[Cortech Logo]
A GREENMAILER AND HOSTILE RAIDER
IS TRYING TO TAKE CONTROL OF YOUR COMPANY
Dear Fellow Stockholder:
By now you probably know that "Asset Value Fund" is soliciting your
vote in its attempted hostile takeover of Cortech, Inc. Do not be fooled!! Do
not sign Asset Value's green proxy card!! Asset Value is an investment vehicle
formed by Paul Koether, a notorious greenmailer and corporate raider. Koether
and his wife have a documented twenty-year history of taking short-term
positions in public companies, waging costly and divisive proxy contests under
the stated purpose of protecting stockholder interests and then taking an
above-market price - greenmail - to go away.
The Cortech Board is committed to maximizing the value of Cortech stock
for the benefit of all stockholders. Cortech's Board nominees include scientists
and businessmen with years of experience in the pharmaceutical industry. In
contrast, Koether is proposing to elect a slate of his business partners, none
of whom have any pharmaceutical industry experience. Cortech's Board believes
that Cortech's technology has significant value that can benefit stockholders.
Koether has offered no plan for Cortech other than to conduct what we think is a
fire sale of the Company. Ask yourself why. Compare the backgrounds of the two
slates, and we believe you will agree that Koether and his slate will not
understand, and will not be able to realize, the full value of Cortech's
technology.
PROTECT YOUR INTERESTS AGAINST THOSE OF A HOSTILE RAIDER
AND GREENMAILER! VOTE THE ENCLOSED WHITE PROXY CARD
TODAY. TIME IS SHORT.
THE ANNUAL MEETING IS SEPTEMBER 4, 1998.
Over the past 20 years, Koether and his wife have extracted greenmail
from more than a dozen companies to the detriment of the other stockholders of
those companies. The Koethers have been able to receive these big payoffs by
selling stock back to the company and agreeing to stop making trouble. The Los
Angeles Times wrote about the Koethers "They frequently launch takeover bids and
threaten proxy fights to the point where many executives pay them to go away."1
Here is the simple strategy they've followed since the 1970's:
The Koethers' Personal Enrichment Scheme
x Phase one: take a short-term minority position in a
distressed security;
x Phase two: threaten to disrupt corporate plans
without offering any tangible, superior
alternative, sometimes filing lawsuits; and
x Phase three: obtain greenmail if at all possible or,
alternatively, wage an expensive and disruptive proxy
fight in order to acquire control of the company and
its assets.
Unfortunately, the Koethers have chosen your Company as their next
target.
Ten years ago, a partnership formed by the Koethers sued to stop a
merger involving May Petroleum. The Delaware Chancery Court said: "As will be
seen, the Court is placed in the difficult position of having to choose between
two protagonists, both of which seem to have little concern for the interests of
hapless minority stockholders." Analyzing the history of the Koethers'
partnership, the Court said: "Emerald obviously deals in many forms of
shareholder blackmail, i.e., greenmail, in attempts to gain control of
corporations or be bought out at substantial premiums." The Court eventually
enjoined the merger, upholding Emerald's role as a representative of the May
stockholders, but wrote: "Emerald has assumed the role here as being a fiduciary
for the minority stockholders, a role which is probably entirely new to it.
Having assumed that role it will be expected to fulfill it in the high standards
required by Delaware law." That litigation, begun ten years ago, is still
ongoing today.
But things have not changed for the better since the 1980s. Koether
wants you to believe he is just an activist shareholder. But the actions
characterized by the Court ten years ago as "shareholder blackmail" have
continued.
Just this year, Koether sold shares of FIND/SVP, Inc. back to FIND at a
substantial premium over market value in connection with the settlement of
litigation. The only difference from the May case was that the FIND litigation
did not involve claims on behalf of all FIND stockholders, so the Koethers did
not have to act as a fiduciary for the other stockholders.
Less than two years ago, Pureworld Inc., another Koether-led vehicle,
extracted $825,000 from American Industrial Properties REIT in a litigation
settlement. Once again, the claims in the REIT litigation were not claims made
by Pureworld on behalf of all of the REIT's stockholders, so the Koethers did
not have to act as a fiduciary for the other stockholders.
MAKE NO MISTAKE
GREENMAILERS AND HOSTILE RAIDERS DO NOT
REPRESENT THE INTEREST OF OTHER STOCKHOLDERS
In its campaign materials, Asset Value says it intends to benefit from
its Cortech investment only to the same extent other stockholders benefit. But
nothing obligates Koether to live up to his promise if he takes control of
Cortech. Indeed, Koether has engaged in, and been sued over, a number of
self-dealing transactions in the companies he controls. We urge you to examine
Koether's record before casting a vote for him and giving him control of your
Company!
We ask for your support in order to stop Koether. Please sign, date and
return the enclosed WHITE proxy card. Do not sign or return any green proxy card
from Asset Value, even marked to withhold your vote as a protest! If you have
already signed a GREEN Asset Value proxy card, you have every legal right to
change your vote by signing, dating and returning the enclosed WHITE proxy card.
Sincerely,
/s/ Bert Fingerhut
Bert Fingerhut
Chairman of the Board and
Acting Chief Executive Officer
August 12, 1998
IMPORTANT
Please sign, date and return your WHITE PROXY
CARD today Use the enclosed, postage paid
envelope
If you have questions or need assistance in
voting your shares, please contact the
Company's proxy solicitor,
D.F. King & Co., Inc., at 1-800-848-3051
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1 J. Bates, "Shell Company's Fate Rests With Dissidents" The Los Angeles Times,
March 15, 1988. The permission of The Los Angeles Times to use this quote was
neither sought nor obtained.
