Company is obligated by its fiduciary responsibilities to approve, pursuant to
the Maine Takeover Statute, the acquisition of Shares pursuant to the Offer and
the Merger. However, there can be no assurance that the Board of Directors will
do so. The Purchaser is hereby requesting that the Board of Directors approve
the Offer and the Merger for purposes of the Maine Takeover Statute.
The Financing Condition. The Offer is subject to the condition (the
"Financing Condition") that the Purchaser shall be satisfied, in its sole
discretion, that the Purchaser has obtained sufficient financing to enable it to
consummate the Offer and the Merger and to pay related fees and expenses.
Chemical Securities Inc. ("CSI"), as advisor and arranger to the Parent, has
agreed to use its best efforts to form a syndicate of financial institutions to
provide a bank credit facility in connection with the consummation of the Offer
and the Merger. The Parent has received a commitment letter (the "Commitment
Letter") from Chemical Bank, which provides that Chemical Bank will provide, on
specified terms and subject to specified conditions, $1.2 billion of the bank
financing. This bank financing is more fully described in Section 9. The Parent
believes that the Purchaser will have sufficient funds necessary to consummate
the Offer and the Merger and to pay related costs.
* * *
The Purchaser expressly reserves the right to waive any one or more of the
conditions to the Offer. See Sections 11, 14 and 15.
Defensive Tactics Litigation. The Purchaser has commenced the Defensive
Tactics Litigation, which names the Company and certain of its directors as
defendants and seeks declaratory and injunctive relief in connection with the
Offer and the Merger. The Defensive Tactics Litigation asks the court either to
invalidate or cause the Company's Board of Directors to remove several defense
mechanisms embodied in the MBCA, the Articles and the By-Laws which, absent the
relief sought, could seriously impede the Purchaser's ability to consummate the
Merger and the Offer. In particular, the Defensive Tactics Litigation seeks a
judgment declaring, among other things, that (i) the Maine Takeover Statute is
unconstitutional; (ii) any attempt to apply any other state's takeover statute
to the Offer is constitutionally impermissible; (iii) the directors would be in
breach of their fiduciary duties if they fail to redeem the Rights in response
to the Offer; (iv) the 80% Charter Provision is void and unlawful and otherwise
inapplicable to the Offer, and the Board of Directors of the Company is
obligated by its fiduciary responsibilities to approve the Offer and the Merger;
and (v) the provision of the By-Laws, which provides that, in order to qualify
for election as, and remain, a director, such director must have been a
registered holder of at least one Share for a six-month period prior to election
(unless such minimum holding period requirement is waived by the Company's Board
of Directors), is void and unlawful. The Defensive Tactics Litigation also seeks
a preliminary and permanent order: (i) enjoining the Company and its agents from
taking any actions to invoke, apply or enforce the Maine Takeover Statute or any
similar provision; (ii) enjoining the defendants from honoring the Rights or
from otherwise enforcing or amending or altering the Rights Agreement; (iii)
enjoining and ordering
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the defendants to redeem the Rights; and (iv) enjoining the Company and its
agents from taking any action (including by changing the Articles or the By-Laws
or otherwise) improperly to impede the Offer.
In order to provide a possible method of consummating the Offer and the
Merger even if the Defensive Tactics Litigation is unsuccessful, depending upon
the Company's response to the Offer and other factors that the Purchaser may
deem relevant, including whether or not the Company takes actions to permit the
consummation of the Offer and the Merger by causing the conditions described
herein to be satisfied, the Purchaser presently intends to seek to have a
special shareholders meeting called and to obtain proxies from shareholders for
the purpose of adopting resolutions of shareholders or taking other actions
(which may be non-binding) instructing the Board of Directors to approve and
effectuate the consummation of the Offer and the Merger and/or removing the
current Board of Directors of the Company from office and electing new directors
nominated by the Purchaser, in order that such new Board of Directors would take
all such actions necessary or appropriate to approve and effectuate the
consummation of the Offer and the Merger.
THIS OFFER TO PURCHASE DOES NOT CONSTITUTE A SOLICITATION OF A PROXY,
CONSENT OR AUTHORIZATION FOR OR WITH RESPECT TO ANY SPECIAL MEETING OR OTHER
MEETING OF THE COMPANY'S SHAREHOLDERS OR ANY ACTION IN LIEU THEREOF. ANY SUCH
SOLICITATION WHICH THE PURCHASER MAY MAKE WILL BE MADE ONLY PURSUANT TO SEPARATE
PROXY MATERIALS IN COMPLIANCE WITH THE REQUIREMENTS OF SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT").
In the event that the Offer is not consummated, the Purchaser intends to
explore all options which may be available to it at such time, which may
include, without limitation, the acquisition of Shares through open market
purchases, privately negotiated transactions, a tender offer or exchange offer
or otherwise, upon such terms and at such prices as it shall determine, which
may be more or less than the price to be paid pursuant to the Offer. The
Purchaser also reserves the right to dispose of Shares.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH
RESPECT TO THE OFFER.
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THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of such extension or amendment), the Purchaser will accept
for payment and pay for all Shares validly tendered on or prior to the
Expiration Date and not properly withdrawn as permitted by Section 4. The term
"Expiration Date" means 12:00 Midnight, New York City time, on Wednesday,
September 7, 1994, unless and until the Purchaser, in its sole discretion, shall
have extended the period during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, shall expire.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SATISFACTION OF EACH OF
THE CONDITIONS SET FORTH ABOVE IN THE INTRODUCTION AND IN SECTION 14. THE
PURCHASER RESERVES THE RIGHT (BUT SHALL NOT BE OBLIGATED) TO WAIVE ANY OR ALL OF
SUCH CONDITIONS.
If by the Expiration Date, any or all of such conditions have not been
satisfied or waived, the Purchaser reserves the right (but shall not be
obligated) (i) to decline to purchase any of the Shares tendered and terminate
the Offer, (ii) to waive all of the unsatisfied conditions and, subject to
complying with applicable rules and regulations of the Commission, to purchase
all Shares validly tendered or (iii) to extend the Offer and, subject to the
right of shareholders to withdraw Shares until the Expiration Date, retain the
Shares which have been tendered during the period or periods for which the Offer
is extended. In the event that the Purchaser waives any of the conditions set
forth in Section 14, the Commission may, if the waiver is deemed to constitute a
material change to the information previously provided to the shareholders,
require that the Offer remain open for an additional period of time and/or that
the Purchaser disseminate information concerning such waiver.
The Purchaser expressly reserves the right, in its sole discretion, at any
time and from time to time, to extend the period during which the Offer is open
for any reason, including the occurrence of any of the conditions specified in
Section 14, by giving oral or written notice of such extension to the
Depositary. During any such extension, all Shares previously tendered and not
properly withdrawn will remain subject to the Offer, subject to the rights of a
tendering shareholder to withdraw such shareholder's Shares. See Section 4.
Subject to the applicable regulations of the Commission, the Purchaser also
reserves the right, in its sole discretion, at any time or from time to time to
(i) delay acceptance for payment of or, regardless of whether such Shares were
theretofore accepted for payment, payment for any Shares pending receipt of any
regulatory approvals specified in Section 15, (ii) terminate the Offer (whether
or not any Shares have theretofore been accepted for payment) if any of the
conditions referred to in Section 14 has not been satisfied or upon the
occurrence of any of the events specified in Section 14 and (iii) waive any
condition or otherwise amend the Offer in any respect, in each case, by giving
oral or written notice of such delay, termination, waiver or amendment to the
Depositary and by making a public announcement thereof. The Purchaser
acknowledges (i) that Rule 14e-1(c) under the Exchange Act requires the
Purchaser to pay the consideration offered or return the Shares tendered
promptly after the termination or withdrawal of the Offer and (ii) that the
Purchaser may not delay acceptance for payment of, or payment for (except as
provided in clause (i) of the preceding sentence), any Shares upon the
occurrence of any of the conditions specified in Section 14 without extending
the period of time during which the Offer is open.
Any such extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, and such
announcement, in the case of an extension, will be made no later than 9:00 A.M.,
New York City time, on the next business day after the previously scheduled
Expiration Date. Without limiting the manner in which the Purchaser may choose
to make any public announcement, except as provided by applicable law (including
Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require that material
changes be promptly disseminated to holders of
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<PAGE>
Shares), the Purchaser shall have no obligation to publish, advertise or
otherwise communicate any such public announcement other than by issuing a
release to the Dow Jones News Service.
If the Purchaser makes a material change in the terms of the Offer, or if
it waives a material condition of the Offer, the Purchaser will extend the Offer
to the extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act.
The minimum period during which an offer must remain open following material
changes in the terms of the offer, other than a change in price or a change in
the percentage of securities sought, will depend upon the facts and
circumstances, including the materiality, of the changes. With respect to a
change in price or, subject to certain limitations, a change in the percentage
of securities sought, a minimum ten business day period from the day of such
change is generally required to allow for adequate dissemination to
shareholders. Accordingly, if prior to the Expiration Date, the Purchaser
decreases the number of Shares being sought, increases or decreases the
consideration offered pursuant to the Offer or adds a dealer's soliciting fee,
and if the Offer is scheduled to expire at any time earlier than the period
ending on the tenth business day from the date that notice of such increase,
decrease or addition is first published, sent or given to shareholders, the
Offer will be extended at least until the expiration of such ten business day
period. For purposes of the Offer, a "business day" means any day other than a
Saturday, Sunday or a federal holiday and consists of the time period from 12:01
A.M. through 12:00 Midnight, New York City time.
A request pursuant to Rule 14d-5 under the Exchange Act is being made to
the Company for the use of its shareholder list, list of the holders of Rights,
if any, and security position listings for the purpose of disseminating the
Offer to holders of Shares. Upon compliance by the Company with such request,
this Offer to Purchase and the related Letter of Transmittal and, if required,
other relevant materials will be mailed to record holders of Shares and Rights
whose names appear on the Company's shareholder list and list of holders of
Rights and will be furnished to brokers, dealers, commercial banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder list and list of holders of Rights, if applicable, or
who are listed as participants in a clearing agency's security position listing
for subsequent transmittal to beneficial owners of Shares. A demand under Maine
law for the Company's shareholder list is also being made to the Company.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment), the
Purchaser will accept for payment, and will pay for, all Shares validly tendered
and not properly withdrawn on or prior to the Expiration Date as soon as
practicable after the later to occur of (i) the Expiration Date and (ii) the
satisfaction or waiver of the conditions of the Offer set forth in Section 14,
including, without limitation, the expiration or termination of the waiting
period applicable to the acquisition of Shares pursuant to the Offer under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"). In addition, subject to applicable rules of the Commission, the Purchaser
expressly reserves the right to delay acceptance for payment of, or payment for,
Shares pending receipt of any other regulatory approvals specified in Section
15.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
Share Certificates and, if applicable, Rights Certificates, or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares and Rights into the Depositary's account at The Depository Trust Company,
the Midwest Securities Trust Company or the Philadelphia Depository Trust
Company (each a "Book-Entry Transfer Facility" and, collectively, the
"Book-Entry Transfer Facilities") pursuant to the procedures set forth in
Section 3, (ii) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message (as defined below) in connection with a book-entry transfer, and
(iii) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that
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<PAGE>
such Book-Entry Transfer Facility has received an express acknowledgment from
the participant in such Book-Entry Transfer Facility tendering the Shares and,
if applicable, Rights which are the subject of such Book-Entry Confirmation,
that such participant has received and agrees to be bound by the terms of the
Letter of Transmittal and that the Purchaser may enforce such agreement against
such participant.
Unless and until the Purchaser declares that the Rights Condition is
satisfied, if Rights Certificates have been distributed to holders of Shares,
such holders are required to tender Rights Certificate(s) representing a number
of Rights equal to one-half the number of Shares being tendered in order to
effect a valid tender of such Shares.
The Parent intends to file on the date hereof with the Federal Trade
Commission (the "FTC") and the Antitrust Division of the Department of Justice
(the "Antitrust Division") a Premerger Notification and Report Form under the
HSR Act with respect to the Offer. Accordingly, it is anticipated that the
waiting period under the HSR Act applicable to the Offer will expire at 11:59
P.M., New York City time, on Thursday, August 25, 1994. However, prior to the
expiration or termination of the waiting period, the FTC or the Antitrust
Division may extend the waiting period applicable to the Offer by requesting
additional information from the Parent. If such a request is made, the waiting
period applicable to the Offer will expire on the tenth calendar day after the
date of substantial compliance by the Parent with such request. Thereafter, the
waiting period may only be extended by court order. The waiting period under the
HSR Act may be terminated by the FTC and the Antitrust Division prior to its
expiration. The Parent has requested early termination of the waiting period
applicable to the Offer, although there can be no assurance that this request
will be granted. See Section 15 for additional information regarding the HSR Act
and other potentially applicable regulatory provisions.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such Shares pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payments from the Purchaser
and transmitting such payments to shareholders whose Shares have been accepted
for payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR
SHARES BE PAID, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT. If, for any
reason whatsoever, acceptance for payment of or payment for any Shares tendered
pursuant to the Offer is delayed, or the Purchaser is unable to accept for
payment or pay for Shares tendered pursuant to the Offer, then, without
prejudice to the Purchaser's rights set forth herein, the Depositary may,
nevertheless, on behalf of the Purchaser and subject to Rule 14e-1(c) under the
Exchange Act, retain tendered Shares and such Shares may not be withdrawn except
to the extent that the tendering stockholder is entitled to and duly exercises
withdrawal rights as described in Section 4.
If any tendered Shares are not accepted for payment for any reason or if
Share Certificates are submitted for more Shares than are tendered, Share
Certificates evidencing unpurchased or untendered Shares will be returned,
without expense to the tendering shareholder (or, in the case of Shares tendered
by book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility pursuant to the procedures set forth in Section 3, such Shares will be
credited to an account maintained at such Book-Entry Transfer Facility), in each
case with the related Rights Certificates, if any, as promptly as practicable
following the expiration, termination or withdrawal of the Offer.
If, prior to the Expiration Date, the Purchaser increases the consideration
offered to shareholders pursuant to the Offer, such increased consideration will
be paid to all shareholders whose Shares are purchased pursuant to the Offer,
whether or not such Shares were tendered or accepted for payment prior to such
increase in consideration.
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The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of its affiliates, the right to purchase
all or any portion of the Shares and Rights tendered pursuant to the Offer, but
any such transfer or assignment will not relieve the Purchaser of its
obligations under the Offer and will in no way prejudice the rights of tendering
shareholders to receive payment for Shares validly tendered and accepted for
payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES AND RIGHTS. Except as set forth below, in
order for Shares and Rights to be validly tendered pursuant to the Offer, the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in connection with a book-entry delivery of Shares and Rights, and any other
documents required by the Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase on or prior to the Expiration Date and either (i) Share Certificates
and Rights Certificates, if applicable, evidencing tendered Shares and Rights
must be received by the Depositary at such address or such Shares and Rights
must be tendered pursuant to the procedure for book-entry transfer described
below and a Book-Entry Confirmation must be received by the Depositary, in each
case on or prior to the Expiration Date, or (ii) the guaranteed delivery
procedures described below must be complied with.
Rights Certificates. If the Purchaser declares that the Rights Condition is
satisfied, the Purchaser will not require delivery of Rights Certificates.
Unless and until the Purchaser declares that the Rights Condition is satisfied,
holders of Shares will be required to tender one-half of one Right for each
Share tendered in order to effect a valid tender of such Share. Accordingly,
shareholders who sell their Rights separately from their Shares and do not
otherwise acquire Rights may not be able to satisfy the requirements of the
Offer for a valid tender of Shares.
If the Distribution Date has occurred and Rights Certificates have been
distributed to such holders prior to the date of tender pursuant to the Offer,
Rights Certificates representing a number of Rights equal to one-half the number
of Shares being tendered must be delivered to the Depositary or, if available, a
Book-Entry Confirmation must be received by the Depositary with respect thereto,
in order for such Shares to be validly tendered. If the Distribution Date has
occurred and Rights Certificates have not been distributed prior to the time
Shares are tendered pursuant to the Offer, Rights may be tendered prior to a
shareholder receiving Rights Certificates by use of the guaranteed delivery
procedures described below. A tender of Shares without Rights Certificates
constitutes an agreement by the tendering shareholder to deliver Rights
Certificates representing a number of Rights equal to one-half the number of
Shares tendered pursuant to the Offer to the Depositary within five business
days after the date such Rights Certificates are distributed. If the Rights
Condition is not satisfied, the Purchaser reserves the right to require that it
receive such Rights Certificates prior to accepting Shares for payment. In that
event, payment for Shares tendered and accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of, among other
things, Rights Certificates, if Rights Certificates have been distributed to
holders of Shares. See Section 1.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES OR OF RIGHTS CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer. The Depositary will make a request to establish
accounts with respect to the Shares at the Book-Entry Transfer Facilities for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the system of any
Book-Entry Transfer Facility may make book-entry delivery of Shares by causing
such Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at such Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery of
Shares may be effected through book-entry transfer at a Book-Entry Transfer
Facility, the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, together with any
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required signature guarantees, or an Agent's Message in connection with a
book-entry transfer, and any other documents required by the Letter of
Transmittal, must, in any case, be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase on or prior to
the Expiration Date, or the guaranteed delivery procedures described below must
be complied with.
If the Distribution Date occurs, to the extent that the Rights become
eligible for book-entry transfer under procedures established by a particular
Book-Entry Transfer Facility, the Depositary will make a request to establish an
account with respect to the Rights at such Book-Entry Transfer Facility as soon
as practicable. No assurance can be given, however, that book-entry delivery of
Rights will be available. If book-entry delivery of Rights is available, the
foregoing book-entry transfer procedure will also apply to Rights. If book-entry
delivery is not available and if separate Rights Certificates have been issued,
a tendering shareholder is not relieved of delivery requirements hereunder and
thus will be required to tender Rights by means of actual physical delivery of
Rights Certificates or pursuant to the guaranteed delivery procedures set forth
below.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
Signature Guarantees. Signatures on Letters of Transmittal must be
guaranteed by a firm which is a member of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., or by a
commercial bank or trust company having an office or correspondent in the United
States (each of the foregoing being referred to as an "Eligible Institution"),
except in cases where Shares or Rights are tendered (i) by a registered holder
of Shares and Rights who has not completed either the box labeled "Special
Payment Instructions" or the box labeled "Special Delivery Instructions" on the
Letter of Transmittal or (ii) for the account of an Eligible Institution. See
Instruction 1 of the Letter of Transmittal.
If the Share Certificates or the Rights Certificates are registered in the
name of a person other than the signer of the Letter of Transmittal, or if
payment is to be made, or Share Certificates or Rights Certificates not accepted
for payment or not tendered are to be returned, to a person other than the
registered holder(s), the Share Certificates or Rights Certificates, as the case
may be, must be endorsed or accompanied by appropriate stock powers, in either
case, signed exactly as the name(s) of the registered holder(s) appear on such
certificates, with the signature(s) on such certificates or stock powers
guaranteed as aforesaid. See Instructions 1 and 5 of the Letter of Transmittal.
If Share Certificates and Rights Certificates are forwarded separately to
the Depositary, a properly completed and duly executed Letter of Transmittal (or
a facsimile thereof) must accompany each such delivery.
Guaranteed Delivery. If a shareholder desires to tender Shares and Rights
pursuant to the Offer and such shareholder's Share Certificates or Rights
Certificates are not immediately available (including because Rights
Certificates have not yet been distributed by the Company), or such shareholder
cannot deliver the Share Certificates or Rights Certificates and all other
required documents to reach the Depositary on or prior to the Expiration Date,
or such shareholder cannot complete the procedure for delivery by book-entry
transfer on a timely basis, such Shares and Rights may nevertheless be tendered,
provided that all of the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by the Purchaser, is
received by the Depositary, as provided below, on or prior to the
Expiration Date; and
(iii) the Share Certificates or Rights Certificates, as the case may
be (or a Book-Entry Confirmation), representing all tendered Shares or
Rights, in proper form for transfer, in each case together with the Letter
of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees (or, in the case of a
book-entry transfer, an
11
<PAGE>
Agent's Message) and any other documents required by the Letter of
Transmittal are received by the Depositary within (x) in the case of
Shares, five New York Stock Exchange, Inc. ("NYSE") trading days after the
date of execution of such Notice of Guaranteed Delivery or (y) in the case
of Rights, a period ending on the later of (1) five NYSE trading days after
the date of execution of such Notice of Guaranteed Delivery and (2) five
business days after the date the Rights Certificates are distributed to
shareholders of the Company.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in such
Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Shares Certificates for, or of Book-Entry
Confirmation with respect to, such Shares, and if the Distribution Date has
occurred, Rights Certificates for, or a Book-Entry Confirmation, if available,
with respect to, the associated Rights (unless the Purchaser elects, in its sole
discretion, to make payment for such Shares pending receipt of the Rights
Certificates for, or a Book-Entry Confirmation with respect to, such Rights), a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof), together with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message), and any other documents required by
the Letter of Transmittal. Accordingly, payment might not be made to all
tendering shareholders at the same time, and will depend upon when Share
Certificates (or Rights Certificates) or Book-Entry Confirmations of such Shares
(or Rights, if available) are received into the Depositary's account at a
Book-Entry Transfer Facility.
If the Rights Condition is satisfied, the guaranteed delivery procedure
with respect to Rights Certificates and the requirement for the tender of Rights
will no longer apply.
Appointment as Proxy. By executing the Letter of Transmittal, a tendering
shareholder irrevocably appoints designees of the Purchaser, and each of them,
as such shareholder's attorneys-in-fact and proxies, with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the full
extent of such shareholder's rights with respect to the Shares and Rights
tendered by such shareholder and accepted for payment by the Purchaser (and with
respect to any and all other Shares or Rights or other securities issued or
issuable in respect of such Shares on or after the date hereof). All such powers
of attorney and proxies shall be considered irrevocable and coupled with an
interest in the tendered Shares and Rights. Such appointment will be effective
when, and only to the extent that, the Purchaser accepts such Shares and Rights
for payment. Upon such acceptance for payment, all prior powers of attorney and
proxies given by such shareholder with respect to such Shares and Rights (and
such other shares and securities) will be revoked without further action, and no
subsequent powers of attorney and proxies may be given nor any subsequent
written consents executed (and, if given or executed, will not be deemed
effective). The designees of the Purchaser will be empowered to exercise all
voting and other rights of such shareholder as they in their sole discretion may
deem proper at any annual or special meeting of the Company's shareholders or
any adjournment or postponement thereof, by written consent in lieu of any such
meeting or otherwise. The Purchaser reserves the right to require that, in order
for Shares and Rights to be deemed validly tendered, immediately upon the
Purchaser's payment for such Shares, the Purchaser must be able to exercise full
voting rights with respect to such Shares, Rights and other securities,
including voting at any meeting of shareholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares and Rights will be determined by the Purchaser, in its sole
discretion, which determination shall be final and binding on all parties. The
Purchaser reserves the absolute right to reject any and all tenders determined
by it not to be in proper form or the acceptance for payment of which may, in
the opinion of its counsel, be unlawful. The Purchaser also reserves the
absolute right to waive any of the conditions of the Offer or any defect or
irregularity in any tender of Shares and Rights of any particular shareholder
whether or not similar
12
<PAGE>
defects or irregularities are waived in the case of other shareholders. No
tender of Shares will be deemed to have been validly made until all defects and
irregularities have been cured or waived. None of the Purchaser, the Parent, any
of their affiliates or assigns, the Dealer Manager, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification. The Purchaser's interpretation of the
terms and conditions of the Offer (including the Letter of Transmittal and the
instructions thereto) will be final and binding.
BACKUP FEDERAL TAX WITHHOLDING. UNDER THE FEDERAL INCOME TAX LAWS, THE
DEPOSITARY WILL BE REQUIRED TO WITHHOLD 31 PERCENT OF THE AMOUNT OF ANY PAYMENTS
MADE TO CERTAIN SHAREHOLDERS PURSUANT TO THE OFFER. TO PREVENT BACKUP FEDERAL
INCOME TAX WITHHOLDING WITH RESPECT TO PAYMENT TO CERTAIN SHAREHOLDERS OF THE
PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE OFFER, EACH SUCH SHAREHOLDER
MUST PROVIDE THE DEPOSITARY WITH SUCH SHAREHOLDER'S CORRECT TAXPAYER
IDENTIFICATION NUMBER AND CERTIFY THAT SUCH SHAREHOLDER IS NOT SUBJECT TO BACKUP
FEDERAL INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN
THE LETTER OF TRANSMITTAL. SEE INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL.
Other Requirements. The Purchaser's acceptance for payment of Shares and,
if applicable, Rights tendered pursuant to any of the procedures described above
will constitute a binding agreement between the tendering shareholder and the
Purchaser upon the terms and subject to the conditions of the Offer.
4. WITHDRAWAL RIGHTS. Tenders of Shares and Rights made pursuant to the
Offer are irrevocable, except that Shares and Rights tendered pursuant to the
Offer may be withdrawn at any time on or prior to the Expiration Date and,
unless theretofore accepted for payment by the Purchaser pursuant to the Offer,
may also be withdrawn at any time after October 8, 1994. If the Purchaser
extends the Offer, is delayed in its acceptance for payment of Shares and Rights
or is unable to purchase Shares and Rights validly tendered pursuant to the
Offer for any reason, then, without prejudice to the Purchaser's rights under
the Offer, the Depositary may nevertheless, on behalf of the Purchaser, retain
tendered Shares and Rights, and such Shares and Rights may not be withdrawn
except to the extent that tendering shareholders are entitled to withdrawal
rights as described in this Section 4. Any such delay will be accompanied by an
extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any notice of withdrawal must specify the name of the person who
tendered the Shares or Rights to be withdrawn, the number of Shares or Rights to
be withdrawn and the name of the registered holder, if different from that of
the person who tendered such Shares or Rights. If Share Certificates or Rights
Certificates to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution unless such Shares or Rights have been tendered for the account of
any Eligible Institution. If Shares or Rights have been tendered pursuant to the
procedure for book-entry transfer as set forth in Section 3, any notice of
withdrawal must specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Shares or Rights, in which
case a notice of withdrawal will be effective if delivered to the Depositary by
any method of delivery described in the first sentence of this paragraph. A
withdrawal of Shares or Rights shall also constitute a withdrawal of the
associated Rights or Shares, as applicable.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of the
Purchaser, the Parent, any of their affiliates or assigns, the Dealer Manager,
the Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
Any Shares or Rights properly withdrawn will thereafter be deemed not to
have been validly tendered for purposes of the Offer. However, withdrawn Shares
or Rights may be re-tendered at any time prior to the Expiration Date by
following one of the procedures described in Section 3.
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<PAGE>
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The summary of tax consequences
set forth below is for general information only. The tax treatment of each
shareholder will depend in part upon his particular situation. Special tax
consequences not described herein may be applicable to particular classes of
taxpayers, such as financial institutions, broker-dealers, persons who are not
citizens or residents of the United States, shareholders who acquired their
Shares through the exercise of an employee stock option or otherwise as
compensation, and persons who received payments in respect of options to acquire
Shares. ALL SHAREHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL AND FOREIGN TAX LAWS.
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local, foreign or other tax laws. Generally,
a shareholder will recognize gain or loss in an amount equal to the difference
between the cash received and the shareholder's adjusted tax basis in the Shares
and the Rights. For federal income tax purposes, such gain or loss will be a
capital gain or loss if the Shares are a capital asset in the hands of the
shareholder, and a long-term capital gain or loss if the shareholder's holding
period is more than one year as of the date the Purchaser accepts such Shares
for payment pursuant to the Offer or the effective date of the Merger, as the
case may be. There are limitations on the deductibility of capital losses.
New York Real Estate Transfer Taxes. The New York State Real Property
Transfer Gains Tax, the New York State Real Estate Transfer Tax and the New York
City Real Property Transfer Tax (collectively, the "Real Estate Transfer Taxes")
are imposed on the transfer or acquisition, directly or indirectly, of
controlling interests in an entity which owns interests in real property located
in New York State or New York City, as the case may be. The Offer and the Merger
will result in the taxable transfer of controlling interests in entities which
own New York State or New York City real property for purposes of the Real
Estate Transfer Taxes. Although any Real Estate Transfer Taxes could be imposed
directly on the shareholders of the Company, the Purchaser will complete and
file any necessary tax returns, and the Purchaser will pay all Real Estate
Transfer Taxes that are imposed as a result of the Offer and the Merger. Upon
receipt of the consideration for either the Offer or the Merger, each
shareholder of the Company will be deemed to have agreed to be bound by the Real
Estate Transfer Tax returns filed by the Purchaser.
6. PRICE RANGE OF SHARES; DIVIDENDS. According to the 1993 Form 10-K, the
Shares are listed and traded principally on the NYSE. The following table sets
forth, for the quarters indicated, the high and low sales prices per Share on
the NYSE as reported by the Dow Jones News Service and the amount of cash
dividends paid or declared per share for each quarter based on publicly
available sources.
<TABLE><CAPTION>
HIGH LOW DIVIDENDS
--------- --------- -----------
<S> <C> <C> <C>
Year Ended December 31, 1992:
First Quarter.................................................................... $ 66 3/8 $ 56 1/4 $ .3750
Second Quarter................................................................... 64 3/4 53 .4125
Third Quarter.................................................................... 62 5/8 54 1/4 .4125
Fourth Quarter................................................................... 59 1/4 52 1/8 .4125
Year Ended December 31, 1993:
First Quarter.................................................................... 58 1/4 46 .4125
Second Quarter................................................................... 54 1/4 49 1/4 .4375
Third Quarter.................................................................... 56 3/8 46 1/2 .4375
Fourth Quarter................................................................... 59 1/4 49 3/8 .4375
Year Ended December 31, 1994:
First Quarter.................................................................... 50 5/8 42 1/4 .4375
Second Quarter................................................................... 56 7/8 45 1/4 .4625
Third Quarter (through August 9, 1994)........................................... 93 7/8 54 3/4 --
</TABLE>
On August 8, 1994, the last full trading day prior to announcement of the
Offer, the closing sale price per Share reported on the NYSE was $91. On August
1, 1994, the last full trading day prior to the
14
<PAGE>
Parent's issuance of the press release announcing the transmission of a letter
to the Company containing an offer to acquire the Company in a transaction in
which shareholders would receive $95.00 per Share in cash, the closing sale
price per Share reported on the NYSE was $63. The Offer represents a 125%
premium over the closing sale price per Share reported on the NYSE of $42 1/4 on
March 14, 1994.
SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
The Rights are currently attached to the outstanding Shares and may not be
traded separately. As a result, the sales prices per Share set forth above are
also the high and low sales prices per Share and associated Right. As a result
of the commencement of the Offer, the Distribution Date may be as early as
August 23, 1994, after which the Rights could begin trading separately from the
Shares. See Section 11. In such event, shareholders are urged to obtain a
current market quotation, if any, for the Rights. Unless and until the Purchaser
declares that the Rights Condition is satisfied, holders of Shares will be
required to tender one-half of one Right for each Share tendered in order to
effect a valid tender of such Share. Accordingly, shareholders who sell their
Rights separately from their Shares and do not otherwise acquire Rights may not
be able to satisfy the requirements of the Offer for a valid tender of Shares.
7. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning
the Company contained in this Offer to Purchase, including financial
information, has been taken from or based upon publicly available documents and
records on file with the Commission and other public sources. The summary
information concerning the Company in this Section 7 and elsewhere in this Offer
to Purchase is derived from the Company's 1993 Form 10-K, the Company's Proxy
Statement for the Annual Meeting of Shareholders held on April 18, 1994, the
March 1994 Form 10-Q, the Company's Registration Statement on Form S-3 filed
with the Commission on March 31, 1994 relating to $600 million aggregate
principal amount of debt securities and information made publicly available by
the Company through the Dow Jones News Service. The summary information set
forth below is qualified in its entirety by reference to such reports and
registration statement (which may be obtained and inspected as described below),
and such information made available through the Dow Jones News Service, and
should be considered in conjunction with the more comprehensive financial and
other information in such reports and other publicly available reports and
documents filed by the Company with the Commission and such other publicly
available information. Although the Purchaser and the Parent do not have any
knowledge that would indicate that any statements contained herein based upon
such documents and records and other publicly available information are untrue,
neither the Purchaser nor the Parent assumes any responsibility for the accuracy
or completeness of the information contained therein, or for any failure by the
Company to disclose events that may have occurred and may affect the
significance or accuracy of any such information but which are unknown to the
Purchaser and the Parent.
General. The Company is a Maine corporation, incorporated in 1907, with its
principal executive offices at One Cyanamid Plaza, Wayne, New Jersey 07470.
The Company is a research-based life sciences company which, together with
its subsidiaries, discovers and develops medical and agricultural products and
manufactures and markets them throughout the world.
The Company's medical products encompass LEDERLE branded and generic
pharmaceutical products; over-the-counter products including CENTRUM and other
multivitamins; LEDERLE-PRAXIS vaccines; DAVIS & GECK wound management devices
and instruments for minimally invasive surgery; STORZ ophthalmic, ear, nose and
throat surgical devices, ophthalmic pharmaceuticals and intraocular lenses; and
ACUFEX orthopedic instruments and equipment.
The Company's agricultural business encompasses herbicides, such as the
imidazolinone herbicides marketed as SCEPTER, PURSUIT, and PURSUIT Plus, PROWL
(marketed as STOMP outside the
15
<PAGE>
United States) for soybeans, cotton, corn, rice and small grains, ARSENAL for
vegetation control, and ASSERT for wheat and barley; insecticides, such as
COUNTER and THIMET and, outside of North America, TORQUE, FASTAC, RIPCORD and
CASCADE; fungicides outside of North America, such as DELAN and ACROBAT; plant
growth regulators, such as CYCOCEL; animal feed supplements and health products,
such as AUREOMYCIN and, outside of the United States, AVOTAN, CYDECTIN and
CYGRO; and animal vaccines. Product designations appearing in differentiated
type are trademarks.
Financial Information. Set forth below is certain selected consolidated
financial data for the Company's last five fiscal years and the three months
ended March 31, 1994 and 1993, which was derived from the 1993 Form 10-K and the
March 1994 Form 10-Q. Certain capsule financial information for the three months
and six months ended June 30, 1994 and 1993 has been derived from information
made publicly available by the Company through the Dow Jones News Service in a
press release dated July 19, 1994. More comprehensive financial information is
included in the reports (including management's discussion and analysis of
financial condition and results of operations) and other documents filed by the
Company with the Commission, and in such press release, and the following
financial data is qualified in its entirety by reference to such reports and
other documents and press release, including the financial information and
related notes contained therein. Such reports and other documents may be
examined and copies thereof may be obtained from the offices of the Commission
and the NYSE in the manner set forth below.
AMERICAN CYANAMID COMPANY
SELECTED CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE><CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31, FOR THE YEAR ENDED DECEMBER 31,
-------------------- ------------------------------------------
1994 1993 1993 1992 1991 1990
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net Sales................................................. $ 1,255 $ 1,146 $ 4,277 $ 4,194 $ 3,821 $ 3,380
Earnings (Loss) From Continuing Operations and Before
Accounting Changes.......................................... 117 115 (164) 350 329 240
Earnings (Loss) From Discontinued Operations.............. -- (216) (622) 45 30 113
Cumulative Effect of Accounting Changes................... -- (333) (333) -- -- --
Net Earnings (Loss)....................................... 117 (434) (1,119) 395 359 353
PER SHARE
Earnings (Loss) From Continuing Operations and Before
Accounting Changes.......................................... $1.30 $1.28 ($1.82) $3.85 $3.53 $2.52
Earnings (Loss) From Discontinued Operations.............. -- (2.40) (6.92) 0.50 0.32 1.19
Cumulative Effect of Accounting Changes................... -- (3.70) (3.70) -- -- --
Net Earnings (Loss)....................................... 1.30 (4.82) (12.44) 4.35 3.85 3.71
BALANCE SHEET DATA (At Period End)
Working Capital........................................... $ 399 NA $ 356 $ 839 $ 794 $ 824
Total Assets.............................................. 6,276 NA 6,057 5,067 4,689 4,729
Total Indebtedness........................................ 1,096 NA 960 674 NA NA
Shareholders' Equity...................................... 1,487 NA 1,367 2,721 2,604 2,563
<CAPTION>
1989
---------
<S> <C>
INCOME STATEMENT DATA
Net Sales................................................. $ 3,014
Earnings (Loss) From Continuing Operations and Before
Accounting Changes.......................................... 232
Earnings (Loss) From Discontinued Operations.............. 60
Cumulative Effect of Accounting Changes................... --
Net Earnings (Loss)....................................... 292
PER SHARE
Earnings (Loss) From Continuing Operations and Before
Accounting Changes.......................................... $2.48
Earnings (Loss) From Discontinued Operations.............. 0.64
Cumulative Effect of Accounting Changes................... --
Net Earnings (Loss)....................................... 3.12
BALANCE SHEET DATA (At Period End)
Working Capital........................................... $ 547
Total Assets.............................................. 4,687
Total Indebtedness........................................ NA
Shareholders' Equity...................................... 2,321
</TABLE>
June 30, 1994 and 1993 Information. The Company's earnings from continuing
operations and net earnings in the second quarter of 1994 were $185 million, or
$2.06 per share, compared to a second quarter 1993 loss from continuing
operations of $235 million, or $2.61 per share, and a net loss of
16
<PAGE>
$229 million, or $2.54 per share. Second quarter 1993 results included a
one-time charge of $378 million, or $4.21 per share, related to the Company's
acquisition of a majority interest in Immunex Corporation and net earnings from
discontinued operations of $6 million, or $.07 per share. Excluding these items,
net earnings per share and earnings per share from continuing operations in the
second quarter of 1993 would have been $1.60. Worldwide sales were $1.50 billion
in the second quarter of 1994, compared to $1.25 billion in the same period of
1993.
The Company's earnings from continuing operations and net earnings in the
first six months of 1994 were $302 million, or $3.36 per share, compared to a
first half 1993 loss from continuing operations of $120 million, or $1.33 per
share, and a net loss of $662 million, or $7.36 per share. The results reported
in the first six months of 1993 included the one-time charge of $378 million, or
$4.21 per share, related to the Immunex acquisition; a $210 million, or $2.33
per share, net loss from discontinued operations; and a $333 million, or $3.70
per share, net charge for the cumulative effect of accounting changes applicable
to continuing operations. Excluding these items, earnings per share from
continuing operations and net earnings per share in the first six months of 1993
would have been $2.88. Worldwide sales were $2.75 billion in the six months of
1994, compared to $2.39 billion in the same period of 1993.
The Shares are registered under the Exchange Act. Accordingly, the Company
is subject to the informational filing requirements of the Exchange Act and, in
accordance therewith, is obligated to file periodic reports, proxy statements
and other information with the Commission relating to its business, financial
condition and other matters. Information, as of particular dates, concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the Company's securities and any material interest of
such persons in transactions with the Company is required to be disclosed in
such proxy statements and distributed to the Company's shareholders and filed
with the Commission. Such reports, proxy statements and other information should
be available for inspection at the public reference facilities of the Commission
located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
should also be available for inspection and copying at prescribed rates at the
regional offices of the Commission located at Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies of this material may also
be obtained by mail, upon payment of the Commission's customary fees, from the
Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
In addition, such material should also be available for inspection at the
library of the New York Stock Exchange, 20 Broad Street, New York, New York
10005. Except as otherwise noted in this Offer to Purchase, all of the
information with respect to the Company set forth in this Offer to Purchase has
been derived from publicly available information.
8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND THE PARENT. The
Purchaser, a Delaware corporation and a wholly owned subsidiary of the Parent,
was organized in connection with the Offer and has not carried on any activities
to date other than those incident to its formation and the commencement of the
Offer.
The Parent is a Delaware corporation organized in 1926. The Parent,
together with its subsidiaries, is a leading manufacturer and marketer of health
care products (including pharmaceuticals, consumer health care products, medical
supplies and diagnostic products) and food products. The Parent's and the
Purchaser's principal offices are located at Five Giralda Farms, Madison, New
Jersey 07940.
The Parent's health care products operations are conducted primarily
through the following divisions and subsidiaries: Wyeth-Ayerst Laboratories
Division, a worldwide manufacturer and marketer of ethical pharmaceuticals, with
major products in such categories as female health care, cardiovascular
products, infant formulas, hospital injectable products, vaccines,
anti-inflammatory agents, psychotropic products and prescription
cough/cold/allergy products; Whitehall-Robins Healthcare Division, a
manufacturer and marketer of self-medication and personal care products in the
U.S., Canada and other international markets; Sherwood Medical Company, a
manufacturer and marketer
17
<PAGE>
of medical supplies and clinical laboratory products worldwide; and Fort Dodge
Laboratories, a manufacturer and marketer of animal biologicals and
pharmaceuticals in the U.S. and internationally. Significant product segments
include small animal vaccines, pharmaceuticals and anesthetics, large animal
vaccines, and mastitis preventative and treatment products. In addition, the
Parent is also the beneficial owner of approximately 64% of the outstanding
equity of Genetics Institute, Inc., a leading biopharmaceutical firm.
The Parent's food products operations are conducted through its American
Home Food Products subsidiary which manufactures and markets entrees, side
dishes, snacks and other food products in the U.S. and Canada.
The Parent's consumer-oriented product lines include the well known health
care brand names ADVIL, ANBESOL, CHAP STICK, DENOREX, DIMETAPP, DRISTAN,
PRIMATENE MIST, PREPARATION H and ROBITUSSIN, as well as the food brands CHEF
BOYARDEE, CRUNCH 'N MUNCH, GULDEN'S, JIFFY-POP, PAM and POLANER. Product
designations appearing in differentiated type are trademarks.
Until immediately prior to the time that the Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that the Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer. Because the Purchaser has minimal assets and capitalization, no
meaningful financial information is available.
The name, citizenship, business address, principal occupation or
employment, and five year employment history of each of the directors and
executive officers of the Purchaser and the Parent and certain other information
are set forth in Schedule I hereto.
Set forth below are certain selected consolidated financial data relating
to the Parent and its subsidiaries for the Parent's last five fiscal years and
the three months ended March 31, 1994 and 1993 which have been derived from the
financial statements contained in the Parent's Annual Report on Form 10-K for
the fiscal year ended December 31, 1993 and from the unaudited financial
statements contained in the Parent's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1994, in each case filed by the Parent with the
Commission. Certain capsule financial information for the three months and six
months ended June 30, 1994 and 1993 has been derived from information made
publicly available through the Dow Jones News Service in a press release dated
July 21, 1994. More comprehensive financial information is included in the
reports (including management's discussion and analysis of financial condition
and results of operations) and other documents filed by the Parent with the
Commission, and in such press release, and the following financial data is
qualified in its entirety by reference to such reports and other documents and
press release, including the financial information and related notes contained
therein. Such reports and other documents may be examined and copies thereof may
be obtained from the offices of the Commission and the NYSE in the same manner
as set forth with respect to information about the Company in Section 7.
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AMERICAN HOME PRODUCTS CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE><CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31, FOR THE YEAR ENDED DECEMBER 31,
-------------------- -----------------------------------------------------
1994 1993 1993 1992 1991 1990 1989
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA
Net Sales.......................................... $ 2,144 $ 2,111 $ 8,305 $ 7,874 $ 7,079 $ 6,775 $ 6,747
Income Before Accounting Changes................... 416 402 1,469 1,151 1,375 1,231 1,102
Cumulative Effect of Accounting Changes............ -- -- -- 310 -- -- --
Net Income......................................... 416 402 1,469 1,461 1,375 1,231 1,102
PER SHARE OF COMMON STOCK
Income Before Accounting Changes................... $1.34 $1.29 $4.73 $3.66 $4.36 $3.92 $3.54
Cumulative Effect of Accounting Changes............ -- -- -- 0.99 -- -- --
Net Income......................................... 1.34 1.29 4.73 4.65 4.36 3.92 3.54
BALANCE SHEET DATA (At Period End)
Working Capital.................................... $ 3,151 $ 3,127 $ 3,223 $ 3,059 $ 2,849 $ 2,132 $ 2,424
Total Assets....................................... 7,684 7,290 7,687 7,141 5,939 5,637 5,681
Total Indebtedness................................. 863 864 864 613 110 790 1,920
Shareholders' Equity............................... 3,902 3,462 3,876 3,563 3,301 2,675 1,970
</TABLE>
June 30, 1994 and 1993 Information. The Parent's net sales were $1,978
million for the 1994 second quarter, 4% above year ago levels. Net sales for the
1994 first half were $4,122 million, 3% higher than 1993 results.
Net income and net income per share were $300 million and $0.98 for the
1994 second quarter, 4% and 5% above 1993 levels. Net income and net income per
share for the 1994 first half were $716 million and $2.32, also 4% and 5% above
1993 levels.
The Parent currently owns 10,000 Shares, representing less than .1 percent
of the 89,754,355 Shares outstanding at March 31, 1994, all of which were
acquired by the Parent on August 2, 1994 in a single open market transaction at
$64.00 per Share.
Except as described in this Offer to Purchase and in Schedule I, none of
the Purchaser, the Parent nor, to the best knowledge of the Purchaser and the
Parent, any of the persons listed on Schedule I hereto or any associate or
majority-owned subsidiary of the Purchaser, the Parent or any of the persons so
listed, beneficially owns or has a right to acquire directly or indirectly any
Shares, and none of the Purchaser, the Parent nor, to the best knowledge of the
Purchaser and the Parent, any of the persons or entities referred to above, or
any of the respective executive officers, directors or subsidiaries of any of
the foregoing, has effected any transactions in the Shares during the past 60
days.
On June 15, 1990, the Parent and the Company entered into an agreement (the
"Verelan Agreement") under which the Parent and the Company co-market in the
United States the Company's calcium channel blocker antihypertensive, VERELAN
(verapamil hydrochloride), through their respective pharmaceutical divisions.
Under the Verelan Agreement, the Parent and the Company each agreed to promote
the product through detailing presentations to physicians and medical residents
in order to maximize sales of VERELAN and to share in the income therefrom in
specified percentages. In addition, under the Verelan Agreement, the Parent and
the Company agreed not to promote a specified type of antihypertensive product
for a three-year period and calcium channel blockers for the duration of the
Verelan Agreement. The Verelan Agreement has an initial term of 17 years from
its date and may be extended for additional five year terms. If the Parent
desires to extend the Verelan
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Agreement and the Company does not, the Company is required to make certain
payments to the Parent as liquidated damages.
In addition, from time to time in the ordinary course of business,
executives of the Parent and/or its subsidiaries and divisions discuss and may
enter into arrangements with executives of various companies in the
pharmaceutical industry, including the Company and/or its subsidiaries and
divisions, typically with respect to the possibility of cooperative ventures
relating to research, development and marketing of their respective products.
Except as set forth in this Offer to Purchase, neither the Purchaser nor
the Parent or, to the best knowledge of the Purchaser and the Parent, any of the
persons listed on Schedule I hereto, has any contract, arrangement,
understanding or relationship with any other person with respect to any
securities of the Company, including, but not limited to, contracts,
arrangements, understandings or relationships concerning the transfer or voting
of such securities, joint ventures, loan or option arrangements, puts or calls,
guarantees of loans, guarantees against loss or the giving or withholding of
proxies. Except as set forth in this Offer to Purchase, neither the Purchaser
nor the Parent or, to the best knowledge of the Purchaser and the Parent, any of
the persons listed on Schedule I hereto, has had since January 1, 1991, any
business relationships or transactions with the Company or any of its executive
officers, directors or affiliates that are required to be reported under the
rules and regulations of the Commission applicable to the Offer. Except as set
forth in this Offer to Purchase, since January 1, 1991, there have been no
contacts, negotiations or transactions between any of the Parent, the Purchaser
or, to the best knowledge of the Purchaser and the Parent, any of the persons
listed in Schedule I hereto, on the one hand, and the Company or its affiliates,
on the other hand, concerning a merger, consolidation or acquisition, a tender
offer or other acquisition of securities, an election of directors, or a sale or
other transfer of a material amount of assets.
9. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by the
Purchaser to purchase all of the outstanding Shares and pay related fees and
expenses is expected to be approximately $9.2 billion. The Purchaser will obtain
such funds through capital contributions by the Parent and/or various wholly
owned direct or indirect subsidiaries of the Parent. The Parent and/or such
subsidiaries will obtain such funds through borrowings by such entities
(collectively, the "Borrower") from commercial banks and from their respective
general corporate funds.
CSI, as advisor and arranger to the Parent, has agreed to use its best
efforts to form a syndicate of financial institutions to provide a $9 billion
bank credit facility. The Parent has received the Commitment Letter from
Chemical Bank, which provides that until May 31, 1995 (unless extended),
Chemical Bank will provide, on specified terms and subject to specified
conditions, up to $1.2 billion of the bank financing and act as administrative
agent (the "Administrative Agent") thereunder. The Parent believes that the
Purchaser will have sufficient funds necessary to consummate the Offer and the
Merger and to pay related costs. See Sections 7 and 8.
The Commitment Letter contemplates (i) a 364-day revolving credit and bid
loan facility in the amount of $6 billion (the "A Credit Facility"), which is
extendable by the Borrower for successive 364-day periods effective upon the
consent of the Majority Lenders (as defined in the Commitment Letter) and only
with respect to such consenting lenders, and (ii) a five year revolving credit
and bid loan facility in the amount of $3 billion (the "B Credit Facility," and,
together with the A Credit Facility, the "Facilities"). The proceeds of the
Facilities may be used by the Borrower (i) to finance the Offer and the Merger,
(ii) to replace the Parent's existing $1 billion credit facility (under which
there are no amounts currently outstanding) and (iii) for the Parent's general
corporate and working capital purposes, including commercial paper back-up.
Each revolving credit loan under the A Credit Facility or the B Credit
Facility, as the case may be, must be repaid on its maturity date. Each bid loan
(whether under the A Credit Facility or the B Credit
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<PAGE>
Facility) will have an interest period (as selected by the Borrower) of between
seven and 180 days, and will mature on the last day of such interest period.
Interest on revolving credit loans borrowed under the Facilities will be payable
at Chemical Bank's Alternate Base Rate or, at the Borrower's election, at
specified spreads (adjusted based on the Parent's securities ratings) above a CD
Rate or Eurodollar Rate (adjusted for reserves), as established by the
Administrative Agent. Interest on bid loans will be determined through a
customary bid process.
Chemical Bank's commitment to provide up to $1.2 billion of the Facilities
and CSI's agreement to use its best efforts to syndicate the remaining portion
thereof is expressly subject to satisfaction of certain customary conditions,
including without limitation (a) satisfactory completion of due diligence
(which, with respect to the Company, will be based solely on public information
and information made available by the Company to the Parent, if any), (b)
absence of certain material adverse changes, (c) the successful syndication of
the Facilities and (d) the appropriate markets being clear of certain competing
transactions on behalf of the Parent. The conditions to the effective date under
the Facilities include (a) execution and delivery of satisfactory loan
documentation, (b) the Administrative Agent's reasonable satisfaction with legal
matters relating to the Facilities and (c) consummation of the Offer in
compliance with the terms and conditions (including the price paid for each
Share pursuant thereto) set forth in this Offer to Purchase, as the same may be
modified to the extent not materially adverse (in the reasonable opinion of the
Administrative Agent) to the interests of the lenders. It is a further condition
precedent to the effective date of the Facilities that, after giving effect to
the consummation of the Offer, the Purchaser shall own and control that number
of Shares as shall be necessary to permit the Purchaser to approve the Merger
without the affirmative vote or approval of any other shareholders, and there
shall be no applicable statute or other restriction which would prohibit,
restrict or materially delay the consummation of the Merger or which would be
reasonably likely to make the consummation of the Merger economically
unfeasible.
The definitive documentation relating to the Facilities also will contain
representations, warranties, covenants (including, without limitation, a
covenant that the Merger occur within 180 days of the consummation of the
Offer), events of default (including with respect to certain change of control
events) and conditions customary in the Administrative Agent's loan agreements
for transactions of this size and type. The Borrower also has agreed to pay
certain expenses of, and provide customary indemnities to, CSI and Chemical Bank
and (under certain circumstances) the other lenders under the Facilities.
The Purchaser has agreed to pay certain fees to CSI and Chemical Bank with
respect to the Facilities and participation and facility fees to the lenders, in
connection with the Facilities which, in the aggregate, are not material to the
transactions described herein.
The foregoing summary of the source and amount of funds is qualified in its
entirety by reference to the text of the Commitment Letter, a copy of which is
filed as an exhibit to the Tender Offer Statement on Schedule 14D-1 of the
Purchaser and the Parent filed with the Commission in connection with the Offer
(the "Schedule 14D-1") and is incorporated herein by reference and may be
inspected in the same manner as set forth in Section 7. If and when definitive
agreements relating to the Facilities are executed, copies will be filed as
exhibits to amendments to the Schedule 14D-1.
Although no definitive plan or arrangement for repayment of borrowings
under the Facilities has been made, the Parent anticipates such borrowings will
be repaid with internally generated funds (including, if the Merger is
accomplished, those of the Company) and from other sources which may include the
proceeds of future borrowings or financings. No plans or arrangements have been
made for any future borrowings or financings.
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<PAGE>
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. For more than one
year prior to the Offer, members of the Parent's senior management have
discussed, among other things, potential transactions that might enhance the
value of the Parent for its shareholders, including the possibility of a
strategic acquisition of a pharmaceutical company or business, such as the
Company. By early June 1994, the Parent's discussions regarding possible
acquisitions began to focus particularly on the Company and actions were taken
to effect a more formal analysis of the Company.
Thereafter, during July 1994, John R. Stafford, Chairman, President and
Chief Executive Officer of the Parent, and Albert J. Costello, Chairman and
Chief Executive Officer of the Company, had a telephone conversation in which
they discussed informally the industry and in which Mr. Stafford, referring to
the Verelan Agreement between the companies, stated that he would like to meet
with Mr. Costello to discuss a broadening of the companies' relationship. In the
course of such conversations, Mr. Stafford and Mr. Costello scheduled a meeting
for August 15, 1994, after Mr. Costello was expected to return from a vacation.
During late July 1994, rumors regarding a possible transaction involving
the Company circulated in the industry and in the financial press and
marketplace. Mr. Stafford subsequently confirmed the scheduled August 15 meeting
in a letter to Mr. Costello dated July 27, 1994, which included the following
statement:
As I mentioned there have been some reports lately related to American
Cyanamid and possible shifts in your strategic direction. In light of our
ongoing and successful venture with VERELAN, I would like to suggest that
you not take any definitive steps involving your pharmaceutical business
before we can have a meeting. We have a keen interest in talking with you
about the future of the pharmaceutical industry and how both our companies
might work together to maximize shareholder value.
At a scheduled meeting of the Parent's Board of Directors on July 28, 1994,
Mr. Stafford presented to the Board a summary of potential acquisition
transactions, including a possible acquisition of the Company, and described for
the Board the substance of his conversation with Mr. Costello, the scheduling of
their meeting and the mailing of the July 27, 1994 letter.
Neither the Parent nor Mr. Stafford received a response to the July 27,
1994 letter. The rumors regarding a possible transaction involving the Company
continued, however, and were reported in an article that appeared on the front
page of The Wall Street Journal on August 2, 1994, which indicated that the
Company might announce imminently a transaction involving an exchange of its
pharmaceutical and consumer products business assets for assets and cash from
another entity. Such a transaction would have affected the Parent's willingness
to proceed with a transaction and might also have prohibited the Company from
entertaining the Parent's transaction proposal, even if the Company determined
that it was a proposal worthy of pursuit.
In the meantime, the Parent's senior management increased its analytical
efforts regarding the Company, including having its investment bankers and other
advisors study the Company in greater depth, with a view to recommending a
proposal regarding possible transaction structures. By August 1, 1994 and
continuing into August 2, 1994, such analysis led to the formulation of a
potential acquisition proposal for the Company at $95.00 per share.
On August 2, 1994, the Parent's senior management finalized its analysis
and, following favorable discussions with various directors who would constitute
a majority of the Parent's Board of Directors, the Parent issued the following
press release:
Madison, NJ, August 2, 1994--American Home Products Corporation
(NYSE:AHP) announced today that it is transmitting a letter to Albert J.
Costello, Chairman and Chief Executive Officer of American Cyanamid
Company, offering to acquire American Cyanamid for
22
<PAGE>
$95 per share in cash, representing a premium of more than 50% over
yesterday's closing market price, which has increased in excess of 50% from
trading levels less than six months ago. American Home Products is prepared
to complete the transaction expeditiously subject to formal approval by its
Board of Directors at a special board meeting scheduled for August 16;
Hart-Scott-Rodino antitrust clearance; there being no significant asset
sales or other transactions by American Cyanamid prior to closing; and the
elimination or satisfaction of applicable anti-takeover provisions.
Shortly thereafter, the Parent's Board of Directors in a telephonic Board
meeting approved the press release and the sending of the following letter:
August 2, 1994
BY FACSIMILE
Mr. Albert J. Costello
Chairman and Chief Executive Officer
American Cyanamid Company
One Cyanamid Plaza
Wayne, New Jersey 07470
Dear Al:
We are writing to offer to acquire American Cyanamid Company (the
"Company") in a transaction in which your stockholders would receive $95 in
cash for each share of common stock. We believe our offer represents an
extremely attractive opportunity for your stockholders at a price which
represents a premium in excess of 50% over yesterday's closing market price
of the Company's common stock (which, as you know, is already up in excess
of 50% from its trading levels less than six months ago). We have been
advised by our financial advisors that the offer price is at a level which
both your financial advisors and stockholders should enthusiastically
support.
As I am sure you are aware, American Home Products Corporation is an
important participant in the pharmaceutical industry and other healthcare
and food products industries, with annual sales in excess of $8 billion. We
have, as you do, a well deserved reputation for quality products and
excellent customer service. We have been studying your company for quite a
while and are extremely impressed with the businesses you have so ably
built up. The combination of our companies would result in an enterprise
with the strength and breadth required to prosper in times of uncertainty
for the healthcare industry. As I have indicated to you in our earlier
communications, we have been keenly interested in discussing with you
opportunities for American Home Products to assist the Company in
maximizing value for its stockholders.
Given our financial strength and longstanding supportive banking
relationships, we are highly confident that financing will not represent
any impediment to the consummation of the transaction.
According to recent press reports, the Company may be considering
entering into a significant transaction involving its pharmaceutical
operations and possibly other assets. Since any such transaction would
affect our willingness to proceed with this proposed transaction, we urge
you not to enter into or to agree to any significant transactions, or to
take any additional defensive measures or other actions, that would
adversely affect the ability of your stockholders to receive the benefits
of our proposed transaction.
Our offer is subject, among other things, to the receipt of any
required regulatory approvals and third-party consents and the taking of
all necessary actions to eliminate the applicability of, or to satisfy, any
anti-takeover or other defensive provisions contained in the applicable
corporate
23
<PAGE>
statutes or the Company's charter and by-laws (including the Company's
poison pill). I have discussed our offer at length with the members of our
senior management and with a majority of our Board members, all of whom
share my enthusiasm for the proposed transaction. However, our offer
remains subject to the formal approval of our Board of Directors at its
scheduled meeting on August 16.
We hope that you and your Board of Directors will view this offer as
we do--an excellent opportunity for the stockholders of the Company to
realize full value for their shares to an extent not likely to be available
to them in the marketplace or in the context of the rumored alternative
transactions. We are both prepared and desirous to enter into immediate
discussions with you and your directors, management and advisors to answer
any questions you have about our offer.
We hope that you and your Board of Directors will give our offer
prompt and serious consideration so that we may move forward, in our
preferred course, to a negotiated transaction which can be presented to
your stockholders as the joint effort of American Home Products and the
Company's Board of Directors and management.
Sincerely,
/s/ Jack Stafford
cc: Members of the Board of Directors of American Cyanamid Company
On August 3, 1994, Mr. Stafford sent a further letter to Mr. Costello, the
text of which is set forth below:
August 3, 1994
Mr. Albert J. Costello
Chairman and Chief Executive Officer
American Cyanamid Company
One Cyanamid Plaza
Wayne, NJ 07470
Dear Al:
Recognizing that my letter to you yesterday was formal in nature, I
wanted to write to you personally to indicate my desire to conclude a
friendly merger of AHP and American Cyanamid.
I regret that events overtook our plan to meet in person later this
month when I planned to discuss possible structures wherein our companies
could collaborate. However, I continue to hope that we can meet to talk
about how we might structure the merger of our companies on a negotiated
basis.
I am enthusiastic about the combined company our two businesses could
create. Our two companies have shared associations that are valuable to
both of us and, in this context, I hope that we will be able to meet as
soon as possible to discuss a broader combination.
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I can be available whenever it is convenient for you, including, of
course, on August 15th as we originally scheduled.
Best regards,
Sincerely,
/s/ Jack
Since August 2, 1994, the date of the offer letter, neither the Parent nor
Mr. Stafford has received a response to either of Mr. Stafford's letters or any
other communications aimed at commencing substantive discussions with respect to
the Parent's offer. On August 4, 1994, the Company was quoted as having said
that "Cyanamid has been considering a number of strategic alternatives in light
of the dramatic changes occurring in the health care industry and will in due
course review the American Home Products unsolicited proposal." Notwithstanding
the Parent's continued desire (as expressed in both the August 2, 1994 and the
August 3, 1994 letters) to engage in a negotiated transaction, as time passed,
the Parent began to believe that the Company's lack of a constructive response,
combined with the market speculation about possible alternative transactions,
necessitated a more direct approach in order to ensure that the offer would be
brought to the Company's shareholders.
Consequently, the Parent accelerated the timing of its formal Board of
Directors' consideration of the offer by convening a special meeting on August
9, 1994. At the meeting, the Board of Directors unanimously approved the Offer
as the first step in implementing the acquisition proposal described in the
August 2, 1994 letter.
11. PURPOSE OF THE OFFER; THE MERGER; PLANS FOR THE COMPANY. The purpose of
the Offer is to acquire control of, and the entire equity interest in, the
Company.
The Merger. The Purchaser intends to propose, and to seek to have the
Company consummate, the Merger as soon as practicable after consummation of the
Offer. However, certain terms of the Rights and certain provisions of the MBCA,
the Articles and the By-Laws may affect the ability of the Purchaser to obtain
control of the Company and to consummate the Merger. Accordingly, the timing and
details of the Merger will depend on a variety of factors and legal
requirements, the actions of the Board of Directors of the Company, the number
of Shares acquired by the Purchaser pursuant to the Offer and whether the
Minimum Condition, the Rights Condition, the Maine Takeover Statute Condition
and/or the Financing Condition have been satisfied or waived.
Board Approval. Except in the case of a short form merger in accordance
with Section 904 of the MBCA described below, the MBCA requires that the Merger
be approved by the Company's Board of Directors. In order to provide a possible
method of consummating the Offer and the Merger, depending upon the Company's
response to the Offer and other factors that the Purchaser may deem relevant,
including whether or not the Company takes actions to permit the consummation of
the Offer and the Merger by causing the conditions described herein to be
satisfied, the Purchaser presently intends to seek to have a special
shareholders meeting called and to obtain proxies from shareholders for the
purpose of adopting resolutions of shareholders or taking other actions (which
may be non-binding) instructing the Board of Directors to approve and effectuate
the consummation of the Offer and the Merger and/or removing the current Board
of Directors of the Company from office and electing new directors nominated by
the Purchaser, in order that such new Board of Directors would take all such
actions necessary or appropriate to approve and effectuate the consummation of
the Offer and the Merger.
There are currently eleven members of the Company's Board of Directors,
divided into two classes of four directors each and one class of three
directors. At each annual meeting of the Company, one
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<PAGE>
class of directors is elected to the Board of Directors for a term of three
years. The Articles and By-Laws provide that any director, or the entire Board
of Directors, may be removed from office by the affirmative vote of at least 66
2/3% of the outstanding Shares. The vacancy caused by any such removal may be
filled at such meeting by the vote of the holders of a majority of the Shares
present in person or by proxy and entitled to vote, except that any vacancy not
so filled may be filled by a majority of the remaining directors.
Under the Company's By-Laws, only holders of at least one share of Common
Stock registered in their own names on the books of the Company for a period of
at least six months prior to the date of their election are eligible for
election or can retain their seats as directors (unless such minimum holding
period requirement is waived by the Board of Directors). Among other things, the
Defensive Tactics Litigation seeks the court to declare this provision of the
By-Laws null and void and that the Board of Directors' failure to waive this
provision of the By-Laws would constitute a breach of fiduciary duty.
In the event that the Purchaser owns more than 90% of the Shares following
the consummation of the Offer and assuming that the Maine Takeover Statute
Condition and the Rights Condition have been satisfied, the Purchaser may elect
to consummate a short form merger in accordance with Section 904 of the MBCA.
If the Purchaser chooses not to seek the removal and replacement of the
Company's Board of Directors prior to consummation of the Offer, or is
unsuccessful in doing so, the Purchaser presently intends to request as soon as
practicable following consummation of the Offer that some or all of the
then-current members of the Board of Directors resign and to cause nominees of
the Purchaser to be elected to fill the resulting vacancies. Should such request
be refused, the Purchaser intends to take such action as may be necessary and
lawful to secure control of the Board of Directors of the Company. In this
connection, in the event that a shareholders meeting is held after the Minimum
Condition has been satisfied and the Offer has been consummated, the Purchaser
will control sufficient votes to remove and replace the Company's entire Board
of Directors to the extent that the Purchaser is able to establish a forum for
such election. In the event that the Purchaser waives the Minimum Condition or
the Rights Condition and is unable to obtain a vote sufficient to remove and
replace the entire Board, the Purchaser could seek to gain control of the
Company by obtaining a majority vote of the outstanding Shares in two successive
annual meetings. In the event the Purchaser obtains control of the Company's
Board of Directors, the Purchaser would expect to seek approval of the Merger as
soon as practicable thereafter, consistent with the fiduciary obligations of the
Board.
THIS OFFER TO PURCHASE DOES NOT CONSTITUTE A SOLICITATION OF A PROXY,
CONSENT OR AUTHORIZATION FOR OR WITH RESPECT TO ANY SPECIAL OR OTHER MEETING OF
THE COMPANY'S SHAREHOLDERS OR ANY ACTION IN LIEU THEREOF. ANY SUCH SOLICITATION
WHICH THE PURCHASER MAY MAKE WILL BE MADE ONLY PURSUANT TO SEPARATE PROXY
MATERIALS IN COMPLIANCE WITH THE REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE
ACT.
Shareholder Approval; Formula Price Provision. Generally, the MBCA requires
that, unless otherwise provided by the Company's Articles, the Merger be
approved by the affirmative vote of the holders of at least a majority of the
outstanding Shares. However, the Articles provide that, in addition to any
affirmative vote required by applicable law, the affirmative vote of the holders
of at least 80% of the outstanding Shares is required to approve certain
business combinations (including mergers) between the Company and an Interested
Stockholder, unless either (i) the business combination is approved by a
majority of those directors (the "Disinterested Directors") who are not
affiliated with or nominees of the Interested Stockholder and who were directors
prior to the time the Interested Stockholder became an Interested Stockholder
and any successors of Disinterested Directors who are not affiliated with or
nominees of the Interested Stockholder and are recommended to succeed the
Disinterested Directors by a majority of the Disinterested Directors then on the
Board (the "Continuing Director Condition") or (ii) certain price and procedural
requirements are met, some of which are beyond the control of the Parent and the
Purchaser (the "Formula Price Conditions").
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The Formula Price Conditions require that the aggregate amount of the cash
and the fair market value (as defined below) as of the date of the consummation
of the business combination of the consideration other than cash to be received
per share by holders of Shares in such business combination shall be an amount
at least equal to the highest applicable of the following: (i) the highest per
share price (including any brokerage commissions, transfer taxes and soliciting
dealers' fees, but adjusted to reflect stock splits, stock dividends,
combinations and similar transactions) paid by the Interested Stockholder for
any Share acquired by it (1) within the two-year period immediately prior to the
first public announcement of the proposal of the business combination (the
"announcement date") or (2) in the transaction in which it became an Interested
Stockholder, whichever is higher; or (ii) the fair market value (as defined
below) per Share (adjusted to reflect stock splits, stock dividends,
combinations and similar transactions) (1) on the announcement date or (2) on
the date on which the Interested Stockholder became an Interested Stockholder,
whichever is higher; or (iii) in the case of capital stock other than the
Shares, the price determined pursuant to subparagraphs (i), (ii) (if applicable)
or the highest preferential amount per share to which the holders of shares of
such class or series of stock are then entitled, in cash, in the event of any
voluntary or involuntary redemption of such classes or series of stock or any
voluntary or involuntary liquidating, dissolution or winding up of the Company.
For purposes of the Articles, the term "fair market value" means, in the
case of the Shares, so long as the Shares are listed for trading on the NYSE,
the highest closing sale price during the 30-day period immediately preceding
the date in question on the NYSE Composite Tape.
The Formula Price Conditions also require, among other things, that (i) the
consideration to be received by holders of Shares must be in cash or in the same
form as previously paid by or on behalf of the Interested Stockholder for the
largest number of Shares previously acquired by the Interested Stockholder; (ii)
after such Interested Stockholder has become an Interested Stockholder and prior
to the consummation of such business combination, (x) there shall have been no
failure to declare and pay at the regular dates therefor any full quarterly
dividend (whether or not cumulative) on any outstanding preferred stock, (y)
there shall have been (1) no reduction in the annual rate of dividends paid on
the Shares (except as approved by a majority of the Disinterested Directors) and
(2) an increase in such annual rate of dividends as necessary to reflect any
reclassification (including any reverse stock split), recapitalization,
reorganization or any similar transaction which has the effect of reducing the
number of outstanding Shares (unless otherwise approved by a majority of the
Disinterested Directors) and (z) such Interested Stockholder shall not have
become the beneficial owner of any additional Shares except as part of the
transaction which results in such Interested Stockholder becoming an Interested
Stockholder and except in a transaction that, after giving effect thereto, would
not result in any increase in the Interested Stockholder's percentage beneficial
ownership of the Shares; and (iii) after such Interested Stockholder has become
an Interested Stockholder, such Interested Stockholder shall not have received
the benefit, directly or indirectly (except proportionately as a stockholder),
of any loans, advances, guarantees, pledges or other financial assistance or any
tax credits or other tax advantages provided by the Company or any subsidiary,
whether in anticipation of, or in connection with, such business combination or
otherwise.
The Minimum Condition requires that there shall have been validly tendered
and not properly withdrawn on or prior to the Expiration Date a number of Shares
which constitutes at least 80% of the voting power (determined on a fully
diluted basis), on the date of purchase, of all securities entitled to vote
generally in the election of directors or in a merger. Upon consummation of the
Offer and assuming the Minimum Condition is satisfied, the Purchaser will own
sufficient Shares to enable it to effect shareholder approval of the Merger
(subject to the requirements of the Maine Takeover Statute) with the affirmative
vote of the Shares owned by it, thereby rendering the Continuing Director
Condition and Formula Price Conditions inapplicable to the Merger.
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The foregoing description of the Articles and the By-Laws is qualified in
its entirety by reference to the text of the Articles and By-Laws, copies of
which have been filed by the Company as exhibits to documents filed with the
Commission and may be obtained in the manner described in Section 7.
The Rights. The following discussion is based on information contained in
the Company's Form 8-A. Although the Purchaser and the Parent do not have any
knowledge (except as otherwise described herein) that would indicate that any
statements contained herein based upon such document are untrue, neither the
Purchaser nor the Parent assumes any responsibility for the accuracy or
completeness of the information contained in such document, or for any failure
by the Company to disclose events that may have occurred and may affect the
significance or accuracy of any such information but which are unknown to the
Purchaser and the Parent. To the Purchaser's knowledge, the publicly available
information regarding the Rights and the Rights Agreement is incomplete in that
the May 1 Form 8 was filed with the Commission without including Exhibit A of
the amendment to the Rights Agreement (which included the substantive
modifications made to the Rights Agreement by such amendment). Accordingly,
without limiting the generality of the foregoing provisions of this paragraph,
the descriptions herein of the Rights and the Rights Agreement are qualified to
the extent that information relating thereto is not publicly available.
The Board of Directors of the Company, on March 10, 1986, declared a
dividend distribution of one Right for each outstanding Share to the
shareholders of record at the close of business on March 25, 1986 (the "Record
Date"). Each Right entitles the registered holder to purchase from the Company a
unit consisting of one two-hundredth of a share (a "Unit") of Series A Junior
Participating Preferred Stock, $1.00 par value (the "Preferred Stock"), at a
price of $200 per Unit, subject to adjustment. On March 25, 1986, each
outstanding Share received one Right and, as a result of a stock split on June
12, 1987, according to publicly available information, one-half of one Right is
currently associated with each Share. As long as the Rights are attached to the
Shares, the Company will issue one-half of one Right for each Share issued
between the Record Date and the Distribution Date so that all such Shares will
have attached Rights.
Initially, Rights are attached to all Share Certificates outstanding, and
no separate Right Certificates are distributed. A "Distribution Date" for the
Rights will occur upon the earlier of (i) 10 days following the date (the "Stock
Acquisition Date") of a public announcement that a person, entity or group of
affiliated or associated persons (an "Acquiring Person") has acquired beneficial
ownership of 20% or more of the outstanding Shares or (ii) 10 business days
following the commencement of a tender offer or exchange offer if, upon
consummation thereof, the person or group proposing such offer would be
beneficial owner of 30% or more of the outstanding Shares.
Until the Distribution Date, the Rights will be transferred with and only
with Share Certificates and until the Distribution Date (or earlier redemption
or expiration of the Rights), new Share Certificates issued after March 25, 1986
upon transfer or new issuance of Shares will contain a notation incorporating
the Rights Agreement by reference. Until the Distribution Date (or earlier
redemption or expiration of the Rights), the surrender for transfer of any Share
Certificate will also constitute the transfer of the Rights associated with the
Shares represented by such Share Certificate.
The Rights are not exercisable until the Distribution Date (or the
expiration of the Company's redemption rights, as described below) and will
expire on March 25, 1996, unless earlier redeemed by the Company as described
below.
As soon as practicable following the Distribution Date, separate Rights
Certificates will be mailed to holders of record of the Shares as of the close
of business on the Distribution Date; after the Distribution Date, such separate
Rights Certificates alone will evidence the Rights.
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In the event that at any time following the Distribution Date, (i) the
Company is the surviving corporation in a merger with an Acquiring Person and
the Shares are not changed or exchanged, (ii) a person becomes the beneficial
owner of 50% or more of the then outstanding Shares, or (iii) during such time
as there is an Acquiring Person, one of the events set forth in Section
11(a)(ii)(C) of the Rights Agreement occurs (e.g., a reverse stock split),
provision shall be made so that each holder of one-half of a Right will
thereafter have the right to receive, upon exercise thereof, two Shares (or, in
certain circumstances, a combination of cash, other property, Shares and/or
other securities), at 25% of the then per share market price of the Shares. In
the event that, at any time following the Distribution Date, the Company is
acquired in a merger or other business combination transaction or (within a
two-year period) more than 50% of its assets or earning power is sold, provision
shall be made so that each holder of one-half of a Right will thereafter have
the right to receive, upon the exercise thereof at the then current Purchase
Price (as defined in the Rights Agreement) of such one-half of a Right, common
stock of the acquiring entity which has a value of two times the Purchase Price
of such one-half of a Right. Following the occurrence of any of the events
described above in this paragraph, any Rights that are or were beneficially
owned by an Acquiring Person or affiliates or associates of any Acquiring Person
will immediately become null and void.
The Purchase Price payable, and the number of Shares or other securities or
property issuable, upon exercise of Rights are subject to adjustment from time
to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of the Preferred Stock, (ii) upon
the grant to holders of the Preferred Stock of certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the current
market price of the Preferred Stock or (iii) upon the distribution to holders of
the Preferred Stock of evidences of indebtedness or assets (excluding dividends
payable in Preferred Stock) or cash (excluding regular quarterly cash dividends)
or of subscription rights or warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
the Purchase Price. No fractional Units will be issued and, in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred Stock
on the last trading date prior to the date of issuance of a Right.
At any time until 30 days following the Stock Acquisition Date, the Company
may redeem the Rights in whole, but not in part, at a price of $.02 per Right
(the "Redemption Price"). Immediately upon the action of the Board of Directors
of the Company ordering redemption of the Rights, the Rights will terminate and
the only right of the holders of Rights will be to receive the Redemption Price.
Rights will not be exercisable prior to the expiration of the Company's right of
redemption described above.
Until a Right is exercised, it will not entitle the holder thereof to any
rights as a shareholder of the Company (other than those of an existing
shareholder), including, without limitation, the right to vote or to receive
dividends.
The terms of the Rights may be amended by the Board of Directors of the
Company, but (following the Distribution Date) no amendment may adversely affect
the interests of holders of the Rights.
Under the Rights Agreement, as a result of the commencement of the Offer,
the Distribution Date will be as early as August 23, 1994, unless prior to such
date the Company's Board of Directors redeems the Rights or takes action to
delay the Distribution Date. The Purchaser believes that the consummation of the
Offer likely would trigger the Ownership Flip-in and, as a result, cause
significant dilution to the Purchaser's interest in the Company and render the
Offer and the Merger economically unattractive for the Purchaser.
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The Purchaser hereby requests that the Company's Board of Directors redeem
the Rights. The Purchaser believes that, under the circumstances of the Offer
and under applicable law, the Board of Directors of the Company is obligated by
its fiduciary responsibilities to redeem the Rights in order to permit the Offer
and the Merger to be consummated. However, there can be no assurance that the
Board will do so. In the Defensive Tactics Litigation, the Purchaser has
requested the court to require that the Company redeem the Rights.
UNLESS THE RIGHTS ARE REDEEMED, HOLDERS OF SHARES WILL ALSO BE REQUIRED TO
TENDER ONE-HALF OF ONE RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID
TENDER OF SUCH SHARE. If separate certificates for the Rights are not issued, a
tender of Shares will also constitute a tender of associated Rights.
Maine Takeover Statute. The Maine Takeover Statute may have the effect of
significantly delaying the Merger. In general, the Maine Takeover Statute
prohibits any person who is the beneficial owner of 25% or more of the
outstanding voting stock of a corporation (a "Statutory Interested Shareholder")
from engaging in certain business combinations (including mergers, as set forth
below) with such corporation for a period of five years following the date on
which such person became a Statutory Interested Shareholder, unless the business
combination is: (i) approved by the board of directors of the corporation prior
to the date on which such person became a Statutory Interested Shareholder; or
(ii) approved, subsequent to the date on which such person became a Statutory
Interested Shareholder, by the board of directors of the corporation and
authorized by the affirmative vote, at a meeting called for that purpose, of at
least a majority of the outstanding voting stock not beneficially owned by that
Statutory Interested Shareholder or any affiliate or associate of that Statutory
Interested Shareholder or by persons who are either directors or officers and
also employees of that corporation.
The Maine Takeover Statute provides that, during the five-year period
following the date the Statutory Interested Shareholder became such, neither the
corporation nor any of its subsidiaries may engage in any of the following
business combinations: (i) any merger or consolidation with (A) that Statutory
Interested Shareholder, (B) any other corporation which is, or after the merger
or consolidation would be, an affiliate or associate of that Statutory
Interested Shareholder or (C) any other corporation if the merger or
consolidation is caused by that Statutory Interested Shareholder and as a result
of that merger or consolidation the Maine Takeover Statute is not applicable to
the surviving corporation; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of assets (A) having an aggregate market value (as
defined in the Maine Takeover Statute) equal to 10% or more of the aggregate
market value, or book value determined in accordance with good accounting
practices, of all the assets determined on a consolidated basis of the
corporation, (B) having an aggregate market value equal to 10% or more of the
aggregate market value of all the outstanding stock of the corporation or (C)
representing 10% or more of the earning power or income, determined on a
consolidated basis, of the corporation proposed by, on behalf of or pursuant to
any agreement or understanding with that Statutory Interested Shareholder or any
affiliate or associate of that Statutory Interested Shareholder; (iii) the
issuance or transfer of any stock of the corporation or such subsidiary which
has an aggregate market value equal to 5% or more of the aggregate market value
of all the outstanding stock of the corporation to that Statutory Interested
Shareholder (with certain exceptions); (iv) the adoption of any plan or proposal
for the liquidation or dissolution of the corporation proposed by, on behalf of
or pursuant to any agreement, arrangement or understanding with that Statutory
Interested Shareholder or any affiliate or associate of that Statutory
Interested Shareholder; (v) any transaction proposed by, on behalf of or
pursuant to any agreement, arrangement or understanding with that Statutory
Interested Shareholder or any affiliate or associate of that Interested
Shareholder, which has the effect of increasing the proportionate share of the
outstanding shares of any class or series of voting stock or securities
convertible into voting stock of the corporation or any such subsidiary which is
directly or indirectly owned by that Statutory Interested Shareholder (with
certain exceptions); or (vi) any receipt by that Statutory Interested
Shareholder or any affiliate or associate of that Statutory Interested
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Shareholder of the benefit (with certain exceptions) of any loans, advances,
guarantees, pledges or other financial assistance or any tax credits or other
tax advantages provided by or through the corporation.
The Offer is subject to satisfaction of, among other things, the Maine
Takeover Statute Condition. The Maine Takeover Condition will be satisfied if
the court in the Defensive Tactics Litigation deems the statute unconstitutional
as applied to the Offer or orders the Company's Board of Directors to take all
actions necessary to render the restrictions on business combinations contained
in the Maine Takeover Statute inapplicable to the Merger. Alternatively, the
Maine Takeover Statute Condition will be satisfied if, prior to the acceptance
for payment of Shares pursuant to the Offer, the Company's Board of Directors
approves the Offer and the Merger with respect to the Company. The Purchaser
hereby requests that the Company's Board of Directors approve the Offer and the
Merger for all purposes, including the Maine Takeover Statute.
In order to provide a possible method of consummating the Offer and the
Merger even if the Defensive Tactics Litigation is unsuccessful with regard to
the Maine Takeover Statute, depending upon the Company's response to the Offer
and other factors that the Purchaser may deem relevant, including whether or not
the Company takes actions to permit the consummation of the Offer and the Merger
by causing the conditions to the Offer and the Merger described herein to be
satisfied, the Purchaser presently intends to seek to have a special
shareholders meeting called and to obtain proxies from shareholders for the
purpose of adopting resolutions of shareholders or taking other actions (which
may be non-binding) instructing the Board of Directors to approve and effectuate
the consummation of the Offer and the Merger and/or removing the current Board
of Directors of the Company from office and electing new directors nominated by
the Purchaser, in order that such new Board of Directors would take all such
actions necessary or appropriate to approve and effectuate the consummation of
the Offer and the Merger.
THIS OFFER TO PURCHASE DOES NOT CONSTITUTE A SOLICITATION OF A PROXY,
CONSENT OR AUTHORIZATION FOR OR WITH RESPECT TO ANY SPECIAL OR OTHER MEETING OF
THE COMPANY'S SHAREHOLDERS OR ANY ACTION IN LIEU THEREOF. ANY SUCH SOLICITATION
WHICH THE PURCHASER MAY MAKE WILL BE MADE ONLY PURSUANT TO SEPARATE PROXY
MATERIALS IN COMPLIANCE WITH THE REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE
ACT.
The Purchaser reserves the right to waive the Maine Takeover Statute
Condition, although there can be no assurance that the Purchaser will do so, and
the Purchaser has not determined whether it would be willing to do so under any
circumstances.
In the event that the Purchaser were to waive the Maine Takeover Statute
Condition, purchase Shares pursuant to the Offer and become a Statutory
Interested Shareholder, the Maine Takeover Statute would cease to be applicable
if thereafter the Merger were approved by the Company's Board of Directors and
authorized by the affirmative vote, at a meeting called for that purpose, of at
least a majority of the outstanding Shares not beneficially owned by the
Purchaser and its affiliates and associates or by persons who are either
directors or officers and also employees of the Company.
Short Form Merger. Under Section 904 of the MBCA and subject to the Maine
Takeover Statute, a parent corporation owning at least 90% of the outstanding
shares of each class of a subsidiary corporation may merge the subsidiary
corporation into itself without the approval of the shareholders of the parent
corporation or of the board of directors or shareholders of the subsidiary
corporation. In the event that the Purchaser owns more than 90% of the Shares
following the consummation of the Offer and assuming that the Maine Takeover
Statute Condition and the Rights Condition have been satisfied, the Purchaser
may elect to consummate a short form merger in accordance with Section 904 of
the MBCA.
THE OFFER IS CONDITIONED UPON THE MAINE TAKEOVER STATUTE CONDITION BEING
SATISFIED.
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Appraisal Rights in Connection with the Offer. Following the acquisition of
25% of the outstanding Shares by the Purchaser pursuant to the Offer or
otherwise (a "Control Transaction"), Section 910 of the MBCA would give each
shareholder of the Company the right to receive cash for such shareholder's
Shares in an amount equal to the fair value of such Shares as of the day prior
to the Control Transaction, taking into account all relevant factors, including
an increment representing a proportion of any value payable for acquisition of
control of the Company. Under Section 910, the Purchaser would be required to
give notice to each shareholder of record within 15 days after the Control
Transaction, and each shareholder would then be entitled, prior to or within 30
days after such notice is given, to make written demand on the Purchaser for
payment for such shareholder's Shares. Within 10 days after such 30-day period,
the Purchaser would be required to make a written offer to each demanding
shareholder to pay for such Shares at a price deemed by the Purchaser to be the
fair value of the Shares. If, within 30 days after such 30-day period, the fair
value of the Shares is agreed upon between any demanding shareholder and the
Purchaser, payment for such Shares shall be made within 90 days after the
written offer was made by the Purchaser. If no agreement is reached within such
period, the Purchaser may, or shall upon receipt of a written demand for suit
from any demanding shareholder, bring an action in state court to determine the
fair value of the Shares within 60 days after the date on which Purchaser's
written offer was made. In any such action, all demanding shareholders (except
those who have agreed with the Purchaser upon the price for their Shares) are to
be made parties to the proceedings as an action against their Shares quasi in
rem. All such shareholders shall be entitled to judgment against the Purchaser
for the amount of the fair value of their Shares as fixed by the court. The
judgment shall include an allowance for interest at such rate as the court may
find to be fair and equitable in all the circumstances, from the date of the
Control Transaction to the date of payment. Certain costs and expenses of any
such proceeding would be assessed against the Purchaser, and may be assessed
against demanding shareholders if the court finds that their failure to accept
the Purchaser's offer was arbitrary, vexatious or in bad faith.
The value so determined in any appraisal proceeding could be more or less
than the per Share price paid pursuant to the Offer or the Merger.
The foregoing description of Section 910 of the MBCA is not necessarily
complete and is qualified in its entirety by reference to such Section of the
MBCA.
The Purchaser reserves the right to attempt to make Section 910 of the MBCA
inapplicable to the Offer by seeking to amend the Articles to provide that
Section 910 shall not be applicable to the Company. The Purchaser does not know
whether such an amendment of the Articles which is made after a Control
Transaction would affect the rights and remedies of shareholders under Section
910 with respect to such Control Transaction. If the Articles are not amended to
provide that Section 910 shall not be applicable to the Company, the Purchaser
currently intends to comply with the terms of Section 910. The Offer is not
conditioned upon the inapplicability of Section 910.
Dissenters' Rights in Connection with the Merger. Sections 908 and 909 of
the MBCA provide that a shareholder has the right to dissent from any plan of
merger, except in certain situations which would not be applicable to the
Merger. If the Merger is consummated, dissenting shareholders who comply with
the applicable statutory procedures will be paid the fair value of their Shares.
The fair value of Shares shall be determined as of the day prior to the date on
which the vote of shareholders was taken approving the Merger, excluding any
appreciation or depreciation of Shares in anticipation of the Merger.
Shareholders who comply with the applicable statutory procedures would be
entitled to a judicial determination of the fair value of their Shares. The
value so determined in any appraisal proceeding could be more or less than the
per Share price paid pursuant to the Offer or the Merger. The Maine Supreme
Judicial Court, which is the highest court in the state, has concluded in
another case that the "fair value" of shares under Section 909 is determined by
reference not just to the stock market price, but also to the net asset value
and investment value as appropriately weighted. In that case the Court held that
the "fair value" under Section 909 does not include any payment for a tender
offer premium.
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In addition, the Merger may be found to be subject to other applicable
procedural and substantive requirements for the existence of "fairness." Several
judicial decisions in other jurisdictions, which may or may not be followed
under Maine law, have held that a controlling shareholder of a company involved
in a merger has a fiduciary duty to other shareholders which requires that the
merger be fair to such other shareholders. In determining whether the
controlling shareholder has fulfilled such duty to the shareholders, certain
courts have considered, among other things, the type and amount of the
consideration to be received by such shareholders, whether there was fair
dealing among the parties and whether the other shareholders are accorded
appraisal rights. At least one such decision provides that, in most cases
involving a merger in which the consideration is found not to be "fair" to
minority shareholders, the remedy available to minority shareholders is the
right to appraisal described above or a damage remedy based on essentially the
same principles.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may, under
certain circumstances, be applicable to the Merger following the purchase of
Shares pursuant to the Offer in which the Purchaser seeks to acquire any
remaining Shares. Rule 13e-3 should not be applicable to the Merger if the
Merger is consummated within one year after the expiration or termination of the
Offer and the price paid in the Merger is not less than the per Share price paid
pursuant to the Offer. However, in the event that the Purchaser is deemed to
have acquired control of the Company pursuant to the Offer and if the Merger is
consummated more than one year after completion of the Offer or an alternative
acquisition transaction is effected whereby shareholders of the Company receive
consideration less than that paid pursuant to the Offer, in either case at a
time when the Shares are still registered under the Exchange Act, the Purchaser
may be required to comply with Rule 13e-3 under the Exchange Act. If applicable,
Rule 13e-3 would require, among other things, that certain financial information
concerning the Company, and certain information relating to the fairness of the
Merger or such alternative transaction and the consideration offered to minority
shareholders in the Merger or such alternative transaction, be filed with the
Commission and disclosed to shareholders prior to consummation of the Merger or
such alternative transaction. The purchase of a substantial number of Shares
pursuant to the Offer may result in the Company being able to terminate its
Exchange Act registration. See Section 13. If such registration were terminated,
Rule 13e-3 would be inapplicable to any such future Merger or such alternative
transaction.
Defensive Tactics Litigation. The Purchaser commenced the Defensive Tactics
Litigation in the United States District Court for the District of Maine on
August 9, 1994, which names the Company and certain of its directors as
defendants and seeks declaratory and injunctive relief in connection with the
Offer. The Defensive Tactics Litigation asks the court either to invalidate or
cause the Company's Board of Directors to remove several defense mechanisms
embodied in the MBCA, the Articles and the By-Laws which, absent the relief
sought, could seriously impede the Purchaser's ability to consummate the Merger
and thereby the Offer. In particular, the Defensive Tactics Litigation seeks a
judgment declaring, among other things, that (i) the Maine Takeover Statute is
unconstitutional; (ii) any attempt to apply any other state's takeover statute
to the Offer is constitutionally impermissible; (iii) the Directors would be in
breach of their fiduciary duties if they fail to redeem the Rights in response
to the Offer; (iv) the 80% Charter Provision is void and unlawful and otherwise
inapplicable to the Offer, and the Board of Directors of the Company is
obligated by its fiduciary responsibilities to approve the Offer and the Merger;
and (v) the provision of the By-Laws, which provides that, in order to qualify
for election as, and remain, a director, such director must have been a
registered holder of at least one Share for a six-month period prior to election
(unless such minimum holding period requirement is waived by the Board of
Directors), is void and unlawful. The Defensive Tactics Litigation also seeks a
preliminary and permanent order: (i) enjoining the Company and its agents from
taking any actions to invoke, apply or enforce the Maine Takeover Statute or any
similar provision; (ii) enjoining the defendants from honoring the Rights or
from otherwise enforcing or amending or altering the Rights Agreement; (iii)
enjoining and ordering the defendants to redeem the Rights; and (iv) enjoining
the
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Company and its agents from taking any action (including by changing the
Articles or the By-Laws or otherwise) improperly to impede the Offer.
Other. The timing and details of the Merger will depend on a variety of
factors and legal requirements, the action of the Company's Board of Directors
and the number of Shares acquired by the Purchaser pursuant to the Offer and
whether the Minimum Condition, the Rights Condition, the Maine Takeover Statute
Condition and/or the Financing Condition is satisfied or waived. Although the
Purchaser has proposed the Merger to the Company and seeks to have the Company
consummate the Merger as soon as practicable after consummation of the Offer,
the Purchaser can give no assurance that the Merger will be consummated or as to
the timing of the Merger if it is consummated. Although the Purchaser has
proposed the Merger on the terms described above, it is possible that, as a
result of substantial delays in the Purchaser's ability to effect the Merger,
information hereafter obtained by the Purchaser, changes in general economic or
market conditions or in the business, operations or financial condition or
prospects of the Company, any of the Minimum Condition, the Rights Condition,
the Maine Takeover Statute Condition or the Financing Condition not being
satisfied or any other currently unforeseen factors, the Merger may not be so
proposed, may be delayed or abandoned or may be proposed on different terms.
Although it has no current intention to do so, the Purchaser expressly reserves
the right to propose a Merger on terms other than those described above and the
right to withdraw any Merger proposal.
The Purchaser reserves the right to purchase, following consummation or
termination of the Offer, additional Shares or Rights in the open market, in
privately negotiated transactions, in another tender offer or exchange offer or
otherwise. In addition, in the event that the Purchaser decides not to propose
the Merger, to propose a Merger on terms other than those described above or to
withdraw any Merger previously proposed, the Purchaser will evaluate its other
alternatives. Such alternatives could include purchasing additional Shares or
Rights in the open market, in privately negotiated transactions, in another
tender offer or exchange offer or otherwise, or taking no further action to
acquire additional Shares or Rights. Any additional purchases of Shares or
Rights could be at a price greater or less than the price to be paid for Shares
and Rights in the Offer and could be for cash or other consideration.
Alternatively, the Purchaser and the Parent may sell or otherwise dispose of any
or all Shares or Rights acquired pursuant to the Offer or otherwise. Such
transactions may be effected on terms and at prices then determined by the
Purchaser and the Parent, which may vary from the price paid for Shares and
Rights in the Offer.
Plans for the Company. Based on the Parent's current understanding of the
Company's business, derived solely from publicly available information, the
Parent believes that significant operating efficiencies and synergies may be
able to be achieved by the combined entity, which could include reduction of
then excess selling, general and administrative and other expenses. If and to
the extent the Parent acquires control of the Company or otherwise obtains
access to the books and records of the Company, the Parent intends to conduct a
detailed review of the Company and its assets, businesses, labor practices,
operations, properties, dividend and other policies, corporate structure,
capitalization and management and personnel and consider what changes the Parent
deems desirable in light of the circumstances which then exist. It is the
Parent's current intention to seek to cause the Company to eliminate dividend
payments on the Shares following consummation of the Offer.
Except as described in this Offer to Purchase, none of the Purchaser, the
Parent nor, to the best knowledge of the Purchaser and the Parent, any of the
persons listed on Schedule I have any present plans or proposals that would
relate to or result in an extraordinary corporate transaction such as a merger,
reorganization or liquidation involving the Company or any of its subsidiaries
or a sale or other transfer of a material amount of assets of the Company or any
of its subsidiaries, any material change in the capitalization or dividend
policy of the Company or any other material change in the Company's corporate
structure or business or the composition of its Board of Directors or
management.
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12. DIVIDENDS AND DISTRIBUTIONS. If the Company should, during the pendency
of the Offer, split, combine or otherwise change the Shares or its
capitalization, or disclose that it has taken any such action, then, without
prejudice to the Purchaser's rights under Section 14, the Purchaser may make
such adjustments to the purchase price and other terms of the Offer as it deems
appropriate to reflect such split, combination or other change.
If, on or after August 2, 1994, the Company should declare or pay any cash
or stock dividend or other distribution on, or issue any rights with respect to,
the Shares (other than regular quarterly cash dividends not in excess of $.4625
per Share having a customary and usual record date) that is payable or
distributable to shareholders of record on a date prior to the transfer to the
name of the Purchaser or the nominee or transferee of the Purchaser on the
Company's stock transfer records of such Shares that are purchased pursuant to
the Offer (except that if the Rights are redeemed by the Board of Directors in
accordance with the terms of the Rights Agreement, tendering shareholders who
are holders of record as of the applicable record date will be entitled to
receive and retain the redemption price of $.02 per Right in accordance with the
Rights Agreement), then, without prejudice to the Purchaser's rights under
Section 14, (i) the purchase price payable per Share by the Purchaser pursuant
to the Offer will be reduced to the extent any such dividend or distribution is
payable in cash and (ii) any non-cash dividend, distribution (including
additional Shares) or right received and held by a tendering shareholder shall
be required to be promptly remitted and transferred by the tendering shareholder
to the Depositary for the account of the Purchaser, accompanied by appropriate
documentation of transfer. Pending such remittance or appropriate assurance
thereof, the Purchaser will be, subject to applicable law, entitled to all
rights and privileges as owner of any such non-cash dividend, distribution or
right and may withhold the entire purchase price or deduct from the purchase
price the amount or value thereof, as determined by the Purchaser in its sole
discretion.
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK EXCHANGE
LISTING AND EXCHANGE ACT REGISTRATION. The purchase of Shares pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
will reduce the number of holders of Shares. This could adversely affect the
liquidity and market value of the remaining Shares held by the public. Depending
upon the number of Shares purchased pursuant to the Offer, the Shares may no
longer meet the requirements for continued listing on the NYSE, and may,
therefore, be delisted from the NYSE. According to the NYSE's published
guidelines, the NYSE would consider delisting the Shares if, among other things:
(i) the number of record holders of 100 or more Shares should fall below 1,200;
(ii) the number of publicly held Shares (exclusive of holdings of the Parent and
the Purchaser and any other subsidiaries or affiliates of the Parent and of
officers or directors of the Company or their immediate families or other
concentrated holdings of 10% or more ("Excluded Holdings")) should fall below
600,000; or (iii) the aggregate market value of such publicly held Shares
(exclusive of Excluded Holdings) should fall below $5,000,000.
According to the 1993 Form 10-K, as of February 18, 1994, there were 41,704
holders of record of Shares. If, as a result of the purchase of Shares pursuant
to the Offer or otherwise, the Shares no longer meet the requirements of the
NYSE for continued listing and the listing of the Shares is discontinued, the
market and prices for such Shares could be adversely affected.
If the NYSE were to delist the Shares, it is possible that such Shares
would continue to trade on other securities exchanges or in the over-the-counter
market and that price quotations would be reported by such exchanges or through
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") or other sources. The extent of the public market for the Shares and
the availability of such quotations would depend, however, upon such factors as
the number of shareholders and/or the aggregate market value of the Shares
remaining at such time, the interest in maintaining a market in the Shares on
the part of securities firms, the possible termination of registration under the
Exchange Act as described below and other factors. The Purchaser cannot predict
whether the reduction in the number of Shares that might otherwise trade
publicly would have an adverse or beneficial effect on the market price for or
marketability of the Shares.
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The Shares are currently "margin securities" under the rules of the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"), which
has the effect, among other things, of allowing brokers to extend credit on the
collateral of such Shares for the purpose of buying, carrying, or trading in
securities ("purpose loans"). Depending upon factors similar to those described
above with respect to stock exchange listing and market quotations, the Shares
might no longer constitute "margin securities" for the purposes of the Federal
Reserve Board's margin regulations and therefore could no longer be used as
collateral for purpose loans made by brokers.
The Shares, along with certain of the Company's other securities, are
currently registered under the Exchange Act. The purchase of Shares pursuant to
the Offer may result in the Shares becoming eligible for deregistration under
the Exchange Act. Registration of the Shares may be terminated upon application
of the Company to the Commission if the Shares are not listed on a national
securities exchange and there are fewer than 300 record holders. The termination
of the registration of the Shares under the Exchange Act would substantially
reduce the information required to be furnished by the Company to holders of the
Shares and would make certain provisions of the Exchange Act, such as the
short-swing profit recovery provisions of Section 16(b), the requirement of
furnishing a proxy statement in connection with shareholders' meetings and the
requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions, no longer applicable to the Shares. Furthermore,
"affiliates" of the Company and persons holding "restricted securities" of the
Company may be deprived of the ability to dispose of the securities pursuant to
Rule 144 under the Securities Act of 1933. If registration of the Shares under
the Exchange Act were terminated, the Shares would no longer be "margin
securities" or eligible for NASDAQ reporting. The Purchaser intends to seek to
cause the Company to terminate the registration of the Shares as soon after the
consummation of the Offer or Merger as the requirements for termination of
registration are met.
14. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of
the Offer, the Purchaser shall not be required to accept for payment or, subject
to any applicable rules and regulations of the Commission, including Rule
14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to pay
for or return tendered Shares promptly after termination or withdrawal of the
Offer), pay for any Shares or Rights tendered pursuant to the Offer, and may
postpone the acceptance for payment or, subject to the restriction referred to
above, payment for any Shares or Rights tendered pursuant to the Offer, and may
amend or terminate the Offer (whether or not any Shares have theretofore been
purchased or paid for) if, in the sole judgment of the Purchaser, the Minimum
Condition, the Rights Condition, the Maine Takeover Statute Condition and/or the
Financing Condition shall not have been satisfied or if, at any time on or after
April 1, 1994 (except to the extent publicly disclosed by the Company with
specificity in documents filed with the Commission since April 1, 1994 and prior
to August 2, 1994) and prior to the acceptance for payment of or payment for
Shares, any one or more of the events listed below shall have occurred or shall
be determined by the Parent or the Purchaser to have occurred:
(a) there shall have been threatened, instituted or pending any
action, proceeding, claim or application by any government or governmental
regulatory or administrative authority or agency, domestic, foreign or
supranational, or by any other person, domestic or foreign, before any
court or governmental, regulatory or administrative agency, authority or
tribunal, domestic, foreign or supranational, that (i) challenges or seeks
to make illegal, to delay or otherwise directly or indirectly to restrain
or prohibit, or which is likely to impose, in the sole judgment of the
Purchaser, voting, procedural, price or other requirements in addition to
those required by the provisions of the MBCA described in Section 11 and
federal securities law (each as in effect on the date of this Offer to
Purchase) in connection with the acquisition of Shares by the Purchaser or
any of its affiliates, the making of the Offer, the acceptance for payment
of or payment for Shares by the Purchaser or any of its affiliates or the
consummation of the Merger or any other business combination involving the
Company or the performance of any of the contracts or other arrangements
entered into by the Purchaser or any of its affiliates in connection with
the acquisition of the Company, seeking to
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obtain any material damages as a result thereof or otherwise directly or
indirectly relating to the Offer or the Merger or such other business
combination, (ii) seeks to restrain, prohibit or limit the exercise of full
rights of ownership or operation by the Purchaser or any of its affiliates
of all or any portion of the business or assets of the Company or any of
its subsidiaries or the Purchaser or any of its affiliates or to compel the
Purchaser or any of its affiliates to dispose of or to hold separately all
or any portion of the business or assets of the Company or any of its
subsidiaries or the Purchaser or any of its affiliates, (iii) seeks to
impose or confirm limitations on the ability of the Purchaser or any of its
affiliates effectively to acquire or hold or to exercise full rights of
ownership of Shares, including, without limitation, the right to vote the
Shares acquired or owned by the Parent or the Purchaser or any of its
affiliates on all matters properly presented to the shareholders of the
Company, or the right to vote any shares of capital stock of any subsidiary
directly or indirectly owned by the Company, (iv) seeks to require
divestiture by the Parent or the Purchaser or any of its affiliates of any
Shares, (v) might result, in the sole judgment of the Purchaser, in a
diminution of the benefits expected to be derived by the Purchaser or any
of its affiliates as a result of the Offer or the Merger or any other
business combination involving the Company, or in a diminution of the value
of the Shares or the Company or any of its subsidiaries to the Purchaser or
any of its affiliates or (vi) challenges or adversely affects the financing
of the Offer or the Merger or any other business combination involving the
Company; or
(b) other than the application of the waiting periods under the HSR
Act and the necessity for the approvals and other actions by domestic
(federal and state) or foreign or supranational governmental,
administrative or regulatory agency described in Section 15, there have
been proposed, sought, promulgated, enacted, entered, enforced or deemed
applicable to the Offer, the Merger or any other business combination
involving the Company, by any government or governmental, regulatory or
administrative agency or authority or by any court or tribunal, in each
case whether domestic, foreign or supranational, any statute, rule,
regulation, judgment, decree, decision, order or injunction that, in the
sole judgment of the Purchaser, might, directly or indirectly, result in
any of the consequences referred to in clauses (i) through (vi) of
paragraph (a) above; or
(c) any change (or any condition, event or development involving a
prospective change) shall have occurred or been threatened in the business,
properties, assets, liabilities, shareholders' equity, condition (financial
or otherwise), capitalization, licenses, franchises, permits, operations,
results of operations or prospects of the Company or any of its
subsidiaries or affiliates (or the Purchaser shall have become aware
thereof) or in general economic or financial market conditions in the
United States or abroad that, in the sole judgment of the Purchaser, is or
may be materially adverse to the Company or any of its subsidiaries or
affiliates, or the Purchaser shall have become aware of any facts that, in
the sole judgment of the Purchaser, have or may have material adverse
significance with respect to either the value of the Company or any of its
subsidiaries or affiliates or the value of the Shares to the Parent or the
Purchaser or any of its affiliates; or
(d) there shall have occurred (i) any general suspension of trading
in, or limitation on prices for, securities on any national securities
exchange or in the United States over-the-counter market, (ii) the
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States, (iii) any material adverse change
(or any existing or threatened condition, event or development involving a
prospective material adverse change) in United States or any other currency
exchange rates or a suspension of, or a limitation on, the markets
therefor, (iv) any other material adverse change in the market price of the
Shares or in the United States securities or financial markets generally,
including, without limitation, a decline of at least 15% in either the Dow
Jones Average of Industrial Stocks or the Standard & Poor's 500 index from
August 2, 1994 through the date of termination or expiration of the Offer,
(v) the commencement of a war, armed hostilities or other international or
national calamity directly or indirectly involving the United States, (vi)
any limitation (whether or not mandatory) by any governmental authority or
any other
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event that, in the sole judgment of the Purchaser, may have material
adverse significance with respect to the extension of credit by banks or
other lending institutions or the financing of the Offer or the Merger or
any other business combination involving the Company or (vii) in the case
of any of the situations described in clauses (i) through (vi) above
existing at the time of the commencement of the Offer, a material
acceleration or worsening thereof; or
(e) a tender or exchange offer for some or all of the Shares shall
have been publicly proposed to be made or shall have been made by another
person (including the Company or any of its subsidiaries or affiliates), or
it shall have been publicly disclosed or the Purchaser shall have otherwise
learned that (i) any person, entity (including the Company or any of its
subsidiaries or affiliates) or "group" (within the meaning of Section
13(d)(3) of the Exchange Act) shall have acquired or proposed to acquire
beneficial ownership of more than 5% of any class or series of capital
stock of the Company (including the Shares) through the acquisition of
stock, the formation of a group or otherwise, or shall have been granted
any option, right or warrant, conditional or otherwise, to acquire
beneficial ownership of more than 5% of any class or series of capital
stock of the Company (including the Shares) other than acquisitions for
bona fide arbitrage purposes only and other than as disclosed in a Schedule
13D or 13G on file with the Commission prior to August 2, 1994, (ii) any
such person, entity or group which, prior to such date, had filed such a
Schedule with the Commission, shall have acquired or proposed to acquire,
through the acquisition of stock, the formation of a group or otherwise,
beneficial ownership of additional shares of any class or series of capital
stock of the Company (including the Shares) constituting 1% or more of any
such class or series, or shall have been granted any option, right or
warrant, conditional or otherwise, to acquire beneficial ownership of
shares of any class or series of capital stock of the Company (including
the Shares) constituting 1% or more of any such class or series, (iii) any
person, entity or group shall have entered into a definitive agreement or
an agreement in principle or made a proposal with respect to a tender or
exchange offer for some or all the Shares or a merger, consolidation or
other business combination with or involving the Company or any of its
subsidiaries or affiliates or (iv) any person, entity or group shall have
filed a Notification and Report Form under the HSR Act or made a public
announcement reflecting an intent to acquire the Company or any of its
subsidiaries or any assets or securities of the Company or any of its
subsidiaries; or
(f) the Company or any of its subsidiaries shall have, directly or
indirectly, (i) split, combined or otherwise changed, or authorized or
proposed the split, combination or other change of, the Shares or its
capitalization, (ii) acquired or otherwise caused a reduction in the number
of, or authorized or proposed the acquisition or other reduction in the
number of, any outstanding Shares (other than a redemption of the Rights in
accordance with the terms of the Rights Agreement as publicly disclosed to
be in effect on August 1, 1994) or other securities of the Company or any
subsidiary thereof, (iii) issued, distributed or sold, or authorized,
proposed or announced the issuance, distribution or sale of, (A) any
additional Shares, shares of any other class or series of capital stock,
other voting securities, or any securities convertible into or exchangeable
or exercisable for any of the foregoing, or options, rights or warrants,
conditional or otherwise, to acquire any of the foregoing, except for the
issuance of 5,723,992 Shares reserved for issuance prior to December 31,
1993 pursuant to the exercise of then outstanding employee stock options,
in accordance with their terms as disclosed in publicly available filings
filed with the Commission prior to August 2, 1994 or (B) any other
securities or rights in respect of, in lieu of or in substitution or
exchange for any shares of its capital stock, (iv) permitted the issuance
or sale of any shares of any class of capital stock or other debt or equity
securities of any subsidiary of the Company or any securities convertible
into or exchangeable or exercisable for any of the foregoing, (v) declared,
paid or proposed to declare or pay any dividend or other distribution,
whether payable in cash, securities or other property, on, or in respect
of, any Shares (other than regular cash dividends on the Shares at a
quarterly rate not in excess of $.4625 per Share or a distribution of the
Rights Certificates or a redemption of the Rights in accordance with the
Rights Agreement as
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publicly disclosed to be in effect on August 1, 1994), (vi) altered or
proposed to alter any material term of any outstanding security of the
Company or any of its subsidiaries (including the Rights), (vii) issued,
distributed or sold, or authorized or proposed the issuance, distribution
or sale of, any debt securities or securities convertible into or
exchangeable or exercisable for debt securities or any rights, warrants or
options entitling the holder thereof to purchase or otherwise acquire any
debt securities, or otherwise incurred, authorized or proposed the
incurrence of, any debt other than in the ordinary course of business and
consistent with past practice or any debt containing burdensome covenants,
(viii) authorized, recommended, proposed, effected or announced its
intention to engage in any merger (other than the Merger), consolidation,
liquidation, dissolution, business combination, acquisition (including by
way of exchange) of assets or securities, disposition (including by way of
exchange) of assets or securities, joint venture, any release or
relinquishment of any material contract or other rights of the Company or
any of its affiliates or any comparable event not in the ordinary course of
business, (ix) authorized, recommended, proposed or announced its intent to
enter into, or entered into any agreement or arrangement with any person,
entity or group that in the sole judgment of the Purchaser, has or may have
material adverse significance with respect to the value of the Company or
any of its affiliates, or the value of the Shares to the Purchaser or any
of its affiliates, (x) amended or proposed, adopted or authorized any
amendment (other than any amendment which provides that the Rights are
inapplicable to the Offer and the Merger) to the Articles or the By-laws or
similar organizational documents of the Company or any of its subsidiaries
or the Rights Agreement or the Purchaser shall have learned that the
Company or any of its subsidiaries shall have proposed or adopted any such
amendment which shall not have been previously disclosed, (xi) entered into
or amended any employment, severance or similar agreement, arrangement or
plan with or for the benefit of any employee of the Company or any of its
subsidiaries (other than in the ordinary course of business) or so as to
provide for increased or accelerated benefits to employees as a result of
or in connection with the making of the Offer, the acceptance for payment
of or payment for Shares by the Purchaser or the consummation by the
Purchaser or any of its affiliates of the Merger or any other business
combination involving the Company, (xii) except as may be required by law,
taken any action to terminate or amend any employee benefit plan (as
defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended) of the Company or any of its affiliates, or the Purchaser
shall have become aware of any such action which shall not have been
previously disclosed or (xiii) agreed in writing or otherwise to take any
of the foregoing actions; or
(g) the Purchaser shall become aware (i) that any material contractual
right of the Company or any of its subsidiaries shall be impaired or
otherwise adversely affected or that any material amount of indebtedness of
the Company or any of its subsidiaries shall become accelerated or
otherwise become due or become subject to acceleration prior to its stated
due date, in each case with or without notice or the lapse of time or both,
as a result of or in connection with the Offer or the consummation by the
Purchaser or any of its affiliates of the Merger or any other business
combination involving the Company, (ii) of any covenant, term or condition
in any of the instruments or agreements of the Company or any of its
subsidiaries that, in the sole judgment of the Purchaser, is or may be
(whether considered alone or in the aggregate with other such covenants,
terms or conditions) materially adverse to either the value of the Company
or any of its subsidiaries (including, without limitation, any event of
default that may occur as a result of or in connection with the Offer, the
consummation by the Purchaser or any of its affiliates of the Merger or any
other business combination involving the Company) or the value of the
Shares to the Purchaser or any of its affiliates or the consummation by the
Purchaser or any of its affiliates of the Merger or any other business
combination involving the Company or (iii) that any report, document,
instrument, financial statement or schedule of the Company filed with the
Commission contained, when filed, an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading; or
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(h) any waiting periods under the HSR Act applicable to the purchase
of Shares pursuant to the Offer shall not have expired or been terminated,
or any approval, permit, authorization or consent of any domestic or
foreign or supranational governmental, administrative or regulatory agency
(federal, state, local, provincial or otherwise) (including those described
or referred to in Section 15) shall not have been obtained on terms
satisfactory to the Parent in its sole discretion; or
(i) (i) the Purchaser or any of its affiliates shall have entered into
a definitive agreement or announced an agreement in principle with respect
to the Merger or any other business combination with the Company or any of
its affiliates or the purchase of any material portion of the securities or
assets of the Company or any of its subsidiaries or (ii) the Purchaser or
any of its affiliates and the Company shall have agreed that the Purchaser
shall amend or terminate the Offer or postpone the payment for the Shares
pursuant thereto;
which, in the sole judgment of the Purchaser with respect to each and every
matter referred to above and regardless of the circumstances (including any
action or inaction by the Purchaser or any of its affiliates) giving rise to any
such condition, makes it inadvisable to proceed with the Offer or with such
acceptance for payment of or payment for Shares.
The foregoing conditions are for the sole benefit of the Purchaser and may
be waived by the Purchaser in whole or in part at any time and from time to time
in its sole discretion. Any determination by the Purchaser concerning the events
described above shall be final and binding upon all parties including tendering
shareholders. The failure by the Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such
right shall be deemed an ongoing right which may be asserted at any time and
from time to time.
A public announcement shall be made of a material change in, or waiver of,
such conditions, to the extent required by Rules 14d-4(c) and 14d-6(d) under the
Exchange Act, and the Offer will be extended in connection with any such change
or waiver to the extent required by such rules.
15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS. General. Except as set
forth below, based upon its examination of publicly available filings by the
Company with the Commission and other publicly available information concerning
the Company, neither the Purchaser nor the Parent is aware of any licenses or
other regulatory permits that appear to be material to the business of the
Company and its subsidiaries, taken as a whole, that might be adversely affected
by the Purchaser's acquisition of Shares (and the indirect acquisition of the
stock of the Company's subsidiaries) as contemplated herein, or of any filings,
approvals or other actions by or with any domestic (federal or state), foreign
or supranational governmental authority or administrative or regulatory agency
that would be required prior to the acquisition of Shares (or the indirect
acquisition of the stock of the Company's subsidiaries) by the Purchaser
pursuant to the Offer as contemplated herein. Should any such approval or other
action be required, it is the Purchaser's present intention to seek such
approval or action. The Purchaser does not presently intend, however, to delay
the purchase of Shares tendered pursuant to the Offer pending the receipt of any
such approval or the taking of any such action (subject to the Purchaser's right
to delay or decline to purchase Shares if any of the conditions in Section 14
shall have occurred). There can be no assurance that any such approval or other
action, if needed, would be obtained without substantial conditions or that
adverse consequences might not result to the business of the Company, the Parent
or the Purchaser or that certain parts of the businesses of the Company, the
Parent or the Purchaser might not have to be disposed of or held separate or
other substantial conditions complied with in order to obtain such approval or
other action or in the event that such approval was not obtained or such other
action was not taken, any of which could cause the Purchaser to elect to
terminate the Offer without the purchase of the Shares thereunder. The
Purchaser's obligation under the Offer to accept for payment and pay for Shares
is subject to certain conditions, including conditions relating to the legal
matters discussed in this Section 15. See Section 14.
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State Takeover Laws. A number of states (including Maine, where the Company
is incorporated) have adopted takeover laws and regulations which purport, to
varying degrees, to be applicable to attempts to acquire securities of
corporations which are incorporated in such states or which have, or whose
business operations have substantial economic effects in such states, or which
have substantial assets, security holders, principal executive offices or
principal places of business therein. To the extent that certain provisions of
certain of these state takeover statutes purport to apply to the Offer, the
Purchaser believes that such laws conflict with federal law and constitute an
unconstitutional burden on interstate commerce. In 1982, the Supreme Court of
the United States, in Edgar v. Mite Corp., invalidated on constitutional grounds
the Illinois Business Takeovers Act, which, as a matter of state securities law,
made takeovers of corporations meeting certain requirements more difficult, and
the reasoning in such decision is likely to apply to certain other state
takeover statutes. In 1987, however, in CTS Corp. v. Dynamics Corp. of America,
the Supreme Court of the United States held that the State of Indiana could, as
a matter of corporate law and, in particular, those aspects of corporate law
concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without the prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain conditions. Subsequently, in TLX Acquisition Corp. v. Telex
Corp., a federal district court in Oklahoma ruled that the Oklahoma statutes
were unconstitutional insofar as they applied to corporations incorporated
outside Oklahoma in that they would subject such corporations to inconsistent
regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a federal district
court in Tennessee ruled that four Tennessee takeover statutes were
unconstitutional as applied to corporations incorporated outside Tennessee. This
decision was affirmed by the United States Court of Appeals for the Sixth
Circuit. In December 1988, a federal district court in Florida held in Grand
Metropolitan PLC v. Butterworth that the provisions of the Florida Affiliated
Transactions Act and the Florida Control Share Acquisition Act were
unconstitutional as applied to corporations incorporated outside of Florida.
Except as described herein, the Purchaser has not attempted to comply with
any state takeover statutes in connection with the Offer. The Purchaser reserves
the right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer to Purchase nor any action
taken in connection herewith is intended as a waiver of that right. Among other
things, the Defensive Tactics Litigation seeks the court to declare that no
state's takeover laws or regulations can be constitutionally applied to the
Offer or the Merger. In the event that any state takeover statute is found
applicable to the Offer, the Purchaser might be unable to accept for payment or
purchase Shares tendered pursuant to the Offer or be delayed in continuing or
consummating the Offer. In such case, the Purchaser may not be obligated to
accept for purchase, or pay for, any Shares tendered. See Section 14.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and the
FTC and certain waiting period requirements have been satisfied. The acquisition
of Shares pursuant to the Offer is subject to such requirements. See Section 2.
The Parent intends to file on the date hereof with the FTC and the
Antitrust Division a Premerger Notification and Report Form in connection with
the purchase of Shares pursuant to the Offer. Under the provisions of the HSR
Act applicable to the Offer, the purchase of Shares pursuant to the Offer may
not be consummated until the expiration of a 15-calendar day waiting period
following the filing by the Purchaser. Accordingly, the waiting period under the
HSR Act applicable to such purchases of Shares pursuant to the Offer should
expire at 11:59 p.m., New York City time, on Thursday, August 25, 1994, unless
such waiting period is earlier terminated by the FTC and the Antitrust Division
or extended by a request from the FTC or the Antitrust Division for additional
information or documentary material prior to the expiration of the waiting
period. Pursuant to the HSR Act, the Parent has requested early termination of
the waiting period applicable to the Offer. There can be no assurance, however,
that the 15-day HSR Act waiting period will be terminated early. If, however,
either the FTC or the Antitrust Division were to request additional information
or documentary material from the Parent, the waiting
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period would expire at 11:59 p.m., New York City time, on the tenth calendar day
after the date of substantial compliance by the Parent with such request.
Thereafter, the waiting period could be extended only by court order. If the
acquisition of Shares is delayed pursuant to a request by the FTC or the
Antitrust Division for additional information or documentary material pursuant
to the HSR Act, the Offer may, but need not, be extended and, in any event, the
purchase of and payment for Shares will be deferred until 10 days after the
request is substantially complied with, unless the 10-day extended period
expires on or before the date when the initial 15-day period would otherwise
have expired or unless the waiting period is sooner terminated by the FTC and
the Antitrust Division. See Section 2. Only one extension of such waiting period
pursuant to a request for additional information is authorized by the HSR Act
and the rules promulgated thereunder, except by court order. Any such extension
of the waiting period will not give rise to any withdrawal rights not otherwise
provided for by applicable law. See Section 4. Although the Company is required
to file certain information and documentary material with the Antitrust Division
and the FTC in connection with the Offer, neither the Company's failure to make
such filings nor a request from the Antitrust Division or the FTC for additional
information or documentary material made to the Company will extend the waiting
period.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
the Purchaser pursuant to the Offer. At any time before or after the purchase by
the Purchaser of Shares pursuant to the Offer, the FTC and the Antitrust
Division could take such action under the antitrust laws as it deems necessary
or desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking the divestiture of Shares purchased by
the Purchaser or the divestiture of substantial assets of the Parent, its
subsidiaries or the Company. Private parties and state attorneys general may
also bring legal action under federal or state antitrust laws under certain
circumstances. Based upon an examination of publicly available information
relating to the businesses in which the Parent and its subsidiaries and the
Company and its subsidiaries are engaged, the Parent and the Purchaser believe
that the Offer will not violate the antitrust laws. Nevertheless, there can be
no assurance that a challenge to the Offer on antitrust grounds will not be made
or, if such a challenge is made, of the result. See Section 14 for certain
conditions to the Offer, including conditions with respect to litigation.
New Jersey Industrial Site Recovery Act. The New Jersey Industrial Site
Recovery Act (formerly known as the Environmental Cleanup Responsibility Act, or
ECRA) and the implementing regulations thereunder (collectively "ISRA") subjects
the "transfer" of an "industrial establishment" in New Jersey to various
requirements concerning the identification of certain environmental matters and
their remediation. Requirements include the timely submission to the New Jersey
Department of Environmental Protection (the "NJDEP") of detailed information
about environmental matters at the industrial establishment. The NJDEP may also
require additional investigation of environmental conditions at the industrial
establishment, the development of an NJDEP-approved cleanup plan to address
environmental conditions, and the implementation of the plan, along with a
financial guarantee, such as a surety bond, self guarantee or a letter of
credit, of the implementation of the cleanup plan. Under specified conditions,
the NJDEP may defer actual implementation of the cleanup plan if the entity
acquiring control of the industrial establishment is certified to have the
financial ability to implement the plan.
Under ISRA, the acquisition of a controlling stock interest in a company
which is the owner or operator of an industrial establishment is generally a
"transfer" subject to ISRA.
According to publicly available information, the Company has certain
facilities located in New Jersey, including certain laboratory facilities and
its corporate headquarters. The Purchaser has no knowledge of the size of these
facilities or whether the activities conducted there make any of them industrial
establishments subject to ISRA. If these facilities are industrial
establishments subject to ISRA, the acquisition of more than a majority of the
outstanding Shares by the Purchaser pursuant to the Offer may constitute a
"transfer" subject to ISRA.
42
<PAGE>
After consummation of the Offer and after the Purchaser has reviewed the
nature and extent of the Company's operations in New Jersey and consulted with
counsel, the Purchaser will determine whether any of the Company's properties
are establishments subject to ISRA and, if so, the Purchaser will comply, or
seek to cause the Company to comply, with the act in the time frame set forth in
the act.
Connecticut Environmental Transfer Law. The Connecticut Transfer Act, Conn.
Gen. Stat. Sec. 22a-134 et seq. ("CTA"), requires that prior to the transfer of
ownership of an establishment subject to the act, the transferor must submit a
"Negative Declaration" to the transferee stating (i) that there has been no
spillage or discharge of hazardous waste on the property or that any such
spillage or discharge has been cleaned up according to the procedures and
requirements of the state Department of Environmental Protection (the "DEP") and
(ii) that any hazardous waste remaining on-site is being managed in accordance
with all applicable regulations. If the transferor cannot submit a "Negative
Declaration," the transferee or another party to the transfer must certify to
the Commissioner of the DEP that such transferee or other party will contain or
otherwise mitigate the effects of any spillage or discharge in accordance with
the procedures and timetable approved by the Commissioner pursuant to an order
or consent decree. Based on publicly available information, the Purchaser
understands that the Company operates a manufacturing plant in Connecticut. The
Purchaser will seek to determine whether any of the Company's properties are
establishments subject to the CTA and, if so, the Purchaser will comply, or seek
to cause the Company to comply, with the CTA as promptly as practicable
following consummation of the Offer. See Section 14.
EEA Merger Regulation. According to the Company's 1993 Form 10-K, the
Purchaser conducts substantial operations within the European Economic Area
("EEA") and certain of the individual member states of the EEA. Regulation (EEC)
No. 4064/89 (the "Merger Regulations") and Article 57 of the EEA Agreement
require that notices of concentrations with a "Community dimension" be provided
to the European Commission for review and approval for compatibility with the
common market prior to being put into effect. The Offer would be deemed to have
a "Community dimension" if the combined aggregate worldwide consolidated annual
revenues of both the Parent and the Company exceed ECU 5 billion, if the
Community-wide annual revenues of each of the Parent and the Company exceed ECU
250 million, and if both the Parent and the Company do not receive more than
two-thirds of their respective Community-wide revenues from one and the same
member state. Based upon information contained in the 1993 Form 10-K, the
Purchaser believes that the Offer may be considered to have a "Community
dimension." If the Offer falls within the Merger Regulation, the European
Commission, as opposed to individual member states, has exclusive jurisdiction
to review it, subject to certain exceptions.
Under the Merger Regulation, a concentration that meets the foregoing
criteria requires the filing of a notification in a prescribed form with the
European Commission. This filing must normally be made within seven days of the
earlier of the announcement of a public bid, the conclusion of the relevant
agreement or acquisition of a controlling interest. Transactions subject to the
filing requirements of the Merger Regulation are suspended automatically until
three weeks after receipt of the notification. The European Commission may
extend the suspension period for such period as it finds necessary to make a
final decision on the legality of the transaction. In the case of a public bid,
the bidder may acquire shares of the target company during the suspension
period, but may not vote such shares until after the end of the period unless
the European Commission grants permission to do so in order to maintain the full
value of the bidder's investment.
The European Commission must decide whether to initiate proceedings within
one month after the receipt of the notification, subject to certain extensions
for holidays or if an individual member state has requested a referral of the
transaction (or part of it) to itself. If proceedings are initiated, the
European Commission must reach a decision in the proceedings within four months
of the commencement of the proceedings. If the European Commission fails to
reach a decision within either of these time periods the transaction will be
deemed to be compatible with the common market.
43
<PAGE>
If the European Commission declares the Offer to be not compatible with the
common market, it may prevent the consummation of the transaction, order a
divestiture if the transaction has already been consummated or impose conditions
or other obligations. In the event that the transaction is found not to be
subject to the Merger Regulation, various national merger control regimes of the
member states of the EEA may apply, resulting in the possibility that approvals
may be necessary from the various national authorities.
There can be no assurance that a challenge to the Offer will not be made
pursuant to the Merger Regulation or, alternatively, pursuant to the merger
regulations of one or more of the various member states, or, if such a challenge
is made, what the outcome will be. See Section 14.
Investment Canada Act. According to the Company's 1993 Form 10-K, the
Company conducts certain operations in Canada, including pharmaceuticals
research and production. The Investment Canada Act (the "ICA") requires that
notice of the acquisition of "control" (as defined in the ICA) by
"non-Canadians" (as defined in the ICA) of any "Canadian business" (as defined
in the ICA) be furnished to Investment Canada, a Canadian governmental agency.
The acquisition of Shares by the Purchaser pursuant to the Offer may
constitute an indirect acquisition of a "Canadian business" within the meaning
of the ICA. The Purchaser intends to file any required notice under the ICA.
Canadian Pre-Merger Notification Requirements. Certain provisions of
Canada's Competition Act require pre-notification to the Director of
Investigation and Research appointed under the Competition Act (the "Canadian
Director") of significant corporate transactions, such as the acquisition of a
large percentage of the stock of a public company which has Canadian operations,
or a merger or consolidation involving such an entity. Pre-notification is
generally required with respect to transactions in which the parties to the
transactions and their affiliates have assets in Canada, or annual gross
revenues from sales in, from or into Canada, in excess of Cdn. $400 million and
which involve the direct or indirect acquisition of an operating business, the
value of the assets of which, or the gross revenues from sales in or from Canada
generated from these assets, exceed Cdn. $35 million per year. For transactions
subject to the notification requirements, notice must be given seven or 21 days
prior to the completion of the transaction depending on the information provided
to the Canadian Director. The Canadian Director may waive the waiting period.
After the applicable waiting period expires or is waived, the transaction may be
completed. If the Canadian Director determines that the proposed transaction
prevents or lessens, or is reasonably likely to prevent or lessen, competition
substantially in a definable market, the Canadian Director may apply to the
Competition Tribunal, a special purpose Canadian tribunal, to, among other
things, require the disposition of the Canadian assets acquired in such
transaction. The Purchaser intends to file any required notice and information
with respect to its proposed acquisition with the Canadian Director and, to the
extent necessary, observe the applicable waiting period and/or apply to the
Canadian Director for an advance ruling certificate to the effect that the Offer
or Proposed Merger would not prevent or lessen, or be likely to prevent or
lessen, competition substantially.
Other Foreign Approvals. According to the Company's 1993 Form 10-K, the
Company also owns property and conducts business in a number of other foreign
countries and jurisdictions including, without limitation, Germany, Australia,
France, Spain, Brazil, Mexico, South Korea, Italy and the United Kingdom. In
connection with the acquisition of the Shares pursuant to the Offer, the laws of
certain of those foreign countries and jurisdictions may require the filing of
information with, or the obtaining of the approval of, governmental authorities
in such countries and jurisdictions. The governments in such countries and
jurisdictions might attempt to impose additional conditions on the Company's
operations conducted in such countries and jurisdictions as a result of the
acquisition of the Shares pursuant to the Offer. There can be no assurance that
the Purchaser will be able to cause the Company or its subsidiaries to satisfy
or comply with such laws or that compliance or non-compliance
44
<PAGE>
will not have adverse consequences for the Company or any subsidiary after
purchase of the Shares pursuant to the Offer.
Margin Credit Regulations. Federal Reserve Board Regulations G, T, U and X
(the "Margin Credit Regulations") restrict the extension or maintenance of
credit for the purpose of buying or carrying margin stock, including the Shares,
if the credit is secured directly or indirectly thereby. Such secured credit may
not be extended or maintained in an amount that exceeds the maximum loan value
of the margin stock. Under the Margin Credit Regulations, the Shares are
presently margin stock, and the maximum loan value thereof is generally 50% of
their current market value.
The definition of "indirectly secured" contained in the Margin Credit
Regulations provides that the term does not include an arrangement with a
customer if the lender, in good faith, has not relied upon margin stock as
collateral in extending or maintaining the particular credit.
16. FEES AND EXPENSES. Gleacher & Co. Inc. ("Gleacher & Co.") is acting as
Dealer Manager in connection with the Offer and serving as financial advisor to
the Parent and the Purchaser in connection with the proposed acquisition of the
Company. The Parent has paid to Gleacher & Co. an initial fee of $1.5 million
and has agreed to pay to Gleacher & Co. an additional fee of $8.5 million upon
the consummation of the Offer or an acquisition of all or substantially all of
the assets of the Company. The Parent and the Purchaser will also reimburse
Gleacher & Co. for reasonable out-of-pocket expenses, including reasonable
attorneys' fees, and have also agreed to indemnify Gleacher & Co. against
certain liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws.
The Purchaser has retained D.F. King & Co., Inc. to act as the Information
Agent and Chemical Bank to act as the Depositary in connection with the Offer.
The Information Agent may contact holders of Shares by mail, telephone, telex,
telegraph and personal interview and may request brokers, dealers and other
nominee stockholders to forward the Offer materials to beneficial owners. The
Information Agent and the Depositary will receive reasonable and customary
compensation for services relating to the Offer and will be reimbursed for
certain out-of-pocket expenses. The Purchaser and the Parent have also agreed to
indemnify the Information Agent and the Depositary against certain liabilities
and expenses in connection with the Offer, including certain liabilities under
the federal securities law.
The Purchaser will not pay any fees or commissions to any broker or dealer
or any other person for soliciting tenders of Shares pursuant to the Offer
(other than to the Dealer Manager, the Information Agent and the Depositary).
Brokers, dealers, commercial banks and trust companies will, upon request, be
reimbursed by the Purchaser for customary mailing and handling expenses incurred
by them in forwarding offering materials to their customers.
17. MISCELLANEOUS. The Offer is being made solely by this Offer to Purchase
and the related Letter of Transmittal and is being made to all holders of
Shares. The Purchaser is not aware of any state where the making of the Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, the
Purchaser will make a good faith effort to comply with any such state statute.
If, after such good faith effort, the Purchaser cannot comply with such state
statute, the Offer will not be made to nor will tenders be accepted from or on
behalf of the holders of Shares in such state. In any jurisdiction where the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by the Dealer Manager or one or more registered brokers or dealers
that are licensed under the laws of such jurisdiction.
The Purchaser and the Parent have filed with the Commission the Schedule
14D-1 (including exhibits) pursuant to Rule 14d-3 under the Exchange Act,
furnishing certain additional information with respect to the Offer. Such
statement and any amendments thereto, including exhibits, may be inspected and
copies may be obtained from the offices of the Commission (except that they will
not be
45
<PAGE>
available at the regional offices of the Commission) in the manner set forth in
Section 7 of this Offer to Purchase.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR THE PARENT NOT CONTAINED HEREIN OR
IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
AC ACQUISITION CORP.
August 10, 1994
46
<PAGE>
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF THE PURCHASER AND THE PARENT
1. Directors and Executive Officer of the Purchaser. The name and position
with the Purchaser of each director and executive officer of the Purchaser are
set forth below. The other required information with respect to each such person
is set forth under Directors and Executive Officers of the Parent below. All
directors and executive officers listed below are citizens of the United States.
<TABLE><CAPTION>
NAME POSITION
- --------------------------------------------------- --------------------------------------------------
<S> <C>
John R. Stafford................................... Director and President.
Robert G. Blount................................... Director and Vice President.
Louis L. Hoynes, Jr................................ Director.
John R. Considine.................................. Vice President.
Thomas M. Nee...................................... Vice President.
</TABLE>
2. Directors and Executive Officers of the Parent. The name, business
address, present principal occupation or employment and material occupations,
positions, offices or employments during the last five years of each director
and executive officer of the Parent and certain other information are set forth
below. Unless otherwise indicated, the business address of each such director
and executive officer is Five Giralda Farms, Madison, New Jersey 07940. Unless
otherwise indicated, each occupation set forth opposite an individual's name
refers to employment with the Parent. All directors and executive officers
listed below are citizens of the United States.
<TABLE><CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES
NAME AND ADDRESS OR EMPLOYMENT HELD DURING THE LAST 5 YEARS
- --------------------------------------------------- --------------------------------------------------
<S> <C>
John R. Stafford................................... Director of the Parent since 1980; Chairman of the
Board, President and Chief Executive Officer of
the Parent since 1986 (except for the period
between May 1990 and January 31, 1994 when he did
not have the additional ]title of President);
Director, AlliedSignal Inc., Chemical Banking
Corporation, Metropolitan Life Insurance Company
and NYNEX Corporation; Chairman of the Executive
and Nominating Committees of the Board and
Chairman of the Finance, Operations and Retirement
Committees.
Robert G. Blount................................... Director of the Parent since 1990; Executive Vice
President of the Parent since 1987; member of the
Executive Committee of the Board and member of the
Finance, Operations and Retirement Committees.
Stanley F. Barshay................................. Senior Vice President of the Parent since 1989;
member of the Finance, Operations and Retirement
Committees.
</TABLE>
I-1
<PAGE>
<TABLE><CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES
NAME AND ADDRESS OR EMPLOYMENT HELD DURING THE LAST 5 YEARS
- --------------------------------------------------- --------------------------------------------------
<S> <C>
Louis L. Hoynes, Jr................................ Senior Vice President and General Counsel of the
Parent since November 1990; Partner at Willkie,
Farr & Gallagher prior to 1990; member of the
Finance, Operations and Retirement Committees.
Joseph J. Carr..................................... Senior Vice President of the Parent since May
1993; Group Vice President of the Parent from
April 1991 to May 1993; Vice President of the
Parent from November 1989 to April 1991; Executive
Vice President-- Operations, Wyeth-Ayerst
Laboratories Division prior to November 1989;
member of the Finance and Operations Committees.
Fred Hassan........................................ Senior Vice President of the Parent since May
1993; Group Vice President of the Parent from
March to May of 1993; President of Wyeth-Ayerst
Laboratories Division from 1989 to 1993; member of
the Finance and Operations Committees. On July 28,
1994, Noreen Hassan, Mr. Hassan's wife, sold 955
shares of the Company at $60 5/8 per share on the
NYSE.
John R. Considine.................................. Vice President--Finance of the Parent since
February 1992; Vice President and Treasurer of the
Parent from February 1989 to 1992; Vice President
and Comptroller of the Parent prior to February
1989; member of the Finance, Operations and
Retirement Committees.
Rene R. Lewin...................................... Vice President--Human Resources of the Parent
since May 1994; Executive Director, Human
Resources--Worldwide Pharmaceutical Division,
Corporate Administration and Worldwide
Manufacturing of Eli Lilly & Company, Inc. from
1992 to May 1994; Executive Director, Human
Resources-- Worldwide Manufacturing and Corporate
Administration of Eli Lilly & Company, Inc. from
1990 to 1992; Executive Director, Human
Resources--Eli Lilly International from 1986 to
1990; member of the Finance and Retirement
Committees.
Thomas M. Nee...................................... Vice President--Taxes of the Parent from 1989 to
date; member of the Finance and Retirement
Committees.
</TABLE>
I-2
<PAGE>
<TABLE><CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES
NAME AND ADDRESS OR EMPLOYMENT HELD DURING THE LAST 5 YEARS
- --------------------------------------------------- --------------------------------------------------
<S> <C>
Clifford L. Alexander, Jr. Director of the Parent since 1993; President of
Alexander & Associates, Inc. Alexander & Associates, Inc. (consulting firm
400 C Street, N.E. specializing in Workforce Inclusiveness);
Washington, D.C. 20002............................. Director, Dreyfus General Family of Funds, Dreyfus
Third Century Fund, Dreyfus Premier Family of
Funds, Dun and Bradstreet Corporation, Equitable
Resources, Inc., MCI Communications Corporation
and Mutual of America Life Insurance Company;
member of the Corporate Issues and Nominating
Committees.
Frank A. Bennack, Jr............................... Director of the Parent since 1988; President and
The Hearst Corporation Chief Executive Officer of The Hearst Corporation
959 Eighth Avenue (owns and operates communications media);
New York, NY 10019 Director, Chemical Banking Corporation; Chairman
of the Compensation and Benefits Committee and
member of the Nominating Committee.
K. Roald Bergethon................................. Director of the Parent since 1974; Educational
Consultant; President-Emeritus of Lafayette
College since August 1978; member of the Corporate
Issues and Nominating Committees.
John W. Culligan................................... Director of the Parent since 1970; retired
November 1988; former Chairman of the Board and
Chief Executive Officer of the Corporation (from
1981 to 1986); member of the Executive, Audit and
Nominating Committees.
Robin Chandler Duke................................ Director of the Parent since 1975; National Chair,
Population Action International; Director,
International Flavors and Fragrances, Inc. and
Rockwell International Corporation; member of the
Compensation and Benefits and Nominating
Committees.
John D. Feerick.................................... Director of the Parent since 1987; Dean, Fordham
Fordham University School University School of Law since 1982; Director,
of Law Sentinel Group Funds, Inc. and Sentinel
140 West 62nd Street Pennsylvania Tax Free Trust; member of the Audit
New York, NY 10023 and Nominating Committees.
</TABLE>
I-3
<PAGE>
<TABLE><CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES
NAME AND ADDRESS OR EMPLOYMENT HELD DURING THE LAST 5 YEARS
- --------------------------------------------------- --------------------------------------------------
<S> <C>
Edwin A. Gee....................................... Director of the Parent since 1978; former Chairman
and Chief Executive Officer, International Paper
Company; Director, Cambrex Corp., Oncogene
Science, Inc., and Director Emeritus of Salomon
Brothers Capital Fund, Inc., Salomon Brothers
Fund, Inc. and Salomon Brothers Investors Fund,
Inc.; member of the Audit and Nominating
Committees.
Robert W. Sarnoff.................................. Director of the Parent since 1969;
Director/Consultant; retired Chairman and Chief
Executive Officer, RCA Corporation; former
Director, New York Stock Exchange and
Manufacturers Hanover Corporation; member of the
Compensation and Benefits and Nominating
Committees.
John R. Torell..................................... Director of the Parent since 1982; Chairman,
Torell Management, Inc. Torell Management, Inc. (financial advisory
767 Fifth Avenue company); former Chairman of the Board, President
Suite 4605 and Chief Executive Officer of CalFed Inc.; former
New York, NY 10153 President, Manufacturers Hanover Corporation and
Manufacturers Hanover Trust Company; Director,
Volt Information Sciences, Inc., and various
investment companies for which PaineWebber, Inc.
or Mitchell Hutchins, Inc. serves as investment
advisor; Chairman of the Audit Committee and
member of the Nominating Committee.
William Wrigley.................................... Director of the Parent since 1981; President,
Wm. Wrigley Jr. Company Chief Executive Officer and member of the Board,
410 North Michigan Avenue Wm. Wrigley Jr. Company (international
Chicago, Ill 60611 manufacturer of chewing gum products); Director,
Texaco, Inc.; Chairman of the Corporate Issues
Committee and member of the Nominating Committee.
</TABLE>
I-4
<PAGE>
Facsimile copies of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, certificates for Shares
and/or Rights and any other required documents should be sent or delivered by
each shareholder of the Company or his broker, dealer, commercial bank, trust
company or other nominee to the Depositary as follows:
THE DEPOSITARY FOR THE OFFER IS:
CHEMICAL BANK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Delivery:
Chemical Bank (for Eligible Institutions only) Chemical Bank
Reorganization Department (212) 629-8015 55 Water Street
P.O. Box 3085 (212) 629-8016 Second Floor--Room 234
G.P.O. Station Confirm by Telephone: New York, New York 10041
New York, New York (212) 613-7137 Attention:
10116-3085 Reorganization Department
</TABLE>
Any questions and requests for assistance may be directed to the
Information Agent or the Dealer Manager at their respective telephone numbers
and addresses listed below. Additional copies of this Offer to Purchase, the
Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained
from the Information Agent. You may also contact your broker, dealer, commercial
bank or trust company for assistance concerning the Offer.
THE INFORMATION AGENT FOR THE OFFER IS:
D.F. KING & CO., INC.
<TABLE>
<S> <C>
UNITED STATES EUROPE
77 Water Street Royex House, Aldermanbury Square
New York, New York 10005 London, England EC2V 7HR
1-800-755-3106 (Toll Free) (44) 71 600 5005 (Collect)
</TABLE>
THE DEALER MANAGER FOR THE OFFER IS:
GLEACHER & CO. INC.
667 Madison Avenue
New York, New York 10021
(212) 418-4281 (Collect)
Exhibit 11(a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
AMERICAN CYANAMID COMPANY
PURSUANT TO THE OFFER TO PURCHASE
DATED AUGUST 10, 1994
BY
AC ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
AMERICAN HOME PRODUCTS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, SEPTEMBER 7, 1994, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
CHEMICAL BANK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Delivery:
Chemical Bank (for Eligible Institutions only) Chemical Bank
Reorganization Department (212)629-8015 55 Water Street
P.O. Box 3085 (212)629-8016 Second Floor--Room 234
G.P.O. Station Confirm by Telephone: New York, New York 10041
New York, New York (212)613-7137 Attention:
10116-3085 Reorganization Department
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN
AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by shareholders, either if
certificates for Shares or Rights (as such terms are defined below) are to be
forwarded herewith or, unless an Agent's Message (as defined in the Offer to
Purchase) is utilized, if tenders of Shares or Rights are to be made by
book-entry transfer into the account of Chemical Bank, as Depositary (the
"Depositary"), at The Depository Trust Company ("DTC"), the Midwest Securities
Trust Company ("MSTC") or the Philadelphia Depository Trust Company ("PDTC")
(each a "Book-Entry Transfer Facility" and collectively the "Book-Entry Transfer
Facilities") pursuant to the procedures set forth in Section 3 of the Offer to
Purchase (as defined below). Shareholders who tender Shares or Rights by book-
entry transfer are referred to herein as "Book-Entry Shareholders".
Unless and until AC Acquisition Corp., a Delaware corporation (the
"Purchaser"), declares that the Rights Condition (as defined in the Offer to
Purchase) is satisfied, holders of Shares will be required to tender one-half of
one Right for each Share tendered in order to effect a valid tender of such
Share. If the Distribution Date (as defined in the Offer to Purchase) has not
occurred prior to the time Shares are tendered pursuant to the Offer, a tender
of Shares will also constitute a tender of the associated Rights. See Section 3
of the Offer to Purchase. If the Distribution Date has occurred, and
certificates representing Rights (the "Rights Certificates") have been
distributed to holders of Shares, such holders of Shares will be required to
tender Rights Certificates representing a number of Rights equal to one-half of
the number of Shares being tendered in order to effect a valid tender of such
Shares. Holders of Shares and Rights whose certificates for such Shares (the
"Share Certificates") and, if applicable, Rights Certificates are not
immediately available or who cannot deliver their Share Certificates or, if
applicable, Rights Certificates and all other required documents to the
Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to
Purchase), or who cannot complete the procedure for book-entry transfer on a
timely basis, must tender their Shares and Rights according to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. See
Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE>
<TABLE><CAPTION>
DESCRIPTION OF SHARES TENDERED
SHARE CERTIFICATE(S) AND SHARE(S)
NAME(S) & ADDRESS(ES) OF REGISTERED HOLDER(S) TENDERED
(PLEASE FILL IN, IF BLANK, EXACTLY AS (ATTACH ADDITIONAL SIGNED LIST IF
NAME(S) APPEAR(S) ON CERTIFICATE(S)) NECESSARY)
TOTAL NUMBER
OF SHARES
SHARE REPRESENTED
CERTIFICATE BY
NUMBER(S)* CERTIFICATE(S)*
<S> <C> <C>
Total Shares..........................
<CAPTION>
DESCRIPTION OF SHARES TENDERED
NAME(S) & ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS
NAME(S) APPEAR(S) ON CERTIFICATE(S))
NUMBER
OF SHARES
TENDERED**
<S> <C>
</TABLE>
* Need not be completed by Book-Entry Shareholders.
** Unless otherwise indicated, all Shares represented by certificates
delivered to the Depositary will be deemed to have been tendered. See
Instruction 4.
<TABLE><CAPTION>
DESCRIPTION OF RIGHTS TENDERED*
RIGHTS CERTIFICATE(S) AND RIGHTS
NAME(S) & ADDRESS(ES) OF REGISTERED HOLDER(S) TENDERED
(PLEASE FILL IN, IF BLANK, EXACTLY AS (ATTACH ADDITIONAL SIGNED LIST IF
NAME(S) APPEAR(S) ON CERTIFICATE(S)) NECESSARY)
TOTAL NUMBER
OF RIGHTS
RIGHTS REPRESENTED
CERTIFICATE BY RIGHTS
NUMBER(S)** CERTIFICATE(S)**
<S> <C> <C>
Total Rights..........................
<CAPTION>
DESCRIPTION OF RIGHTS TENDERED*
NAME(S) & ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS
NAME(S) APPEAR(S) ON CERTIFICATE(S))
NUMBER
OF RIGHTS
TENDERED***
<S> <C>
</TABLE>
* Need not be completed if the Distribution Date (as defined below) has
not occurred.
** Need not be completed by Book-Entry Shareholders.
*** Unless otherwise indicated, all Rights represented by certificates
delivered to the Depositary will be deemed to have been tendered. See
Instruction 4.
<PAGE>
/ / CHECK HERE IF SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE TO
AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution _________________________________________
Check box of Book-Entry Transfer Facility:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number _________________________________Transaction Code
Number _________________________________
/ / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered
Owner(s): _____________________________________________________________________
Window Ticket Number (if
any): _________________________________________________________________________
Date of Execution of Notice of Guaranteed
Delivery: ________________________________________________________
Name of Institution that Guaranteed
Delivery: _______________________________________________________________
If delivered by Book-Entry Transfer check box of Book-Entry Transfer
Facility:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number _________________________________Transaction Code
Number _________________________________
<PAGE>
/ / CHECK HERE IF RIGHTS ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE TO
AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER
FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY
TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering
Institution ___________________________________________________________________
Check box of Book-Entry Transfer Facility:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number _________________________________Transaction Code
Number _________________________________
/ / CHECK HERE IF RIGHTS ARE BEING TENDERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE
FOLLOWING:
Name(s) of Registered
Owner(s): _____________________________________________________________________
Window Ticket Number (if
any): _________________________________________________________________________
Date of Execution of Notice of Guaranteed
Delivery: ________________________________________________________
Name of Institution that Guaranteed
Delivery: _______________________________________________________________
If delivered by Book-Entry Transfer check box of Book-Entry Transfer
Facility:
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number ________________________________ Transaction Code
Number ________________________________
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to AC Acquisition Corp., a Delaware
corporation (the "Purchaser"), a wholly owned subsidiary of American Home
Products Corporation, a Delaware corporation ("Parent"), the above-described
shares of Common Stock, $5.00 par value per share (the "Shares"), of American
Cyanamid Company, a Maine corporation (the "Company"), and (unless and until the
Purchaser declares that the Rights Condition (as defined in the Offer to
Purchase described below) is satisfied), the associated Preferred Stock Purchase
Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of March
10, 1986, as amended as of April 29, 1986 and as of April 21, 1987 (the "Rights
Agreement"), between the Company and Mellon Bank, N.A., as successor Rights
Agent (the "Rights Agent"), at a purchase price of $95.00 per Share (and
associated Right), net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated August 10, 1994 (the "Offer
to Purchase") and in this Letter of Transmittal (which together constitute the
"Offer"). Unless the context requires otherwise, all references to Shares shall
be deemed to refer also to the associated Rights, and all references to Rights
shall be deemed to include all benefits that may inure to the shareholders of
the Company or to holders of the Rights pursuant to the Rights Agreement. The
undersigned understands that the Purchaser reserves the right to transfer or
assign, in whole or from time to time in part, to one or more of its affiliates,
the right to purchase all or any portion of the Shares and Rights tendered
pursuant to the Offer, receipt of which is hereby acknowledged.
The undersigned understands that if the Distribution Date (as defined in
the Offer to Purchase) has occurred and certificates representing Rights (the
"Rights Certificates") have been distributed to holders of Shares prior to the
date of tender of the Shares and Rights tendered herewith, Rights Certificates
representing a number of Rights equal to one-half of the number of Shares being
tendered herewith must be delivered to the Depositary or, if available, a
Book-Entry Confirmation received with respect thereto, in order for the Shares
tendered herewith to be validly tendered. If the Distribution Date has occurred
and Rights Certificates have not been distributed prior to the time Shares and
Rights are tendered herewith, the undersigned agrees to deliver Rights
Certificates representing a number of Rights equal to one-half of the number of
Shares tendered herewith to Chemical Bank (the "Depositary") within five
business days after the date such Rights Certificates are distributed. A tender
of shares without Rights Certificates constitutes an agreement by the tendering
shareholder to deliver Rights Certificates representing a number of Rights equal
to one-half the number of Shares tendered pursuant to the Offer to the
Depositary within five business days after the date such Rights Certificates are
distributed. The undersigned understands that if the Rights Condition is not
satisfied the Purchaser reserves the right to require that the Depositary
receive such Rights Certificates prior to accepting Shares for payment. In that
event, payment for Shares tendered and accepted for payment pursuant to the
Offer will be made only after timely receipt by the Depositary of, among other
things, Rights Certificates, if Rights Certificates have been distributed to
holders of Shares.
Subject to, and effective upon, acceptance for payment for the Shares and
Rights tendered herewith in accordance with the terms of the Offer, the
undersigned hereby sells, assigns and transfers to, or upon the order of, the
Purchaser all right, title and interest in and to all of the Shares and Rights
that are being tendered hereby and any and all dividends, except for regular
quarterly cash dividends not in excess of $.4625 per Share having a customary
and usual record date, distributions (including additional Shares) or rights
declared, paid or issued with respect to the tendered Shares on or after August
9, 1994 and payable or distributable to the undersigned on a date prior to the
transfer to the name of the Purchaser or nominee or transferee of the Purchaser
on the Company's stock transfer records of the Shares tendered herewith (except
that if the Rights are redeemed by the Company's Board of Directors in
accordance with the terms of the Rights Agreement, tendering shareholders who
are holders of record as of the applicable record date will be entitled to
receive and retain the redemption price of $.02 per Right in accordance with the
Rights Agreement) (collectively, a "Distribution"), and appoints the Depositary
the true and lawful agent and attorney-in-fact of the undersigned with respect
to such Shares and Rights (and any Distribution) with full power of substitution
(such power of attorney being deemed to be an irrevocable power coupled with an
interest) to (a) deliver such Share Certificates (as defined herein) and Rights
Certificates (and any Distribution) or transfer ownership of such Shares and
Rights (and any Distribution) on the account books maintained by a Book-Entry
Transfer Facility, together in either case with appropriate evidences of
transfer, to the Depositary for the account of the Purchaser, (b) present such
Shares and Rights (and any Distributions) for transfer on the books of the
Company and (c) receive all benefits and otherwise exercise all rights of
beneficial ownership of such Shares and Rights (and any Distribution), all in
accordance with the terms and subject to the conditions of the Offer.
The undersigned irrevocably appoints designees of the Purchaser as such
shareholder's proxy, with full power of substitution, to the full extent of such
shareholder's rights with respect to the Shares and Rights tendered by such
shareholder and accepted for payment by the Purchaser and with respect to any
and all other Shares or other securities issued or issuable in respect of such
Shares on or after August 9, 1994. Such appointment will be effective when, and
only to the extent that, the Purchaser accepts such Shares for payment. Upon
such acceptance for payment, all prior proxies given by such shareholder with
respect to such Shares and Rights (and such other shares and securities) will be
revoked without further action, and no subsequent proxies may be given nor any
<PAGE>
subsequent written consents executed (and, if given or executed, will not be
deemed effective). The designees of the Purchaser will be empowered to exercise
all voting and other rights of such shareholder as they in their sole discretion
may deem proper at any annual or special meeting of the Company's shareholders
or any adjournment or postponement thereof, by written consent in lieu of any
such meeting or otherwise. The Purchaser reserves the right to require that, in
order for Shares and Rights to be deemed validly tendered, immediately upon the
Purchaser's payment for such Shares, the Purchaser must be able to exercise full
voting rights with respect to such Shares and Rights.
The undersigned hereby represents and warrants that (a) the undersigned has
full power and authority to tender, sell, assign and transfer the Shares and
Rights tendered hereby (and any Distribution) and (b) when the Shares and Rights
are accepted for payment by the Purchaser, the Purchaser will acquire good,
marketable and unencumbered title to the Shares and Rights (and any
Distribution), free and clear of all liens, restrictions, charges and
encumbrances, and the same will not be subject to any adverse claim. The
undersigned, upon request, will execute and deliver any additional documents
deemed by the Depositary or the Purchaser to be necessary or desirable to
complete the sale, assignment and transfer of the Shares and Rights tendered
hereby (and any Distribution). In addition, the undersigned shall promptly remit
and transfer to the Depositary for the account of the Purchaser any and all
Distributions in respect of the Shares and Rights tendered hereby, accompanied
by appropriate documentation of transfer; and pending such remittance or
appropriate assurance thereof, the Purchaser will be, subject to applicable law,
entitled to all rights and privileges as owner of any such Distribution and may
withhold the entire purchase price or deduct from the purchase price the amount
or value thereof, as determined by the Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall not be
affected by and shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned.
Tenders of Shares and Rights made pursuant to the Offer are irrevocable,
except that Shares and Rights tendered pursuant to the Offer may be withdrawn at
any time prior to the Expiration Date (as defined in the Offer to Purchase) and,
unless theretofore accepted for payment by the Purchaser pursuant to the Offer,
may also be withdrawn at any time after October 8, 1994. See Section 4 of the
Offer to Purchase.
The undersigned understands that tenders of Shares and Rights pursuant to
any of the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions set forth in the
Offer, including the undersigned's representation that the undersigned owns the
Shares and Rights being tendered.
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or issue or return any
certificate(s) for Shares and Rights not tendered or not accepted for payment in
the name(s) of the registered holder(s) appearing under "Description of Shares
Tendered" and "Description of Rights Tendered", respectively. Similarly, unless
otherwise indicated herein under "Special Delivery Instructions", please mail
the check for the purchase price and/or any certificate(s) for Shares and Rights
not tendered or not accepted for payment (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing under
"Description of Shares Tendered" and "Description of Rights Tendered",
respectively. In the event that both the Special Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price and/or any certificate(s) for Shares and Rights not tendered or
accepted for payment in the name of, and deliver such check and/or such
certificates to, the person or persons so indicated. Unless otherwise indicated
herein under "Special Payment Instructions", please credit any Shares and Rights
tendered herewith by book-entry transfer that are not accepted for payment by
crediting the account at the Book-Entry Transfer Facility designated above. The
undersigned recognizes that the Purchaser has no obligation, pursuant to the
Special Payment Instructions, to transfer any Shares or Rights from the name(s)
of the registered holder(s) thereof if the Purchaser does not accept for payment
any of the Shares or Rights so tendered.
<PAGE>
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be competed ONLY if certificate(s) for Shares and Rights not tendered or not
accepted for payment and/or the check for the purchase price of Shares and
Rights accepted for payment are to be issued in the name of someone other than
the undersigned or if Shares or Rights tendered by book-entry transfer which are
not accepted for payment are to be returned by credit to an account maintained
at a Book-Entry Transfer Facility.
Issue / / check / / certificates to:
Name............................................................................
(PLEASE PRINT)
Address.........................................................................
...............................................................................
(INCLUDE ZIP CODE)
...............................................................................
(TAX ID. OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 ON THE REVERSE SIDE)
Credit Shares tendered by book-entry transfer that are not accepted for payment
to (Check one):
/ / DTC / / MSTC / / PDTC
...............................................................................
(DTC, MSTC or PDTC Account No.)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificate(s) for Shares and Rights not tendered or not
accepted for payment and/or the check for the purchase price of Shares and
Rights accepted for payment are to be sent to someone other than the undersigned
or to the undersigned at an address other than that shown above.
Mail / / check / / certificates to:
Name............................................................................
(PLEASE PRINT)
Address.........................................................................
...............................................................................
(INCLUDE ZIP CODE)
...............................................................................
(TAX ID. OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9 ON THE REVERSE SIDE)
<PAGE>
SIGN HERE
AND COMPLETE SUBSTITUTE FORM W-9 ON REVERSE
SIGN SIGN
HERE HERE
X.................................................................
X.................................................................
(SIGNATURE(S) OF HOLDER(S))
Dated: .......................... , 19 ..........................
(Must be signed by the registered holder(s) exactly as name(s)
appear(s) on Share Certificate(s) or Rights Certificate(s)
or on a security position listing or by person(s) authorized to
become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors,
administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative
capacity, please provide the following information and see
Instruction 5.)
Name(s)...........................................................
..................................................................
(PLEASE PRINT)
Capacity (full title)...........................................
Address...........................................................
..................................................................
(INCLUDE ZIP CODE)
Area Code and Telephone Number..................................
Tax Identification or
Social Security No.......................................
COMPLETE SUBSTITUTE FORM W-9 ON REVERSE
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature............................................
Name..............................................................
Name of Firm....................................................
(PLEASE PRINT)
Address...........................................................
..................................................................
(INCLUDE ZIP CODE)
Area Code and Telephone Number..................................
Dated: ......................... , 19 .........................
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) of Shares and Rights (which term, for purposes of this
document, shall include any participant in a Book-Entry Transfer Facility whose
name appears on a security position listing as the owner of Share(s) and/or
Rights) tendered herewith, unless such holder(s) has completed either the box
entitled "Special Payment Instructions" or the box entitled "Special Delivery
Instructions" above, or (b) if such Share(s) and/or Right(s) are tendered for
the account of a firm which is a member of a registered national securities
exchange or of the National Association of Securities Dealers, Inc., or by a
commercial bank or trust company having an office or correspondent in the United
States (each of the foregoing being referred to as an "Eligible Institution").
In all other cases, all signatures on this Letter of Transmittal must be
guaranteed by an Eligible Institution. See Instruction 5 of this Letter of
Transmittal.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
shareholders either if certificates are to be forwarded herewith or, unless an
Agent's Message is utilized, if tenders are to be made pursuant to the procedure
for tender by book-entry transfer set forth in Section 3 of the Offer to
Purchase. Share Certificates, or timely confirmation (a "Book-Entry
Confirmation") of a book-entry transfer of such Shares into the Depositary's
account at a Book-Entry Transfer Facility, as well as this Letter of Transmittal
(or a facsimile hereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message in the case of a book-entry
delivery, and any other documents required by this Letter of Transmittal, must
be received by the Depositary at one of its addresses set forth herein prior to
the Expiration Date and, unless and until the Purchaser declares that the Rights
Condition (as defined in the Offer to Purchase) is satisfied, Rights
Certificates or timely confirmation of a book-entry transfer of Rights into the
Depositary's account at a Book-Entry Transfer Facility, if available (together
with, if Rights are forwarded separately from Shares, a properly completed and
duly executed Letter of Transmittal (or a facsimile hereof) with any required
signature guarantees, or an Agent's Message in the case of a book-entry
delivery, and any other documents required by this Letter of Transmittal), must
be received by the Depositary at one of its addresses set forth herein prior to
the Expiration Date or, if later, within five business days after the date such
Rights Certificates are distributed. Shareholders whose Share Certificates or
Rights Certificates are not immediately available (including Rights Certificates
that have not yet been distributed by the Company) or who cannot deliver their
Share Certificates or Rights Certificates and all other required documents to
the Depositary prior to the Expiration Date or who cannot complete the procedure
for delivery by book-entry transfer on a timely basis may tender their Shares
and Rights by properly completing and duly executing a Notice of Guaranteed
Delivery pursuant to the guaranteed delivery procedure set forth in Section 3 of
the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made
by or through an Eligible Institution; (ii) a properly completed and duly
executed Notice of Guaranteed Delivery, substantially in the form made available
by the Purchaser, must be received by the Depositary prior to the Expiration
Date; (iii) the Share Certificates (or a Book-Entry Confirmation) representing
all tendered Shares, in proper form for transfer, in each case together with the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees (or, in the case of a
book-entry delivery, an Agent's Message) and any other documents required by
this Letter of Transmittal, must be received by the Depositary within five New
York Stock Exchange, Inc. ("NYSE") trading days after the date of execution of
such Notice of Guaranteed Delivery; and (iv) unless and until the Purchaser
declares that the Rights Condition is satisfied, the Rights Certificates, if
issued, representing the appropriate number of Rights or a Book Entry
Confirmation, if available, in each case together with a properly completed and
duly executed Letter of Transmittal (or a facsimile thereof), with any required
signature guarantees (or, in the case of a book-entry delivery, an Agent's
Message) and any other documents required by this Letter of Transmittal, must be
received by the Depositary within five NYSE trading days after the date of
execution of such Notice of Guaranteed Delivery or, if later, five NYSE trading
days after Rights Certificates are distributed to shareholders, all as provided
in Section 3 of the Offer to Purchase. If Share Certificates and Rights
Certificates are forwarded separately to the Depositary, a properly completed
and duly executed Letter of Transmittal must accompany each such delivery.
<PAGE>
THE METHOD OF DELIVERY OF SHARE CERTIFICATES OR OF RIGHTS CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares and Rights will be purchased. All tendering shareholders, by
execution of this Letter of Transmittal (or a facsimile hereof), waive any right
to receive any notice of the acceptance of their Shares and Rights for payment.
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and Rights and any other
required information should be listed on a separate signed schedule attached
hereto.
4. PARTIAL TENDERS. (Not Applicable to Book-Entry Stockholders) If fewer
than all the Shares evidenced by any Share Certificate submitted are to be
tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered". If fewer than all the Rights evidenced by
any Rights Certificates submitted are to be tendered, fill in the number of
Rights which are to be tendered in the box entitled "Number of Rights Tendered".
In such cases, new Share Certificates or Rights Certificates, as the case may
be, for the Shares or Rights that were evidenced by your old Share Certificates
or Rights Certificates, but were not tendered by you, will be sent to you,
unless otherwise provided in the appropriate box on this Letter of Transmittal,
as soon as practicable after the Expiration Date. All Shares represented by
Share Certificates and all Rights represented by Rights Certificates delivered
to the Depositary will be deemed to have been tendered unless otherwise
indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
and Rights tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the certificate(s) without alteration, enlargement or any
change whatsoever.
If any of the Shares and Rights tendered hereby are owned of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares and Rights are registered in different names
on several certificates, it will be necessary to complete, sign and submit as
many separate Letters of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares and Rights listed and transmitted hereby, no endorsements of certificates
or separate stock powers are required unless payment is to be made to or
certificates for Shares or Rights not tendered or not purchased are to be issued
in the name of a person other than the registered holder(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed, the certificate(s) must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the certificate(s).
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
Unless and until the Purchaser declares the Rights Condition to be
satisfied, if Rights Certificates have been distributed to holders of Shares,
such holders are required to tender Rights Certificate(s) representing a number
of Rights equal to one-half of the number of Shares tendered in order to effect
a valid tender of such Shares. It is necessary that shareholders follow all
signature requirements of this Instruction 5 with respect to the Rights in order
to tender such Rights.
<PAGE>
6. STOCK TRANSFER TAXES. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of Shares and Rights to it or its order
pursuant to the Offer. If, however, payment of the purchase price is to be made
to, or if certificates for Shares and Rights not tendered or accepted for
payment are to be registered in the name of, any person other than the
registered holder(s), or if tendered certificates are registered in the name of
any person other than the person(s) signing this Letter of Transmittal, the
amount of any stock transfer taxes (whether imposed on the registered holder(s)
or such person) payable on account of the transfer to such person will be
deducted from the purchase price unless satisfactory evidence of the payment of
such taxes or an exemption therefrom, is submitted.
EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE(S) LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of, and/or certificates for Shares and Rights not tendered or not
accepted for payment are to be issued or returned to, a person other than the
signer of this Letter of Transmittal or if a check and/or such certificates are
to be returned to a person other than the signer of this Letter of Transmittal
or to an address of the signer other than that shown in this Letter of
Transmittal, the appropriate boxes on this Letter of Transmittal must be
completed. Book-Entry Shareholders may request that Shares and/or Rights not
accepted for payment be credited to such account maintained at a Book-Entry
Transfer Facility as such Book-Entry Shareholder may designate under "Special
Payment Instructions". If no such instructions are given, such Shares or Rights
not accepted for payment will be returned by crediting the account at the
Book-Entry Transfer Facility designated above.
8. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the
Purchaser in whole or in part at any time and from time to time in its sole
discretion.
9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income
tax law, a shareholder whose tendered Shares or Rights are accepted for payment
is required to provide the Depositary with such shareholder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Depositary is
not provided with the correct TIN, the Internal Revenue Service may subject the
shareholder or other payee to a $50 penalty. In addition, payments that are made
to such shareholder or other payee with respect to Shares or Rights purchased
pursuant to the Offer may be subject to 31% backup withholding.
Certain shareholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the shareholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments made to the shareholder or other payee. Backup withholding
is not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering shareholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the shareholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Depositary.
The shareholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares and Rights or of the last transferee appearing on the transfers attached
to, or endorsed on, the Shares and Rights. If the Shares or Rights are in more
than one name or are not in the name of the actual owner, consult the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional guidance on which number to report.
<PAGE>
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests for
assistance may be directed to the Dealer Manager or the Information Agent at
their respective addresses and telephone numbers set forth below. Additional
copies of the Offer to Purchase, this Letter of Transmittal and the Notice of
Guaranteed Delivery may also be obtained from the Information Agent or from
brokers, dealers, commercial banks or trust companies.
11. LOST, DESTROYED OR STOLEN CERTIFICATES If any certificate representing
Shares or Rights has been lost, destroyed or stolen, the shareholder should
promptly notify the Depositary. The shareholder will then be instructed as to
the steps that must be taken in order to replace the certificate(s). This Letter
of Transmittal and related documents cannot be processed until the procedures
for replacing lost or destroyed certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER
WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED
DOCUMENTS, OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE.
<PAGE>
PAYER'S NAME: CHEMICAL BANK
<TABLE>
<S> <C> <C>
Part 1--PLEASE PROVIDE YOUR TIN IN Social Security Number
SUBSTITUTE THE BOX AT THE RIGHT AND CERTIFY or Employer
Form W-9 BY SIGNING AND DATING BELOW Identification Number
-----------------------------
Part 2--Certification--Under penalties of perjury, I
certify that:
(1) The number shown on this form is my correct
Taxpayer Identification Number (or I am waiting
for a number to be issued to me) and
Department of the
Treasury
Internal Revenue Service
(2) I am not subject to backup withholding because:
(a) I am exempt from backup withholding, or (b) I
have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report
all interest or dividends, or (c) the IRS has
notified me that I am no longer subject to backup
withholding.
PAYER'S REQUEST FOR
TAXPAYER IDENTIFICATION
NUMBER ("TIN")
Certification Instructions--You must cross out
item (2) above if you have been notified by the
IRS that you are currently subject to backup
withholding because of under-reporting interest
or dividends on your tax return. However, if
after being notified by the IRS that you were
subject to backup withholding you received
another notification from the IRS that you are no
longer subject to backup withholding, do not
cross out such Item (2).
SIGN HERE SIGNATURE..................................... Part 3--
Awaiting TIN / /
DATE.........................., 1994
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX
IN PART 3 OF SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all reportable payments made to me will be withheld,
but that such amounts will be refunded to me if I then provide a Taxpayer
Identification Number within sixty (60) days.
<TABLE>
<S> <C>
Signature................................................... Date......................... , 1994
</TABLE>
<PAGE>
The Information Agent for the Offer is:
D.F. KING & CO., INC.
<TABLE>
<S> <C>
UNITED STATES EUROPE
77 Water Street Royex House, Aldermanbury Square
New York, New York 10005 London, England EC2V 7HR
1-800-755-3106 (Toll Free) (44) 71 600 5005 (Collect)
</TABLE>
The Dealer Manager for the Offer is:
GLEACHER & CO. INC.
667 Madison Avenue
New York, New York 10021
(212) 418-4281
(Collect)
August 10, 1994
Exhibit 11(a)(3)
NOTICE OF GUARANTEED DELIVERY
TO
TENDER SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
AMERICAN CYANAMID COMPANY
As set forth in Section 3 of the Offer to Purchase described below,
this instrument or one substantially equivalent hereto must be used to accept
the Offer (as defined below) if certificates for Shares (as defined below) and
the associated Preferred Stock Purchase Rights (the "Rights") are not
immediately available or the certificates for Shares or Rights and all other
required documents cannot be delivered to the Depositary prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) or if the procedure for
delivery by book-entry transfer cannot be completed on a timely basis. This
instrument may be delivered by hand or transmitted by facsimile transmission or
mail to the Depositary.
The Depositary for the Offer is:
CHEMICAL BANK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile: By Hand or Overnight Delivery:
Chemical Bank (for Eligible Institutions only) Chemical Bank
Reorganization Department (212) 629-8015 55 Water Street
P.O. Box 3085 (212) 629-8016 Second Floor--Room 234
G.P.O. Station New York, New York 10041
New York, New York Confirm by Telephone: Attention:
10116-3085 (212) 613-7137 Reorganization Department
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box in the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tenders to AC Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of American Home Products Corporation,
a Delaware corporation, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated August 10, 1994 (the "Offer to Purchase"), and in
the related Letter of Transmittal (which together constitute the "Offer"),
receipt of which is hereby acknowledged, the number of shares of Common Stock,
$5.00 par value per share (the "Shares"), and the number of Rights, indicated
below of American Cyanamid Company, a Maine corporation, pursuant to the
guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase.
<PAGE>
Signature(s) ...................................................................
Name(s) of Record Holders
...............................................................................
PLEASE TYPE OR PRINT
Number of Shares and Rights.....................................................
Certificate Nos. (If Available)
...............................................................................
...............................................................................
Dated.......................................................................1994
Address(es).....................................................................
...............................................................................
ZIP CODE
Area Code and Tel. No(s)........................................................
(Check one box if Shares and Rights will be tendered by book-entry transfer)
/ / The Depository Trust Company
/ / Midwest Securities Trust Company
/ / Philadelphia Depository Trust Company
Account Number..................................................................
...............................................................................
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or a commercial bank or trust company having an office, branch or agency in the
United States, (a) represents that the above named person(s) "own(s)" the Shares
and/or Rights tendered hereby within the meaning of Rule 14e-4 under the
Securities Exchange Act of 1934, as amended ("Rule14e-4"), (b) represents that
such tender of Shares complies with Rule 14e-4, (c) guarantees to deliver to the
Depositary either the certificates evidencing all tendered Shares, in proper
form for transfer, or to deliver Shares pursuant to the procedure for book-entry
transfer into the Depositary's account at The Depository Trust Company, the
Midwest Securities Trust Company or the Philadelphia Depository Trust Company
(each a "Book-Entry Transfer Facility"), in either case together with the Letter
of Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees or an Agent's Message (as defined in the
Offer to Purchase) in the case of a book-entry delivery, and any other required
documents, all within five New York Stock Exchange, Inc. ("NYSE") trading days
after the date hereof and (d) guarantees, if applicable, to deliver certificates
representing the Rights ("Rights Certificates") in proper form for transfer, or
to deliver such Rights pursuant to the procedure for book-entry transfer into
the Depositary's account at a Book-Entry Transfer Facility together with, if
Rights are forwarded separately, the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed with any required signature
guarantees or an Agent's Message (as defined in the Offer to Purchase) in the
case of a book-entry delivery, and any other required documents, all within five
NYSE trading days after the date hereof or, if later, five business days after
Rights Certificates are distributed to holders of Shares.
...............................................................................
NAME OF FIRM
...............................................................................
ADDRESS
...............................................................................
ZIP CODE
Area Code and Tel. No. .........................................................
...............................................................................
AUTHORIZED SIGNATURE
Name ...........................................................................
PLEASE TYPE OR PRINT
Title ..........................................................................
Dated.......................................................................1994
NOTE: DO NOT SEND CERTIFICATES FOR SHARES OR RIGHTS WITH THIS NOTICE.
CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
Exhibit 11(a)(4)
GLEACHER & CO. INC.
667 MADISON AVENUE
NEW YORK, NEW YORK 10021
(212) 418-4281
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
AMERICAN CYANAMID COMPANY
AT
$95.00 NET PER SHARE
BY
AC ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
AMERICAN HOME PRODUCTS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, SEPTEMBER 7, 1994, UNLESS THE OFFER IS EXTENDED.
August 10, 1994
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by AC Acquisition Corp., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of American Home Products
Corporation, a Delaware corporation (the "Parent"), to act as Financial Advisor
and Dealer Manager in connection with the Purchaser's offer to purchase for cash
all the outstanding shares of Common Stock, par value $5.00 per share (the
"Shares"), of American Cyanamid Company, a Maine corporation (the "Company"),
and (unless and until the Purchaser declares the Rights Condition (as defined in
the Offer to Purchase) is satisfied) the associated Preferred Stock Purchase
Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of March
10, 1986, as amended as of April 29, 1986 and as of April 21, 1987 (the "Rights
Agreement"), between the Company and Mellon Bank, N.A., as successor Rights
Agent, at a purchase price of $95.00 per Share (and associated Right), net to
the seller in cash without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated August 10, 1994 (the "Offer
to Purchase") and in the related Letter of Transmittal (which together
constitute the "Offer") enclosed herewith. Unless and until the Purchaser
declares that the Rights Condition is satisfied, holders of Shares will be
required to tender one-half of one Right for each Share tendered in order to
effect a valid tender of such Share. If the Distribution Date (as defined in the
Offer to Purchase) has not occurred prior to the time Shares are tendered
pursuant to the Offer, a tender of Shares will constitute a tender of the
associated Rights. If the Distribution Date has occurred and certificates
representing Rights ("Rights Certificates") have been distributed by the Company
to holders of Shares, such holders of Shares shall be required to tender Rights
Certificates representing a number of Rights equal to one-half of the number of
Shares being tendered in order to effect valid tender of such Shares. Holders of
Shares and Rights whose certificates for such Shares (the "Share Certificates")
and, if applicable, Rights Certificates are not immediately available or who
cannot deliver their Share Certificates or, if applicable, their Rights
Certificates, and all other required documents to the Depositary (as defined
below) prior to the Expiration Date (as defined in the Offer to Purchase), or
who cannot complete the procedures for book-entry transfer on a timely basis,
must tender their Shares and Rights according to the guaranteed delivery
procedures set forth in Section 3 of the Offer to Purchase. Unless the context
otherwise requires, all references to Shares shall include the associated
Rights. All
<PAGE>
References to the Rights shall include all benefits that may inure to holders of
Rights pursuant to the Rights Agreement.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee.
The Offer is conditioned upon, among other things: (1) there being validly
tendered and not properly withdrawn prior to the expiration of the Offer a
number of Shares which constitutes at least 80% of the voting power (determined
on a fully diluted basis), on the date of purchase, of all securities of the
Company entitled to vote generally in the election of directors or in a merger;
(2) the Rights having been redeemed by the Company's Board of Directors or the
Purchaser being satisfied, in its sole discretion, that the Rights have been
invalidated or are otherwise inapplicable to the Offer and the Merger (as
defined in the Offer to Purchase); (3) the Purchaser being satisfied, in its
sole discretion, that the restrictions on business combinations contained in
Section 611-A of the Maine Business Corporation Act (or any similar provision)
are invalid or otherwise inapplicable to the Merger (as a result of action by
the Company's Board of Directors, final judicial action or otherwise); and (4)
the Purchaser being satisfied, in its sole discretion, that the Purchaser has
obtained sufficient financing to enable it to consummate the Offer and the
Merger and to pay related fees and expenses. The Offer is also subject to other
terms and conditions. See the Introduction and Sections 1, 9 and 14 of the Offer
to Purchase.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated August 10, 1994.
2. The green Letter of Transmittal to tender Shares for your use and
for the information of your clients. Facsimile copies of the Letter of
Transmittal may be used to tender Shares.
3. The gold Notice of Guaranteed Delivery for Shares and Rights to be
used to accept the Offer if Share Certificates or Rights Certificates are
not immediately available or if such certificates and all other required
documents cannot be delivered to Chemical Bank (the "Depositary") by the
Expiration Date or if the procedure for book-entry transfer cannot be
completed by the Expiration Date.
4. A gray printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Offer.
5. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9.
6. A return envelope addressed to Chemical Bank, the Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT
12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, SEPTEMBER 7, 1994, UNLESS THE
OFFER IS EXTENDED.
In order to take advantage of the Offer, (i) a duly executed and properly
completed Letter of Transmittal and any required signature guarantees, or an
Agent's Message (as defined in the Offer to Purchase) in connection with a
book-entry delivery of Shares or Rights, and other required documents should be
sent to the Depositary, and (ii) either Share Certificates representing the
tendered Shares (and, if applicable, tendered Rights) should be delivered to the
Depositary, or such Shares (and, if applicable, tendered Rights) should be
tendered by book-entry transfer into the Depositary's account maintained at one
of the Book-Entry Transfer Facilities (as described in the Offer to Purchase),
all in accordance with the instructions set forth in the Letter of Transmittal
and the Offer to Purchase.
2
<PAGE>
If holders of Shares wish to tender, but it is impracticable for them to
forward their Share Certificates or, if applicable, Rights Certificates, or
other required documents on or prior to the Expiration Date or to comply with
the book-entry transfer procedures on a timely basis, a tender may be effected
by following the guaranteed delivery procedures specified in Section 3 of the
Offer to Purchase.
The Purchaser will not pay any commissions or fees to any broker, dealer or
other person (other than the Dealer Manager, the Depositary and D.F. King & Co.,
Inc. (the "Information Agent") (as described in the Offer to Purchase)) for
soliciting tenders of Shares pursuant to the Offer. The Purchaser will, however,
upon request, reimburse you for customary clerical and mailing expenses incurred
by you in forwarding any of the enclosed materials to your clients. The
Purchaser will pay or cause to be paid any stock transfer taxes payable on the
transfer of Shares to it, except as otherwise provided in Instruction 6 of the
Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Gleacher & Co. Inc., the Dealer Manager, or the Information Agent, at their
respective addresses and telephone numbers set forth on the back cover of the
Offer to Purchase. Additional copies of the enclosed material may be obtained
from the Information Agent.
Very truly yours,
GLEACHER & CO. INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, THE PARENT, THE DEALER MANAGER,
THE COMPANY, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF
THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE
ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
3
Exhibit 11(a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
AMERICAN CYANAMID COMPANY
AT
$95.00 NET PER SHARE
BY
AC ACQUISITION CORP.
A WHOLLY OWNED SUBSIDIARY OF
AMERICAN HOME PRODUCTS CORPORATION
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, SEPTEMBER 7, 1994,
UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated August 10,
1994 (the "Offer to Purchase"), and the related Letter of Transmittal relating
to an offer by AC Acquisition Corp., a Delaware corporation (the "Purchaser")
and a wholly owned subsidiary of American Home Products Corporation, a Delaware
corporation (the "Parent"), to purchase all of the outstanding shares of Common
Stock, $5.00 par value per share (the "Shares"), of American Cyanamid Company, a
Maine corporation (the "Company"), and (unless and until the Purchaser declares
that the Rights Condition (as defined in the Offer to Purchase) is satisfied)
the associated Preferred Stock Purchase Rights (the "Rights") issued pursuant to
the Rights Agreement, dated as of March 10, 1986, as amended as of April 29,
1986 and as of April 21, 1987 (the "Rights Agreement"), between the Company and
Mellon Bank, N.A., as successor Rights Agent, at a purchase price of $95.00 per
Share (and associated Right), net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase and in the related Letter of Transmittal (which together constitute the
"Offer"). Unless the context requires otherwise, all references to "Shares"
shall be deemed to refer also to the associated Rights. We are the holder of
record of Shares held by us for your account. A tender of such Shares can be
made only by us as the holder of record and pursuant to your instructions. The
Letter of Transmittal is furnished to you for your information only and cannot
be used by you to tender Shares held by us for your account.
Unless and until the Purchaser declares that the Rights Condition (as
defined below) is satisfied, if certificates representing Rights (the "Rights
Certificates") have been distributed to holders of Shares, such holders are
required to tender Rights Certificate(s) representing a number of Rights equal
to one-half the number of Shares being tendered in order to effect a valid
tender of such Shares. Based on the Company's filings with the Commission, until
the Distribution Date (as defined in the Offer to Purchase), the surrender for
transfer of any of the certificates representing Shares (the "Share
Certificates") will also constitute the surrender for transfer of the Rights
associated with the Shares represented by such Share Certificates. Based on the
Company's filings with the Commission, as soon as practicable following the
Distribution Date, the Rights Certificates will be mailed to holders of record
of Shares as of the close of business on the Distribution Date; after the
Distribution Date, such separate Rights Certificates alone will evidence the
Rights. See Section 3 of the Offer to Purchase.
We request instructions as to whether you wish to have us tender on your
behalf any or all of such Shares held by us for your account, pursuant to the
terms and subject to the conditions set forth in the Offer to Purchase. Your
instructions to tender Shares held by us for your account will also constitute a
direction to us to tender a number of Rights held by us for your account equal
to one-half of the number of Shares tendered.
<PAGE>
Your attention is directed to the following:
1. The tender price is $95.00 per share, net to the seller in cash.
2. The Offer is made for all of the outstanding Shares.
3. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Wednesday,, September 7, 1994, unless the Offer is
extended.
4. The Offer is conditioned upon, among other things: (1) there being
validly tendered and not properly withdrawn prior to the expiration of the
Offer a number of Shares which constitutes at least 80% of the voting power
(determined on a fully diluted basis) on the date of purchase of all
securities of the Company entitled to vote generally in the election of
directors or in a merger; (2) the Rights having been redeemed by the
Company's Board of Directors or the Purchaser being satisfied, in its sole
discretion, that the Rights have been invalidated or are otherwise
inapplicable to the Offer and the Merger (as defined in the Offer to
Purchase); (3) the Purchaser being satisfied, in its sole discretion, that
the restrictions on business combinations contained in Section 611-A of the
Maine Business Corporation Act (or any similar provision) are invalid or
otherwise inapplicable to the Merger (as a result of action by the
Company's Board of Directors, final judicial action or otherwise); and (4)
the Purchaser being satisfied, in its sole discretion, that the Purchaser
has obtained sufficient financing to enable it to consummate the Offer and
the Merger and to pay related fees and expenses. The Offer is also subject
to other terms and conditions. See the Introduction and Sections 1, 9 and
14 of the Offer to Purchase.
5. Tendering shareholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer.
The Offer is being made solely by the Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of Shares. The Purchaser
is not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If the
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, the Purchaser will make a
good faith effort to comply with any such state statute. If, after such good
faith effort, the Purchaser cannot comply with such state statute, the Offer
will not be made to nor will tenders be accepted from or on behalf of the
holders of Shares in such state. In any jurisdiction where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of the Purchaser by the Dealer
Manager or one or more registered brokers or dealers that are licensed under the
laws of such jurisdiction.
If you wish to have us tender any or all of the Shares held by us for your
account, please instruct us by completing, executing and returning to us the
instruction form contained in this letter. If you authorize a tender of your
Shares, all such Shares will be tendered unless otherwise specified in such
instruction form. Your instructions should be forwarded to us in ample time to
permit us to submit a tender on your behalf prior to the expiration of the
Offer.
<PAGE>
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
(INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS)
OF
AMERICAN CYANAMID COMPANY
The undersigned acknowledge(s) receipt of your letter enclosing the Offer
to Purchase dated August 10, 1994 (the "Offer to Purchase") and the related
Letter of Transmittal pursuant to an offer by AC Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of American Home Products Corporation,
a Delaware corporation, to purchase all outstanding shares of Common Stock,
$5.00 par value per share (the "Shares"), of American Cyanamid Company, a Maine
corporation, and (unless and until the Purchaser declares that the Rights
Condition (as defined in the Offer to Purchase) is satisfied) the associated
Preferred Stock Purchase Rights (the "Rights").
This will instruct you to tender the number of Shares and Rights indicated
below (or, if no number is indicated below, all Shares and Rights) which are
held by you for the account of the undersigned, upon the terms and subject to
the conditions set forth in the Offer to Purchase and in the related Letter of
Transmittal furnished to the undersigned.
Number of Shares (and Rights) to be Tendered*
..........................................................Shares (and Rights)
Dated: , 19
SIGN HERE
.............................................................................
.............................................................................
Signature(s)
.............................................................................
Please print name(s)
.............................................................................
Address
.............................................................................
Area Code and Telephone Number
.............................................................................
Tax Identification or Social Security Number
- ---------------
* Unless otherwise indicated, it will be assumed that all of your Shares (and
Rights) held by us for your account are to be tendered.
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
- -------------------------------------------------------- --------------------------------------------------------
GIVE THE GIVE THE EMPLOYER
SOCIAL SECURITY IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF-- FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- -------------------------------------------------------- --------------------------------------------------------
<S> <C> <C> <C>
1. An individual's account The individual 8. Sole proprietorship account The owner(4)
2. Two or more individuals The actual owner of the 9. A valid trust, estate, or The legal entity (Do not
(joint account) account or, if combined pension trust furnish the identifying
funds, the first number of the personal
individual on the representative or
account(1) trustee unless the legal
3. Husband and wife (joint The actual owner of the entity itself is not
account) account or, if joint designated in the
funds, either person(1) account title.)(5)
4. Custodian account of a The minor(2) 10. Corporate account The corporation
minor (Uniform Gift to 11. Religious, charitable, or The organization
Minors Act) educational organization
5. Adult and minor (joint The adult or, if the account
account) minor is the only 12. Partnership account held The partnership
contributor, the in the name of the
minor(1) business
6. Account in the name of The ward, minor, or 13. Association, club, or The organization
guardian or committee for a incompetent person(3) other tax-exempt
designated ward, minor, or organization
incompetent person 14. A broker or registered The broker or nominee
7. a. The usual revocable The grantor-trustee(1) nominee
savings trust account 15. Account with the The public entity
(grantor is also Department of Agriculture
trustee) in the name of a public
b. So-called trust account The actual owner(1) entity (such as a State or
that is not a legal or local government, school
valid trust under State law district, or prison) that
receives agricultural
program payments
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. If the owner does not have an employer
identification number, furnish the owner's social security number.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE>
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service.
To complete Substitute Form W-9 if you do not have a taxpayer identification
number, write "Applied For" in the space for the taxpayer identification number
in Part I, sign and date the Form, and give it to the requester. Generally, you
will then have 60 days to obtain a taxpayer identification number and furnish it
to the requester. If the requester does not receive your taxpayer identification
number within 60 days, backup withholding, if applicable, will begin and
continue until you furnish your taxpayer identification number to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include
the following:
. A corporation.
. A financial institution.
. An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
. The United States or any agency or instrumentality thereof.
. A State, the District of Columbia, a possession of the United States, or any
political subdivision or instrumentality thereof.
. A foreign government or a political subdivision, agency or instrumentality
thereof.
. An international organization or any agency or instrumentality thereof.
. A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
. A real estate investment trust.
. A common trust fund operated by a bank under section 584(a).
. An entity registered at all times during the tax year under the Investment
Company Act of 1940.
. A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
. Payments to nonresident aliens subject to withholding under section 1441.
. Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
. Payments of patronage dividends where the amount received is not paid in
money.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
<PAGE>
. Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
. Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
. Payments described in section 6049(b)(5) to nonresident aliens.
. Payments on tax-free covenant bonds under section 1451.
. Payments made by certain foreign organizations.
. Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE A SUBSTITUTE FORM W-9 TO AVOID
POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxypayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. Payers must be
given the numbers whether or not recipients are required to file tax returns.
Payers must generally withhold 31% of taxable interest, dividends, and certain
other payments to a payee who does not furnish a taxpayer identification number
to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT
YOUR TAX CONSULTANT OR
THE INTERNAL REVENUE SERVICE
2
This announcement is neither an offer to purchase nor a solicitation
of an offer to sell Shares. The Offer is being made solely by the
Offer to Purchase dated August 10, 1994 and the related Letter of
Transmittal and is being made to all holders of Shares. The Offer is
not being made to (nor will tenders be accepted from or on behalf of)
holders of Shares in any jurisdiction in which the making of the Offer
or the acceptance thereof would not be in compliance with the laws of
such jurisdiction. In any jurisdiction where the securities, blue sky
or other laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by Gleacher & Co. Inc. or one or moreregistered brokers or
dealers that are licensed under the laws of such jurisdiction.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
(Including the Associated Preferred Stock Purchase Rights)
of American Cyanamid Company
at
$95.00 Net Per Share
by
AC Acquisition Corp.
a wholly owned subsidiary of
American Home Products Corporation
AC Acquisition Corp., a Delaware corporation (the _Purchaser_)
and a wholly owned subsidiary of American Home Products Corporation, a
Delaware corporation (the _Parent_), hereby offers to purchase all of
the outstanding shares of common stock, $5.00 par value per share (the
_Shares_), of American Cyanamid Company, a Maine corporation (the
_Company_), and (unless and until the Purchaser declares that the
Rights Condition (as defined below) is satisfied) the associated
Preferred Stock Purchase Rights (the _Rights_) issued pursuant to the
Rights Agreement, dated as of March 10, 1986, as amended as of April
29, 1986 and as of April 21, 1987, between the Company and Mellon
Bank, N.A., as successor Rights Agent (the _Rights Agreement_), at a
purchase price of $95.00 per Share (and associated Right), net to the
seller in cash, without interest thereon, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated August 10,
1994 (the _Offer to Purchase_) and in the related Letter of
Transmittal (which together constitute the _Offer_). Unless the
context requires otherwise, all references to Shares shall be deemed
to refer also to the associated Rights, and all references to Rights
shall be deemed to include all benefits that may inure to the
shareholders of the Company or to holders
of Rights pursuant to the Rights Agreement.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON WEDNESDAY, SEPTEMBER 7, 1994, UNLESS THE
OFFER IS EXTENDED.
The Offer is conditioned upon, among other things: (1) there
being validly tendered and not properly withdrawn prior to the
expiration of the Offer a number of Shares which constitutes at least
<PAGE>
80% of the voting power (determined on a fully diluted basis), on the
date of purchase, of all securities of the Company entitled to vote
generally in the election of directors or in a merger; (2) the
Company_s Preferred Stock Purchase Rights having been redeemed by the
Company_s Board of Directors, or the Purchaser being satisfied, in its
sole discretion, that such Preferred Stock Purchase Rights have been
invalidated or are otherwise inapplicable to the Offer and the
proposed Merger described below (the _Rights Condition_); (3) the
Purchaser being satisfied, in its sole discretion, that the
restrictions on business combinations contained in Section 611-A of
the Maine Business Corporation Act (or any similar provision) are
invalid or otherwise inapplicable to the proposed Merger described
below (as a result of action by the Company_s Board of Directors,
final judicial action or otherwise); and (4) the Purchaser being
satisfied, in its sole discretion, that the Purchaser has obtained
sufficient financing to enable it to consummate the Offer and the
proposed Merger and to pay related fees and expenses. The Offer is
also subject to other terms and conditions. See the Introduction and
Sections 1, 9 and 14 of the Offer to Purchase.
The purpose of the Offer is to acquire control of, and the entire
equity interest in, the Company. The Purchaser intends to propose,
and to seek to have the Company consummate as soon as practicable
after consummation of the Offer, a merger or similar business
combination (the _Merger_) with the Purchaser or another direct or
indirect subsidiary of the Parent, pursuant to which each then
outstanding Share (other than Shares held by the Parent, the Purchaser
or any other wholly owned subsidiary of the Parent, Shares held in
the treasury of the Company and Shares held by shareholders who
properly exercise appraisal rights under Maine law) would be converted
into the right to receive in cash the price per Share paid by the
Purchaser pursuant to the Offer. The consummation of the Merger would
be subject to a number of factors (including satisfaction of various
conditions) discussed in the Introduction and in Sections 9, 11 and 14
of the Offer to Purchase. Section 11 of the Offer to Purchase also
discusses certain appraisal rights available to shareholders upon
consummation of each of the Offer and the Merger.
Unless and until the Purchaser declares that the Rights Condition
is satisfied, if certificates representing Rights (_Rights
Certificates_) have been distributed to holders of Shares, such
holders will be required to tender Rights Certificate(s) representing
a number of Rights equal to one-half the number of Shares being
tendered in order to effect a valid tender of such Shares.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment (and thereby purchased) Shares validly tendered
and not properly withdrawn as, if and when the Purchaser gives oral or
written notice to the Depositary of the Purchaser_s acceptance for
payment of such Shares pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Shares accepted
for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent
for tendering shareholders for the purpose of receiving payments from
<PAGE>
the Purchaser and transmitting such payments to shareholders whose
Shares have been accepted for payment. Under no circumstances will
interest on the purchase price for Shares be paid, regardless of any
delay in making such payment. In all cases, payment for Shares
tendered and accepted for payment pursuant to the Offer will be made
only after timely receipt by the Depositary of (i) certificates
representing shares (_Share Certificates_) and, if applicable, Rights
Certificates, or timely confirmation of a book-entry transfer of such
Shares and Rights into the Depositary_s account at The Depository
Trust Company, the Midwest Securities Trust Company or the
Philadelphia Depository Trust Company (each a _Book-Entry Transfer
Facility_) pursuant to the procedures set forth in Section 3 of the
Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent_s Message (as defined in Section 2
of the Offer to Purchase) in connection with a book-entry transfer,
and (iii) any other documents required by the Letter of Transmittal.
The Purchaser expressly reserves the right, in its sole
discretion, at any time and from time to time, to extend the period
during which the Offer is open for any reason, including the
occurrence of any of the events specified in Section 14 of the Offer
to Purchase, by giving oral or written notice of such extension to the
Depositary. Any such extension will be followed as promptly as
practicable by public announcement thereof, such announcement to be
made no later than 9:00 A.M., New York City time, on the next business
day after the previously scheduled Expiration Date.
The term _Expiration Date_ means 12:00 Midnight, New York City
time, on Wednesday, September 7, 1994, unless and until the Purchaser,
in its sole discretion, shall have extended the period during which
the Offer is open, in which event the term _Expiration Date_ shall
mean the latest time and date at which the Offer, as so extended by
the Purchaser, shall expire.
Tenders of Shares and Rights made pursuant to the Offer are
irrevocable, except that Shares and Rights tendered pursuant to the
Offer may be withdrawn at any time on or prior to the Expiration Date
and, unless theretofore accepted for payment by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after October 8, 1994.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by
the Depositary at one of its addresses set forth on the back cover of
the Offer to Purchase. Any such notice of withdrawal must specify the
name of the person who tendered the Shares or Rights to be withdrawn,
the number of Shares or Rights to be withdrawn and the name of the
registered holder, if different from that of the person who tendered
such Shares or Rights. If Share Certificates or Rights Certificates to
be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates,
the serial numbers shown on such certificates must be submitted to the
Depositary and the signature(s) on the notice of withdrawal must be
guaranteed by an Eligible Institution (as defined in Section 3 of the
Offer to Purchase) unless such Shares or Rights have been tendered for
<PAGE>
the account of any Eligible Institution. If Shares or Rights have been
tendered pursuant to the procedure for book-entry transfer as set
forth in Section 3 of the Offer to Purchase, any notice of withdrawal
must specify the name and number of the account at the Book-Entry
Transfer Facility to be credited with the withdrawn Shares or Rights,
in which case a notice of withdrawal will be effective if delivered to
the Depositary by any method of delivery described in the second
sentence of this paragraph. A withdrawal of Shares or Rights shall
also constitute a withdrawal of the associated Rights or Shares, as
applicable. All questions as to the form and validity (including time
of receipt) of any notice of withdrawal will be determined by the
Purchaser, in its sole discretion, whose determination will be final
and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii)
of the General Rules and Regulations under the Securities Exchange Act
of 1934, as amended (the _Exchange Act_), is contained in the Offer to
Purchase and is incorporated herein by reference.
A request pursuant to Rule 14d-5 under the Exchange Act is being
made to the Company for the use of its shareholder list, list of the
holders of Rights, if any, and security position listings for the
purpose of disseminating the Offer to holders of Shares. Upon
compliance by the Company with such request, the Offer to Purchase and
the related Letter of Transmittal and, if required, other relevant
materials will be mailed to record holders of Shares and Rights whose
names appear on the Company_s shareholder list and list of holders of
Rights and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose
nominees, appear on the shareholder list and list of holders of
Rights, if applicable, or who are listed as participants in a clearing
agency_s security position listing for subsequent transmittal to
beneficial owners of Shares.
The Offer to Purchase and the related Letter of Transmittal
contain important information which should be read before any decision
is made with respect to the Offer.
Questions and requests for assistance may be directed to the
Dealer Manager or the Information Agent as set forth below. Requests
for copies of the Offer to Purchase and the related Letter of
Transmittal and all other tender offer materials may be directed to
the Information Agent, and copies will be furnished promptly at the
Purchaser_s expense. The Purchaser will not pay any fees or
commissions to any broker or dealer or any other person (other than
the Dealer Manager and the Information Agent) for soliciting tenders
of Shares and Rights pursuant to the Offer.
The Information Agent for the Offer is:D.F. King & Co., Inc.
United States: Europe:
77 Water Street Royex House, Aldermanbury Square
New York, New York 10005 London, England EC2V 7HR
1-800-755-3106 (Toll Free) (44) 71 600 5005 (Collect)
<PAGE>
The Dealer Manager for the Offer is:
Gleacher & Co. Inc.
667 Madison Avenue
New York, New York 10021
(212) 418-4281 (Collect)
August 10, 1994
[LOGO]
AMERICAN HOME PRODUCTS CORPORATION
FIVE GIRALDA FARMS,MADISON,NEW JERSEY 07940, (201) 660-5000
EXECUTIVE OFFICES
FOR IMMEDIATE RELEASE:
Investor Contact: Media Contact:
John R. Considine Louis V. Cafiero
(201) 660-6429 (201) 660-5013
AMERICAN HOME PRODUCTS TO COMMENCE CASH TENDER
OFFER FOR AMERICAN CYANAMID AT $95 PER SHARE
Madison, N.J., August 9, 1994 -- American Home Products
Corporation (NYSE:AHP) announced today that its Board of
Directors has formally approved the Company's previously
announced offer to purchase American Cyanamid Company for $95 per
share in cash. In furtherance of this offer, the Board
authorized the commencement of a cash tender offer for all of the
outstanding stock of American Cyanamid at that price, subject to
customary conditions for an offer of this nature.
John R. Stafford, Chairman, President and Chief Executive
Officer of American Home Products, stated that "although we are
starting our tender offer, we are confident that American
Cyanamid's Board of Directors will recognize the inherent value
of our offer to their stockholders, and we hope they will quickly
accept our invitation to begin meaningful discussions for a
negotiated transaction."
American Home Products also announced that it was commencing
litigation designed to eliminate the applicability to its offer
of certain of American Cyanamid's anti-takeover and other
defensive provisions. In addition, American Home Products stated
that it intends to solicit other American Cyanamid stockholders
to join it in calling for a special stockholders meeting to act
on matters relating to the American Home Products offer.
# # # # #
EXHIBIT 11.(a)(9)
[LOGO]
AMERICAN HOME PRODUCTS CORPORATION
FIVE GIRALDA FARMS,MADISON,NEW JERSEY 07940, (201) 660-5000
FOR IMMEDIATE RELEASE:
Investor Contact: Media Contact:
John R. Considine Louis V. Cafiero
(201) 660-6429 (201) 660-5013
AMERICAN HOME PRODUCTS ANNOUNCES
COMMENCEMENT $95 PER SHARE CASH TENDER OFFER
FOR AMERICAN CYANAMID AND RELATED STEPS
Madison, N.J., August 10, 1994 -- American Home Products
Corporation (NYSE:AHP) announced today that it has commenced its
previously announced tender offer for all outstanding shares of
common stock of American Cyanamid Company at $95.00 per share in
cash. American Home Products also announced that in connection
with the tender offer, it has filed in the United States District
Court for the District of Maine, the previously announced
litigation against Cyanamid with respect to certain anti-takeover
and other defensive provisions, and has sent to Cyanamid a demand
under Maine Law for a shareholder list.
The tender offer and withdrawal rights thereunder will
expire at 12:00 Midnight, New York City time, on Wednesday,
September 7, 1994, unless the tender offer is extended.
# # #
August 9, 1994
American Home Products Corporation
Five Giralda Farms
Madison, New Jersey 07940
Attention: John Considine
Vice President -- Finance
re Acquisition Financing -- Commitment Letter
- ----------------------------------------------
Dear Sirs:
You have advised us that American Home Products
Corporation (the "Company") may, directly or through an
acquisition subsidiary, commence an all cash tender offer
(the "Tender Offer") for all of the issued and outstanding
shares (the "Shares") of common stock of American Cyanamid
Company ("AC") which will be subsequently followed by a
merger of AC with the Company (or a newly created subsidiary
of the Company) (the "Merger", and together with the Tender
Offer, the "Acquisition ").
We understand that up to $9.0 billion of senior
bank financing (the "Bank Financing") is required to finance
the Acquisition, to replace an existing working capital
facility of the Company, to pay related costs and expenses
and to provide for ongoing general corporate purposes,
including commercial paper back-up. Such Bank Financing is
to include a (i) a 364-day extendable revolving credit and
<PAGE>
bid loan facility in the amount of $6 billion (the "A Credit
Facility") and (ii) a five year revolving credit and bid
loan facility in the amount of $3 billion (the "B Credit
Facility", and together with the A Credit Facility, the
"Credit Facilities").
You have requested that the Bank Financing be made
available through the Credit Facilities extended on the
terms and subject to the conditions set forth on Annex I
hereto (the "Term Sheet"). Chemical Bank ("Chemical") is
pleased to confirm that it is willing to provide, on the
terms and subject to the conditions set forth herein and in
the Term Sheet, up to $1.2 billion of the Bank Financing.
Chemical Securities Inc. ("CSI"), as advisor and arranger to
you, hereby agrees to use its best efforts to form a
syndicate of financial institutions (together with Chemical,
the "Lenders") to provide the balance of the Bank Financing.
The commitments of each of the Lenders (including Chemical's
commitment) will be made on a pro rata basis between the A
--- ----
Credit Facility and the B Credit Facility.
Chemical's commitment to provide up to $1.2
billion of the Bank Financing is expressly subject to (i)
Chemical's satisfactory completion of its business and legal
due diligence analysis and review with respect to the
assets, liabilities, businesses, operations or condition
(financial and otherwise) of the Company and its sub-
sidiaries and (to the extent of publicly available
information and information that may be made available by or
on behalf of AC to the Company (collectively, "Available AC
Information")) of AC and its subsidiaries, (ii) the absence
of any event or occurrence having a material adverse effect
on the assets, liabilities, businesses, operations or
condition (financial or otherwise) of the Company on a
consolidated basis or of AC on a consolidated basis, (iii)
the successful syndication of the Bank Financing and (iv)
the appropriate markets being clear of competing
transactions by or on behalf of the Company at the time of
the proposed syndication of the Bank Financing (other than
to the extent coordinated with CSI's syndication efforts in
respect of the Bank Financing). In addition, Chemical's
commitment hereunder shall terminate on May 31, 1995, unless
the date on which all of the conditions to the effectiveness
of the Credit Agreements set forth in the Term Sheet
(including the consummation of the Tender Offer) have been
satisfied (the "Effective Date") has occurred on or before
such date.
It is also a condition of our commitments that
Chemical act as the sole Administrative Agent, and that CSI
-2-
<PAGE>
act as the sole advisor to the Company and arranger, for the
Credit Facilities and perform all functions and exercise all
authority (including, without limitation, selecting counsel
for the Lenders, serving as manager of the syndication
effort and negotiating definitive credit documentation)
customarily performed and exercised by each of us in such
capacities. It is agreed that CSI will manage all aspects
of the syndication, including, without limitation, decisions
as to the selection and number of institutions to be
approached and when they will be approached, when their
commitments will be accepted, which institutions will
participate, the allocations of the commitments among the
syndicate lenders and the amount and distribution of fees
among the syndicate lenders, provided that CSI's decisions
in such matters are to be acceptable to the Company. To
assist CSI in its syndication efforts, you agree promptly to
provide, and to cause your advisors to provide, Chemical
and/or CSI upon request with all information reasonably
deemed necessary by Chemical and/or CSI to complete
successfully the syndication, including but not limited to
projections and pro forma combined balance sheets prepared
by you relating to the transactions contemplated hereby but
limited in the case of AC and its subsidiaries to Available
AC Information.
Chemical reserves the right, prior to or after the
execution of definitive documentation with respect to the
Bank Financing and as part of the primary syndication or
otherwise, to assign part of its commitment to one or more
financial institutions that will become Lenders and will be
parties to such definitive documentation. It is agreed that
no Lender will receive compensation outside the terms
contained herein and in the Fee Letter referred to below in
order to obtain its commitment to participate in the Bank
Financing. You understand that CSI intends to commence
syndication efforts promptly, and you agree actively to
assist Chemical and CSI in completing promptly a syndication
which is satisfactory to us and you. Such assistance shall
include your using your diligent efforts to ensure that our
syndication efforts benefit materially from the lending and
other banking relationships of the Company and its
subsidiaries. This will be accomplished by a variety of
means, including direct contact during the syndication
between senior management and advisors of the Company and
the proposed syndicate lenders.
As consideration for our commitments hereunder and
for the agreements contained herein as to the management,
structuring and syndication of the Credit Facilities, you
-3-
<PAGE>
agree to pay the fees set forth in the Fee Letter dated the
date hereof and delivered herewith (the "Fee Letter").
To induce Chemical and CSI to issue this letter,
you hereby agree that the reasonable out-of-pocket fees and
expenses (including the reasonable fees and expenses of
consultants, if any, selected by Chemical with the consent
of the Company and syndication costs)of Chemical, CSI and
their affiliates, together with the reasonable fees and
expenses of counsel, arising in connection with this letter
(and our due diligence in connection herewith) and in
connection with the transactions described herein shall be
for your account, whether or not the Acquisition is
consummated, the Bank Financing is made available or
definitive credit documents are executed. You further agree
to indemnify and hold harmless Chemical, CSI and each
director, officer, employee and affiliate of each thereof
(each an "indemnified person") from and against any and all
actions, suits, proceedings (including any investigations or
inquiries), claims, losses, damages, liabilities or expenses
of any kind or nature whatsoever which may be incurred by or
asserted against or involve any such indemnified person as a
result of or arising out of or in any way related to or
resulting from this letter, the Acquisition or any eventual
extension of the Bank Financing, and, upon demand, to pay
and reimburse each indemnified person for any reasonable
legal or other out-of-pocket expenses incurred in connection
with investigating, defending or preparing to defend any
such action, suit, proceeding (including any inquiry or
investigation) or claim (whether or not any such person is a
party to any action or proceeding out of which any such
expenses arise), provided that you shall have no obligation
to indemnify any indemnified person for any of the foregoing
to the extent determined by a judgment to have arisen from
its gross negligence, willful misconduct or bad faith. This
letter is addressed solely to you, and neither Chemical nor
CSI, on the one hand, nor the Company, on the other hand,
shall be liable to the other or any other person for any
consequential damages which may be alleged as a result of
this letter or any of the transactions referred to herein.
You may terminate this letter at any time upon
written notice thereof to us, provided that the provisions
--------
of the preceding paragraph shall survive any termination of
this letter.
You are not authorized to show or circulate this
letter or the Term Sheet to any other person or entity (other
than your legal and financial advisors in connection with
-4-
<PAGE>
your evaluation hereof and except as required by law or
applicable judicial process) until such time as you have
accepted this letter as provided in the immediately
succeeding paragraph. Without in any way limiting the
foregoing, in the event that you show or circulate the terms
of this letter or the Term Sheet prior to your acceptance of
this letter as provided below, you shall be deemed to have
accepted the terms of this letter and the enclosed Fee
Letter.
If you are in agreement with the foregoing, please
sign and return to us (including by way of telecopier) the
enclosed copy of this letter and a copy of the enclosed Fee
Letter no later than 5:00 p.m., New York time, on August 9,
1994. If you decline to take the foregoing actions, our
commitment and agreements hereunder shall terminate and you
are to return all copies of this letter, the Term Sheet and
the Fee Letter to us as promptly as possible and in such
event you are not authorized to disclose this letter or the
contents thereof to any other party.
Very truly yours,
CHEMICAL BANK
By_________________________
Title:
CHEMICAL SECURITIES INC.
By_________________________
Title:
Accepted and Agreed to this
____ day of August, 1994
AMERICAN HOME PRODUCTS CORPORATION
By________________________
Title:
-5-
<PAGE>
ANNEX I
-------
AMERICAN HOME PRODUCTS CORPORATION
$9,000,000,000 Credit Facilities
Statement of Terms and Conditions*
---------------------------------
I. Documentation and Parties.
-------------------------
Type of Agree-
ments: The A Credit Facility and the B Credit
Facility shall be provided pursuant to
two separate Revolving Credit and Bid
Loan Facility Agreements (the "A Credit
Agreement" and the "B Credit Agreement,"
respectively).
Borrower: American Home Products Corporation, a
Delaware corporation (the "Company") or a
domestic wholly-owned direct or indirect
subsidiary of the Company reasonably
satisfactory to the Administrative Agent
to the extent the Company has entered
into an appropriate guaranty in respect
thereof.
Arranger: Chemical Securities Inc. (the
"Arranger").
Lenders: Chemical and a syndicate of financial
institutions to be formed by the Company
and the Arranger.
Administrative
Agent: Chemical (the "Administrative Agent").
II. Amount and Terms of the Credit Facilities.
-----------------------------------------
Type of
Facilities: Revolving Credit and Bid Loan Facilities
available for usage through borrowings
--------------------
* Defined terms shall have the meaning provided in the
Commitment Letter to which this Term Sheet is attached.
<PAGE>
under each Credit Facility, pro rata
--- ----
from the Lenders under such Credit
Facility ("Committed Rate Loans") and/or
bid loan borrowings under each Credit
Facility from one or more Lenders ("Bid
Loans", and together with the Committed
Rate Loans, the "Loans").
Aggregate
Commitments: A Credit Facility - $6,000,000,000 (the
"Aggregate A Commitments").
B Credit Facility - $3,000,000,000 (the
"Aggregate B Commitments" and together
with the Aggregate A Commitments, the
"Aggregate Commitments").
Purpose: The proceeds of Loans will be used (i)
to finance the Acquisition, (ii) to
replace the Company's existing
$1,000,000,000 credit facility, and
(iii) for the Company's general
corporate and working capital purposes,
including commercial paper back-up.
Termination
Dates: A Credit Facility - 364 days after the
Effective Date (the "A Termination
Date"), subject to extensions as
provided below.
B Credit Facility - Five years after the
Effective Date (the "B Termination
Date").
Commitment
Periods: The period from and including the
Effective Date to but not including the
respective Termination Date for each
Credit Agreement, or such earlier date
on which the Commitments shall terminate
as provided in such Credit Agreement.
Maturity Dates: A Credit Facility - As to any Committed
Rate Loan which shall be outstanding on
the A Termination Date, the first anni-
versary of the date immediately
preceding the date on which such
Committed Rate Loan shall have been made
or most recently converted or continued
under the Credit Agreement for the A
Credit Facility.
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<PAGE>
B Credit Facility - The B Termination
Date.
Repayment: Each Committed Rate Loan must be repaid
on its applicable Maturity Date and each
Bid Loan must be repaid on its
applicable maturity date.
Extension
Provisions For The A Credit Agreement will contain a
A Credit mechanism for the Company to request
Facility: successive 364-day extensions of the A
Termination Date, which will become
effective only with the consent of the
Majority-A Lenders (50.1% of the
Aggregate A Commitments) and only with
respect to such Lenders that so consent.
The Company shall pay any Lender that
does not consent to any such extension
of the Termination Date (an "Exiting
Lender") all amounts then owing to such
Exiting Lender under the A Credit
Agreement on the existing A Termination
Date applicable to such Exiting Lender.
The Company may, with the consent of the
Administrative Agent (which consent
shall not be unreasonably withheld),
replace any Exiting Lender with another
financial institution which shall become
a party to the A Credit Agreement and,
at the Company's option, to the B Credit
Agreement (in replacement of such
Exiting Lender's total B Commitments).
The Company may arrange for any such
financial institution to purchase all or
any portion of the Loans owing to any
Exiting Lender on the existing A
Termination Date applicable to such
Exiting Lender. The Arranger and the
Administrative Agent will use diligent
efforts to assist the Company in
identifying replacement Lenders for the
purposes of this Section and "Lender
Replacement" below.
Optional
Reduction of
Aggregate
Commitments: The unused portion of the Aggregate A
Commitments and/or Aggregate B
Commitments may be reduced at any time
-3-
<PAGE>
in minimum amounts of $50,000,000 and
whole multiples of $5,000,000 in excess
thereof upon five Business Days' written
notice.
Use of the
Credit
Facilities:
(a) Committed
Rate Loans: The Company may use the Aggregate
Commitments from time to time prior to
the applicable Termination Dates for
Committed Rate Loans under either or
both Credit Facilities. The Company may
borrow, repay and reborrow Committed
Rate Loans from time to time during the
applicable Commitment Period up to the
available amount of the Aggregate
Commitments applicable to each Credit
Facility.
(b) Bid Loans: The Credit Agreements will include
provisions permitting the Company from
time to time prior to the applicable
Termination Date (i) to invite Lenders
to submit bids to the Company which
shall offer Bid Loans (a) bearing
interest at a fixed rate or a rate based
upon the Eurodollar Rate and (b) having
an interest period, as selected by the
Company, of between 7 days and 180 days
and (ii) to borrow, in its sole
discretion, one or more of the Bid Loans
offered in submitted bids on the terms
set forth in such bids. The aggregate
principal amount of the outstanding Bid
Loans of a Lender under any Credit
Facility may exceed its portion of the
respective Aggregate Commitments under
such Credit Facility. The minimum
aggregate principal amount of Bid Loans
that the Company may request the Lenders
to offer on any one occasion will be
$50,000,000, and the minimum principal
amount of a Bid Loan that a Lender may
offer to make will be $10,000,000.
-4-
<PAGE>
Aggregate
Loans: The aggregate outstanding principal
amount of Loans under any Credit
Facility may not at any time during the
Commitment Period exceed the respective
Aggregate Commitments under such Credit
Facility.
Facility Fees: The Company shall pay to the Administra-
tive Agent, for the ratable benefit of
the Lenders (or to the Bid Loan Lenders
alone in the case of Bid Loans covered
by clause (ii) below), a Facility Fee at
the applicable percentages per annum set
forth on the Pricing Grid attached
hereto as Schedule I (the "Pricing
Grid") (i) of the respective Aggregate
Commitments under each Credit Facility
from and including the Allocation Date
(as defined below) to but excluding the
Termination Date applicable thereto, and
(ii) with respect to Loans under the A
Credit Agreement, of the average
principal amount of Loans outstanding
under such Credit Facility from and
after the A Termination Date, payable
quarterly in arrears on the last day of
each March, June, September and
December, on the applicable Termination
Date (in respect of the fee relating to
the Aggregate Commitments) and on the
date on which the Loans are fully repaid
(in respect of the fee relating to Loans
outstanding after the A Termination Date
under the A Credit Agreement).
"Allocation Date" shall mean the date
(not more than five days after the date
identified by the Arranger to the
Company as the date on which the
syndication of the Credit Facilities has
been completed) on which the commitments
of the Lenders have been accepted by the
Company and allocated.
Interest on
Committed Rate
Loans: Committed Rate Loans will bear interest
at a rate equal to the Borrowing Rates
plus the Applicable Margins (as defined
----
below).
The Borrowing Rates available to the
Company are:
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<PAGE>
(a) the average of the rates (grossed-
up for reserve requirements as
described herein) at which
eurodollar deposits for one, two,
three or six months (as selected by
the Company) are offered by each of
the three Lenders to be designated
by the Company as the Reference
Lenders (a "Reference Lender") in
the interbank eurodollar market in
the approximate amount of such
Reference Lender's share of the
relevant Loan (the "Eurodollar
Rate"); or
(b) the sum of (i) the average of the
rates (grossed-up for reserve
requirements as described herein)
reported by each Reference Lender
as the rate bid by certificate of
deposit dealers for the purchase at
face value in the secondary market
of certificates of deposit of such
Reference Lender having a term of
30, 60, 90 or 180 days (as selected
by the Company) in the approximate
amount of such Reference Lender's
share of the relevant Loan and (ii)
the relevant FDIC assessment rate
applicable to Chemical Bank (the
"C/D Rate"); or
(c) the higher of (i) the rate from
time to time publicly announced by
Chemical in New York City as its
prime rate, (ii) Chemical's "Base
CD Rate" plus 1% and (iii) the
federal funds rate from time to
time in effect plus 1/2 of 1% (such
higher rate, the "Alternate Base
Rate"; this rate is not intended to
be the lowest rate charged by
Chemical to its borrowers).
Interest will be payable on the last day
of each interest period in respect of
Eurodollar Rate Loans and C/D Rate Loans
(except in the case of interest periods
of 6 months or 180 days where interest
will also be payable on the date which
is 3 months or 90 days, as the case may
be, from the commencement date thereof)
-6-
<PAGE>
and quarterly in respect of Alternate
Base Rate Loans.
Applicable The "Applicable Margin" shall be as set
Margin: forth on the Pricing Grid.
Reserve The rate quoted as the C/D Rate will be
Requirements; grossed-up for the maximum reserve
Yield requirements prescribed by the Board of
Protection: Governors of the Federal Reserve System
for certificates of deposit from time to
time. The Company will pay to each
Lender the cost of eurocurrency reserve
liabilities actually incurred. In
addition, the Credit Agreements will
contain customary provisions relating to
increased costs, capital adequacy
protection, withholding, indemnity for
"breakage" costs and other taxes and
illegality.
Lender If any Lender submits a request for
Replacement: reimbursement to the Company under the
increased cost, withholding, indemnity,
capital adequacy or reserve requirements
provisions referred to above, the
Company may, with the consent of the
Administrative Agent (which consent
shall not be unreasonably withheld),
substitute another financial institution
to acquire the Loans (other than Bid
Loans) and Commitments of such Lender
under both Credit Facilities. The
Company will in any event be required to
make such requested reimbursement to
such Lender, provided that no such
reimbursement shall be required in
respect of periods commencing (i) prior
to the commencement of the interest
period in respect of which such
reimbursement is requested, in the case
of eurocurrency liability reserve
requirements or (ii) prior to the date
60 days prior to the date of such re-
quest, in all other cases. The Company
will also be required to provide addi-
tional reimbursement to such Lender for
periods subsequent to such request
through the date of replacement.
III. Conditions Precedent.
--------------------
-7-
<PAGE>
(a) To the 1. Execution and delivery of the
Effective Credit Agreements and related
Date: documents and guaranties, if any,
in form reasonably satisfactory to
the Company, the Administrative
Agent and the Lenders.
2. Receipt by the Administrative Agent
of certificates as to required
corporate resolutions, certificates
of incorporation, bylaws, the
incumbency of officers of the
Company.
3. An opinion, reasonably satisfactory
to the Lenders, of the General
Counsel of the Company, as to the
authorization, execution and
enforceability of the Credit
Agreements and all related
documents, legal and regulatory
compliance and such other matters
as the Lenders may reasonably
specify.
4. The Tender Offer shall have been
consummated in compliance with the
terms and conditions (including the
price paid for each Share pursuant
thereto) set forth in the Offer to
Purchase as the same may be modified
to the extent not materially
adverse (in the reasonable opinion
of the Administrative Agent) to the
interests of the Lenders, or such
other terms and conditions as shall
be reasonably satisfactory to the
Administrative Agent and the
Majority Lenders. After giving
effect to the consummation of the
Tender Offer, the Company shall own
and control that number of shares
of AC as shall be necessary to
permit the Company to approve the
Merger without the affirmative vote
or approval of any other
shareholders, and there shall be no
applicable statute or other
restriction which would prohibit,
materially restrict or materially
delay the consummation of the
Merger or which would be reasonably
-8-
<PAGE>
likely to make the consummation of
the Merger economically unfeasible.
5. All legal matters incident to the
Credit Facilities (including, with-
out limitation, opinions of
counsel) must be reasonably
satisfactory to counsel to the
Administrative Agent (determined
when delivered thereto).
(b) The 1. Accuracy of representations and
Effective warranties.
Date and
the Date 2. No existing Default or Event of
of each Default.
Loan:
3. The Company must give the Adminis-
trative Agent not less than 3
Business Days' written notice of
each Eurodollar Rate borrowing, 2
Business Days' written notice of
each C/D Rate borrowing and same-
day written notice of each
Alternate Base Rate borrowing. The
Company shall request Bid Loans by
delivering a written request
therefor (i) not later than 4
Business Days prior to the proposed
borrowing date in the case of
Eurodollar Rate Bid Loans and (ii)
not later than 1 Business Day prior
to the proposed borrowing date in
the case of fixed rate Bid Loans.
IV. Representations
---------------
and Warranties:
--------------
Customary in transactions of this type,
including, without limitation, those
relating to the Acquisition, no material
adverse change in the Company's
consolidated business or financial
condition and no material litigation,
and no material restrictions on
dividends payable by material
subsidiaries of the Company.
V. Covenants.
---------
Reporting 1. Financial statements:
Requirements:
-9-
<PAGE>
(a) Quarterly Report on Form 10-Q
of the Company due within 60
days after the end of each of
the first three quarters of
each fiscal year.
(b) Audited consolidated annual
statements of the Company due
within 120 days after the end
of each fiscal year.
2. Certificate of no Default or Event
of Default due with delivery of the
annual statements and the Quarterly
Report for the Company's second
quarter as set forth above.
3. All other non-confidential reports
and financial information filed by
the Company with the SEC will be
furnished to the Lenders within 30
days after they are sent to the
SEC.
4. Any material Default, Event of
Default or litigation and any
material adverse change must be
reported.
5. Such other information as the
Administrative Agent on behalf of
any Lender may reasonably request.
Maintenance of Maintain existence, pay taxes, maintain
Existence: properties, maintain insurance, comply
with applicable legal requirements.
Inspection: Permit inspection of properties, books
and records by the Administrative Agent
at any reasonable time. Cooperate in
furnishing information.
Maintenance of
Books and
Records: Maintain books and records in accordance
with GAAP.
Merger: Consummate the Merger within 180 days of
consummation of the Tender Offer
pursuant to documentation reasonably
satisfactory to the Administrative
Agent.
-10-
<PAGE>
Financial
Covenant: Maximum Total Debt to Total
Capitalization at the end of each
quarter, or another financial covenant,
in each case to be mutually acceptable
to the Company and Chemical.
VI. Events of Default.
-----------------
1. Failure to pay any principal on any
Loan when due or to pay any
interest on any Loan, any fee or
any other sum under either Credit
Agreement within 5 Business Days
after the same becomes due.
2. Cross-default to other indebtedness
in excess of $100,000,000 (with any
defaults under indebtedness of AC
and its subsidiaries resulting from
the Acquisition not to be events of
defaults for a period after the
Effective Date to be determined).
3. If any representation is incorrect,
false or misleading in any material
respect on or as of the date made
or deemed made.
4. Default in the observance or per-
formance of any agreement (other
than as provided above) contained
in either Credit Agreement which
shall continue unremedied for 30
days except that there shall be no
grace period for breaches of the
financial covenant (provided if the
Company is in compliance with such
covenant (on a pro forma basis)
prior to time required to be
reported to the Lenders, then no
default shall be deemed to have
existed).
5. Any one or more judgments (not paid
when due or covered by insurance)
in excess of $100,000,000 are
rendered against the Company or any
of its subsidiaries and remain
undischarged, unstayed or unbonded
pending appeal for 30 days.
6. Other usual defaults, including
-11-
<PAGE>
insolvency and bankruptcy defaults.
7. Either (i) a "person" or "group"
(within the meaning of Sections
13(d) and 14(d)(2) of the Securi-
ties Exchange Act of 1934) becomes
the "beneficial owner" (as defined
in Rule 13d-3 under the Securities
Exchange Act of 1934) of more than
50% (25% after the Effective Date)
of the then outstanding voting
stock of the Company or (ii) a
majority of the Board of Directors
of the Company shall consist of
individuals who are not Continuing
Directors.
"Continuing Directors" means, as of
any date, (i) individuals who on
the date two years prior to such
date were members of the Company's
Board of Directors and (ii) any new
Director whose nomination for
election by the Company's
shareholders was approved by a vote
of at least 75% of the Directors
then still in office who either
were Directors on the date two
years prior to such date or whose
nomination for election was
previously so approved.
VII. Other Terms:
-----------
Transfer The Lenders may sell, assign or
Provisions: otherwise transfer all or any part of
their Loans, Commitments and other
rights and duties to one or more other
financial institutions; provided,
--------
however, that any such sale, assignment
-------
or transfer shall be subject to the
consent of the Company and the
Administrative Agent (in each case,
which consent shall not be unreasonably
withheld) if any such sale, assignment
or transfer is to any financial
institution that is not a Lender or an
affiliate of a Lender; and provided
--------
further, that any such sale, assignment
-------
or transfer relating to the Credit
Facilities shall be made with respect to
both the A Credit Facility and the B
Credit Facility, on a pro rata basis.
--- ----
Each partial assignment shall be in an
-12-
<PAGE>
amount equal to at least $25,000,000,
or, if less, the entire amount of the
assignor Lender's Commitment.
In addition, the Lenders may at the time
without the consent of the Company grant
participations in all or any part of
their Loans, Commitments and other
rights and duties to one or more other
financial institutions, subject to
customary restrictions on voting rights.
Majority Lenders with majority of Aggregate
Lenders: Commitments.
Governing Law: State of New York. All documentation
for the Credit Facilities to be prepared
by White & Case, counsel to the
Administrative Agent.
-13-
<PAGE>
SCHEDULE I
----------
PRICING GRID
------------
The Applicable Facility Fee, Applicable Eurodollar Margin, Applicable CD Margin
and Applicable ABR Margin at any time will be determined based on the highest
Category set forth below for each of the Credit Facilities for which the
Company meets either of the criteria set forth below under such Category (the
highest category being Category A).
I. A Credit Facility
- ---------------------
Applicable Applicable Applicable Applicable
Facility Eurodollar CD ABR
Criteria Fee Margin* Margin* Margin*
-------- ---------- ---------- ---------- ----------
Category A:
AAA or Aaa .05% .125% .25% .0%
--
Category B:
AA or better or .05% .15% .275% .0%
--
Aa2 or better
Category C:
A- or better or .08% .22% .345% .0%
--
A3 or better
Category D:
BBB or better or .10% .30% .425% .0%
--
Baa2 or better
Category E:
BBB- or below or .125% .375% .50% .0%
--
Baa3 or below
<PAGE>
SCHEDULE I
Page 2
II. B Credit Facility
- ----------------------
Applicable Applicable Applicable Applicable
Facility Eurodollar CD ABR
Criteria Fee Margin* Margin* Margin*
-------- ---------- ---------- ---------- ----------
Category A:
AAA or Aaa .075% .10% .225% .0%
--
Category B:
AA or better or .08% .12% .245% .0%
--
Aa2 or better
Category C:
A- or better or .10% .20% .325% .0%
--
A3 or better
Category D:
BBB or better or .15% .25% .375% .0%
--
Baa2 or better
Category E:
BBB- or below or .20% .30% .425% .0%
--
Baa3 or below
______________________
* The Applicable Eurodollar Margin, Applicable CD Margin and Applicable ABR
Margin set forth above for each of the Credit Facilities shall be increased by
the amounts set forth below at any time that any of the Categories set forth
below is in effect and outstanding Loans exceed 66% of the Aggregate
Commitments:
Category A-.0%, Category B-.05%, Category C-.075%, Category D-.10% and
Category E-.125%
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
AMERICAN HOME PRODUCTS )
CORPORATION, a Delaware Corporation, )
and AC ACQUISITION CORP., a )
Delaware Corporation, ) Civil Action
) Docket No. 94-______P
Plaintiffs, )
)
v. )
)
AMERICAN CYANAMID COMPANY, a )
Maine Corporation, ALBERT J COSTELLO, )
FRANK V. ATLEE, DAVID M. CULVER, )
ALLAN R. DRAGONE, SIR RONALD )
HALSTEAD, ARNOLD J. LEVINE, )
PAUL W. MACAVOY, VINCENT T. )
MARCHESI, GEORGE J. SELLA, JR., )
and ANNE WEXLER. )
)
)
Defendants. )
COMPLAINT FOR DECLARATORY JUDGMENT AND INJUNCTIVE RELIEF
Plaintiffs American Home Products Corporation and AC Acquisition Corp.
(referred to collectively hereafter as "AHP"), by their undersigned attorneys,
allege as follows:
Nature of Action
----------------
1. This action seeks declaratory as well as injunctive relief in
connection with an offer (the "Tender Offer") AHP announced on August 9, 1994
for all outstanding shares of Defendant American Cyanamid Company ("Cyanamid").
1
<PAGE>
2. Cyanamid's incumbent directors and management stand mute in the face
of repeated overtures by AHP seeking a negotiated business combination of the
two companies. On August 2, 1994, John R. Stafford, Chairman and Chief
Executive Officer of AHP, wrote a letter to Albert J. Costello, Chairman and
Chief Executive Officer of Cyanamid, proposing an all-cash, all-shares
acquisition of Cyanamid by AHP. That letter stated AHP's desire "to enter into
immediate discussions with [Cyanamid's] directors, management and advisors to
answer any questions" about the proposal.
3. The following day, on August 3, 1994, Mr. Stafford wrote again to Mr.
Costello, indicating his "desire to conclude a friendly merger of AHP and . . .
Cyanamid" and proposing a meeting to "talk about how we might structure the
merger of our companies on a negotiated basis."
4. Cyanamid has not responded to either of Mr. Stafford's letters or any
other communications aimed a commencing substantive discussions with respect to
a merger between AHP and Cyanamid. Cyanamid's sole published comment with
respect to AHP's proposal was that it would consider AHP's premium offer "in due
course."
5. Notwithstanding AHP's continued desire to conclude a negotiated
transaction, Cyanamid's lack of a constructive response combined with the myriad
market reports about Cyanamid's pursuit of possible alternative transactions led
AHP to announce its Tender Offer in order to ensure that its $95 premium bid
would be brought to Cyanamid's shareholders.
6. Pursuant to the Tender Offer, AHP seeks to purchase for cash all
outstanding shares of common stock (including the associated preferred stock
purchase rights) of Cyanamid at $95 per share. The price AHP is offering
Cyanamid shareholders represents a premium of over 50% over the reported closing
price of Cyanamid's Common Stock on August 1, 1994, the day before AHP offered
to acquire Cyanamid, and a premium of 125% over the $42 1/4 reported closing
sale price of
2
<PAGE>
Cyanamid's common stock as recently as March 14, 1994. That closing price
itself was more than 50% higher than the trading levels of Cyanamid's shares
less than six months earlier. The Tender Offer is made in contemplation of a
business combination between Plaintiffs and Cyanamid at $95 per share (the
"Merger"). The Tender Offer is not "front-end loaded" -- that is, the
consideration it offers is not part cash and part stock and it does not offer a
higher price than non-tendering shareholders would receive in the Merger. The
Tender Offer is also not coercive, since it offers all cash consideration for
all shares and treats all Cyanamid shareholders equally.
7. Consistent with the requirements of Sections 14(d)-(e) of the
Securities Exchange Act of 1934 (also referred to as the Williams Act), 15
U.S.C. Sec. 78n(d)-(e), and the rules and regulations promulgated thereunder by
the Securities and Exchange Commission (the "SEC"), the Tender Offer, a
significant transaction in interstate commerce, is scheduled to expire on
September 7, 1994.
8. Cyanamid's shareholders -- the owners of the company -- have an
undeniable right to consider AHP's premium offer without interference by
Defendants and to accept the offer if they deem it to be in their own best
interests. AHP's all-cash, equal treatment premium bid offers Cyanamid
shareholders an important investment opportunity they might very well deem
beneficial. The Tender Offer in no way threatens the interests of Cyanamid or
its shareholders. Consequently, there is no justification for interference by
the Defendants with AHP's premium bid.
9. In light of Cyanamid's failure to respond to AHP's proposals for a
negotiated transaction, and in light of Cyanamid's extensive history of
incumbency protection, as evidenced by an unusually restrictive array of
defensive weapons in provisions of Cyanamid's by-laws (the "By-Laws") and
Restated Articles of Incorporation (the "Charter"), and by extensive lobbying
and other legislative activities, Cyanamid's incumbent directors and management
are likely to persist in making determined and continuing efforts to deprive
Cyanamid shareholders of the substantial benefits AHP's
3
<PAGE>
bid provides.
10. The present federal action is brought to oppose and prevent such acts.
This action seeks declaratory and injunctive relief concerning (i) the
constitutionality of the Maine Business Combination Act, Me. Rev. Stat. Ann.
tit. 13-A, Sec. 611-A (1988) (the "Maine Business Combination Act"); (ii) the
applicability of similar legislation adopted by states other than Maine either
as "business combination" statutes, "control share" statutes or otherwise (the
"Foreign State Business Combination Acts"); and (iii) the legality of a number
of measures and of conduct through which Cyanamid management and directors, in
derogation of their duty to exercise informed and loyal business judgment,
improperly endeavor to prevent Cyanamid shareholders from considering freely and
on its merits AHP's all-cash, equal treatment premium offer.
The Maine Act
- -------------
11. The Tender Offer is conditioned upon, among other things, the
enjoining of the operation of the Maine Business Combination Act or other relief
or actions satisfying Plaintiffs that the Act will not serve as an impediment to
the Tender Offer. This condition is necessitated by the fact that the Act would
impose a five-year bar to the effectuation of any second-step merger between AHP
and Cyanamid absent approval by the incumbent board of Cyanamid.
12. While purporting to regulate solely the merger component of a tender
offer transaction, the Act, in reality, forecloses the tender offer itself. The
inevitable, practical effect of the five-year moratorium on mergers is to
significantly deter, if not preclude altogether, the making of a tender offer.
Few, if any, companies would be willing or able to invest billions of dollars to
acquire another company's stock without the corresponding ability to conclude a
merger. And few, if any, financial institutions would be willing to provide
financing for such a transaction.
13. By granting existing management effective power to block tender
offers, the Maine
4
<PAGE>
Business Combination Act irreconcilably conflicts with the Williams Act, 15
U.S.C. Sec.Sec. 78m(d) and 78n(d)-(e). The Williams Act seeks to regulate
tender offers in a comprehensive and neutral fashion, favoring neither an
offeror nor incumbent management. The structure and content of the Maine
Business Combination Act, in contrast, overwhelmingly favors incumbent
directors, giving them a virtual veto over any offer they do not approve. The
Maine Business Combination Act is one of the most restrictive statutes of its
kind and, unlike other states' laws, contains no provision exempting
transactions that are supported by the vast majority of a company's
shareholders. As a result, the Maine Business Combination Act is preempted by
federal law and violative of Article VI, Clause 2 (the Supremacy Clause) of the
United States Constitution.
14. In addition, the Maine Business Combination Act violates Article I,
Section 8, Clause 3 (the Commerce Clause) of the United States Constitution.
The Tender Offer constitutes an interstate transaction of billions of dollars.
If the Maine Business Combination Act is applied to the Tender Offer and Merger,
the burden on interstate commerce will clearly be excessive in relation to the
limited and local interest that the Act purports to serve.
Other State Statutes
- --------------------
15. This action also seeks relief against business combination provisions
enacted by a number of states other than Maine that purport to regulate the
internal affairs of Cyanamid, a Maine corporation. Subject to the
constitutional constraints set forth below, Maine is the only state possessing
authority to regulate Cyanamid's internal corporate affairs. Nevertheless, a
number of states have adopted anti-takeover legislation purporting to control
the internal affairs of out-of-state companies such as Cyanamid by, among other
things, purporting to control the ability of a tender offeror to make a tender
offer for the shares of Cyanamid; the ability of such a tender offeror to vote
shares sold to it during a tender offer; and the ability of such a tender
offeror to merge or otherwise
5
<PAGE>
combine with Cyanamid after a tender offer.
16. Any such Foreign Business Combination Act, if applied to the Tender
Offer, would substantially and unconstitutionally burden interstate commerce.
Indeed, the substantial burden of attempting to comply with those multiple and
potentially inconsistent systems of state regulation will unconstitutionally
burden the right of Plaintiffs to complete the Tender Offer and the right of
Cyanamid's stockholders to consider and accept the Tender Offer. Thus, if
applied to the Tender Offer, these Acts would conflict with the Williams Act and
violate the Commerce Clause, the Full Faith and Credit Clause, the Due Process
Clause, and the Supremacy Clause of the United States Constitution.
17. In order to avoid the unconstitutional application of inconsistent
statutes to the Tender Offer and to eliminate the uncertainty concerning the
laws with which Plaintiffs must comply to complete the Tender Offer and Merger,
Plaintiffs also seek a judgment (a) declaring that any purported application of
any Foreign Business Combination Act to the Tender Offer violates the United
States Constitution and the Williams Act; and (b) enjoining defendants from
commencing any action, claim or proceeding in order to invoke any Foreign
Business Combination Act with respect to the Tender Offer.
6
<PAGE>
18. Finally, Plaintiffs also seek this Court's intervention to restrain
Defendants from deploying one or more of the many defensive measures through
which Cyanamid's directors have vested themselves with absolute veto power over
any potential acquiror's offer and from making any changes or amendments to
Cyanamid's By-Laws or Charter that would impede or prevent the Tender Offer. In
the context of AHP's offer, those defenses have no legitimate purpose and will
only serve to stop AHP's shareholders from considering a very lucrative, premium
offer.
Parties
-------
19. Plaintiff American Home Products Corporation is a Delaware corporation
with its principal place of business in Madison, New Jersey. AHP is an
integrated manufacturer and distributor of a wide variety of pharmaceutical,
medical and health care products. AHP is a holder of 10,000 shares of Cyanamid
common stock.
20. AHP's common stock is registered with the SEC and is listed and traded
on the New York Stock Exchange.
21. Plaintiff AC Acquisition Corp. is a Delaware corporation, which is a
wholly- owned subsidiary of American Home Products Corporation.
22. Defendant Cyanamid is a Maine corporation with its principal executive
offices in Wayne, New Jersey. Upon information and belief, 89,754,355 shares of
Cyanamid stock are outstanding. Cyanamid is a manufacturer and distributor of a
wide variety of pharmaceutical and agricultural products. Upon information and
belief, Cyanamid has no material presence in Maine except for its appointed
agent; it does not have any significant number of employees in Maine and no
significant facilities or offices in Maine.
23. Cyanamid's common stock is registered with the SEC and is listed and
traded on the New York Stock Exchange.
7
<PAGE>
24. Defendant Albert J. Costello, is Chairman of the Board and Chief
Executive Officer of Cyanamid.
25. Defendant Frank V. AtLee is President of Cyanamid and a Director of
Cyanamid.
26. Defendants David M. Culver, Allan R. Dragone, Sir Ronald Halstead,
Arnold J. Levine, Paul W. MacAvoy, Vincent T. Marchesi, George J. Sella, Jr.,
and Anne Wexler are Directors of Cyanamid.
27. The above-named individual defendants (the "Director Defendants"), as
members of the Board of Directors of Cyanamid, owe the highest fiduciary duties
of loyalty and care to Cyanamid shareholders.
Jurisdiction and Venue
----------------------
28. This action arises under the Commerce Clause (Art. I, Sec. 8, cl. 3),
the Supremacy Clause (Art. VI, cl. 2), and the Fourteenth Amendment to the
United States Constitution; the Williams Act, Sec.Sec. 14(d)-(e) and 28 of the
Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. Sec.Sec.
78n(d)-(e) and 78bb, the rules and regulations promulgated thereunder by the
SEC, 17 C.F.R. Sec. 240.14d-1, et seq., and the federal Declaratory Judgments
------
Act, 28 U.S.C. Sec. 2201. Further, this action invokes the Court's supplemental
jurisdiction pursuant to 28 U.S.C. Sec. 1367.
29. Jurisdiction over this action is conferred on the Court by Sec. 27 of
the Exchange Act, 15 U.S.C. Sec. 78aa (federal securities laws), and under 28
U.S.C. Sec.Sec. 1331 (federal question), and 1337 (interstate commerce).
30. Venue is proper in this district pursuant to Sec. 27 of the Exchange
Act, 15 U.S.C. Sec. 78aa and 28 U.S.C. Sec. 1391.
FACTUAL BACKGROUND
------------------
8
<PAGE>
The Williams Act's Regulation of Interstate Tender Offers
- ---------------------------------------------------------
31. The Williams Act establishes a comprehensive, uniform system for
regulating interstate tender offers. In enacting the Williams Act, Congress
unequivocally recognized the economic benefits created by tender offers, which
include providing investors with an opportunity to sell their shares at
advantageous premiums over prevailing market prices and/or providing a mechanism
for the removal of entrenched management failing to generate maximum returns on
shareholders' equity investments.
32. The Williams Act reflects Congress' judgment and philosophy that
shareholders themselves should be able to determine when it is in their best
interests to tender their shares to an offeror. Thus, the Williams Act
deliberately strikes a neutral balance, favoring neither an offeror nor
incumbent management, so that shareholders' interests receive maximum
protection.
33. To achieve these ends, the Williams Act requires that shareholders be
given specific information deemed by the SEC to be material to their intelligent
decision to sell their securities or to decline an offer. Removing all
artificial barriers to the exercise of shareholder choice, the Williams Act is
specifically designed to enable shareholders to take advantage of tender offers
that maximize their economic interests.
34. Pursuant to its authority under Sec. 23(a) of the Exchange Act, the
SEC has promulgated comprehensive rules and regulations governing interstate
tender offers in furtherance of Congress' purposes. The SEC regulations are
designed to "ensure a balance between the interests of the person making a
tender offer and the management of the company whose securities are being sought
while providing disclosure and substantive protections to shareholders making
investment decisions." (Exchange Act Release No. 1).
Statutory Provisions That the Director Defendants
May Try to Invoke to Retain Control of Cyanamid
- -------------------------------------------------
9
<PAGE>
The Maine Business Combination Act (Sec. 611-A)
--------------------------------------------
35. The Maine Business Combination Act creates a bar to any "business
combination" between an "interested stockholder" and a "domestic corporation"
(i.e., a corporation like Cyanamid, whose shares "are formed under the laws of
Maine") for a period of five (5) years from the date that the interested
stockholder first acquires 25% of the corporation's stock. Generally, an
"interested stockholder" is any person or entity that is the beneficial owner,
directly or indirectly, of 25% or more of the outstanding voting stock of a
domestic corporation, or is an affiliate or associate of a domestic corporation
and at any time during the 5 year period prior to the date in question was the
beneficial owner of 25% or more of the outstanding shares of that domestic
corporation.
36. The five-year prohibition referred to in the paragraph above is
automatic unless either:
(a) the business combination is approved by the board of directors of the
domestic corporation prior to the date that the interested stockholder
-----
first acquires 25% of the corporation's stock; or
(b) the business combination is approved by the board of the domestic
corporation after the date the interested stockholder acquires 25% of
the corporation's stock and is authorized by the affirmative vote of
---
at least a majority of the outstanding voting stock not beneficially
----------------
owned by the interested stockholder; any affiliate or associate of the
----------------------------------------------------------------------
interested stockholder; or by persons who are either directors or
-----------------------------------------------------------------
officers and also employees of the corporation.
----------------------------------------------
10
<PAGE>
The effect of the Maine Business Combination Act is to permit incumbent
management and directors, rather than the shareholders as a whole, to decide
whether a tender offer may proceed whenever -- as is virtually always the case -
- - a tender offeror contemplates a subsequent merger.
37. Shareholders are not authorized under the Maine Business Combination
Act to avoid the application of the Act even as to tender offers that they
overwhelmingly desire to see consummated. Instead, in all instances in which an
offeror contemplates a merger, the Act vests in the incumbent directors the
power to determine whether shareholders should be given the opportunity to
consider the merits of a tender offer. Even if a tender offeror receives
director approval after it becomes an interested stockholder, the offeror must
also obtain approval from a majority of the very shareholders that declined to
--------
tender their shares.
38. The Maine Business Combination Act, as applied in this case, is
patently inconsistent with federal law as embodied in the Williams Act and the
SEC regulations promulgated thereunder and imposes an impermissible burden on
interstate commerce. The Act operates as a substantial deterrent to the Tender
Offer. The Act will deprive Plaintiffs of the ability to effect, among other
things, a merger or other significant transaction involving the assets of
Cyanamid unless Plaintiffs obtain the prior approval of the incumbent directors,
even if the shareholders overwhelmingly tender to Plaintiffs the vast majority
of the shares. The Act thereby impedes Plaintiffs from exercising effective
control over the corporation. As a practical matter, in order for virtually any
tender offer, including this Tender Offer, to succeed economically, the tender
offeror must be able to control the acquired corporation's assets, including
through a merger or other business combination, shortly after consummation of
the offer. The Maine Business Combination Act is designed to -- and does --
deprive Plaintiffs of that crucial ability.
11
<PAGE>
39. The Maine Business Combination Act thereby interferes with the conduct
of tender offers and eliminates the most fundamental rights of shareholders to
decide the fate of their company and to exercise the rights protected and
fostered by the Williams Act. The Maine Business Combination Act decidedly and
impermissibly tips the balance in this control contest in favor of entrenched
management.
Foreign Business Combination Acts
---------------------------------
40. Several other states have adopted statutes that purport to restrict
both the right of Cyanamid's stockholders to vote their stock and the right of
Cyanamid to engage in certain business combinations. These rights are core
"internal corporate affairs" of Cyanamid in which states other than Maine have
no constitutionally cognizable interest and into which states other than Maine
may not constitutionally intrude. Foreign Business Combination Acts, if applied
to the Tender Offer and Merger, would exceed federal constitutional constraints
on state power. Nonetheless, Defendants may seek to invoke these statutes in
order to block Plaintiffs' Tender Offer or the Merger.
Additional Defensive Weapons that the Director Defendants
Have Engrafted onto Cyanamid's Charter and By-Laws
- --------------------------------------------------
Defendants' One-Share/Six Month Director Requirement
----------------------------------------------------
41. Article II, section 2.01 of Cyanamid's By-Laws provides, in pertinent
part:
None but holders of at least one share of Common Stock registered in
their own names on the books of the Company for a period of at least
six months prior to the date of their election shall be eligible for
election or shall retain their seats as Directors; provided that the
requirement that such ownership of shares shall extend for a period of
six months prior to election may be waived by vote of the Board of
Directors.
(Emphasis added).
42. This extraordinary provision allows the Director Defendants to prevent
the election of
12
<PAGE>
new directors who may favor a change of control transaction that would unseat
incumbent management.
43. Cyanamid's Board of Directors conceded as much in a 1985 proxy
statement, which listed the foregoing "One Share/Six Month" requirement as one
of "several" by-law provisions "which may have the effect of impeding attempts
to change control of the Board of Directors."
44. The One Share/Six Month requirement serves no other purpose than to
inhibit efforts to replace incumbent directors. A share ownership requirement,
let alone a requirement that one share be registered in a director's own name,
clearly bears no imaginable, much less reasonable, relationship to a person's
qualifications to serve as a director.
45. In fact, Cyanamid and the Director Defendants have waived the One
Share/Six Month restriction in the past.
The 80% Charter Provision
-------------------------
46. In the spring of 1985, Cyanamid's directors erected another barrier to
any transactions that threatened their control over the company. The directors
recommended to their shareholders that they amend the Charter to add an Article
Six -- a provision that would drastically impair a wide variety of business
combinations, including a sale or merger of Cyanamid, unless the transaction was
either approved by the incumbent directors or received a favorable vote from 80%
of the voting power of all of the outstanding shares of the company.
47. On April 15, 1985, 27,791,403 shares, approximately 57% of the
company's 48,664,372 total outstanding shares, were voted in favor of Article
Six and the measure was
13
<PAGE>
adopted. 10,032,121 shares, representing over 20% of the Cyanamid's outstanding
shares, were voted in opposition to the Charter amendment.
48. Pursuant to Article Six, applicable transactions not receiving the
blessing of incumbent management or an 80% shareholder vote are subject to a
complex array of price and procedural requirements, key elements of which are
beyond the control of the offeror. Other portions constrain the bidder's
conduct after the closing of the offer, such as the requirement that the bidder
continue to pay dividends after the closing of the offer until the merger.
49. Under the pricing mechanism of Article Six, in order for a tender
offeror to consummate a merger, the offeror is required to pay all shareholders
an amount equal to the highest of, inter alia, the "fair market value per share"
----- ----
(i) on the date the offer was announced; or (ii) on the date on which the
offeror became the beneficial owner of more than 15% of the Company's
outstanding shares. Article Six defines "fair market value" to be the highest
closing sale price of the stock during the 30-day period prior to the date in
question.
50. Frequently, a tender offeror does not acquire more than 15% of an
acquired company's stock until the tender period has expired and the offeror
purchases or "takes down" the tendered shares. Such will be the case if AHP's
Tender Offer is allowed to proceed. At the same time, it is very possible for
the market price of the shares of a company that is subject to a tender offer to
rise above the tender offer price during the pendency of the offer and then fall
-----
back if no alternative transaction surfaces.
51. In this way, Article Six's so-called "fair price" provision really
acts as a "random price" provision, rendering it impossible for a tender offeror
to know the required price of its own merger until all shares have already been
tendered into the offer. As a result, a tender offeror subject to Article Six's
pricing requirements must incur the significant expense involved in making a
tender
14
<PAGE>
offer and wait until the time for tendering shares has expired before learning
whether it will be able to conclude the transaction.
52. Under Article Six, if 79% of Cyanamid's shareholders are in favor of a
merger, and the Board does not favor the merger, the shareholders may be
powerless to effectuate that merger by replacing the Board. That is because
approval by "disinterested directors", i.e., directors who were in office before
----
the subject business combination was proposed, is required to exempt that
transaction from the 80% or pricing requirements. Thus, even if a majority of
the Board is replaced by truly independent directors who are not at all
affiliated with, but who are nominated by, the interested stockholder, Article
Six prevents that majority from approving a merger. Instead, the power to
approve a merger that is favored by a majority of the shareholders remains with
the minority of the directors.
53. In seeking to convince shareholders to incorporate Article Six into
Cyanamid's Charter, the company's directors touted the provision as a means to
ensure that all shareholders were treated equally in the event of a "multi-step
attempt to gain control of the Company." 1985 Proxy Statement issued by
Cyanamid Board of Directors at 6. The proxy materials that Cyanamid used to
solicit votes before the April 1985 Annual Meeting stated that Article Six would
provide protection against "two-tiered" or "coercive" measures by
"discourag[ing] purchasers whose objective is to take over the Company at a
relatively cheap price, since acquiring the remaining equity interest would not
be assured unless the requirements of [Article Six] were satisfied." Id. at 7-
---
8.
54. The Board further represented that adoption of the amendment was
supported by the following considerations:
15
<PAGE>
In recent years, purchases of controlling interests frequently
have been followed by Business Combinations in which the
purchaser has paid a lower price than it paid in acquiring its
original controlling interest and has paid that lower price in a
different, less desirable form of consideration, usually
securities of the purchaser that do not have an established
trading market.
* * *
In many cases, smaller long-term stockholders receive a lower
price and a less desirable form of consideration paid in the
second-step merger. Moreover, the Board believes that some two-
tier offers are structured to be inherently coercive and unfair
in that they pressure the long-term investor either to sell out
quickly at what might be an inadequate price or to run the risk
of having his shares become, by virtue of there being a majority
stockholder, far less salable and far less desirable as an
investment.
Id. at 7.
- ---
55. Thus, according to what Cyanamid's directors told the company's
shareholders at the time, Article Six was specifically designed to defend
against offers that threatened differential treatment among shareholders. The
provision, as advertised, was not intended for the purpose of frustrating all-
---
cash, all-shares, equal treatment premium tender offers, such as AHP's offer,
where a clear majority of the holders wish to accept the offer. Indeed, in its
proxy materials, Cyanamid expressly represented to its shareholders:
The provisions of the Amendment would not discourage persons who
are willing to seek control by acquiring 80 percent of the Voting
Stock or who are prepared to pay the same price to all
------------------------------------------------
stockholders.
-------------
Id. at 8 (emphasis added).
- ---
56. AHP's Offer to Purchase expressly states that it is prepared to pay
the same price to all stockholders. The Tender Offer is for "all of the
outstanding shares" of Cyanamid at $95 per share. Offer to Purchase at 1. The
Offer to Purchase also provides that any shares not
16
<PAGE>
tendered will "be converted into the right to receive in cash the price per
Share paid by [AHP] pursuant to the Offer." Id.
---
The Poison Pill
---------------
57. In soliciting votes for adoption of the 80% Charter Provision,
Cyanamid's Board of Directors told the shareholders that it had "no present
intention" of adopting a "poison pill." One year later, however, in March 1986,
the directors supplemented their arsenal of defensive devices by adopting a
share purchase rights plan, or "poison pill" (the "Poisin Pill"), which also
precludes the consummation of any tender offer or business combination not
approved by the directors. The Poison Pill, which was adopted without a vote of
-------
Cyanamid's owners -- the shareholders -- is designed to inflict massive economic
penalties on a potential acquiror and to prevent the owners of Cyanamid from
accepting an offer to purchase their shares without the prior approval of the
incumbent Board. Thus, in implementing the Poison Pill, the directors bestowed
upon themselves an unbridled veto power over any tender offer, including a non-
coercive, fully-priced, all-cash, all shares offer such as AHP's.
58. Pursuant to the Poison Pill, a dividend of one preferred stock
purchase right (a "Right") per share of common stock was distributed to each of
Cyanamid's shareholders of record as of March 25, 1986. As the result of a 2
for 1 stock split on June 12, 1987, each stock purchase right was adjusted so
that each share of common stock was thereafter accompanied by a one-half Right.
59. Each Right ostensibly entitles the registered holder to purchase from
Cyanamid a unit consisting of one two-hundredth of a share (a "Unit") of Series
A Junior Participating Preferred Stock, $1.00 par value, at a price of $200 per
unit. The prohibitive exercise price, however, of $200 per Unit (equal to
$40,000 for one preferred share) makes it clear that the Rights were never
intended to provide the holders thereof with a meaningful opportunity to
purchase the preferred stock
17
<PAGE>
authorized under the Poison Pill. Instead, the directors instituted the Poison
Pill so that its adjustment features described below can be deployed to punish
any interested offeror whom the directors disfavor by drastically diluting
Cyanamid's outstanding shares or ravaging the capital structure of the potential
acquiror.
60. The Rights issued pursuant to the Poison Pill are not exercisable or
transferable apart from Cyanamid common stock until after the "Distribution
Date." The Distribution Date occurs upon the earlier of (i) ten days after a
person or group announces that it has acquired beneficial ownership of 20% or
more of Cyanamid's outstanding common shares; or (ii) ten business days after
the commencement or announcement of a tender offer for more than 30% of the
company's outstanding shares, unless the Board of Directors takes action to
delay the occurrence of the Distribution Date.
61. Upon the Distribution Date, the Rights become exercisable and can be
transferred separately from the shares of common stock to which they were
linked.
62. After the Distribution Date, certain events, one or more of which
would inevitably occur in an attempted acquisition of Cyanamid, trigger "flip-
in" or "flip-over" rights that allow Cyanamid's shares and/or the shares of an
acquiring company to be sold at deeply discounted prices.
63. The "flip-in" rights are triggered if:
(i) Cyanamid is the surviving corporation in a merger and its common
stock is not changed or exchanged;
(ii) a person or entity becomes the beneficial owner of 50% or more of
Cyanamid's outstanding shares; or
(iii) a reclassification of securities, recapitalization of
Cyanamid or merger or consolidation of Cyanamid with any of its subsidiaries
occurs after a person or entity has acquired 20% of Cyanamid's shares.
18
<PAGE>
64. Upon the happening of any of these "flip-in" events, all Rights
holders, except the potential acquiror, are entitled to receive four shares of
-----------------------------
common stock for 25% of the then market price of the stock. Any Rights held by
the potential acquiror become void. At the same time, all other Right holders
are entitled to purchase Cyanamid's common stock at one-fourth of its then
----------
market price. In this way, the "flip-in" feature flagrantly discriminates
against an acquiror by diluting its holdings and increasing exponentially the
number of shares the acquiror would have to purchase in order to consummate a
merger.
65. The "flip-over" rights are triggered if:
(i) Cyanamid engages in a merger or other business combination in
which it is not the surviving corporation;
(ii) Cyanamid engages in a merger or other business combination in
which it is the surviving corporation, but in which its Common Stock is changed
or exchanged; or
(iii) 50% or more of Cyanamid's assets or earning power is sold or
transferred.
66. Upon the happening of any of these "flip-over" events, each holder of
a Right has the right to receive common stock of the acquiring company equal in
---------
value to two times the exercise price. In this way, the "flip-over" feature
subjects the acquiring company to a massive half-price sale of its own stock,
drastically impairing its capital structure.
67. The obvious purpose of the Poison Pill is to render an attempted
acquisition of Cyanamid financially impossible without the blessing of the
incumbent Directors. As Cyanamid
19
<PAGE>
itself explained in a Securities and Exchange Commission report on Form 8-A,
dated March 18, 1986:
The Rights have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the
Company without also acquiring a substantial number of Rights. The
Rights should not interfere with any merger or other business
combination approved by the Board . . . .
---------------------
68. Unless the Poison Pill is redeemed, Cyanamid's shareholders will be
deprived of the opportunity to decide whether they want to accept AHP's all-
cash, all-shares, equal-treatment tender offer. Recognizing the insurmountable
barriers posed by the Poison Pill, AHP has made its all-cash, all-shares premium
tender offer conditional upon the voluntary or court-ordered redemption or
removal of the Rights.
69. Cyanamid's Board has repeatedly represented to its shareholders that
the Poison Pill is intended to protect against "coercive or abusive takeover
tactics, such as two-tiered, partial or bust-up offers." Eg., Cyanamid Board's
----
1987 Proxy Statement at 20. Cyanamid's Board has further assured the company's
owners that the Poison Pill "should not affect any prospective offeror willing
to make an all cash offer at a full and fair price or to negotiate with your
Board." Id. Thus, the Poison Pill should not be deployed to block AHP's all-
---
cash, all-shares Tender Offer, which offers a premium price and which AHP has
repeatedly stated it is willing to negotiate with Cyanamid's Board.
70. The ability to remove the draconian effects of the Poison Pill and to
provide Cyanamid's shareholders with an opportunity to accept AHP's offer rests
solely in the hands of the Director Defendants, who, in devising the Poison
Pill, granted themselves the authority to redeem the Rights at $.02 per Right.
This power of redemption expires if it is not exercised by the thirtieth day
following the acquisition by any person or entity of at least 20% of Cyanamid's
outstanding shares.
71. While the Director Defendants may view Plaintiffs' offer as a threat
to their continued incumbency, there is no reasonable basis for concluding that
the Tender Offer poses a threat of any
20
<PAGE>
kind to the shareholders of Cyanamid. If those shareholders deem the Tender
Offer to be inadequate, they, the owners of Cyanamid, can just say no.
72. Indeed, the only risk of harm to the shareholders is that which would
result if the Director Defendants succeeded in employing the Poison Pill to
force Plaintiffs to withdraw their offer before the shareholders have the
opportunity to decide whether to accept it.
Plaintiffs and Cyanamid's Shareholders Will Suffer
Irreparable Injury if Injunctive Relief Is Not Granted
- ------------------------------------------------------
73. Unless preliminary and permanent injunctive relief is granted,
enjoining Defendants (a) from invoking the Maine Business Combination Act and/or
any Foreign State Business Combination Acts, (b) from employing one or more of
the above-described defensive weapons in order to deprive the Cyanamid
shareholders of an opportunity to reap the benefits of AHP's Tender Offer, and
(c) from altering or amending Cyanamid's By-Laws or Charter to hinder, impede or
prevent AHP's Tender Offer, both Plaintiffs and Cyanamid's shareholders will be
irreparably harmed.
74. In the absence of injunctive relief, Plaintiffs will be compelled to
terminate their efforts to acquire control of Cyanamid, which is a unique
business opportunity.
75. Absent injunctive relief, the shareholders of Cyanamid will also
suffer irreparable harm by being deprived of their rights (i) to remove
directors, (ii) to elect qualified directors, (iii) to otherwise exercise their
franchise in an effective manner; and (iv) to decide for themselves whether to
take advantage of a unique and valuable opportunity to maximize the return on
their investment.
76. Plaintiffs have no adequate remedy at law.
COUNT I
-------
(The Maine Business Combination Act, Sec. 611-A, Is
21
<PAGE>
Unconstitutional Because It Violates the Supremacy Clause)
77. Plaintiffs repeat and reallege the allegations set forth in Paragraphs
1 through 76 above as if set out in full.
78. The Supremacy Clause of the United States Constitution provides, in
pertinent part:
This Constitution, and the Laws of the United States which shall be made in
Pursuance thereof . . . shall be the supreme Law of the Land; and the
Judges in every State shall be bound thereby, any Thing in the Constitution
or Laws of any State to the Contrary notwithstanding.
U.S. Const., Art. VI, cl. 2.
79. The structure and intent of the Maine Business Combination Act
effectively frustrates the objectives of the Williams Act and the SEC rules and
regulations promulgated thereunder. The Williams Act provides that the success
or failure of an offer, otherwise in compliance with the comprehensive rules and
regulations set forth in the Williams Act and the SEC rules promulgated
thereunder, should be left to the judgment of shareholders and that neither the
prospective purchaser nor incumbent management should be favored.
80. The Maine Business Combination Act substantially frustrates these
objectives of the Williams Act and the SEC rules and regulations. The Maine
Business Combination Act:
(a) unfairly discourages acquisitions of stock, such as through the Tender
Offer, by affording incumbent management and directors of a domestic
corporation a powerful weapon with which to delay and possibly defeat
such acquisitions to the detriment of shareholders;
22
<PAGE>
(b) empowers the board of directors -- not the shareholders -- to derail a
tender offer by withholding approval of a planned business
combination, depriving shareholders of any opportunity to choose to
accept a particular tender offer;
(c) does not permit shareholders to evaluate the fairness of a tender
offer that contemplates a subsequent merger or other business
combination, but leaves that determination to management and
directors; and
(d) represents an attempt to assert the legislative power of the State of
Maine in a fundamentally inconsistent manner over a subject matter for
which the United States government has developed the governing,
comprehensive body of law and regulations.
81. The Maine Business Combination Act is therefore preempted by the
Williams Act. It is unconstitutional on its face and as applied to the Tender
Offer because it violates the Supremacy Clause of the United States
Constitution, Article VI, Clause 2, which accords supremacy to United States law
over conflicting state laws. The Act is, and therefore should be declared to
be, invalid, and its enforcement should be enjoined.
COUNT II
--------
(The Maine Business Combination Act Is Unconstitutional Because
It Violates the Commerce Clause)
82. Plaintiffs repeat and re-allege the allegations set forth in
Paragraphs 1 through 81 of this Complaint as if fully set forth herein.
83. The Commerce Clause of the United States Constitution provides that:
"Congress shall have the power . . . [t]o regulate commerce . . . among the
several states." U.S. Const., Art. 1, Sec. 8, cl. 3.
23
<PAGE>
84. The Maine Business Combination Act imposes a substantial and adverse
burden on interstate commerce because it:
(a) deters and/or substantially eliminates nationwide tender offers for
Maine corporations, except offers that are approved by incumbent
management;
(b) burdens AHP and other prospective tender offerors in their efforts to
buy securities from willing sellers located throughout the United
States;
(c) burdens shareholders throughout the United States in their efforts to
sell their shares at premium prices;
(d) substantially interferes with and diminishes access to national
securities markets; and
(e) impedes the injection into interstate commerce of billions of dollars
by means of tender offers and interferes with the efficient allocation
of economic resources.
85. These burdens imposed on interstate commerce pursuant to the Maine
Business Combination Act far outweigh any purported local benefits. In fact,
the Act provides little, if any, additional protection to shareholders beyond
the substantive protections and disclosure requirements of the Williams Act and
the SEC rules and regulations promulgated thereunder. To the extent that it
reduces or eliminates shareholder autonomy and entrenches existing management,
the Act is detrimental to the interests of shareholders.
86. The great majority of the shareholders of Cyanamid reside outside the
State of Maine. Upon information and belief, Cyanamid has no material presence
in Maine and, except for its appointed agent, does not have any significant
number of employees in Maine and maintains no significant facilities in Maine.
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87. While Maine, as the state of Cyanamid's incorporation, has the right
to regulate certain of Cyanamid's affairs, Maine has no legitimate interest in
regulating investment opportunities offered to residents of other states in
connection with interstate transactions such as the Tender Offer and Merger.
The burden imposed upon interstate commence by the Maine Business Combination
Act is substantial, while any benefit is modest or non-existent. Moreover,
those few Maine shareholders are already protected by the disclosure and anti-
fraud provisions of the Williams Act.
88. The Act is, and therefore should be declared to be, invalid, and its
enforcement should be enjoined.
COUNT III
---------
(Defendants Should Be Barred from Invoking the Foreign State Business
Combination Acts, Which, if Applied to the Tender Offer and Merger, Would
Violate the Commerce,
Full Faith and Credit and Supremacy Clauses)
89. Plaintiffs repeat and re-allege the allegations set forth in
Paragraphs 1 through 88 of this Complaint as if fully set forth herein.
90. This claim for relief arises under the Commerce Clause, the Full Faith
and Credit Clause, the Due Process Clause, and the Supremacy Clause of the
United States Constitution, U.S. Const. Art. I Sec. 8, cl. 3; Art. IV Sec. 1;
Amend. XIV Sec. 1; and Art. VI, cl. 2.
91. Because Cyanamid is a Maine corporation, any attempt by Defendants to
invoke a Foreign State Business Combination Act in connection with the Tender
Offer or Merger would create an unconstitutional burden on interstate commerce.
If applied to the Tender Offer or Merger, Foreign State Business Combination
Acts would impose substantial and adverse burdens upon interstate commerce,
including, but not limited to, the following:
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(a) inhibiting Plaintiffs from making a nationwide tender offer, as well
as from engaging in the proposed Merger with Cyanamid;
(b) depriving Cyanamid's stockholders throughout the United States of the
opportunity to sell their shares at a premium above the unaffected
market price in a transaction wholly in compliance with United States
law; and
(c) creating unnecessary, burdensome, and wasteful expenses for companies
engaged in interstate commerce and for persons wishing to use
interstate or national facilities as instrumentalities for the
purchase and sale of securities.
92. Under the decisions of the United States Supreme Court in Edgar v.
--------
MITE Corp., 457 U.S. 624 (1982), and CTS Corp. v. Dynamics Corp. of America, 481
- ---------- --------------------------------------
U.S. 69 (1987), the attempted regulation by states other than Maine of the
internal affairs of a Maine corporation, imposing the burdens on interstate
commerce described above, is constitutionally impermissible. Those burdens on
interstate commerce and the absence of any legitimate state interest prohibit
the application of Foreign State Business Combination Acts to the Tender Offer
or Merger.
93. The voting rights of Cyanamid's stockholders (including Plaintiffs)
are created and guaranteed by Maine law. Application of Foreign State Business
Combination Acts to the Tender Offer or Merger would alter those voting rights
or restrict them in ways that Maine law does not and, as such, fail to give full
faith and credit to Maine law.
94. The threat of inconsistent regulation created by Foreign State
Business Combination Acts and the burden of complying with those inconsistent
regulations will impermissibly impede the Tender Offer in a manner inconsistent
with the Williams Act. As a result, any attempt to apply any Foreign State
Business Combination Act to the Tender Offer
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and proposed Merger would conflict with the Williams Act and would thus violate
the Supremacy Clause of the United States Constitution.
COUNT IV
--------
(The One Share/Six Month Director Requirement
Is Unfair, Irrational and Contrary to
Public Policy and Should Be Declared Void)
95. Plaintiffs repeat and reallege the allegations set forth in Paragraphs
1 through 94 of this Complaint as if fully set forth herein.
96. Section 403(1)(E)(3) of the Maine Business Corporation Act provides,
in pertinent part, that a corporation's articles of incorporation shall set
forth any provisions which the incorporators elect to include, provided that:
Such provision relates to the business or affairs of the corporation,
or the rights or powers of its shareholders, directors or officers,
and, although not specifically authorized by this Act, is not
inconsistent with law or contrary to public policy.
97. Section 601 of the Maine Business Corporation Act provides, in
pertinent part:
The bylaws of a corporation may contain any provisions for the
regulation and management of the business and affairs of the
corporation which are not inconsistent with law or with the articles
of incorporation.
98. As a corporation's bylaws must be consistent with the corporation's
articles of incorporation, a corporation's bylaws must not be contrary to public
policy, unreasonable or arbitrary.
99. The bylaws of a corporation must be consistent with public policy,
reasonable and rational, not only in and of themselves, but also in their
practical application.
100. The statutory provision enabling the corporation's bylaws to prescribe
qualifications for its directors is subject to the limitation that such
prescriptions be fair, reasonable, and not be contrary to public policy.
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101. Article II, section 2.01 of the By-Laws of Cyanamid violates Maine
law, inasmuch as the One Share/Six Month director requirement is arbitrary and
irrational. The requirement bears no reasonable relation to a person's
qualifications to be a corporate director.
102. Article II, Section 2.01 arbitrarily excludes from the Board any
person who has held shares through a nominee, regardless of how long those
shares have been held:
None but holders of at least one share of Common Stock registered in
their own names on the books of the Company for a period of at least
six months prior to the date of their election ...
(Emphasis added). This requirement is entirely irrational and ignores the
common practice whereby shares are held by nominees.
103. Because this requirement drastically and arbitrarily limits the pool
of qualified directors with no corresponding benefit to the corporation, or,
alternatively, would impose an arbitrary six month delay on the shareholders'
exercise of their franchise, it is irrational, violative of public policy, and
contrary to the provisions of the Maine Business Corporations Act and should be
declared void.
COUNT V
-------
(The One Share/Six Month Restriction Is Not Authorized By
Section 702 of the MBCA and Is Fundamentally
Inconsistent With Section 707 of the MBCA)
104. Plaintiffs repeat and reallege the allegations set forth in Paragraphs
1 through 103 of this Complaint as if fully set forth herein.
105. Section 702 of the Maine Business Corporation Act grants corporations
the right to prescribe qualifications for their directors. In pertinent part,
Section 702 provides:
Unless the articles of incorporation or the bylaws so require,
the directors need not be residents of this State nor
shareholders of the corporation. The articles of incorporation
or the bylaws may prescribe other qualifications for directors.
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106. Section 702 of the Maine Business Corporation Act states the general
rule that directors need not be shareholders, unless the articles of
incorporation or bylaws of the corporation so require. The legislature has thus
recognized the limited right of a Maine corporation to require shareholder
status of its directors during their tenure. The Maine legislature has not,
-------------------
however, granted the corporation the right to require historic shareholder
--------
status of its directors.
107. If Plaintiffs acquired proxies representing 66 2/3% of Cyanamid's
shares, and therefore obtained an absolute right to remove the directors
pursuant to 13-A M.R.S.A. Sec. 707 (2), the Director Defendants' refusal to
waive the One Share/Six Month requirement would create an untenable situation
whereby shareholders with a statutory right to remove directors would be
effectively deprived of the ability to replace the removed directors with
qualified persons. The arbitrary limitations imposed by the One Share/Six Month
restriction are particularly damaging and inappropriate for directors of a
multi-billion dollar international corporation such as Cyanamid.
108. Article II, section 2.01 of the By-Laws of Cyanamid is invalid because
it establishes qualifications not permitted under state law and is fundamentally
inconsistent with the shareholders' inalienable right to replace directors.
COUNT VI
--------
(The Director Defendants' Refusal to Waive
the One Share/Six Month Requirement Constitutes a
Breach of their Fiduciary Duty)
109. Plaintiffs repeat and reallege the allegations set forth in Paragraphs
1 through 108 of this Complaint as if fully set forth herein.
110. The Director Defendants have the power to waive the requirement that
new directors must own Cyanamid shares for six months prior to their election.
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111. Based upon their extensive history of incumbency protection set
out above, there is a high likelihood that the Director Defendants would refuse
to waive the One Share/Six Month requirement under these circumstances. Such a
refusal would constitute a breach of the Director Defendants' fiduciary duties.
COUNT VII
---------
(Defendants' Attempt to Apply the 80% Charter Provision
to the Tender Offer or Merger Constitutes a Breach of
Their Fiduciary Duties)
112. Plaintiffs repeat and reallege the allegations set forth in Paragraphs
1 through 111 above as if set forth fully herein.
113. Article Six of Cyanamid's Charter requires an affirmative vote of at
least 80% of the voting power of the outstanding shares before Cyanamid can
engage in a business combination (i.e., a merger) with an interested
stockholder, unless that business combination is approved by a majority of
Cyanamid's directors who are not "an affiliate, representative, associate or
nominee of the interested stockholder."
114. Pursuant to their fiduciary duties, the Director Defendants are
obligated to render Article Six inapplicable to the AHP's proposed acquisition.
The directors are obligated to live up to their representations that Article Six
is intended only to deter two-tier and coercive offers, not all-cash, all-
shares, equal treatment premium offers such as AHP's. A refusal to do so would
be completely inconsistent with the representations made in the Board's 1985
Proxy Statement which, pursuant to federal law, were required to be accurate in
all material respects.
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115. The Director Defendants' refusal to render Article Six inapplicable
to the Tender Offer and Merger would also breach their fiduciary duties,
inasmuch as it would deprive Cyanamid's shareholders of the opportunity to reap
the benefit of Plaintiffs' premium offer.
COUNT VIII
----------
(The 80% Charter Provision Violates
Section 710 of the MBCA)
116. Plaintiffs repeat and reallege the allegations set forth in Paragraphs
1 through 115 above as if set forth fully herein.
117. Section 710(3) of the MBCA states that the "vote of a majority of the
directors ... shall be the act of the board of directors." Article Six of the
Charter violates Section 710(3) of the MBCA because it illegally confers the
Board of Directors' power to act upon a minority of the Board.
118. A majority of Cyanamid's shareholders may well be willing to sell
their stock pursuant to the Tender Offer and to give Plaintiffs their proxy vote
to replace the Board of Directors and to merge with Cyanamid. Article Six would
frustrate the democratic decision of that majority by granting paramount
authority to the "disinterested" directors who were entrenched on the Board
before Plaintiffs' Tender Offer was announced.
119. Article Six violates Section 710(3) of the MBCA because under Article
Six the vote of a majority of Cyanamid's duly elected directors, who happen to
be affiliated with an interested stockholder, can be invalidated by a vote of
the minority of directors.
COUNT IX
--------
(Failure to Redeem the Rights in the Present Circumstances
Constitutes a Breach by the Directors of Their Fiduciary Duties)
120. Plaintiffs repeat and reallege the allegations contained in Paragraphs
1 through 119 of this Complaint as if fully set forth herein.
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121. The Director Defendants, who vested themselves with the all-preclusive
power of the Poison Pill, and did so in the absence of a single shareholder's
vote and in derogation of their one-year earlier representation to the
shareholders, are bound by their fiduciary obligations to observe the highest
and most stringent duties of loyalty, care, candor and good faith in determining
how and when that power should be used. This is especially true in the context
of a proposed change-of-control transaction, which raises the specter that the
directors may be acting primarily in their own interests, rather than those of
the corporation and its shareholders.
122. Constituting as it does the ultimate corporate defense mechanism, the
directors are obligated not to use the Poison Pill to rebuff acquisition
proposals unless, after good faith and reasonable investigation, the Board has
reasonable grounds for believing that the proposal poses a real and substantial
threat to the shareholders.
123. Plaintiff has proposed an offer, in the Tender Offer, which treats all
Cyanamid shareholders equally and allows them to decide for themselves whether
to accept the substantial benefits of Plaintiffs' premium, all-cash, all-shares
offer. The Tender Offer constitutes no threat of any kind to Cyanamid or to
Cyanamid's shareholders.
124. Furthermore, the punitive consequences of the Poison Pill are
disproportionate to any conceivable threat posed by Plaintiffs' premium offer
that the Director Defendants could reasonably perceive.
125. Nonetheless, consistent with their long-standing practice of rebuffing
acquisition proposals and implementing drastic, all-preclusive defensive
devices, the defendants are likely to refuse to redeem the Rights in order to
give Cyanamid's shareholders an opportunity to accept the Tender Offer.
126. The refusal to redeem the Rights serves an improper purpose --
entrenchment of the
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defendants and Cyanamid's management -- at the direct expense of Cyanamid's
shareholders.
127. Failure to redeem the Rights in the present circumstances constitutes
a breach by the Director Defendants of their fiduciary duties.
COUNT X
-------
(Defendants Should Be Enjoined from Taking Any Further Action
to Prevent Cyanamid's Shareholders from Receiving the
Benefits of AHP's Tender Offer or Blocking the Merger)
128. Plaintiffs repeat and reallege the allegations set forth in Paragraphs
1 through 127 of this Complaint as if fully set forth herein.
129. As set out more fully above, Defendants have a long history of acts
which are intended to prevent the shareholders of the company from having a fair
and free opportunity to consider tender offers and to otherwise govern the
corporation democratically. These acts include changes in the by-laws and
Charter of the company, the creation of a draconian Poison Pill, without
shareholder approval, and extensive lobbying efforts.
130. Based upon this past conduct, there exists a substantial likelihood
that the Director Defendants will engage in similar conduct in the future
intended to thwart the Tender Offer and Merger.
131. Defendants and their assigns and successors, agents, employees,
attorneys, servants, and all persons acting in concert or participation with
Defendants should be enjoined from undertaking any act, including changing,
amending or otherwise altering the existing By-Laws and Charter of Cyanamid,
which acts have either the purpose or effect of impeding, restraining or
precluding the consummation of the Tender Offer and Merger, including the
ability
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of the shareholders to freely exercise their voting franchise in the context of
any solicitation of proxies or calls related to the Tender Offer or Merger.
132. Defendants and their assigns and successors, agents, employees,
attorneys, servants, and all persons acting in concert or participation with
Defendants should also be enjoined from commencing or participating in any legal
action or proceeding in any state or federal court, or before any state or
federal administrative agency, which in any manner seeks to affect, impede,
restrain, or concern in any manner the Tender Offer, the Merger, and all related
activities.
WHEREFORE, Plaintiffs pray that this Court:
(i) declare and adjudge that the Maine Business Combination Act is
unconstitutional and that it is null and void as applied;
(ii) preliminarily and permanently enjoin Cyanamid, its assigns and
successors, agents, employees, attorneys, servants, and all persons in active
concert or participation with it, from taking any actions to invoke, apply or
enforce the Maine Business Combination Act or from refusing to take actions that
may be necessary to effect a business combination between the parties;
(iii) declare and adjudge that the application of any Foreign
State Business Combination Act to the Tender Offer or to any business
combination between Plaintiffs and Cyanamid is unconstitutional;
(iv) preliminarily and permanently enjoin Defendants, their assigns
and successors, agents, employees, attorneys, servants, and all persons in
active concert or
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participation with them, from taking any actions to invoke, apply or enforce the
provisions of any Foreign State Business Combination Acts;
(v) preliminarily and permanently enjoin Defendants, their assigns
and successors, agents, employees, attorneys, servants, and all persons in
active concert or participation with them, from commencing any judicial
proceeding, in any forum other than this Court, that would require litigation,
by way of claim, defense or counterclaim, or any other claims, defenses, or
counterclaims that may be asserted in this lawsuit regarding the applicability
or validity of any state business combination statute, facially and as applied
to the Tender Offer or any business combination between Plaintiffs and Cyanamid;
(vi) declare and adjudge as unlawful and void the provision of
Cyanamid's Charter requiring that directors must have held shares for six months
prior to their election;
(vii) declare and adjudge that in the event that AHP obtain two
thirds of the shares of Cyanamid and announces its intention to discharge the
then current directors pursuant to 13-A M.R.S.A. Sec. 702(2), then the Director
Defendants' refusal to waive the requirement that new directors own shares for
six months prior to thief election of the Board would constitute a breach of the
then current Directors' fiduciary duty.
(viii) declare and adjudge the Director Defendants to be in breach
of their fiduciary duties if they fail to render Article Six of the Charter
inapplicable to the Tender Offer and Merger;
(ix) preliminarily and permanently enjoin the Director Defendants from
applying Article Six of the Charter to the Tender Offer or Merger;
(x) declare and adjudge as unlawful and void the 80% provision of
Cyanamid's Charter;
(xi) declare and adjudge the director defendants to be in breach of
their fiduciary
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duties if they fail to redeem the Rights in response to AHP's Tender Offer;
(xii) preliminarily and permanently enjoin the defendants from
honoring the Rights or from otherwise enforcing or amending or altering the
Rights Plan (except to redeem the Rights) or from adopting yet another Rights
Plan;
(xiii) preliminary and permanently enjoin the defendants to redeem
the Rights;
(xiv) enjoin Defendants and their assigns and successors, agents,
employees, attorneys, servants, and all persons in active concert or
participation with them, from refusing to take actions that may be necessary
under the Maine Business Combination Act to effect a business combination
between Plaintiffs and Cyanamid;
(xv) enjoin Defendants and their assigns and successors, agents,
employees, attorneys, servants, and all persons in active concert or
participation with them, from taking any action prohibited by applicable
provisions of state or federal law in an effort to improperly impede the Tender
Offer, or any act of any shareholder of Cyanamid to exercise its rights in
connection with the Tender offer and all related activities;
(xvi) enjoin Defendants and their assigns and successors, agents,
employees, attorneys, servants, and all persons in active concert or
participation with them, from commencing or participating in any legal action or
proceeding in any state or federal court outside of Maine, or before any state
or federal administrative agency, which in any manner seeks to affect, impede,
restrain or concern in any manner the Tender Offer, the Merger, and all related
activities; and
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(xvii) award Plaintiffs such other and further relief as the Court
shall deem just and proper, including reasonable attorneys' fees and other costs
and disbursements of this action.
________________________________
Peter R. Rubin (Bar Number 110)
John H. Montgomery (Bar Number 903)
David A. Soley (Bar Number 748)
Patricia A. Peard (Bar Number 758)
BERNSTEIN, SHUR, SAWYER & NELSON
100 Middle Street
Portland, Maine 04104-5029
207/774-1200
__________________________________
Kenneth R. Logan
Michael J. Chepiga
David J. Woll
Jennifer K. Nelsen
SIMPSON THACHER & BARTLETT
425 Lexington Avenue
New York, New York 10017-3954
Attorneys for Plaintiffs American Home
Products Corporation and AC Acquisition Corp.
Dated: August 9, 1994
37
