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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3
TO
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
PAGE 1 OF PAGES
THE EXHIBIT INDEX IS LOCATED ON PAGE
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<PAGE>
This Amendment No. 3 amends and supplements the Tender Offer Statement
Schedule 14D-1 filed on August 10, 1994 (as amended, the "Schedule 14D-1")
relating 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"),
and in the related Letter of Transmittal. Unless otherwise indicated, all
capitalized terms used but not defined herein shall have the meanings assigned
to them in the Schedule 14D-1.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
Item 3(b) of the Schedule 14D-1 is hereby amended and supplemented as
follows:
On August 17, 1994, the Company, the Parent and the Purchaser executed
an Agreement and Plan of Merger, dated August 17, 1994, a copy of which is set
forth in Exhibit 11(c)(1) and is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
Items 5(a)-(e) of the Schedule 14D-1 are hereby amended and supplemented
as follows:
The information provided in this Amendment No. 3 under Item 3 is
incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
Item 7 of the Schedule 14D-1 is hereby amended and supplemented as follows:
The information provided in this Amendment No. 3 under Item 3 is
incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
Item 11 of the Schedule 14D-1 is hereby amended and supplemented to add
the following:
(c)(1) Agreement and Plan of Merger, dated August 17, 1994, among the
Company, the Parent and the Purchaser
2
<PAGE>
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 18, 1994
3
<PAGE>
EXHIBIT INDEX
<TABLE><CAPTION>
EXHIBIT PAGE
NO. DESCRIPTION NO.
- --------- --------------------------------------------------------------------------------------------- ---------
<S> <C> <C>
11(c)(1) Agreement and Plan of Merger, dated August 17, 1994, among the Company, the Parent and the
Purchaser .................................................................................
</TABLE>
4
CONFORMED COPY
__________________________________________________________
AGREEMENT AND PLAN OF MERGER
Among
AMERICAN HOME PRODUCTS CORPORATION,
AC ACQUISITION CORP.
and
AMERICAN CYANAMID COMPANY
Dated August 17, 1994
__________________________________________________________
<PAGE>
TABLE OF CONTENTS
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Page
----
ARTICLE I
THE OFFER
SECTION 1.1 The Offer . . . . . . . . . . . . . . . . . 2
SECTION 1.2 Company Action . . . . . . . . . . . . . . 3
ARTICLE II
THE MERGER
SECTION 2.1 The Merger . . . . . . . . . . . . . . . . 4
SECTION 2.2 Effective Time . . . . . . . . . . . . . . 4
SECTION 2.3 Effects of the Merger . . . . . . . . . . . 5
SECTION 2.4 Articles of Incorporation; By-Laws . . . . 5
SECTION 2.5 Directors and Officers . . . . . . . . . . 5
SECTION 2.6 Conversion of Securities . . . . . . . . . 6
SECTION 2.7 Treatment of Employee Options . . . . . . . 6
SECTION 2.8 Dissenting Shares and Section 910
Shares . . . . . . . . . . . . . . . . . 6
SECTION 2.9 Surrender of Shares; Stock Transfer
Books . . . . . . . . . . . . . . . . . . 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Organization and Qualification;
Subsidiaries . . . . . . . . . . . . . . 9
SECTION 3.2 Articles of Incorporation and By-Laws . . 10
SECTION 3.3 Capitalization . . . . . . . . . . . . . 10
SECTION 3.4 Authority Relative to This Agreement . . 11
SECTION 3.5 No Conflict; Required Filings and
Consents . . . . . . . . . . . . . . . 12
SECTION 3.6 Compliance . . . . . . . . . . . . . . . 13
SECTION 3.7 SEC Filings; Financial Statements . . . . 13
SECTION 3.8 Absence of Certain Changes or Events . . 15
SECTION 3.9 Absence of Litigation . . . . . . . . . . 15
SECTION 3.10 Employee Benefit Plans . . . . . . . . . 16
SECTION 3.11 Tax Matters . . . . . . . . . . . . . . . 16
SECTION 3.12 Environmental Matters . . . . . . . . . . 17
SECTION 3.13 Intellectual Property . . . . . . . . . . 19
SECTION 3.14 Offer Documents; Proxy Statement . . . . 19
SECTION 3.15 Rights Agreement . . . . . . . . . . . . 20
SECTION 3.16 Brokers . . . . . . . . . . . . . . . . . 20
SECTION 3.17 Offer Conditions. . . . . . . . . . . . . 21
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<PAGE>
Page
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
SECTION 4.1 Corporate Organization . . . . . . . . . 21
SECTION 4.2 Authority Relative to This Agreement . . 21
SECTION 4.3 No Conflict; Required Filings and
Consents . . . . . . . . . . . . . . . 21
SECTION 4.4 Offer Documents; Proxy Statement . . . . 22
SECTION 4.5 Financing. . . . . . . . . . . . . . . . 23
SECTION 4.6 Brokers . . . . . . . . . . . . . . . . . 23
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 Conduct of Business of the Company
Pending the Merger . . . . . . . . . . 23
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Shareholders Meeting . . . . . . . . . . 26
SECTION 6.2 Proxy Statement . . . . . . . . . . . . . 27
SECTION 6.3 Company Board Representation; Section
14(f) . . . . . . . . . . . . . . . . . 27
SECTION 6.4 Access to Information; Confidentiality . 28
SECTION 6.5 No Solicitation of Transactions . . . . . 29
SECTION 6.6 Employee Benefits Matters . . . . . . . . 30
SECTION 6.7 Directors' and Officers' Indemnification
and Insurance . . . . . . . . . . . . . 33
SECTION 6.8 No Amendment to the Rights Agreement;
Redemption . . . . . . . . . . . . . . 33
SECTION 6.9 Further Action; Reasonable Best Efforts . 33
SECTION 6.10 Public Announcements . . . . . . . . . . 34
SECTION 6.11 Notice Pursuant to Section 910 . . . . . 34
SECTION 6.12 Taxes . . . . . . . . . . . . . . . . . . 34
SECTION 6.13 Disposition of Litigation. . . . . . . . 34
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.1 Conditions to Obligation of Each Party
to Effect the Merger . . . . . . . . . 35
ARTICLE
VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination . . . . . . . . . . . . . . . 35
SECTION 8.2 Effect of Termination . . . . . . . . . . 37
-ii-
<PAGE>
SECTION 8.3 Fees and Expenses . . . . . . . . . . . . 37
SECTION 8.4 Amendment . . . . . . . . . . . . . . . . 39
SECTION 8.5 Waiver . . . . . . . . . . . . . . . . . 39
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Non-Survival of Representations,
Warranties and Agreements . . . . . . . 39
SECTION 9.2 Notices . . . . . . . . . . . . . . . . . 39
SECTION 9.3 Certain Definitions . . . . . . . . . . . 40
SECTION 9.4 Severability . . . . . . . . . . . . . . 41
SECTION 9.5 Entire Agreement; Assignment . . . . . . 42
SECTION 9.6 Parties in Interest . . . . . . . . . . . 42
SECTION 9.7 Governing Law . . . . . . . . . . . . . . 42
SECTION 9.8 Headings . . . . . . . . . . . . . . . . 42
SECTION 9.9 Counterparts . . . . . . . . . . . . . . 42
Annex A - Offer Conditions
Schedule 5.1(f) - Certain Permitted Payments
-iii-
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated August 17, 1994
(the "Agreement"), among AMERICAN HOME PRODUCTS CORPORATION, a
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Delaware corporation ("Parent"), AC ACQUISITION CORP., a Delaware
------
corporation and a wholly owned subsidiary of Parent
("Purchaser"), and AMERICAN CYANAMID COMPANY, a Maine corporation
---------
(the "Company").
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WHEREAS, Purchaser has outstanding an offer (such offer
as amended pursuant to this Agreement is hereinafter referred to
as the "Offer") to purchase all of the outstanding shares of
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Common Stock, $5.00 par value per share, of the Company (the
"Company Common Stock"; all of the outstanding shares of Company
--------------------
Common Stock being hereinafter collectively referred to as the
"Shares") and the associated Preferred Stock Purchase Rights (the
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"Rights") issued pursuant to the Rights Agreement dated as of
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March 10, 1986, as amended as of April 29, 1986, as of April 21,
1987 and as of the date hereof, between the Company and Mellon
Bank, N.A., as successor Rights Agent (the "Rights Agreement"),
----------------
at a purchase price of $95 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, and in the related letter of transmittal;
WHEREAS, in consideration of the Company's entering
into this Agreement, Parent is willing to cause Purchaser to
increase the price to be paid pursuant to the Offer to $101 per
Share (such amount being hereinafter referred to as the ("Per
---
Share Amount");
- ------------
WHEREAS, the Board of Directors of the Company has (i)
determined that the consideration to be paid for each Share in
the Offer and in the Merger (as defined below) is fair to and in
the best interests of the shareholders of the Company, (ii)
approved this Agreement and the transactions contemplated hereby
and (iii) resolved to recommend acceptance of the Offer and the
Merger and approval of this Agreement by such shareholders; and
WHEREAS, the Board of Directors of Parent and Purchaser
have each approved the merger (the "Merger") of Purchaser with
------
the Company in accordance with the Business Corporation Act of
the State of Maine ("Maine Law") and the General Corporation Law
---------
of the State of Delaware ("Delaware Law") upon the terms and
------------
subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and
the mutual covenants and agreements herein contained, and
intending to be legally bound hereby, Parent, Purchaser and the
Company hereby agree as follows:
<PAGE>
2
ARTICLE I
THE OFFER
SECTION 1.1 The Offer. (a) Provided that this
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Agreement shall not have been terminated in accordance with
Section 8.1 and no event shall have occurred and no circumstance
shall exist which would result in a failure to satisfy any of the
conditions or events set forth in Annex A hereto (the "Offer
-----
Conditions"), Purchaser shall amend the Offer as soon as
- ----------
practicable after the date hereof, and in any event within five
business days from the date hereof, (i) to extend the Offer to
September 14, 1994, (ii) to increase the purchase price offered
to $101 per Share, (iii) to modify the conditions of the Offer to
conform to the Offer Conditions, including by reducing the
percentage of Shares required to be validly tendered and not
properly withdrawn prior to the expiration of the Offer from 80%
to the minimum number of Shares which, together with any Shares
owned by Parent and Purchaser, constitutes not less than a
majority of the Company's 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 (the "Minimum Condition")and (iv) to make such
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other amendments as are required to conform the Offer to this
Agreement. The obligation of Purchaser to accept for payment
Shares tendered shall be subject to the satisfaction of the Offer
Conditions. Purchaser expressly reserves the right, in its sole
discretion, to waive any such condition (other than the Minimum
Condition) and to increase the Per Share Amount payable pursuant
to the Offer or make any other changes in the terms and
conditions of the Offer (provided that, unless previously
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approved by the Company in writing, no change may be made which
decreases the Per Share Amount payable in the Offer, which
changes the form of consideration payable in the Offer, which
reduces the maximum number of Shares to be purchased in the Offer
or which imposes conditions to the Offer in addition to the Offer
Conditions). Purchaser covenants and agrees that, subject to the
terms and conditions of this Agreement, including but not limited
to the Offer Conditions, unless the Company otherwise consents in
writing, Purchaser will accept for payment and pay for Shares as
soon as it is permitted to do so under applicable law, provided
--------
that Purchaser may extend the Offer up to the twenty-fifth
business day after the latest of (i) September 14, 1994, (ii) the
tenth business day after the amendment of the Offer pursuant to
this Section 1.1 and (iii) the date on which all such conditions
shall first have been satisfied or waived. It is agreed that the
Offer Conditions are for the benefit of Purchaser and may be
asserted by Purchaser regardless of the circumstances giving rise
to any such condition (including any action or inaction by
Purchaser or Parent not inconsistent with the terms hereof) or,
except with respect to the Minimum Condition as set forth above,
may be waived by Purchaser, in whole or in part at any time and
from time to time, in its sole discretion.
<PAGE>
3
(b) As soon as reasonably practicable after the date
hereof, and in any event within five business days from the date
hereof, Purchaser and Parent shall amend their Tender Offer
Statement on Schedule 14D-1 (the "Schedule 14D-1") with respect
--------------
to the Offer which was originally filed with the Securities and
Exchange Commission (the "SEC") on August 10, 1994, and shall
---
file such amendment with the SEC. The Schedule 14D-1 will
contain a supplement to the Offer to Purchase dated August 10,
1994 and a revised form of the related letter of transmittal
(which Schedule 14D-1, Offer to Purchase and other documents,
together with any further supplements or amendments thereto, are
referred to herein collectively as the "Offer Documents").
---------------
Parent, Purchaser and the Company each agrees promptly to correct
any information provided by it for use in the Offer Documents
that shall have become false or misleading in any material
respect, and Parent and Purchaser further agree to take all steps
necessary to cause the Schedule 14D-1 as so corrected to be filed
with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of Shares, in each case as and to the
extent required by applicable federal securities laws.
SECTION 1.2 Company Action. (a) The Company hereby
--------------
approves of and consents to the Offer and represents and warrants
that: (i) its Board of Directors, at a meeting duly called and
held on August 16 and August 17, 1994, has unanimously (A)
determined that this Agreement and the transactions contemplated
hereby, including each of the Offer and the Merger, are fair to
and in the best interests of the holders of Shares, (B) approved
this Agreement and the transactions contemplated hereby and (C)
resolved to recommend that the shareholders of the Company accept
the Offer, tender their Shares to Purchaser thereunder and
approve this Agreement and the transactions contemplated hereby;
and (ii) Morgan Stanley & Co. Incorporated and CS First Boston
Corporation (the "Financial Advisers") have delivered to the
------------------
Board of Directors of the Company their respective written
opinions (or oral opinions confirmed in writing) that the
consideration to be received by holders of Shares, other than
Parent and Purchaser, pursuant to each of the Offer and the
Merger is fair to such holders from a financial point of view.
The Company has been authorized by each of the Financial Advisers
to permit, subject to prior review and consent by such Financial
Adviser (such consent not to be unreasonably withheld), the
inclusion of such fairness opinion (or a reference thereto) in
the Offer Documents and in the Schedule 14D-9 referred to below
and the Proxy Statement referred to in Section 3.14. The Company
hereby consents to the inclusion in the Offer Documents of the
recommendations of the Company's Board of Directors described in
this Section 1.2(a).
(b) The Company shall file with the SEC,
contemporaneously with the amendment to the Offer pursuant to
Section 1.1, a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto, the
"Schedule 14D-9"), containing the recommendations of the
--------------
<PAGE>
4
Company's Board of Directors described in Section 1.2(a)(i) and
shall promptly mail the Schedule 14D-9 to the shareholders of the
Company. The Company, Parent and Purchaser each agrees promptly
to correct any information provided by it for use in the Schedule
14D-9 that shall have become false or misleading in any material
respect, and the Company further agrees to take all steps
necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and disseminated to holders of Shares, in each case
as and to the extent required by applicable federal securities
laws.
(c) In connection with the Offer, if requested by
Purchaser, the Company shall promptly furnish Purchaser with
mailing labels, security position listings, any non-objecting
beneficial owner lists and any available listings or computer
files containing the names and addresses of the record holders of
Shares, each as of a recent date, and shall promptly furnish
Purchaser with such additional information (including but not
limited to updated lists of shareholders, mailing labels,
security position listings and non-objecting beneficial owner
lists) and such other assistance as Parent, Purchaser or their
agents may reasonably require in communicating the Offer to the
record and beneficial holders of Shares. The Company will not
object if Purchaser disseminates amendments disclosing material
changes to the Offer Documents in any manner that would be
permitted by applicable law if Purchaser had not, by its letter
to the Company of August 10, 1994, made the election to require
the Company to disseminate such amendments pursuant to Rule 14d-
5(f) promulgated under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
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ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to
----------
the conditions of this Agreement, and in accordance with Maine
Law and Delaware Law, at the Effective Time (as defined in
Section 2.2), Purchaser shall be merged with and into the
Company. As a result of the Merger, the separate corporate
existence of Purchaser shall cease and the Company shall continue
as the surviving corporation of the Merger (the "Surviving
---------
Corporation"). At Parent's election, the Merger may
- -----------
alternatively be structured so that (i) the Company is merged
with and into Parent, Purchaser or any other direct or indirect
subsidiary of Parent or (ii) any direct or indirect subsidiary of
Parent other than Purchaser is merged with and into the Company.
In the event of such an election, the parties agree to execute an
appropriate amendment to this Agreement in order to reflect such
election.
SECTION 2.2 Effective Time. As soon as practicable
--------------
after the satisfaction or, if permissible, waiver of the
<PAGE>
5
conditions set forth in Article VII, the parties hereto shall
cause the Merger to be consummated by delivering articles of
merger (the "Articles of Merger") to the Secretary of State of
------------------
the State of Maine and by filing this Agreement or a certificate
of merger or a certificate of ownership and merger (the
"Certificate of Merger") with the Secretary of State of the State
---------------------
of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, Maine Law and
Delaware Law (the date and time of the later to occur of the
filing of the Articles of Merger by the Secretary of State of the
State of Maine and the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware (or such later
time as is specified in the Articles of Merger and Certificate of
Merger) being the "Effective Time").
--------------
SECTION 2.3 Effects of the Merger. The Merger shall
---------------------
have the effects set forth in the applicable provisions of Maine
Law and Delaware Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, immunities, powers and franchises
of the Company and Purchaser shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company
and Purchaser shall become the debts, liabilities and duties of
the Surviving Corporation.
SECTION 2.4 Articles of Incorporation; By-Laws. (a)
----------------------------------
Unless otherwise determined by Parent prior to the Effective
Time, the Articles of Incorporation of the Surviving Corporation
shall, as a result of the Merger, be changed so as to read in
their entirety as closely as possible to the Certificate of
Incorporation of Purchaser immediately prior to the Effective
Time, except to the extent necessary (in the case of a merger
where the Company is the Surviving Corporation) to comply with or
conform to Maine Law until thereafter amended as provided by law
and such Articles of Incorporation.
(b) Unless otherwise determined by Parent prior to the
Effective Time, the By-Laws of the Surviving Corporation shall,
as a result of the Merger, be changed so as to read in their
entirety as closely as possible to the By-Laws of Purchaser
immediately prior to the Effective Time, except to the extent
necessary to comply with Section 6.7 or (in the case of a merger
where the Company is the Surviving Corporation) to comply with or
conform to Maine Law until thereafter amended as provided by law,
the Articles of Incorporation of the Surviving Corporation and
such By-Laws.
SECTION 2.5 Directors and Officers. The directors of
----------------------
Purchaser immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, each to hold
office in accordance with the Articles of Incorporation and By-
Laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until
<PAGE>
6
their respective successors are duly elected or appointed (as the
case may be) and qualified.
SECTION 2.6 Conversion of Securities. At the
------------------------
Effective Time, by virtue of the Merger and without any action on
the part of Purchaser, the Company or the holders of any of the
following securities:
(a) Each Share issued and outstanding immediately
prior to the Effective Time (other than any Shares to be
cancelled pursuant to Section 2.6(b), any Dissenting Shares
(as defined in Section 2.8(a)) and any Section 910 Shares
(as defined in Section 2.8(b))) shall be cancelled,
extinguished and converted into the right to receive an
amount equal to the Per Share Amount in cash (the "Merger
------
Consideration") payable to the holder thereof, without
-------------
interest, upon surrender of the certificate formerly
representing such Share in the manner provided in Section
2.9, less any required withholding taxes.
(b) Each share of Company Common Stock held in the
treasury of the Company and each Share owned by Parent,
Purchaser or any other direct or indirect subsidiary of
Parent or of the Company, in each case immediately prior to
the Effective Time, shall be cancelled and retired without
any conversion thereof and no payment or distribution shall
be made with respect thereto.
(c) Each share of common, preferred or other capital
stock of Purchaser issued and outstanding immediately prior
to the Effective Time shall be converted into and become one
validly issued, fully paid and nonassessable share of
identical common, preferred or other capital stock of the
Surviving Corporation.
SECTION 2.7 Treatment of Employee Options.
-----------------------------
Immediately prior to the Effective Time, each outstanding
employee stock option and any related stock appreciation right
(together, an "Employee Option") whether or not then exercisable
---------------
shall be cancelled by the Company, and each holder of a cancelled
Employee Option shall be entitled to receive at the Effective
Time or as soon as practicable thereafter (or, if later, the date
six months and one day following the grant of such Employee
Option) from the Company in consideration for the cancellation of
such Employee Option an amount in cash equal to the product of
(i) the number of Shares previously subject to such Employee
Option and (ii) the excess, if any, of the Merger Consideration
over the exercise price per Share previously subject to such
Employee Option.
SECTION 2.8 Dissenting Shares and Section 910 Shares.
----------------------------------------
(a) Notwithstanding any provision of this Agreement to the
contrary, Shares which are outstanding immediately prior to the
Effective Time and which are held by holders of Shares who have
<PAGE>
7
filed with the Company a written objection to the Merger and have
not voted in favor of the Merger, and who shall have properly
demanded in writing appraisal for such Shares in accordance with
Section 909 ("Section 909") of Maine Law (collectively, the
-----------
"Dissenting Shares"), shall not be converted into or represent
-----------------
the right to receive the Merger Consideration, but such holders
of Shares shall be entitled to receive payment of the appraised
value of such Shares in accordance with the provisions of Section
909, except that any Dissenting Shares held by holders of Shares
who shall have failed to perfect or shall have effectively
withdrawn or lost their rights to appraisal of such Shares under
Section 909 shall thereupon be deemed to have been converted into
and to have become exchangeable for, as of the Effective Time,
the right to receive the Merger Consideration without any
interest thereon, upon surrender of the certificate or
certificates formerly representing such Shares in the manner
provided in Section 2.9, less any required withholding taxes.
(b) Notwithstanding any provisions of this Agreement
to the contrary, Shares which are outstanding immediately prior
to the Effective Time and which are held by holders of Shares who
have prior to the Effective Time demanded in writing appraisal
for their Shares pursuant to Section 910 ("Section 910") of Maine
-----------
Law (other than holders of Shares who shall have failed to
perfect their rights pursuant to Section 910 or shall have
effectively withdrawn or lost their rights to such fair value
under Section 910; collectively, the "Section 910 Shares") shall
------------------
not be converted into or represent the right to receive the
Merger Consideration, but such holders of Shares shall be
entitled to receive payment of the fair value of such Shares in
accordance with the provisions of Section 910, except that any
Section 910 Shares held by holders of Shares who shall have
failed to perfect or shall have effectively withdrawn or lost
their rights to appraisal of such Shares under Section 910 shall
thereupon be deemed to have been converted into and to have
become exchangeable for, as of the Effective Time, the right to
receive the Merger Consideration without any interest thereon,
upon surrender of the certificate or certificates formerly
representing such Shares in the manner provided in Section 2.9,
less any required withholding taxes.
(c) The Company shall give Parent (i) prompt notice of
any demands for appraisal pursuant to Section 909 received by the
Company, withdrawals of such demands, and any other instruments
served pursuant to Maine Law and received by the Company and (ii)
the opportunity to direct all negotiations and proceedings with
respect to demands for appraisal under Maine Law. The Company
shall not, except with the prior written consent of Parent, make
any payment with respect to any such demands for appraisal or
offer to settle or settle any such demands.
SECTION 2.9 Surrender of Shares; Stock Transfer Books.
-----------------------------------------
(a) Prior to the Effective Time, Purchaser shall designate a
bank or trust company to act as agent for the holders of Shares
<PAGE>
8
in connection with the Merger (the "Paying Agent") to receive the
------------
Merger Consideration to which holders of Shares shall become
entitled pursuant to Section 2.6(a). When and as needed, Parent
or Purchaser will make available to the Paying Agent sufficient
funds to make all payments pursuant to Section 2.9(b). Such
funds shall be invested by the Paying Agent as directed by
Purchaser or, after the Effective Time, the Surviving
Corporation, provided that such investments shall be in
--------
obligations of or guaranteed by the United States of America, in
commercial paper obligations rated A-1 or P-1 or better by
Moody's Investors Service, Inc. or Standard & Poor's Corporation,
respectively, or in certificates of deposit, bank repurchase
agreements or banker's acceptances of commercial banks with
capital exceeding $50 million. Any net profit resulting from, or
interest or income produced by, such investments will be payable
to the Surviving Corporation or Parent, as Parent directs.
(b) Promptly after the Effective Time, the Surviving
Corporation shall cause to be mailed to each record holder, as of
the Effective Time, of an outstanding certificate or certificates
which immediately prior to the Effective Time represented Shares
(the "Certificates"), a form of letter of transmittal (which
------------
shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Paying Agent) and
instructions for use in effecting the surrender of the
Certificates for payment of the Merger Consideration therefor.
Upon surrender to the Paying Agent of a Certificate, together
with such letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, and such
other documents as may be required pursuant to such instructions,
the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration for each Share
formerly represented by such Certificate, and such Certificate
shall then be cancelled. No interest shall be paid or accrued
for the benefit of holders of the Certificates on the Merger
Consideration payable upon the surrender of the Certificates. If
payment of the Merger Consideration is to be made to a person
other than the person in whose name the surrendered Certificate
is registered, it shall be a condition of payment that the
Certificate so surrendered shall be properly endorsed or shall be
otherwise in proper form for transfer and that the person
requesting such payment shall have paid any transfer and other
taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the
Certificate surrendered or shall have established to the
satisfaction of the Surviving Corporation that such tax either
has been paid or is not applicable.
(c) At any time following six months after the
Effective Time, the Surviving Corporation shall be entitled to
require the Paying Agent to deliver to it any funds (including
any interest received with respect thereto) which had been made
available to the Paying Agent and which have not been disbursed
<PAGE>
9
to holders of Certificates, and thereafter such holders shall be
entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as
general creditors thereof with respect to the Merger
Consideration payable upon due surrender of their Certificates.
Notwithstanding the foregoing, neither the Surviving Corporation
nor the Paying Agent shall be liable to any holder of a
Certificate for Merger Consideration delivered to a public
official pursuant to any applicable abandoned property, escheat
or similar law.
(d) At the Effective Time, the stock transfer books of
the Company shall be closed and thereafter there shall be no
further registration of transfers of shares of Company Common
Stock on the records of the Company. From and after the
Effective Time, the holders of Certificates evidencing ownership
of Shares outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Shares except
as otherwise provided for herein or by applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent
and Purchaser that:
SECTION 3.1 Organization and Qualification;
-------------------------------
Subsidiaries. Each of the Company and each of its subsidiaries
- ------------
is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation
and has the requisite corporate power and authority and any
necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being
conducted, except where the failure to be so organized, existing
and in good standing or to have such power, authority and
governmental approvals would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect (as defined below). Each of the Company and each of its
subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, leased
or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to
be so duly qualified or licensed and in good standing which would
not, individually or in the aggregate, reasonably be expected to
either have a Material Adverse Effect or prevent the consummation
of the transactions contemplated hereby. When used in connection
with the Company or any of its subsidiaries, the term "Material
--------
Adverse Effect" means any change or effect that is or is
- --------------
reasonably likely to be materially adverse to the business,
assets, financial condition or results of operations of the
Company and its subsidiaries taken as a whole.
<PAGE>
10
SECTION 3.2 Articles of Incorporation and By-Laws.
-------------------------------------
The Company has heretofore furnished to Parent a complete and
correct copy of the Restated Articles of Incorporation and the
By-Laws of the Company as currently in effect. Such Restated
Articles of Incorporation and By-Laws are in full force and
effect and no other organizational documents are applicable to or
binding upon the Company. The Company is not in violation of any
of the provisions of its Restated Articles of Incorporation or
By-Laws.
SECTION 3.3 Capitalization. The authorized capital
--------------
stock of the Company consists of 200,000,000 shares of Company
Common Stock and 10,000,000 shares of Preferred Stock, $1.00 par
value per share (collectively, "Company Preferred Stock"). As of
-----------------------
August 12, 1994, (i) 90,832,206 shares of Company Common Stock
were issued and outstanding, all of which were validly issued,
fully paid and nonassessable and were issued free of preemptive
(or similar) rights, (ii) 11,893,400 shares of Company Common
Stock were held in the treasury of the Company and (iii) an
aggregate of 5,451,876 shares of Company Common Stock were
reserved for issuance and issuable upon or otherwise deliverable
in connection with the exercise of outstanding Employee Options
issued pursuant to the Plans (as defined in Section 3.10). Since
August 12, 1994, no options to purchase shares of Company Common
Stock have been granted and no shares of Company Common Stock
have been issued except for shares issued pursuant to the
exercise of Employee Options outstanding as of August 12, 1994.
As of the date hereof, no shares of Company Preferred Stock are
issued and outstanding and 300,000 shares of Series A Junior
Participating Preferred Stock are reserved for issuance upon
exercise of the Rights. Except as set forth above, except for
the Rights, and except as a result of the exercise of Employee
Options outstanding as of August 12, 1994, there are outstanding
(i) no shares of capital stock or other voting securities of the
Company, (ii) no securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of
the Company, (iii) no options or other rights to acquire from the
Company, and no obligation of the Company to issue, any capital
stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the
Company and (iv) no equity equivalents, interests in the
ownership or earnings of the Company or other similar rights
(collectively, "Company Securities"). There are no outstanding
------------------
obligations of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any Company Securities.
There are no other options, calls, warrants or other rights,
agreements, arrangements or commitments of any character relating
to the issued or unissued capital stock of the Company or any of
its subsidiaries to which the Company or any of its subsidiaries
is a party except, with respect to Immunex Corporation
("Immunex"), as contemplated by the Immunex Governance Agreement
(as defined below) or the Amended and Restated Merger Agreement,
dated as of December 15, 1992, among Immunex, the Company and the
other parties thereto. All shares of Company Common Stock
<PAGE>
11
subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they
are issuable, shall be duly authorized, validly issued, fully
paid and nonassessable and free of preemptive (or similar)
rights. There are no outstanding contractual obligations of the
Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any shares of Company Common Stock or the
capital stock of any subsidiary or, except as described below, to
provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any such subsidiary or any
other entity. Each of the outstanding shares of capital stock of
each of the Company's subsidiaries is duly authorized, validly
issued, fully paid and nonassessable and is owned free and clear
of all security interests, liens, claims, pledges, agreements,
limitations in voting rights, charges or other encumbrances of
any nature whatsoever, except where the failure to own such
shares free and clear would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect. The Company has delivered to Parent prior to the date
hereof is a list of the subsidiaries and associated entities of
the Company which evidences, among other things, the amount of
capital stock or other equity interests owned by the Company,
directly or indirectly, in such subsidiaries or associated
entities. No entity in which the Company owns, directly or
indirectly, less than a 50% equity interest is, individually or
when taken together with all such other entities, material to the
business of the Company and its subsidiaries taken as a whole.
Pursuant to an Amended and Restated Governance Agreement with
Immunex, dated as of December 15, 1992 (the "Immunex Governance
Agreement"), the Company is obligated to make payments to Immunex
covering certain revenue shortfalls through 1997. The aggregate
amount of such payments pursuant to such agreement will not
exceed $44.7 million in 1994, $56.6 million in 1995, $70 million
in 1996 and $75 million in 1997.
SECTION 3.4 Authority Relative to This Agreement. The
------------------------------------
Company has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all
necessary corporate action and no other corporate proceedings on
the part of the Company are necessary to authorize this Agreement
or to consummate the transactions so contemplated (other than,
with respect to the Merger, the approval of this Agreement by the
holders of a majority of the outstanding shares of Company Common
Stock if and to the extent required by applicable law, and the
filing of appropriate merger documents as required by Maine Law
and Delaware Law). This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due
authorization, execution and delivery hereof by Parent and
Purchaser, constitutes a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with
<PAGE>
12
its terms. The Board of Directors of the Company has approved
this Agreement and the transactions contemplated hereby
(including but not limited to the Offer and the Merger) so as to
render inapplicable hereto and thereto (a) the limitation on
business combinations contained in Section 1 of Section 611-A of
Maine Law (or any similar provision), and (b) the supermajority
shareholder voting requirements of Article SIXTH of the Company's
Restated Articles of Incorporation. The Board of Directors of
the Company has irrevocably waived the requirement of ownership
of Shares (and the related holding period) set forth in Section
2.01 of the Company's By-Laws with respect to the directors of
Purchaser immediately prior to the Effective Time and any other
director nominees or designees of Parent or Purchaser for
election to the Company's Board of Directors. As a result of the
foregoing actions, the only vote required to authorize the Merger
is the affirmative vote of a majority of the outstanding Shares.
SECTION 3.5 No Conflict; Required Filings and
---------------------------------
Consents. (a) The execution, delivery and performance of this
- --------
Agreement by the Company do not and will not: (i) conflict with
or violate the Restated Articles of Incorporation or By-Laws of
the Company or the equivalent organizational documents of any of
its subsidiaries; (ii) assuming that all consents, approvals and
authorizations contemplated by clauses (i), (ii) and (iii) of
subsection (b) below have been obtained and all filings described
in such clauses have been made, conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to the
Company or any of its subsidiaries or by which its or any of
their respective properties are bound or affected; or (iii)
result in any breach or violation of or constitute a default (or
an event which with notice or lapse of time or both could become
a default) or result in the loss of a material benefit under, or
give rise to any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of the Company or
any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties are
bound or affected, except, in the case of clauses (ii) and (iii),
for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate,
reasonably be expected to either have a Material Adverse Effect
or prevent the consummation of the Offer or the Merger.
(b) The execution, delivery and performance of this
Agreement by the Company and the consummation of the Merger by
the Company do not and will not require any consent, approval,
authorization or permit of, action by, filing with or
notification to, any governmental or regulatory authority,
domestic or foreign, except for (i) applicable requirements, if
any, of the Exchange Act, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), Regulation
-------
<PAGE>
13
(EEC) No. 4064/89 of the European Community, the New Jersey
Industrial Site Recovery Act, Canada's Competition Act, the
Investment Canada Act, the Connecticut Transfer Act, state
securities, takeover and Blue Sky laws, (ii) the filing and
recordation of appropriate merger or other documents as required
by Maine Law and Delaware Law, (iii) compliance with the
statutory provisions and regulations relating to the New York
State Tax on Gains Derived from Certain Real Property Transfers
and the New York City Real Property Transfer Tax and (iv) such
consents, approvals, authorizations, permits, actions, filings or
notifications the failure of which to make or obtain would not
reasonably be expected to (x) prevent consummation of the Offer
or the Merger or materially delay the Merger, (y) otherwise
prevent or delay the Company from performing its obligations
under this Agreement or (z) individually or in the aggregate,
have a Material Adverse Effect.
SECTION 3.6 Compliance. Neither the Company nor any
----------
of its subsidiaries is in conflict with, or in default or
violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its subsidiaries or by
which its or any of their respective properties are bound or
affected, or (ii) any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument
or obligation to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries or its
or any of their respective properties are bound or affected,
except for any such conflicts, defaults or violations which would
not, individually or in the aggregate, reasonably be expected to
either have a Material Adverse Effect or prevent the consummation
of the Offer or the Merger.
SECTION 3.7 SEC Filings; Financial Statements. (a)
---------------------------------
The Company and, to the extent applicable (and, in the case of
Immunex, to the Company's knowledge), each of its then or current
subsidiaries, has filed all forms, reports, statements and
documents required to be filed with the SEC since January 1, 1990
(collectively, the "SEC Reports"), each of which has complied in
-----------
all material respects with the applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the
--------------
Exchange Act, each as in effect on the date so filed. The
Company has heretofore delivered or promptly will deliver to
Parent, in the form filed with the SEC (including any amendments
thereto), (i) its (and, to the extent applicable, its
subsidiaries') Annual Reports on Form 10-K for each of the four
fiscal years ended December 31, 1990, 1991, 1992 and 1993 and its
Quarterly Reports on Form 10-Q for each of the quarterly periods
ended March 31, 1994 and June 30, 1994, (ii) all definitive proxy
statements relating to the Company's (and such subsidiaries')
meetings of shareholders (whether annual or special) held since
January 1, 1990 and (iii) all other reports or registration
statements filed by the Company (and such subsidiaries) with the
SEC since January 1, 1990. None of such forms, reports or
documents (including but not limited to any financial statements
<PAGE>
14
or schedules included or incorporated by reference therein) filed
by the Company and its then or current subsidiaries (including,
to the Company's knowledge, Immunex) contained, when filed, any
untrue statement of a material fact or omitted to state a
material fact required to be stated or incorporated by reference
therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. Except to the extent revised or superseded by a
subsequent filing with the SEC (a copy of which has been provided
to Parent prior to the date hereof), none of the SEC Reports
filed by the Company since December 31, 1993 and prior to the
date hereof contains any untrue statement of a material fact or
omits to state a material fact required to be stated or
incorporated by reference therein or necessary in order to make
the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) Each of the audited and unaudited consolidated
interim financial statements of the Company (including, in each
case, any related notes thereto) included in its Annual Reports
on Form 10-K for each of the two fiscal years ended December 31,
1992 and 1993 and in its Quarterly Reports on Form 10-Q for its
fiscal quarters ended March 31, 1994 and June 30, 1994, which
have previously been furnished to Parent, has been prepared in
accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods involved (except as
may be indicated in the notes thereto) and each fairly presents
the consolidated financial position of the Company and its
subsidiaries at the respective dates thereof and the consolidated
results of its operations and changes in cash flows for the
periods indicated, except that the unaudited interim financial
statements are subject to normal and recurring year-end
adjustments which are not expected to be material in amount.
(c) Except as and to the extent set forth on the
consolidated balance sheet of the Company and its subsidiaries at
December 31, 1993, including the notes thereto, neither the
Company nor any of its subsidiaries has any liabilities or
obligations of any nature (whether accrued, absolute, contingent
or otherwise) which would be required to be reflected on a
balance sheet or in the notes thereto prepared in accordance with
generally accepted accounting principles, except for liabilities
or obligations incurred in the ordinary course of business since
December 31, 1993 which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
(d) The Company has heretofore furnished to Parent a
complete and correct copy of any amendments or modifications,
which have not yet been filed with the SEC, to agreements
(including the Rights Agreement), documents or other instruments
which previously had been filed by the Company with the SEC
pursuant to the Securities Act or the Exchange Act.
<PAGE>
15
SECTION 3.8 Absence of Certain Changes or Events.
------------------------------------
Since December 31, 1993, except as contemplated by this Agreement
or disclosed in the SEC Reports filed since that date and up to
the date of this Agreement, the Company and its subsidiaries have
conducted their businesses only in the ordinary course and in a
manner consistent with past practice and, since such date, there
has not been (i) any condition, event or occurrence which,
individually or in the aggregate, has had, or would reasonably be
expected to have, a Material Adverse Effect (without regard,
however, to changes in conditions generally applicable to the
industries in which the Company and its subsidiaries are involved
or general economic conditions), (ii) any change by the Company
in its accounting methods, principles or practices, (iii) any
revaluation by the Company of any of its material assets,
including but not limited to writing down the value of inventory
or writing off notes or accounts receivable other than in the
ordinary course of business, (iv) other than in respect of the
previously announced sale of Davis & Geck, any entry by the
Company or any of its subsidiaries into any commitment or
transactions material to the Company and its subsidiaries taken
as a whole, (v) except for (A) each of the regular quarterly
Share dividends declared on or prior to the date hereof in
amounts not exceeding $.4625 per Share and (B) the amounts to be
paid upon redemption of the Rights pursuant to the Rights
Agreement in accordance with Section 6.8, any declaration,
setting aside or payment of any dividends or distributions in
respect of the Shares or any redemption, purchase or other
acquisition of any of its securities, or (vi) except with respect
to the adoption or amendment of certain plans or arrangements or
the taking of certain actions with respect to certain of such
plans or arrangements, in each case, effective as of the date
hereof, as described in Schedule 5.1(f), any increase in or
establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options,
stock appreciation rights, performance awards, or restricted
stock awards), stock purchase or other employee benefit plan or
agreement or arrangement, or any other increase in the
compensation payable or to become payable to any officers or key
employees of the Company or any of its subsidiaries, except in
the ordinary course of business consistent with past practice.
SECTION 3.9 Absence of Litigation. Except as
---------------------
disclosed with reasonable specificity in the SEC Reports filed
prior to the date of this Agreement, there are no suits, claims,
actions, proceedings or investigations pending or, to the
knowledge of the Company, threatened against the Company or any
of its subsidiaries, or any properties or rights of the Company
or any of its subsidiaries, before any court, arbitrator or
administrative, governmental or regulatory authority or body,
domestic or foreign, that (i) individually or in the aggregate,
would reasonably be expected to have a Material Adverse Effect or
(ii) seek to materially delay or prevent the consummation of the
transactions contemplated hereby. As of the date hereof, neither
<PAGE>
16
the Company nor any of its subsidiaries nor any of their
respective properties is or are subject to any order, writ,
judgment, injunction, decree, determination or award having, or
which would reasonably be expected to have, a Material Adverse
Effect or which would prevent or delay the consummation of the
transactions contemplated hereby.
SECTION 3.10 Employee Benefit Plans. With respect to
----------------------
all the employee benefit plans, programs and arrangements
maintained for the benefit of any current or former employee,
officer or director of the Company or any subsidiary of the
Company (collectively, the "Plans"), except as set forth in the
-----
SEC Reports and except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect: (i) none of the Plans is a multiemployer plan within the
meaning of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"); (ii) none of the Plans promises or provides
-----
retiree medical or life insurance benefits to any person, except
as otherwise required by law in the applicable jurisdiction and,
outside of the United States, in accordance with local custom and
practice; (iii) each Plan intended to be qualified under Section
401(a) of the Internal Revenue Code of 1986, as amended, has
received a favorable determination letter from the Internal
Revenue Service that it is so qualified and nothing has occurred
since the date of such letter that could reasonably be expected
to affect the qualified status of such Plan; (iv) each Plan has
been operated in all respects in accordance with its terms and
the requirements of applicable law; (v) neither the Company nor
any subsidiary of the Company has incurred any direct or indirect
liability under, arising out of or by operation of Title IV of
ERISA in connection with the termination of, or withdrawal from,
any Plan or other retirement plan or arrangement, and no fact or
event exists that could reasonably be expected to give rise to
any such liability; and (vi) the Company and its subsidiaries
have not incurred any liability under, and have complied in all
respects with, the Worker Adjustment Retraining Notification Act,
and no fact or event exists that could give rise to liability
under such Act. Except as set forth in the SEC Reports, the
aggregate accumulated benefit obligations of each Plan subject to
Title IV of ERISA (as of the date of the most recent actuarial
valuation prepared for such Plan) do not exceed the fair market
value of the assets of such Plan (as of the date of such
valuation). The "Compensation Letter" (as defined in Schedule
5.1(f) and attached hereto) constitutes a reasonable estimate,
prepared in good faith by the Company, of the amounts and
benefits payable, as of the date of such letter, and the amounts
and benefits proposed to be paid, as of the date of such letter,
pursuant to the plans and programs of the Company enumerated
therein for the benefit of its employees.
SECTION 3.11 Tax Matters. The Company and each of its
-----------
subsidiaries, and any consolidated, combined, unitary or
aggregate group for Tax purposes of which the Company or any of
its subsidiaries is or has been a member has timely filed all Tax
<PAGE>
17
Returns required to be filed by it, has paid all Taxes shown
thereon to be due and has provided adequate reserves in its
financial statements for any Taxes that have not been paid,
whether or not shown as being due on any returns, except where
the failure to make such filings, pay such taxes or provide for
such reserves has not had, and would not reasonably be expected
to have, a Material Adverse Effect. As used herein, "Taxes"
-----
shall mean any taxes of any kind, including but not limited to
those on or measured by or referred to as income, gross receipts,
sales, use, ad valorem, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation,
premium, value added, property or windfall profits taxes,
customs, duties or similar fees, assessments or charges of any
kind whatsoever, together with any interest and any penalties,
additions to tax or additional amounts imposed by any
governmental authority, domestic or foreign. As used herein,
"Tax Return" shall mean any return, report or statement required
----------
to be filed with any governmental authority with respect to
Taxes.
SECTION 3.12 Environmental Matters. Except to the
---------------------
extent that the inaccuracy of any of the following (or the
circumstances giving rise to such inaccuracy), individually or in
the aggregate, would not reasonably be expected to have a
Material Adverse Effect (after taking into account any reserves
therefor reflected in the most recent financial statements
included in the SEC Reports filed prior to the date hereof):
(a) The Company and its subsidiaries hold, and are in
compliance with, all Environmental Permits, and the Company
and its subsidiaries are in compliance with all applicable
Environmental Laws;
(b) There are no circumstances which would reasonably
be expected to prevent or interfere with such compliance in
the future;
(c) None of the Company or its subsidiaries has
received, nor to the knowledge of the Company is there
threatened, any Environmental Claim, nor are there any
circumstances, conditions or events that would reasonably be
expected to give rise to any Environmental Claim against the
Company or any of its subsidiaries;
(d) None of the Company or its subsidiaries has
entered into or agreed to any consent decree or order under
any Environmental Law, and none of the Company or its
subsidiaries is the subject of any pending or, to the
knowledge of the Company, threatened judgment, decree, order
or other requirement of any governmental authority or
private party relating to compliance with any Environmental
Law or to investigation, cleanup, remediation or removal of
regulated substances under any Environmental Law;
<PAGE>
18
(e) There are no (i) underground storage tanks, (ii)
polychlorinated biphenyls, (iii) asbestos or asbestos-
containing materials or (iv) Hazardous Materials present at
any facility currently or formerly owned, leased or operated
by the Company or any of its subsidiaries that could
reasonably be expected to give rise to liability of the
Company or any of its subsidiaries under any Environmental
Laws or otherwise result in any cost or expense to the
Company or any of its subsidiaries; and
(f) There are no past (including, without limitation,
with respect to assets or businesses formerly owned, leased
or operated by the Company or any of its subsidiaries) or
present actions, activities, events, conditions or
circumstances, including without limitation the release,
threatened release, emission, discharge, generation,
treatment, storage or disposal of Hazardous Materials, that
would reasonably be expected to give rise to liability of
the Company or any of its subsidiaries under any
Environmental Laws or any contract or agreement relating to
Environmental Claims.
For purposes of this Agreement, the following terms
shall have the following meanings:
"Environmental Claim" means any written or oral notice,
-------------------
claim, demand, action, suit, complaint, proceeding or other
communication by any person alleging liability or potential
liability (including without limitation liability or
potential liability for emergency actions, investigatory
costs, cleanup costs, governmental response costs, natural
resource damages, property damage, personal injury, fines or
penalties) arising out of, relating to, based on or
resulting from (i) the presence, discharge, emission,
release or threatened release of any Hazardous Materials at
any location, whether or not owned, leased or operated by
the Company or any of its subsidiaries, or (ii)
circumstances forming the basis of any violation or alleged
violation of any Environmental Law or Environmental Permit.
"Environmental Permits" means all permits, licenses,
---------------------
registrations and other governmental authorizations required
for the Company and the operations of the Company's and its
subsidiaries' facilities, and otherwise to conduct their
respective businesses under Environmental Laws.
"Environmental Laws" means all applicable federal,
------------------
state and local statutes, rules, regulations, ordinances,
orders, decrees and common law relating in any manner to
contamination, pollution or protection of human health or
the environment, including without limitation the
Comprehensive Environmental Response, Compensation and
Liability Act, the Solid Waste Disposal Act, the Resource
Conservation and Recovery Act, the Clean Air Act, the Clean
<PAGE>
19
Water Act, the Toxic Substances Control Act, the
Occupational Safety and Health Act, the Emergency Planning
and Community-Right-to-Know Act, the Safe Drinking Water
Act, all as amended, and similar state laws.
"Hazardous Materials" means all hazardous or toxic
-------------------
substances, wastes, materials or chemicals, petroleum
(including crude oil or any fraction thereof) and petroleum
products, asbestos and asbestos-containing materials,
pollutants, contaminants and all other materials and
substances regulated pursuant to any Environmental Law.
SECTION 3.13 Intellectual Property. Except to the
---------------------
extent that the inaccuracy of any of the following (or the
circumstances giving rise to such inaccuracy), individually or in
the aggregate, would not reasonably be expected to have a
Material Adverse Effect: (1) the Company and each of its
subsidiaries owns, or is licensed to use (in each case, clear of
any liens or encumbrances of any kind), all Intellectual Property
used in or necessary for the conduct of its business as currently
conducted; (2) the use of any Intellectual Property by the
Company and its subsidiaries does not infringe on or otherwise
violate the rights of any person; (3) to the knowledge of the
Company, no product (or component thereof or process) used, sold
or manufactured by and/or for, or supplied to, the Company and
each of its subsidiaries infringes or otherwise violates the
Intellectual Property of any other person; and (4) to the
knowledge of the Company, no person is challenging, infringing on
or otherwise violating any right of the Company or any of its
subsidiaries with respect to any Intellectual Property owned by
and/or licensed to the Company and its subsidiaries. For
purposes of this Agreement "Intellectual Property" shall mean
---------------------
trademarks, service marks, brand names, certification marks,
trade dress, assumed names, trade names and other indications of
origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any extension,
modification or renewal of any such registration or application;
inventions, discoveries and ideas, whether patentable or not in
any jurisdiction; patents, applications for patents (including,
without limitation, divisions, continuations, continuations in
part and renewal applications), and any renewals, extensions or
reissues thereof, in any jurisdiction; nonpublic information,
trade secrets and confidential information and rights in any
jurisdiction to limit the use or disclosure thereof by any
person; writings and other works, whether copyrightable or not in
any jurisdiction; registrations or applications for registration
of copyrights in any jurisdiction, and any renewals or extensions
thereof; any similar intellectual property or proprietary rights;
and any claims or causes of action arising out of or related to
any infringement or misappropriation of any of the foregoing.
SECTION 3.14 Offer Documents; Proxy Statement.
--------------------------------
Neither the Schedule 14D-9, nor any of the information supplied
<PAGE>
20
by the Company for inclusion in the Offer Documents, shall, at
the respective times such Schedule 14D-9, the Offer Documents or
any amendments or supplements thereto are filed with the SEC or
are first published, sent or given to shareholders, as the case
may be, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
Neither the proxy statement to be sent to the shareholders of the
Company in connection with the Shareholders Meeting (as defined
in Section 6.1) or the information statement to be sent to such
shareholders, as appropriate (such proxy statement or information
statement, as amended or supplemented, is herein referred to as
the "Proxy Statement"), shall, at the date the Proxy Statement
---------------
(or any amendment thereof or supplement thereto) is first mailed
to shareholders and at the time of the Shareholders Meeting and
at the Effective Time, be false or misleading with respect to any
material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they are
made, not misleading or necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies
for the Shareholders Meeting which has become false or
misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information
supplied by Parent or Purchaser or any of their respective
representatives which is contained in the Schedule 14D-9 or the
Proxy Statement. The Schedule 14D-9 and the Proxy Statement will
comply in all material respects as to form with the requirements
of the Exchange Act and the rules and regulations thereunder.
SECTION 3.15 Rights Agreement. The Company has
----------------
heretofore provided Parent with a complete and correct copy of
the Rights Agreement, including all amendments and exhibits
thereto. The Company has taken all necessary action so that none
of the execution of this Agreement, the making of the Offer, the
acquisition of Shares pursuant to the Offer or the consummation
of the Merger will (a) cause the Rights issued pursuant to the
Rights Agreement to become exercisable, (b) cause any person to
become an Acquiring Person (as such term is defined in the Rights
Agreement) or (c) give rise to a Distribution Date or a
Triggering Event (as each such term is defined in the Rights
Agreement).
SECTION 3.16 Brokers. No broker, finder or investment
-------
banker (other than the Financial Advisers) is entitled to any
brokerage, finder's or other fee or commission in connection with
the transactions contemplated by this Agreement based upon
arrangements made by and on behalf of the Company. The Company
has heretofore furnished to Parent a complete and correct copy of
all agreements between the Company and each of the Financial
Advisers pursuant to which such firm would be entitled to any
payment relating to the transactions contemplated hereby.
<PAGE>
21
SECTION 3.17 Offer Conditions. Since July 1, 1994, no
----------------
event shall have occurred and no circumstance shall have arisen
which would reasonably be expected to result in a failure to
satisfy any of the Offer Conditions.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally,
represent and warrant to the Company that:
SECTION 4.1 Corporate Organization. Each of Parent
----------------------
and Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and
has the requisite corporate power and authority and any necessary
governmental authority to own, operate or lease its properties
and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing and in good
standing or to have such power, authority and governmental
approvals would not, individually or in the aggregate, reasonably
be expected to prevent the consummation of the Offer or the
Merger.
SECTION 4.2 Authority Relative to This Agreement.
------------------------------------
Each of Parent and Purchaser has all necessary corporate power
and authority to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of
this Agreement by each of Parent and Purchaser and the
consummation by each of Parent and Purchaser of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and Purchaser other than
filing and recordation of appropriate merger documents as
required by Maine Law and Delaware Law. This Agreement has been
duly executed and delivered by Parent and Purchaser and, assuming
due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of each such
corporation enforceable against such corporation in accordance
with its terms.
SECTION 4.3 No Conflict; Required Filings and
---------------------------------
Consents. (a) The execution, delivery and performance of this
- --------
Agreement by Parent and Purchaser do not and will not: (i)
conflict with or violate the respective certificates of
incorporation or by-laws of Parent or Purchaser; (ii) assuming
that all consents, approvals and authorizations contemplated by
clauses (i), (ii) and (iii) of subsection (b) below have been
obtained and all filings described in such clauses have been
made, conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or Purchaser or by which
either of them or their respective properties are bound or
<PAGE>
22
affected; or (iii) result in any breach or violation of or
constitute a default (or an event which with notice or lapse of
time or both could become a default) or result in the loss of a
material benefit under, or give rise to any right of termination,
amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the property or
assets of Parent or Purchaser pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent or
Purchaser is a party or by which Parent or Purchaser or any of
their respective properties are bound or affected, except, in the
case of clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which would
not, individually or in the aggregate, reasonably be expected to
prevent the consummation of the Offer or the Merger.
(b) The execution, delivery and performance of this
Agreement by Parent and Purchaser do not and will not require any
consent, approval, authorization or permit of, action by, filing
with or notification to, any governmental or regulatory
authority, domestic or foreign, except for (i) applicable
requirements, if any, of the laws referred to in clause (i) of
the exception to Section 3.5(b), (ii) the filing and recordation
of appropriate merger or other documents as required by Maine Law
and Delaware Law, (iii) compliance with the statutory provisions
and regulations relating to the New York State Tax on Gains
Derived from Certain Real Property Transfers and the New York
City Real Property Transfer Tax and (iv) such consents,
approvals, authorizations, permits, actions, filings or
notifications the failure of which to make or obtain would not,
individually or in the aggregate, reasonably be expected to
prevent the consummation of the Offer or the Merger.
SECTION 4.4 Offer Documents; Proxy Statement. The
--------------------------------
Offer Documents, as amended pursuant to Section 1.1, will not, at
the time such Offer Documents as so amended are filed with the
SEC or are first published, sent or given to shareholders, as the
case may be, contain any untrue statement of a material fact or
omit to state any material fact required to be stated or
incorporated by reference therein or necessary in order to make
the statements therein, in light of the circumstances under which
they were made, not misleading. The information supplied by
Parent for inclusion in the Proxy Statement shall not, on the
date the Proxy Statement is first mailed to shareholders, at the
time of the Shareholders Meeting (as defined in Section 6.1) or
at the Effective Time, contain any statement which, at such time
and in light of the circumstances under which it shall be made,
is false or misleading with respect to any material fact, or
shall omit to state a material fact required to be stated therein
or necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the
Shareholders Meeting which has become false or misleading.
Notwithstanding the foregoing, Parent and Purchaser make no
<PAGE>
23
representation or warranty with respect to any information
supplied by the Company or any of its representatives which is
contained in any of the foregoing documents or the Offer
Documents. The Offer Documents, as amended and supplemented by
the Supplement, will comply in all material respects as to form
with the requirements of the Exchange Act and the rules and
regulations thereunder.
SECTION 4.5 Financing. Upon the terms and subject to
---------
the conditions of this Agreement and the amended Offer, Purchaser
is highly confident that it has or will have available to it all
funds necessary to satisfy the obligation to pay the Per Share
Amount pursuant to the Offer and the Merger Consideration
pursuant to the Merger.
SECTION 4.6 Brokers. No broker, finder or investment
-------
banker (other than Gleacher & Co. Inc.) is entitled to any
brokerage, finder's or other fee or commission in connection with
the transactions contemplated by this Agreement based upon
arrangements made by and on behalf of Parent or Purchaser.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 Conduct of Business of the Company Pending
------------------------------------------
the Merger. The Company covenants and agrees that, during the
- ----------
period from the date hereof to the Effective Time, except
pursuant to the terms hereof or as disclosed with reasonable
specificity in the SEC Reports filed prior to the date hereof, or
unless Parent shall otherwise agree in writing, the businesses of
the Company and its subsidiaries (other than Immunex) shall be
conducted only in, and the Company shall not take any action
(including with respect to Immunex) and its subsidiaries (other
than Immunex) shall not take any action except in the ordinary
course of business and in a manner consistent with past practice
and in compliance with applicable laws; and the Company and its
subsidiaries (other than Immunex) shall each use its reasonable
best efforts to preserve substantially intact the business
organization of the Company and its subsidiaries, to keep
available the services of the present officers, employees and
consultants of the Company and its subsidiaries and to preserve
the present relationships of the Company and its subsidiaries
with customers, suppliers and other persons with which the
Company or any of its subsidiaries has significant business
relations. By way of amplification and not limitation, neither
the Company (including with respect to Immunex) nor any of its
subsidiaries (other than Immunex) shall, between the date of this
Agreement and the Effective Time, directly or indirectly do, or
propose or commit to do, any of the following, except as
contemplated by this Agreement or as previously disclosed with
reasonable specificity in the SEC Reports filed prior to the date
hereof, without the prior written consent of Parent:
<PAGE>
24
(a) Amend or otherwise change its Restated Articles of
Incorporation or By-Laws or equivalent organizational
documents;
(b) Issue, deliver, sell, pledge, dispose of or
encumber, or authorize or commit to the issuance, sale,
pledge, disposition or encumbrance of, (A) any shares of
capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to
acquire any shares of capital stock, or any other ownership
interest (including but not limited to stock appreciation
rights or phantom stock), of the Company or any of its
subsidiaries (except for the issuance of up to 5,451,876
shares of Company Common Stock issuable in accordance with
the terms of Employee Options outstanding as of August 12,
1994 or (B) any assets of the Company or any of its
subsidiaries, except for sales of products in the ordinary
course of business and in a manner consistent with past
practice;
(c) Declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock, except
for the regular quarterly dividend on the Shares in the
amount of $.4625 per Share declared on August 16, 1994 and
the amounts to be paid upon the redemption of the Rights
pursuant to the Rights Agreement in accordance with Section
6.8;
(d) Reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any
of its capital stock, except for the redemption of the
Rights at the redemption price of $.02 per Right in
accordance with Section 6.8;
(e) (i) Acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership
or other business organization or division thereof, except
for the completion of the Company's previously announced
acquisition of the Shell Company's crop protection business,
(ii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or
otherwise as an accommodation become responsible for, the
obligations of any person, or make any loans, advances or
capital contributions to, or investments in, any other
person, except for such of the foregoing incurred in the
ordinary course of business, consistent with past practice,
having a maturity not exceeding 90 days, in an aggregate
amount not in excess (including refinancing of already
outstanding amounts) of $900 million; (iii) enter into any
contract or agreement other than in the ordinary course of
business consistent with past practice; (iv) authorize any
single capital expenditure which is in excess of $1 million
or capital expenditures which are, in the aggregate, in
<PAGE>
25
excess of $20 million for the Company and its subsidiaries
taken as a whole; or (v) enter into or amend any contract,
agreement, commitment or arrangement with respect to any of
the matters set forth in this Section 5.1(e);
(f) Except as set forth on Schedule 5.1(f), as
previously approved by Parent or to the extent required
under existing employee and director benefit plans,
agreements or arrangements as in effect on the date of this
Agreement, increase the compensation or fringe benefits of
any of its directors, officers or employees, except for
increases in salary or wages of employees of the Company or
its subsidiaries who are not officers or directors of the
Company in the ordinary course of business in accordance
with past practice, or grant any severance or termination
pay not currently required to be paid under existing
severance plans to, or enter into any employment, consulting
or severance agreement with any present or former director,
officer or other employee of the Company or any of its
subsidiaries (other than an agreement entered into in
exchange for a release by an employee who is not an officer
or director, of any and all claims against the Company
following such employee's termination of employment, but
only if the aggregate amount payable to any terminated
employee under any such agreement does not exceed $100,000
and the aggregate amount payable pursuant to all such
agreements does not exceed $1,000,000), or establish, adopt,
enter into or amend or terminate any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy or arrangement for the
benefit of any directors, officers or employees;
(g) Except as may be required as a result of a change
in law or in generally accepted accounting principles,
change any of the accounting practices or principles used by
it;
(h) Make any tax election or settle or compromise any
material federal, state, local or foreign tax liability;
(i) Settle or compromise any pending or threatened
suit, action or claim which is material or which relates to
the transactions contemplated hereby;
(j) Take any action, including but not limited to
introducing a new product, which, in the good faith judgment
of the Company, is reasonably likely to result in any
material claim that the Company has violated applicable
laws, rules or regulations or any rights of any other
person;
<PAGE>
26
(k) Adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or
any of its subsidiaries not constituting an inactive
subsidiary (other than the Merger);
(l) Pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge
or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or
reserved against in the financial statements of the Company
or incurred in the ordinary course of business and
consistent with past practice; or
(m) Take, or offer or propose to take, or agree to
take in writing or otherwise, any of the actions described
in Sections 5.1(a) through 5.1(l) or any action which would
make any of the representations or warranties of the Company
contained in this Agreement untrue and incorrect as of the
date when made if such action had then been taken, or would
result in any of the Offer Conditions not being satisfied.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Shareholders Meeting. (a) The Company,
--------------------
acting through its Board of Directors, shall, if required in
accordance with applicable law and the Company's Restated
Articles of Incorporation and By-Laws, (i) duly call, give notice
of, convene and hold a special meeting of its shareholders as
soon as practicable following consummation of the Offer for the
purpose of considering and taking action on this Agreement and
the transactions contemplated hereby (the "Shareholders Meeting")
--------------------
and (ii) subject to its fiduciary duties under applicable law,
exercised after consultation with independent legal counsel, (A)
include in the Proxy Statement the unanimous recommendation of
the Board of Directors that the shareholders of the Company vote
in favor of the approval of this Agreement and the transactions
contemplated hereby and the written opinions of the Financial
Advisers that the consideration to be received by the
shareholders of the Company pursuant to the Offer and the Merger
is fair to such shareholders and (B) use its reasonable best
efforts to obtain the necessary approval of this Agreement and
the transactions contemplated hereby by its shareholders. At the
Shareholders Meeting, Parent and Purchaser shall cause all Shares
then owned by them and their subsidiaries to be voted in favor of
approval of this Agreement and the transactions contemplated
hereby.
(b) Notwithstanding the foregoing, in the event that
Purchaser shall acquire at least 90% of the outstanding Shares,
<PAGE>
27
the Company agrees, at the request of Purchaser, subject to
Article VII, to take all necessary and appropriate action to
cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the
Company's shareholders, in accordance with Section 904 of Maine
Law.
SECTION 6.2 Proxy Statement. If required by
---------------
applicable law, as soon as practicable following Parent's
reasonable request, the Company shall file with the SEC under the
Exchange Act, and shall use its reasonable best efforts to have
cleared by the SEC, the Proxy Statement with respect to the
Shareholders Meeting. Parent, Purchaser and the Company will
cooperate with each other in the preparation of the Proxy
Statement; without limiting the generality of the foregoing, each
of Parent and Purchaser will furnish to the Company the
information relating to it required by the Exchange Act to be set
forth in the Proxy Statement. The Company agrees to use its
reasonable best efforts, after consultation with the other
parties hereto, to respond promptly to any comments made by the
SEC with respect to the Proxy Statement and any preliminary
version thereof filed by it and cause such Proxy Statement to be
mailed to the Company's shareholders at the earliest practicable
time.
SECTION 6.3 Company Board Representation; Section
-------------------------------------
14(f). (a) Promptly upon the purchase by Purchaser of Shares
- -----
pursuant to the Offer, and from time to time thereafter,
Purchaser shall be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Board of
Directors of the Company as shall give Purchaser representation
on the Board of Directors equal to the product of the total
number of directors on such Board (giving effect to the directors
elected pursuant to this sentence) multiplied by the percentage
that the aggregate number of Shares beneficially owned by
Purchaser or any affiliate of Purchaser bears to the total number
of Shares then outstanding, and the Company shall, at such time,
promptly take all action necessary to cause Purchaser's designees
to be so elected, including either increasing the size of the
Board of Directors or securing the resignations of incumbent
directors or both. At such times, the Company will use its
reasonable best efforts to cause persons designated by the
Purchaser to constitute the same percentage as is on the Board of
(i) each committee of the Board, (ii) each board of directors of
each domestic subsidiary of the Company and (iii) each committee
of each such board, in each case only to the extent permitted by
law. Until Purchaser acquires a majority of the outstanding
Shares on a fully diluted basis, the Company shall use its
reasonable best efforts to ensure that all the members of the
Board and such boards and committees as of the date hereof who
are not employees of the Company shall remain members of the
Board and such boards and committees.
<PAGE>
28
(b) The Company's obligations to appoint designees to
its Board of Directors shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. The Company
shall promptly take all actions required pursuant to Section
14(f) and Rule 14f-1 in order to fulfill its obligations under
this Section 6.3 and shall, if requested by Parent, include in
the Schedule 14D-9 or a separate Rule 14f-1 Statement provided to
shareholders such information with respect to the Company and its
officers and directors as is required under Section 14(f) and
Rule 14f-1 to fulfill its obligations under this Section 6.3.
Parent or Purchaser will supply to the Company and be solely
responsible for any information with respect to either of them
and their nominees, officers, directors and affiliates required
by Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of
Purchaser's designees pursuant to this Section 6.3 and prior to
the Effective Time, any amendment of this Agreement or the
Restated Articles of Incorporation or By-Laws of the Company, any
termination of this Agreement by the Company, any extension by
the Company of the time for the performance of any of the
obligations or other acts of Purchaser or waiver of any of the
Company's rights hereunder, and any other consent or action by
the Board of Directors hereunder, will require the concurrence of
a majority (which shall be at least two) of the directors of the
Company then in office who are neither designated by Purchaser
nor are employees of the Company (the "Disinterested Directors").
-----------------------
SECTION 6.4 Access to Information; Confidentiality.
--------------------------------------
(a) From the date hereof to the Effective Time, the Company
shall, and shall cause its subsidiaries, officers, directors,
employees, auditors and other agents to, afford the officers,
employees, auditors and other agents of Parent, and financing
sources who shall agree to be bound by the provisions of this
Section 6.4 as though a party hereto, complete access at all
reasonable times to its officers, employees, agents, properties,
offices, plants and other facilities and to all books and
records, and shall furnish Parent and such financing sources with
all financial, operating and other data and information as
Parent, through its officers, employees or agents, or such
financing sources may from time to time request.
(b) Each of Parent and Purchaser will hold and will
cause its officers, employees, auditors and other agents to hold
in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all
documents and information concerning the Company and its
subsidiaries furnished to Parent or Purchaser in connection with
the transactions contemplated in this Agreement (except to the
extent that such information can be shown to have been (i)
previously known by Parent or Purchaser from sources other than
the Company, or its directors, officers, auditors or other
agents, (ii) in the public domain through no fault of Parent or
Purchaser or (iii) later lawfully acquired by Parent or Purchaser
<PAGE>
29
on a non-confidential basis from other sources who are not known
by Parent or Purchaser to be bound by a confidentiality agreement
(after inquiry of such sources) or otherwise prohibited from
transmitting the information to Parent or Purchaser by a
contractual, legal or fiduciary obligation) and will not release
or disclose such information to any other person, except its
auditors and other advisors in connection with this Agreement who
need to know such information. If the transactions contemplated
by this Agreement are not consummated, such confidence shall be
maintained for a period of three years from the date hereof and,
if requested by or on behalf of the Company, Parent and Purchaser
will, and will use all reasonable efforts to cause their auditors
and other agents to, return to the Company or destroy all copies
of written information furnished by the Company to Parent and
Purchaser or their agents, representatives or advisors. It is
understood that Parent and Purchaser shall be deemed to have
satisfied their obligation to hold such information confidential
if they exercise the same care as they take to preserve
confidentiality for their own similar information.
(c) No investigation pursuant to this Section 6.4
shall affect any representations or warranties of the parties
herein or the conditions to the obligations of the parties
hereto.
SECTION 6.5 No Solicitation of Transactions. The
-------------------------------
Company, its affiliates and their respective officers, directors,
employees, representatives and agents shall immediately cease any
existing discussions or negotiations, if any, with any parties
conducted heretofore with respect to any acquisition or exchange
of all or any material portion of the assets of, or any equity
interest in, the Company or any of its subsidiaries or any
business combination with the Company or any of its subsidiaries.
The Company may, directly or indirectly, furnish information and
access, in each case only in response to a request for such
information or access to any person made after the date hereof
which was not encouraged, solicited or initiated by the Company
or any of its affiliates or any of its or their respective
officers, directors, employees, representatives or agents after
the date hereof, pursuant to appropriate confidentiality
agreements, and may participate in discussions and negotiate with
such entity or group concerning any merger, sale of assets, sale
of shares of capital stock or similar transaction (including an
exchange of stock or assets) involving the Company or any
subsidiary or division of the Company, if such entity or group
has submitted a written proposal to the Board relating to any
such transaction and failing to take such action would constitute
a breach of the Board's fiduciary duty under applicable law. The
Board shall provide a copy of any such written proposal to Parent
immediately after receipt thereof, unless independent outside
legal counsel to the Company has advised the Board of Directors
that providing such a copy would constitute a breach of the
Board's fiduciary duty under applicable law. Notwithstanding the
foregoing, the Company shall notify Parent immediately if any
<PAGE>
30
such proposal is made and shall keep Parent promptly advised of
all developments which could reasonably be expected to culminate
in the Board of Directors withdrawing, modifying or amending its
recommendation of the Offer, the Merger and the other
transactions contemplated by this Agreement. Except as set forth
in this Section 6.5, neither the Company or any of its
affiliates, nor any of its or their respective officers,
directors, employees, representatives or agents, shall, directly
or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to,
any corporation, partnership, person or other entity or group
(other than Parent and Purchaser, any affiliate or associate of
Parent and Purchaser or any designees of Parent or Purchaser)
concerning any merger, sale of assets, sale of shares of capital
stock or similar transactions (including an exchange of stock or
assets) involving the Company or any subsidiary or division of
the Company; provided, however, that nothing in this Section 6.5
-------- -------
shall prevent the Board from taking, and disclosing to the
Company's shareholders, a position contemplated by Rules 14d-9
and 14e-2 promulgated under the Exchange Act with regard to any
tender offer; provided, further, that the Board shall not
-------- -------
recommend that the shareholders of the Company tender their
Shares in connection with any such tender offer unless failing to
take such action would constitute a breach of the Board's
fiduciary duty under applicable law. The Company agrees not to
release any third party from, or waive any provisions of, any
confidentiality or standstill agreement to which the Company is a
party, unless failing to release such third party or waive such
provisions would constitute a breach of the Board's fiduciary
duty under applicable law.
SECTION 6.6 Employee Benefits Matters. (a) Parent
-------------------------
shall cause the Company and the Surviving Corporation to promptly
pay or provide when due all compensation and benefits earned
through or prior to the Effective Time as provided pursuant to
the terms of any compensation arrangements, employment agreements
and employee or director benefit plans, programs and policies in
existence as of the date hereof for all employees (and former
employees) and directors (and former directors) of the Company.
Parent and the Company agree that the Company and the Surviving
Corporation shall pay promptly or provide when due all
compensation and benefits required to be paid pursuant to the
terms of any individual agreement with any employee, former
employee, director or former director in effect and disclosed to
Parent as of the date hereof. Nothing in this Agreement shall
require the continued employment of any person or prevent the
Company and/or the Surviving Corporation from taking any action
or refraining from taking any action which the Company could take
or refrain from taking prior to the Effective Time.
(b) Except as contemplated herein, Parent shall cause
the Surviving Corporation, for the period ending on December 31,
1995, to provide employee benefits under plans, programs and
arrangements which, in the aggregate, will provide benefits to
<PAGE>
31
the employees and former employees of the Surviving Corporation
(other than employees and former employees covered by a
collective bargaining agreement) which are no less favorable in
the aggregate than those provided to such persons pursuant to the
plans, programs and arrangements of the Company in effect on the
date hereof (other than all Performance Allotments and
Performance Share Allotments under the Company's Incentive Plan,
which shall be disregarded for all purposes under this Section
6.6(b)) and employees and former employees covered by collective
bargaining agreements shall be provided with such benefits as
shall be required under the terms of any applicable collective
bargaining agreement; provided, however, that nothing herein (i)
-------- -------
shall prevent the amendment or termination of any such plan,
program or arrangement, (ii) require that the Surviving
Corporation provide or permit investment in the securities of
Parent, the Company or the Surviving Corporation or (iii)
interfere with the Surviving Corporation's right or obligation to
make such changes as are necessary to conform with applicable
law. On and after January 1, 1996, Parent shall provide
employees and former employees of the Surviving Corporation
(other than those covered by collective bargaining agreements)
with benefits, in the aggregate, that are no less favorable than
those provided to similarly situated employees and former
employees of other subsidiaries of Parent.
(c) With respect to the payment of the Current
Allotments under the Company Incentive Plan and cash incentive
compensation awards under the Cash Incentive Compensation Plan of
the Company in respect of the year ending December 31, 1994,
Parent shall cause the Company to pay such amounts, in accordance
with the applicable performance targets established at the
beginning of such year, as soon as practicable following the
close of such year and the date the actual performance of the
Company and its subsidiaries for the year then ended is
calculated. The determination of the performance of the Company
and its subsidiaries shall be made in good faith by the certified
public accountants of the Company who were the Company's
certified public accountants prior to the purchase of Shares
pursuant to the Offer, after disregarding the financial effects
of the transactions contemplated hereunder and any other changes
made by Parent after the purchase of Shares pursuant to the Offer
to the operations, finances or corporate structure of the Company
and its subsidiaries. Notwithstanding anything in this Section
6.06(c) to the contrary, if, prior to the date the Current
Allotments or cash incentive compensation awards are paid
pursuant to this section (c), any employee is terminated by the
Company without "cause" or voluntarily terminates employment
following a reduction in base salary, the Company or the
Surviving Corporation shall pay the employee his or her award
under the applicable plan as soon as practicable following the
employee's termination of employment.
(d) Parent shall cause the Company to contribute to
the Company Savings Plan approximately $7 million as the Company
<PAGE>
32
"performance contribution" for the year ended December 31, 1994,
provided the actual performance of the Company and its
subsidiaries as of December 31, 1994 satisfies the conditions
provided under the Savings Plan for such contribution. Such
contribution shall be made as soon as practicable following the
close of such year and the date the actual performance of the
Company and its subsidiaries for the year then ended is
calculated. The determination of such performance shall be made
in the same manner as provided in Section 6.6(c) above.
Moreover, with respect to any participant in the Savings Plan
whose employment is terminated by the Company prior to December
31, 1994 without cause or voluntarily by the employee following a
reduction in base salary, such participant shall be vested in
that portion of the Company performance contribution which such
participant would have otherwise been entitled to receive under
the terms of the Savings Plan as in effect on the date hereof had
such participant's employment not been terminated prior to
December 31, 1994.
(e) As soon as practicable after the date the Shares
are purchased pursuant to the Offer, the Company shall pay
Incentive Compensation Plan participants an amount ("Incentive
Compensation Cashout") equal to the value of the Performance
Allotments determined in accordance with Rule 8(g) of the Rules
and Regulations of the Compensation Committee under such plan, as
in effect on the date hereof. As soon as practicable after
December 31, 1994, Parent shall cause the Surviving Corporation
to pay to each participant who is an employee as of December 31,
1994 an amount (the "Additional Payment") equal to the excess of
the amount such employee would have received under such Rule 8(g)
had the value of the Performance Allotments been calculated at
141.5% of the target bonus over the Incentive Compensation
Cashout received by such employee. Notwithstanding the
foregoing, if an employee's employment is terminated without
cause by the Company or voluntarily by the employee following
the reduction of such employee's base salary after the date the
Shares are purchased pursuant to the Offer but prior to the payment
of the Additional Payment, the Company shall pay such employee the
Additional Payment as soon as practicable after the employee's
termination of employment.
(f) Parent shall cause the Surviving Corporation to
include as a participant in the Company's Supplemental Employees
Retirement Plan ("SERP") any individual who is a Key Manager (as
defined below) as of the date hereof whose employment is
terminated by the Company without cause or who voluntarily
terminates employment following a reduction in base salary within
the two year period following the date the Shares are purchased
pursuant to the Offer and such person shall be entitled to
benefits hereunder if, but only if, at the time of such
termination, the Key Manager has attained age 50 with 10 years of
service with the Company and the Surviving Corporation. Payment
of retirement benefits under the SERP will commence no earlier
than the first day of the month following the Key Manager's 60th
birthday. As used herein, "Key Manager" means a participant in
<PAGE>
33
the Company's Incentive Compensation Plan, as in effect on the
date hereof.
SECTION 6.7 Directors' and Officers' Indemnification
----------------------------------------
and Insurance. (a) The By-Laws of the Surviving Corporation
- -------------
shall contain provisions no less favorable with respect to
indemnification than are set forth in Article IV of the By-laws
of the Company, which provisions shall not be amended, repealed
or otherwise modified for a period of five years from the
Effective Time in any manner that would adversely affect the
rights thereunder of individuals who at the Effective Time were
directors, officers, agents or employees of the Company or
otherwise entitled to indemnification pursuant to Article IV of
the Company's By-Laws.
(b) Parent shall use its best efforts to cause to be
maintained in effect for three years from the Effective Time the
current policies of the directors' and officers' liability
insurance maintained by the Company (provided that Parent may
--------
substitute therefor policies of at least the same coverage
containing terms and conditions which are not materially less
advantageous) with respect to matters occurring prior to the
Effective Time to the extent available; provided, however, that
-------- -------
in no event shall Parent or the Company be required to expend
more than an amount per year equal to 150% of current annual
premiums paid by the Company (which the Company represents and
warrants to be not more than $1,204,050) to maintain or procure
insurance coverage pursuant hereto.
SECTION 6.8 No Amendment to the Rights Agreement;
-------------------------------------
Redemption. The Company covenants and agrees that it will not
- ----------
amend the Rights Agreement, except as expressly contemplated by
this Agreement. The Company will redeem all outstanding Rights
at a redemption price of $.02 per Right immediately prior to the
consummation of the Offer; the Rights Agreement permits and will
permit such redemption.
SECTION 6.9 Further Action; Reasonable Best Efforts.
---------------------------------------
Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use its reasonable best efforts to take, or
cause to be taken, all appropriate action, and to do or cause to
be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement, including but
not limited to (i) cooperation in the preparation and filing of
the Offer Documents, the Schedule 14D-9, the Proxy Statement, any
required filings under the HSR Act and other laws described in
clause (i) of the exception in Section 3.5(b), and any amendments
to any thereof and (ii) using its reasonable best efforts to make
all required regulatory filings and applications and to obtain
all licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and parties
to contracts with the Company and its subsidiaries as are
necessary for the consummation of the transactions contemplated
<PAGE>
34
by this Agreement and to fulfill the conditions to the Offer and
the Merger. The Company will cooperate with Parent and Purchaser
with respect to consummating the financing for the Offer and the
Merger. In case at any time after the Effective Time any further
action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and directors of each party
to this Agreement shall use their reasonable best efforts to take
all such necessary action.
SECTION 6.10 Public Announcements. Parent and the
--------------------
Company shall consult with each other before issuing any press
release or otherwise making any public statements with respect to
the Offer or the Merger and shall not issue any such press
release or make any such public statement prior to such
consultation, except as may be required by law or any listing
agreement with its securities exchange.
SECTION 6.11 Notice Pursuant to Section 910. To the
------------------------------
extent required by Maine Law, Parent shall cause the Purchaser to
give the notice required by subsection 3 of Section 910 not later
than fifteen days after the acceptance for payment of Shares
pursuant to the Offer. In order to provide such notice, the
Company shall provide to Parent, not less than five days prior to
the date on which such notice must be made pursuant to this
Section, an updated list of shareholders, which list shall be
subject to the provisions of Section 1.2(c) of this Agreement.
If permitted by applicable law, such notice may be contained in
or provided in connection with the Offer Documents or the Proxy
Statement.
SECTION 6.12 Taxes. Any liability with respect to the
-----
transfer of the property of the Company arising out of the New
York State Real Property Gains Tax, the New York State Real
Estate Transfer Tax and the New York City Real Property
Transaction Tax shall be borne by the Company and expressly shall
not be a liability of the shareholders of the Company.
SECTION 6.13 Disposition of Litigation. (a) Each
-------------------------
party agrees to use its best efforts to obtain a dismissal
without prejudice of American Home Products Corporation, et al.
------------------------------------------
v. American Cyanamid Company, et al., Civil Action Docket
- ------------------------------------
No. 94-230-P-H (D. Me. 1994), including any and all counterclaims
asserted against the Company, its directors, its officers, Parent
and Purchaser, with each party bearing its own costs and
attorneys' fees therefor. The Company agrees that it will not
settle any litigation currently pending, or commenced after the
date hereof, against the Company or any of its directors by any
shareholder of the Company relating to the Offer or this
Agreement, without the prior written consent of Parent.
(b) The Company will not voluntarily cooperate with
any third party which has sought or may hereafter seek to
restrain or prohibit or otherwise oppose the Offer or the Merger
and will cooperate with Parent and Purchaser to resist any such
<PAGE>
35
effort to restrain or prohibit or otherwise oppose the Offer or
the Merger, unless failing so to cooperate with such third party
or cooperating with Parent or Purchaser, as the case may be,
would constitute a breach of the Board's fiduciary duty under
applicable law.
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.1 Conditions to Obligation of Each Party to
-----------------------------------------
Effect the Merger. The respective obligations of each party to
- -----------------
effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions:
(a) If required by Maine Law, this Agreement shall
have been approved by the affirmative vote of the
shareholders of the Company by the requisite vote in
accordance with the Company's Restated Articles of
Incorporation and Maine Law (which the Company has
represented shall be solely the affirmative vote of a
majority of the outstanding Shares).
(b) No statute, rule, regulation, executive order,
decree, ruling, injunction or other order (whether
temporary, preliminary or permanent) shall have been
enacted, entered, promulgated or enforced by any United
States or state court or governmental authority which
prohibits, restrains, enjoins or restricts the consummation
of the Merger.
(c) Any waiting period applicable to the Merger under
the HSR Act shall have terminated or expired.
(d) Purchaser shall have purchased Shares pursuant to
the Offer.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination. This Agreement may be
-----------
terminated and the Merger contemplated hereby may be abandoned at
any time prior to the Effective Time, notwithstanding approval
thereof by the shareholders of the Company:
(a) By mutual written consent of Parent, Purchaser and
the Company; or
(b) By Parent or the Company if any court of competent
jurisdiction or other governmental body located or having
jurisdiction within the United States or any country or
economic region in which either the Company or Parent,
<PAGE>
36
directly or indirectly, has material assets or operations,
shall have issued a final order, decree or ruling or taken
any other final action restraining, enjoining or otherwise
prohibiting the Offer or the Merger and such order, decree,
ruling or other action is or shall have become final and
nonappealable;
(c) By Parent if due to an occurrence or circumstance
which would result in a failure to satisfy any of the Offer
Conditions, Purchaser shall have (i) failed to amend the
Offer as provided in Section 1.1, (ii) terminated the Offer
or (iii) failed to pay for Shares pursuant to the Offer on
or prior to the Outside Date (as defined below);
(d) By the Company if (i) there shall not have been a
material breach of any representation, warranty, covenant or
agreement on the part of the Company, and Purchaser shall
have (A) terminated the Offer or (B) failed to pay for
Shares pursuant to the Offer on or prior to the Outside Date
or (ii) prior to the purchase of Shares pursuant to the
Offer, any person shall have made a bona fide offer to
acquire the Company (A) that the Board has determined in its
good faith judgment is more favorable to the Company's
shareholders than the Offer and the Merger and (B) as a
result of which the Board is obligated by its fiduciary duty
under applicable law to terminate this Agreement, provided
--------
that such termination under this clause (ii) shall not be
effective until the Company has made payment of the full fee
required by Section 8.3(b) hereof and has deposited with a
mutually acceptable escrow agent $50 million for
reimbursement to Parent of expenses in accordance with
Section 8.3(b) hereof; or
(e) By Parent prior to the purchase of Shares pursuant
to the Offer, if (i) there shall have been a breach of any
representation or warranty on the part of the Company which
would reasonably be expected to either have a Material
Adverse Effect on the Company or prevent the consummation of
the Offer, (ii) there shall have been a breach of any
covenant or agreement on the part of the Company which would
reasonably be expected to either have a Material Adverse
Effect or prevent the consummation of the Offer, which shall
not have been cured prior to the earlier of (A) 10 days
following notice of such breach and (B) two business days
prior to the date on which the Offer expires, (iii) the
Board shall have withdrawn or modified (including by
amendment of the Schedule 14D-9) in a manner adverse to
Purchaser its approval or recommendation of the Offer, this
Agreement or the Merger or shall have recommended another
offer or transaction, or shall have resolved to effect any
of the foregoing or (iv) the Minimum Condition shall not
have been satisfied by the expiration date of the Offer and
on or prior to such date (A) any person (other than Parent
or Purchaser) shall have made a proposal or public
<PAGE>
37
announcement or communication to the Company with respect to
a Third Party Acquisition or (B) any person (including the
Company or any of its subsidiaries or affiliates), other
than Parent or any of its affiliates, shall have become the
beneficial owner of 19.9% or more of the Shares. As used
herein, the "Outside Date" shall mean the latest (not to
exceed 120 days following the date hereof) of (A) 60 days
following the date hereof, (B) if a Request for Additional
Information is made by the Federal Trade Commission pursuant
to the HSR Act, 10 business days after substantial
compliance with any such request, or (C) 10 business days
following the conclusion of any ongoing proceedings before
the European Commission in connection with its review of the
transactions contemplated hereby or any similar delay
pursuant to any other material antitrust or competition law
or regulation.
SECTION 8.2 Effect of Termination. In the event of
---------------------
the termination of this Agreement pursuant to Section 8.1, this
Agreement shall forthwith become void and there shall be no
liability on the part of any party hereto except as set forth in
Section 8.3 and Section 9.1; provided, however, that nothing
-------- -------
herein shall relieve any party from liability for any breach
hereof.
SECTION 8.3 Fees and Expenses.
-----------------
(a) If:
(i) Parent terminates this Agreement pursuant to
Section 8.1(e)(i) or (ii) hereof, or if the Company
terminates this Agreement pursuant to Section 8.1(d)(i)
hereof, and, within 12 months thereafter, the Company enters
into an agreement with respect to a Third Party Acquisition,
or a Third Party Acquisition occurs, involving any party (or
any affiliate or associate thereof) (x) with whom the
Company (or its agents) had any discussions with respect to
a Third Party Acquisition, (y) to whom the Company (or its
agents) furnished information with respect to or with a view
to a Third Party Acquisition or (z) who had submitted a
proposal or expressed any interest publicly or to the
Company in a Third Party Acquisition, in the case of each of
clauses (x), (y) and (z) prior to such termination; or
(ii) Parent terminates this Agreement pursuant to
Section 8.1(e)(i) or (ii) hereof, or if the Company
terminates this Agreement pursuant to Section 8.1(d)(i)
hereof, and within 12 months thereafter a Third Party
Acquisition shall occur involving a direct or indirect
consideration (or implicit valuation) for Shares (including
the value of any stub equity) in excess of the Per Share
Amount; or
<PAGE>
38
(iii) Parent terminates this Agreement pursuant to
Section 8.1(e)(iii) or (iv) hereof or the Company terminates
this Agreement pursuant to Section 8.1(d)(ii) hereof or
otherwise under circumstances that would have permitted
Parent to terminate this Agreement under Section 8.1(e)(iv)
hereof;
then the Company shall pay to Parent and Purchaser, within one
business day following the execution and delivery of such
agreement or such occurrence, as the case may be, or
simultaneously with any termination contemplated by Section
8.3(a)(iii) above, a fee, in cash, of $100 million, provided,
--------
however, that the Company in no event shall be obligated to pay
- -------
more than one such $100 million fee with respect to all such
agreements and occurrences and such termination.
"Third Party Acquisition" means the occurrence of any
-----------------------
of the following events: (i) the acquisition of the Company by
merger, tender offer or otherwise by any person other than
Parent, Purchaser or any affiliate thereof (a "Third Party");
-----------
(ii) the acquisition by a Third Party of 19.9% or more of the
total assets of the Company and its subsidiaries, taken as a
whole; (iii) the acquisition by a Third Party of 19.9% or more of
the outstanding Shares; (iv) the adoption by the Company of a
plan of liquidation or the declaration or payment of an
extraordinary dividend; or (v) the repurchase by the Company or
any of its subsidiaries of 19.9% or more of the outstanding
Shares, other than a repurchase which was not approved by the
Company or publicly announced prior to the termination of this
Agreement and which is not part of a series of transactions
resulting in a change of control.
(b) Upon the termination of this Agreement (i) under
circumstances in which Parent or Purchaser shall have been
entitled to terminate this Agreement pursuant to Section
8.1(e)(i) or (ii) hereof (whether or not expressly terminated on
such basis) or (ii) under circumstances in which the Company
shall be obligated to pay a fee pursuant to Section 8.3(a), the
Company shall reimburse Parent, Purchaser and their affiliates
(not later than one business day after submission of statements
therefor) for all actual documented out-of-pocket fees and
expenses actually incurred by any of them or on their behalf in
connection with the Offer and the Merger and the consummation of
all transactions contemplated by this Agreement (including,
without limitation, fees and disbursements payable to financing
sources, investment bankers, counsel to Purchaser or Parent or
any of the foregoing, and accountants). Unless required to be
paid earlier pursuant to Section 8.1(d), the Company shall in any
event pay the amount requested within one business day of such
request, subject to the Company's right to demand a return of any
portion as to which invoices are not received in due course after
request by the Company. The escrow agent referred to in Section
8.1(d) shall promptly and in any event within one business day of
receipt of request therefor by Purchaser or Parent disburse to
<PAGE>
39
Purchaser or Parent the fees and expenses payable by the Company
pursuant to this Section 8.3(b). To the extent that funds
deposited with such escrow agent are insufficient to reimburse
Purchaser and Parent for all fees and expenses pursuant to this
Section 8.3(b), the Company shall, upon submission of invoices,
directly reimburse Purchaser and Parent.
(c) Except as specifically provided in this Section
8.3, each party shall bear its own expenses in connection with
this Agreement and the transactions contemplated hereby.
SECTION 8.4 Amendment. Subject to Section 6.3, this
---------
Agreement may be amended by the parties hereto by action taken by
or on behalf of their respective Boards of Directors at any time
prior to the Effective Time; provided, however, that, after
-------- -------
approval of the Merger by the shareholders of the Company, no
amendment may be made which would reduce the amount or change the
type of consideration into which each Share shall be converted
upon consummation of the Merger. This Agreement may not be
amended except by an instrument in writing signed by the parties
hereto.
SECTION 8.5 Waiver. Subject to Section 6.3, at any
------
time prior to the Effective Time, any party hereto may (a) extend
the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in
the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with
any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid if set forth in an instrument
in writing signed by the party or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Non-Survival of Representations,
--------------------------------
Warranties and Agreements. The representations, warranties and
- -------------------------
agreements in this Agreement shall terminate at the Effective
Time or upon the termination of this Agreement pursuant to
Section 8.1, as the case may be, except that the agreements set
forth in Article II, Section 6.6, Section 6.7, Section 6.9 and
Article IX shall survive the Effective Time indefinitely and
those set forth in Section 6.4, Section 8.3 and Article IX shall
survive termination indefinitely.
SECTION 9.2 Notices. All notices, requests, claims,
-------
demands and other communications hereunder shall be in writing
and shall be given (and shall be deemed to have been duly given
upon receipt) by delivery in person, by cable, telecopy, telegram
or telex or by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the
following addresses (or at such other address for a party as
shall be specified by like notice):
<PAGE>
40
if to Parent or Purchaser:
American Home Products Corporation
Five Giralda Farms
Madison, New Jersey 07940
Attention: Louis L. Hoynes, Jr., Esq.
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: Robert E. Spatt, Esq.
if to the Company:
American Cyanamid Company
One Cyanamid Plaza
Wayne, New Jersey 07470
Attention: Secretary
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: Peter D. Lyons, Esq.
SECTION 9.3 Certain Definitions. For purposes of this
-------------------
Agreement, the term:
(a) "affiliate" of a person means a person that
---------
directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with,
the first mentioned person;
(b) "beneficial owner" with respect to any Shares
----------------
means a person who shall be deemed to be the beneficial
owner of such Shares (i) which such person or any of its
affiliates or associates beneficially owns, directly or
indirectly, (ii) which such person or any of its affiliates
or associates (as such term is defined in Rule 12b-2 of the
Exchange Act) has, directly or indirectly, (A) the right to
acquire (whether such right is exercisable immediately or
subject only to the passage of time), pursuant to any
agreement, arrangement or understanding or upon the exercise
of consideration rights, exchange rights, warrants or
options, or otherwise, or (B) the right to vote pursuant to
any agreement, arrangement or understanding or (iii) which
are beneficially owned, directly or indirectly, by any other
persons with whom such person or any of its affiliates or
person with whom such person or any of its affiliates or
associates has any agreement, arrangement or understanding
<PAGE>
41
for the purpose of acquiring, holding, voting or disposing
of any shares;
(c) "control" (including the terms "controlled by" and
------- -------------
"under common control with") means the possession, directly
-------------------------
or indirectly or as trustee or executor, of the power to
direct or cause the direction of the management policies of
a person, whether through the ownership of stock, as trustee
or executor, by contract or credit arrangement or otherwise;
(d) "generally accepted accounting principles" shall
----------------------------------------
mean the generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified
Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a
significant segment of the accounting profession in the
United States, in each case applied on a basis consistent
with the manner in which the audited financial statements
for the fiscal year of the Company ended December 31, 1993
were prepared;
(e) "knowledge" means knowledge after reasonable
---------
inquiry;
(f) "person" means an individual, corporation,
------
partnership, association, trust, unincorporated
organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act); and
(g) "subsidiary" or "subsidiaries" of the Company, the
---------- ------------
Surviving Corporation, Parent or any other person means any
corporation, partnership, joint venture or other legal
entity of which the Company, the Surviving Corporation,
Parent or such other person, as the case may be (either
alone or through or together with any other subsidiary),
owns, directly or indirectly, 50% or more of the stock or
other equity interests the holder of which is generally
entitled to vote for the election of the board of directors
or other governing body of such corporation or other legal
entity.
SECTION 9.4 Severability. If any term or other
------------
provision of this Agreement is invalid, illegal or incapable of
being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected
in any manner adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of
being enforced, the parties hereto shall negotiate in good faith
to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner to the
<PAGE>
42
end that the transactions contemplated hereby are fulfilled to
the fullest extent possible.
SECTION 9.5 Entire Agreement; Assignment. This
----------------------------
Agreement constitutes the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior
agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter
hereof. This Agreement shall not be assigned by operation of law
or otherwise, except that Parent and Purchaser may assign all or
any of their respective rights and obligations hereunder to any
direct or indirect wholly owned subsidiary or subsidiaries of
Parent, provided that no such assignment shall relieve the
--------
assigning party of its obligations hereunder if such assignee
does not perform such obligations.
SECTION 9.6 Parties in Interest. This Agreement shall
-------------------
be binding upon and inure solely to the benefit of each party
hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any rights,
benefits or remedies of any nature whatsoever under or by reason
of this Agreement.
SECTION 9.7 Governing Law. This Agreement shall be
-------------
governed by, and construed in accordance with, the laws of the
State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of laws thereof,
except to the extent that the consummation of the Merger is
governed by Maine Law.
SECTION 9.8 Headings. The descriptive headings
--------
contained in this Agreement are included for convenience of
reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.9 Counterparts. This Agreement may be
------------
executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
<PAGE>
IN WITNESS WHEREOF, Parent, Purchaser and the Company
have caused this Agreement to be executed as of the date first
written above by their respective officers thereunto duly
authorized.
AMERICAN HOME PRODUCTS CORPORATION
By: /s/ Robert G. Blount
---------------------------
Name: Robert G. Blount
Title: Executive Vice President
AC ACQUISITION CORP.
By: /s/ Robert G. Blount
---------------------------
Name: Robert G. Blount
Title: Vice President
AMERICAN CYANAMID COMPANY
By: /s/ J. S. McAuliffe
----------------------------
Name: J.S. McAuliffe
Title: Vice President
<PAGE>
ANNEX A
Offer Conditions
----------------
The capitalized terms used in this Annex A have the
meanings set forth in the attached Agreement, except that the
term "Merger Agreement" shall be deemed to refer to the attached
Agreement and the term "Commission" shall be deemed to refer to
the SEC.
Notwithstanding any other provision of the Offer,
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
Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for
any Shares tendered pursuant to the Offer, and may postpone the
acceptance for payment or, subject to the restriction referred to
above, payment for any Shares 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, prior to the
expiration of the Offer, (i) the Minimum Condition shall not have
been satisfied or (ii) at any time on or after
August 16, 1994 and prior to the acceptance for payment of
Shares, any of the following conditions occurs or has occurred or
Purchaser makes a good faith determination that any of the
following conditions has occurred:
(a) there shall have been any action or proceeding
brought by any governmental authority before any federal or
state court, or any order or preliminary or permanent
injunction entered in any action or proceeding before any
federal or state court or governmental, administrative or
regulatory authority or agency, located or having
jurisdiction within the United States or any country or
economic region in which either the Company or Parent,
directly or indirectly, has material assets or operations,
or any other action taken, proposed or threatened, or
statute, rule, regulation, legislation, interpretation,
judgment or order proposed, sought, enacted, entered,
enforced, promulgated, amended, issued or deemed applicable
to Purchaser, the Company or any subsidiary or affiliate of
Purchaser or the Company or the Offer or the Merger, by any
legislative body, court, government or governmental,
administrative or regulatory authority or agency located or
having jurisdiction within the United States or any country
or economic region in which either the Company or Parent,
directly or indirectly, has material assets or operations,
which could reasonably be expected to have the effect of:
(i) making illegal, or otherwise directly or indirectly
restraining or prohibiting or making materially more costly,
the making of the Offer, the acceptance for payment of,
payment for, or ownership, directly or indirectly, of some
of or all the Shares by Parent or Purchaser, the
consummation of any of the transactions contemplated by the
<PAGE>
Merger Agreement or materially delaying the Merger; (ii)
prohibiting or materially limiting the ownership or
operation by the Company or any of its subsidiaries, or by
Parent, Purchaser or any of Parent's subsidiaries of all or
any material portion of the business or assets of the
Company or any of its material subsidiaries or Parent or any
of its subsidiaries, or compelling Purchaser, Parent or any
of Parent's subsidiaries to dispose of or hold separate all
or any material portion of the business or assets of the
Company or any of its material subsidiaries or Parent or any
of its subsidiaries, as a result of the transactions
contemplated by the Offer or the Merger Agreement; (iii)
imposing or confirming limitations on the ability of
Purchaser, Parent or any of Parent's subsidiaries
effectively to acquire or hold or to exercise full rights of
ownership of Shares, including, without limitation, the
right to vote any Shares acquired or owned by Parent or
Purchaser or any of Parent's subsidiaries on all matters
properly presented to the shareholders of the Company,
including, without limitation, the adoption and approval of
the Merger Agreement and the Merger or the right to vote any
shares of capital stock of any subsidiary (other than
immaterial subsidiaries) directly or indirectly owned by the
Company; (iv) requiring divestiture by Parent or Purchaser,
directly or indirectly, of any Shares; or (v) which would
reasonably be expected to materially adversely affect the
business, financial condition or results of operations of
the Company and its subsidiaries taken as a whole or the
value of the Shares or of the Offer to Purchaser or Parent;
(b) there shall have occurred, or Purchaser shall have
become aware of any fact that would reasonably be expected
to have, a Material Adverse Effect;
(c) 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
over-the-counter market in the United States, (ii) any
extraordinary or 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 25% in either the Dow Jones Average of
Industrial Stocks or the Standard & Poor's 500 index from
the date hereof, (iii) any material adverse change or any
condition, event or development involving a prospective
material adverse change in United States or other material
international currency exchange rates or a suspension of, or
limitation on, the markets therefor, (iv) a declaration of a
banking moratorium or any suspension of payments in respect
of banks in the United States, (v) any limitation (whether
or not mandatory) by any government or governmental,
administrative or regulatory authority or agency, domestic
or foreign, on, or any other event that could reasonably be
expected to materially adversely affect, the extension of
A-2
<PAGE>
credit by banks or other lending institutions, (vi) a
commencement of a war or armed hostilities or other national
or international calamity directly or indirectly involving
the United States which would reasonably be expected to have
a Material Adverse Effect or materially adversely affect (or
materially delay) the consummation of the Offer or (vii) in
the case of any of the foregoing existing at the time of
commencement of the Offer, a material acceleration or
worsening thereof;
(d) (i) it shall have been publicly disclosed or
Purchaser shall have otherwise learned that beneficial
ownership (determined for the purposes of this paragraph as
set forth in Rule 13d-3 promulgated under the Exchange Act)
of 19.9% or more of the outstanding Shares has been acquired
by any corporation (including the Company or any of its
subsidiaries or affiliates), partnership, person or other
entity or group (as defined in Section 13(d)(3) of the
Exchange Act), other than Parent or any of its affiliates,
or (ii) (A) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a
manner adverse to Parent or Purchaser the approval or
recommendation of the Offer, the Merger or the Merger
Agreement, or approved or recommended any takeover proposal
or any other acquisition of Shares other than the Offer and
the Merger, (B) any such corporation, partnership, person or
other entity or group shall have entered into a definitive
agreement or an agreement in principle with the Company with
respect to a tender offer or exchange offer for any Shares
or a merger, consolidation or other business combination
with or involving the Company or any of its subsidiaries or
(C) the Board of Directors of the Company or any committee
thereof shall have resolved to do any of the foregoing;
(e) any of the representations and warranties of the
Company set forth in the Merger Agreement that are qualified
as to materiality shall not be true and correct or any such
representations and warranties that are not so qualified
shall not be true and correct in any material respect, in
each case as if such representations and warranties were
made at the time of such determination;
(f) the Company shall have failed to perform in any
material respect any obligation or to comply in any material
respect with any agreement or covenant of the Company to be
performed or complied with by it under the Merger Agreement;
(g) the Merger Agreement shall have been terminated in
accordance with its terms or the Offer shall have been
amended or terminated with the consent of the Company; or
(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 material approval,
A-3
<PAGE>
permit, authorization, consent or waiting period of any
domestic, foreign or supranational governmental,
administrative or regulatory agency (federal, state, local,
provincial or otherwise) located or having jurisdiction
within the United States or any country or economic region
in which either the Company or Parent, directly or
indirectly, has material assets or operations, shall not
have been obtained or satisfied on terms satisfactory to the
Parent in its reasonable discretion;
which, in the reasonable judgment of Purchaser with respect to
each and every matter referred to above and regardless of the
circumstances (including any action or inaction by Purchaser or
any of its affiliates not inconsistent with the terms hereof)
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 or to proceed with the Merger.
The foregoing conditions are for the sole benefit of
Purchaser and may be asserted by Purchaser regardless of the
circumstances giving rise to any such condition or may be waived
by Purchaser in whole or in part at any time and from time to
time in its sole discretion (subject to the terms of the Merger
Agreement). The failure by Purchaser at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such
right, the waiver of any such right with respect to particular
facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances, and each such right
shall be deemed an ongoing right that may be asserted at any time
and from time to time.
A-4
<PAGE>
Schedule 5.1(f)
Certain Permitted Payments
1. The Company shall be permitted to increase the salaries of:
Effective Date Base Salary Employee Name
- -------------- ----------- -------------
Increase
--------
September 1, 1994 $11,000 P.W. Wood
(from $182,000 to
$193,000)
October 1, 1994 $20,000 D.R. Bethune
(from $340,000 to
$360,000)
October 1, 1994 $20,000 L. Elberger
(from $188,000 to
$$208,000)
October 1, 1994 $27,000 D. Lilley
(from $250,000 to
$277,000)
2. In accordance with past practice, the Company shall be
permitted to pay lump sum special recognition bonuses to
employees who are not officers or directors of the Company,
provided that no special recognition bonus payable to any
individual exceeds $10,000 and the aggregate bonuses payable
to all such employees between the date of this Agreement and
the Effective Time does not exceed $500,000.
3. The Company may adopt a severance plan that is substantially
similar in all material respects to the Company's existing
severance policy as described in that certain letter dated
August 16, 1994 (the "Compensation Letter") except that the
Company may provide that employees in salary grade 10 to 17
shall have the right to receive benefits under this plan if
they resign for "good reason". For this purpose, "good
reason" shall be defined as either (i) a reduction in an
employee's base salary; (ii) a material adverse change in an
employee's job responsibilities, without an employee's
consent; or (iii) a relocation of the employee's principal
work location, unless such employee is entitled to the
relocation benefits provided under Parent's relocation
policy (as previously disclosed to the Company).
4. The Company may amend the Company Employees Savings Plan to
provide for the vesting of participants as of the date the
Shares are purchased pursuant to the Offer and to permit the
calculation, making and vesting of the Company
PerformanceContribution for 1994 in accordance with Section
6.06(d) of the Agreement.
<PAGE>
2
5. The Company may amend the Company Executive Income
Continuity Plan to permit A.C. Brennan to participate in the
plan (but such benefit to be limited to one times base pay
and target bonus) and to provide for a waiver of the ten-
year eligibility requirement thereunder for any person
otherwise eligible therefor whose employment is terminated
without cause (as defined therein) or who voluntarily
terminates his employment following a reduction of his base
salary as in effect prior to the purchase of Shares pursuant
to the Offer within two years after such purchase by the
Company.
6. The Company may amend the Company Key Manager Income
Continuity Plan to permit plan participants to recover
reasonable attorneys' fees and expenses in connection with a
dispute regarding the plan's terms; provided, however, such
amendment shall not permit a participant to recover such
fees if it is determined that a participant's claim was
frivolous.
7. The Company may amend both the Company Executive Income
Continuity Plan and the Company Key Manager Income
Continuity Plan in a manner reasonably consistent with the
descriptions set forth below, as consented to by Parent
(which consent shall not be unreasonably withheld):
(a) to remove the restriction on competitive employment
contained therein;
(b) to provide that benefits due thereunder shall be paid
in a lump sum rather than in installments;
(c) to modify the definition of "good reason" by deleting
paragraph (C) and adopting in lieu thereof a paragraph
substantially identical to the following:
a failure to continue a member as a participant in
the Incentive Compensation Plan of the Company as
in effect on the date the Shares are purchased
pursuant to the Offer in accordance with the terms
of the Agreement and Plan of Merger among AC
Acquisition Corp., American Home Products
Corporation and the Company (the "Merger
Agreement") (or a plan providing benefits that are
not substantially less favorable than the benefits
provided under such plan (the "IC Plan")
(disregarding for this purpose any enhanced or
accelerated benefits paid or payable in connection
with the Merger Agreement and the transactions
contemplated thereby) or a failure to pay a member
any installment of a previous allotment made to
such member under the IC Plan.
(d) to further modify the definition of "good reason" by
deleting the words "unless such action is applied uniformly
<PAGE>
3
to all members" at the end of paragraph (E) of such
definition; and
(e) to eliminate the restriction on payment of income
continuity benefits beyond age 60 where the participant is
also a participant in the Supplemental Employees Retirement
Plan.
8. The Company may contribute to one or more rabbi trusts (a)
the present value, as of the date the Shares are purchased
pursuant to the Offer, of accrued benefits under the Company
ERISA Excess Retirement Plan and the Company and
Subsidiaries Supplemental Employees Retirement Plan (the
"SERP"), (b) related "gross up" amounts, if any, under the
Company's Compensation Taxation Equalization Plan and (c) a
reasonable reserve for the fees and expenses that may be
incurred by the trustee or its agents or designees, which
amounts shall be substantially the same as or less than the
amounts set forth below.
RABBI TRUST FUNDING ANALYSIS
----------------------------
Anticipated
Rabbi Estimated Term of
----- Employees Amount ---
Trust Description Covered (M$)(1) Rabbi Trust
----- ----------- ------- -------- ------------
SERP
1 Retired 101 32.1 (2) L/T
Executives
since Oct.
1990 &
Superannuati
on
2 Currently 9 10.1 L/T
Elected
Personnel
3 New Members up to 35 9.0 L/T
added
pursuant to
Sec.6.6(f) of
the Merger
Agreement
ERISA Excess
4 ERISA Excess 200 1.6(2) L/T
------
Total 52.8
(1) Amounts include estimate for fees and expenses.
(2) Trust accounts in place at Morgan Guaranty.
9. The Company may amend the Non-Employee Directors Retirement
Plan to eliminate the three-year eligibility requirement.
<PAGE>
4
10. In accordance with the terms of the Non-Employee Directors
Retirement Plan, the Company may accelerate the payment of
the unpaid benefits due to the one former director and one
surviving spouse currently receiving benefits under the Non-
Employee Directors Retirement Plan.
11. The Company may amend the SERP to permit the actions
contemplated in Section 6.6(f) of the Merger Agreement.
12. The Company may amend the Incentive Compensation Plan to
permit the actions contemplated in Section 6.6(e) of the
Merger Agreement.
13. As provided by the terms of the Company's Incentive
Compensation Plan and the Company's Cash Incentive
Compensation Plan, all Deferred Cash Awards, Deferred Cash
Accounts and Deferred Stock Accounts may be made payable as
of the date the Shares are purchased pursuant to the Offer.
