-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, rB+5XduuoH87cFB/SIMMHIUi2TUESiH/2vhehmXkps3D6OQF7cpeNihzgtSzHCPi JMjd0xJ+cytn4HEVoDPs5g== 0000950112-94-002091.txt : 19940811 0000950112-94-002091.hdr.sgml : 19940811 ACCESSION NUMBER: 0000950112-94-002091 CONFORMED SUBMISSION TYPE: SC 14D1 PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 19940810 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN CYANAMID CO CENTRAL INDEX KEY: 0000004829 STANDARD INDUSTRIAL CLASSIFICATION: 2800 IRS NUMBER: 130430890 STATE OF INCORPORATION: ME FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 SEC ACT: 1934 Act SEC FILE NUMBER: 005-17398 FILM NUMBER: 94542540 BUSINESS ADDRESS: STREET 1: 1 CYANAMID PLAZA CITY: WAYNE STATE: NJ ZIP: 07470 BUSINESS PHONE: 2018312000 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN CYANAMID/ME DATE OF NAME CHANGE: 19930928 FORMER COMPANY: FORMER CONFORMED NAME: CYANAMID DATE OF NAME CHANGE: 19930928 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN CYANAMID CO DATE OF NAME CHANGE: 19930928 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN HOME PRODUCTS CORP CENTRAL INDEX KEY: 0000005187 STANDARD INDUSTRIAL CLASSIFICATION: 2834 IRS NUMBER: 132526821 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 14D1 BUSINESS ADDRESS: STREET 1: 5 GIRALDA FARMS CITY: MADISON STATE: NJ ZIP: 07940 BUSINESS PHONE: 201-660-5000 SC 14D1 1 AMERICAN HOME PRODUCTS CORPORATION - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------------ AMERICAN CYANAMID COMPANY (Name of Subject Company) AC ACQUISITION CORP. AMERICAN HOME PRODUCTS CORPORATION (Bidder) COMMON STOCK, $5.00 PAR VALUE PER SHARE (Title of Class of Securities) 025321100 (CUSIP Number of Class of Securities) LOUIS L. HOYNES, JR. SENIOR VICE PRESIDENT AND GENERAL COUNSEL AMERICAN HOME PRODUCTS CORPORATION FIVE GIRALDA FARMS MADISON, NEW JERSEY 07940 TELEPHONE: (201) 660-5000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidder) COPY TO: CHARLES I. COGUT, ESQ. SIMPSON THACHER & BARTLETT 425 LEXINGTON AVENUE NEW YORK, NEW YORK 10017 TELEPHONE: (212) 455-2000 CALCULATION OF FILING FEE TRANSACTION VALUATION* AMOUNT OF FILING FEE** $9,070,442,965.00 $1,814,088.60
* Based on the offer to purchase all of the outstanding shares of Common Stock of the Subject Company and the associated Rights at $95.00 cash per share, the number of Shares outstanding as reported in the Quarterly Report on Form 10-Q of the Subject Company for the quarter ended March 31, 1994, and the number of options outstanding as reported in the Annual Report on Form 10-K of the Subject Company for the year ended December 31, 1993. ** 1/50 of 1% of Transaction Valuation. / / Check box if any part of the fee is offset as provided by Rule 0-11(a)(2) and identify the filing with which the offsetting fee was previously paid. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. Amount Previously Paid: Form or Registration No.: Filing Party: Date Filed: PAGE 1 OF PAGES THE EXHIBIT INDEX IS LOCATED ON PAGE - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- This Tender Offer Statement on Schedule 14D-1 relates to the offer by AC Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of American Home Products Corporation, a Delaware corporation (the "Parent"), to purchase all of the outstanding shares of Common Stock, $5.00 par value per share (the "Shares"), of American Cyanamid Company, a Maine corporation (the "Company"), and (unless and until the Purchaser declares that the Rights Condition as defined in the Offer to Purchase referred to below is satisfied) the associated Preferred Stock Purchase Rights (the "Rights") issued pursuant to the Rights Agreement dated as of March 10, 1986, as amended as of April 29, 1986 and as of April 21, 1987, between the Company and Mellon Bank, N.A., as successor Rights Agent, at a purchase price of $95.00 per Share (and associated Right), net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 10, 1994 (the "Offer to Purchase"), a copy of which is attached hereto as Exhibit (a)(1), and in the related Letter of Transmittal (which, together with the Offer to Purchase, constitute the "Offer"), a copy of which is attached hereto as Exhibit (a)(2). ITEM 1. SECURITY AND SUBJECT COMPANY. (a) The name of the subject company is American Cyanamid Company. The information set forth in Section 7 ("Certain Information Concerning the Company") of the Offer to Purchase is incorporated herein by reference. (b) The exact title of the class of equity securities being sought in the Offer is Common Stock, $5.00 par value per share, including the associated Preferred Stock Purchase Rights, of the Company. The information set forth in the Introduction (the "Introduction") of the Offer to Purchase is incorporated herein by reference. (c) The information set forth in Section 6 ("Price Range of Shares; Dividends") of the Offer to Purchase is incorporated herein by reference. ITEM 2. IDENTITY AND BACKGROUND. (a)-(d) and (g) This Statement is filed by the Purchaser and the Parent. The information set forth in Section 8 ("Certain Information Concerning the Purchaser and the Parent") of the Offer to Purchase and in Schedule I thereto is incorporated herein by reference. (e) and (f) During the last five years, neither the Purchaser nor the Parent nor, to the best knowledge of the Purchaser or the Parent, any of the persons listed in Schedule I to the Offer to Purchase (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting activities subject to, federal or state securities laws or finding any violation of such laws. ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY. (a) The information set forth in Section 8 ("Certain Information Concerning the Purchaser and the Parent") of the Offer to Purchase is incorporated herein by reference. Except as set forth in Section 8 of the Offer to Purchase, since January 1, 1991, there have been no transactions which would be required to be disclosed under this Item 3(a) between either the Purchaser or the Parent or, to the best knowledge of the Purchaser and the Parent, any of the persons listed in Schedule I to the Offer to Purchase and the Company or any of its executive officers, directors or affiliates. (b) The information set forth in Section 8 ("Certain Information Concerning the Purchaser and the Parent") and Section 10 ("Background of the Offer; Contacts with the Company") of the Offer to Purchase is incorporated herein by reference. Except as set forth in Section 8 and Section 10 of the Offer to Purchase, since January 1, 1991, there have been no contacts, negotiations or transactions 2 which would be required to be disclosed under Item 3(b) between either the Purchaser or the Parent or any of their respective subsidiaries or, to the best knowledge of the Purchaser and the Parent, any of those persons listed in Schedule I to the Offer to Purchase and the Company or its affiliates concerning a merger, consolidation or acquisition, a tender offer or other acquisition of securities, an election of directors or a sale or other transfer of a material amount of assets. ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. (a) and (b) The information set forth in Section 9 ("Source and Amount of Funds") of the Offer to Purchase is incorporated herein by reference. (c) Not applicable. ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER. (a)-(g) The information set forth in the Introduction, Section 10 ("Background of the Offer; Contacts with the Company"), Section 11 ("Purpose of the Offer; the Merger; Plans for the Company"), Section 12 ("Dividends and Distributions") and Section 13 ("Effect of the Offer on the Market for the Shares, Stock Exchange Listing and Exchange Act Registration") of the Offer to Purchase is incorporated herein by reference. ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY. (a) The information set forth in the Introduction and Section 8 ("Certain Information Concerning the Purchaser and the Parent") of and Schedule I to the Offer to Purchase is incorporated herein by reference. Except as set forth in the Introduction and Section 8 of and Schedule I to the Offer to Purchase, neither the Purchaser nor the Parent nor, to the best knowledge of the Purchaser or the Parent, any of the persons listed in Schedule I to the Offer to Purchase or any associate or majority-owned subsidiary of either the Purchaser or the Parent or any of the persons so listed beneficially owns or has any right to acquire, directly or indirectly, any Shares. (b) The information set forth in the Introduction and Section 8 ("Certain Information Concerning the Purchaser and the Parent") of and Schedule I to the Offer to Purchase is incorporated herein by reference. Except as set forth in the Introduction and Section 8 of and Schedule I to the Offer to Purchase, neither the Purchaser nor the Parent nor, to the best knowledge of the Purchaser or the Parent, any of the persons or entities referred to above or any executive officer, director or subsidiary of any of the foregoing has effected any transactions in the Shares during the past sixty days. ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO THE SUBJECT COMPANY'S SECURITIES. The information set forth in the Introduction, Section 8 ("Certain Information Concerning the Purchaser and the Parent"), Section 9 ("Source and Amount of Funds"), Section 10 ("Background of the Offer; Contacts with the Company"), Section 11 ("Purpose of the Offer; the Merger; Plans for the Company") and Section 16 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. Except as set forth in the Introduction and Sections 8, 9, 10, 11 and 16 of the Offer to Purchase, neither the Purchaser nor the Parent, nor, to the best knowledge of the Purchaser or the Parent, any of the persons listed in Schedule I to the Offer to Purchase, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company (including, but not limited to, any contract, arrangement, understanding or relationship concerning the transfer or the voting of any such securities, joint ventures, loans or option arrangements, puts or calls, guarantees of loans, guarantee agreements or any giving or withholding of proxies). 3 ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED. The information set forth in the Introduction, Section 9 ("Source and Amount of Funds") and Section 16 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference. ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS. The information set forth in Section 8 ("Certain Information Concerning the Purchaser and the Parent") of the Offer to Purchase is incorporated herein by reference. ITEM 10. ADDITIONAL INFORMATION. (a) None. (b) and (c) The information set forth in the Introduction and Section 15 ("Certain Legal Matters and Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (d) The information set forth in Section 9 ("Source and Amount of Funds") and Section 15 ("Certain Legal Matters and Regulatory Approvals") of the Offer to Purchase is incorporated herein by reference. (e) The information set forth in the Introduction and Section 11 ("Purpose of the Offer; the Merger; Plans for the Company") of the Offer to Purchase is incorporated herein by reference. The complaint filed in the Defensive Tactics Litigation (as defined in the Offer to Purchase) is filed herewith. (f) The information set forth in the Offer to Purchase and the Letter of Transmittal is incorporated herein by reference. ITEM 11. MATERIAL TO BE FILED AS EXHIBITS. (a)(1) Offer to Purchase dated August 10, 1994. (a)(2) Letter of Transmittal. (a)(3) Notice of Guaranteed Delivery. (a)(4) Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. (a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Nominees. (a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9. (a)(7) Summary Advertisement as published on August 10, 1994. (a)(8) Press Release issued by the Parent on August 9, 1994. (a)(9) Press Release issued by the Parent on August 10, 1994. (b)(1) Commitment Letter dated August 9, 1994 to Parent from Chemical Bank. (c) Not applicable. (d) Not applicable. (e) Not applicable. (f) Not applicable. (g) Complaint in American Home Products Corporation and AC Acquisition Corp. v. American Cyanamid Company, et al, U.S. District Court for the District of Maine. 4 SIGNATURE After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. AMERICAN HOME PRODUCTS CORPORATION By: /s/ ROBERT G. BLOUNT .................................. Name: Robert G. Blount Title: Executive Vice President and Chief Financial Officer AC ACQUISITION CORP. By: /s/ ROBERT G. BLOUNT ................................. Name: Robert G. Blount Title: Vice President Date: August 10, 1994 5 EXHIBIT INDEX
EXHIBIT PAGE NO. DESCRIPTION NO. - ---------- ------------------------------------------------------------------------------------------ ------------- 11(a)(1) Offer to Purchase dated August 10, 1994................................................... 11(a)(2) Letter of Transmittal..................................................................... 11(a)(3) Notice of Guaranteed Delivery............................................................. 11(a)(4) Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks, Trust Companies and Nominees.................................................................................. 11(a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks, Trust Companies and Nominees.................................................................................. 11(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9..... 11(a)(7) Summary Advertisement as published on August 10, 1994..................................... 11(a)(8) Press Release issued by the Parent on August 9, 1994...................................... 11(a)(9) Press Release issued by the Parent on August 10, 1994..................................... 11(b)(1) Commitment Letter dated August 9, 1994 to Parent from Chemical Bank....................... 11(g) Complaint in American Home Products Corporation and AC Acquisition Corp. v. American Cyanamid Company, et al, U.S. District Court for the District of Maine....................
6 EX-99.11(A)(1) 2 Exhibit 11(a)(1) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF AMERICAN CYANAMID COMPANY AT $95.00 NET PER SHARE BY AC ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF AMERICAN HOME PRODUCTS CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, SEPTEMBER 7, 1994, UNLESS THE OFFER IS EXTENDED. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS: (1) THERE BEING VALIDLY TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A NUMBER OF SHARES OF COMMON STOCK OF THE COMPANY WHICH CONSTITUTES AT LEAST 80% OF THE VOTING POWER (DETERMINED ON A FULLY DILUTED BASIS), ON THE DATE OF PURCHASE, OF ALL SECURITIES OF THE COMPANY ENTITLED TO VOTE GENERALLY IN THE ELECTION OF DIRECTORS OR IN A MERGER; (2) THE COMPANY'S PREFERRED STOCK PURCHASE RIGHTS HAVING BEEN REDEEMED BY THE COMPANY'S BOARD OF DIRECTORS, OR THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT SUCH PREFERRED STOCK PURCHASE RIGHTS HAVE BEEN INVALIDATED OR ARE OTHERWISE INAPPLICABLE TO THE OFFER AND THE PROPOSED MERGER DESCRIBED HEREIN; (3) THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE RESTRICTIONS ON BUSINESS COMBINATIONS CONTAINED IN SECTION 611-A OF THE MAINE BUSINESS CORPORATION ACT (OR ANY SIMILAR PROVISION) ARE INVALID OR OTHERWISE INAPPLICABLE TO THE PROPOSED MERGER (AS A RESULT OF ACTION BY THE COMPANY'S BOARD OF DIRECTORS, FINAL JUDICIAL ACTION OR OTHERWISE); AND (4) THE PURCHASER BEING SATISFIED, IN ITS SOLE DISCRETION, THAT THE PURCHASER HAS OBTAINED SUFFICIENT FINANCING TO ENABLE IT TO CONSUMMATE THE OFFER AND THE PROPOSED MERGER DESCRIBED HEREIN AND TO PAY RELATED FEES AND EXPENSES. THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS. SEE THE INTRODUCTION AND SECTIONS 1, 9 AND 14. (Continued on next page) ------------------------ THE DEALER MANAGER FOR THE OFFER IS: GLEACHER & CO. INC. August 10, 1994 (Continued from previous page) IMPORTANT Any shareholder desiring to tender all or any portion of such shareholder's shares of Common Stock, $5.00 par value per share (the "Shares"), and the associated Preferred Stock Purchase Rights (the "Rights"), of the Company should either (1) complete and sign the Letter of Transmittal (or a facsimile thereof) in accordance with the instructions in the Letter of Transmittal, mail or deliver the Letter of Transmittal (or such facsimile) and any other required documents to the Depositary (as defined herein), and either deliver the certificates representing the tendered Shares and, if separate, the certificates representing the associated Rights and any other required documents to the Depositary or tender such Shares (and Rights, if applicable) pursuant to the procedure for book-entry transfer set forth in Section 3 or (2) request such shareholder's broker, dealer, commercial bank, trust company or other nominee to effect the transaction for such shareholder. Shareholders having Shares (and Rights, if applicable) registered in the name of a broker, dealer, commercial bank, trust company or other nominee must contact such broker, dealer, commercial bank, trust company or other nominee if they desire to tender Shares (and Rights, if applicable) so registered. Unless and until the Purchaser declares that the Rights Condition (as defined herein) is satisfied, holders of Shares will be required to tender one-half of one Right for each Share tendered in order to effect a valid tender of such Share. A shareholder who desires to tender Shares and Rights and whose certificates representing such Shares (and Rights, if applicable) are not immediately available, or who cannot comply with the procedure for book-entry transfer on a timely basis, may tender such Shares (and Rights, if applicable) by following the procedures for guaranteed delivery set forth in Section 3. Questions and requests for assistance may be directed to Gleacher & Co. Inc. (the "Dealer Manager") or to D.F. King & Co., Inc. (the "Information Agent"), at their respective addresses and telephone numbers set forth on the back cover of this Offer to Purchase. Additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained from the Information Agent or from brokers, dealers, commercial banks or trust companies. TABLE OF CONTENTS
PAGE --------- INTRODUCTION.................................................................................................. 1 THE TENDER OFFER.............................................................................................. 7 1. Terms of the Offer; Expiration Date................................................................ 7 2. Acceptance for Payment and Payment for Shares...................................................... 8 3. Procedure for Tendering Shares and Rights.......................................................... 10 4. Withdrawal Rights.................................................................................. 13 5. Certain Federal Income Tax Consequences............................................................ 14 6. Price Range of Shares; Dividends................................................................... 14 7. Certain Information Concerning the Company......................................................... 15 8. Certain Information Concerning the Purchaser and the Parent........................................ 17 9. Source and Amount of Funds......................................................................... 20 10. Background of the Offer; Contacts with the Company................................................. 22 11. Purpose of the Offer; the Merger; Plans for the Company............................................ 25 12. Dividends and Distributions........................................................................ 35 13. Effect of the Offer on the Market for the Shares, Stock Exchange Listing and Exchange Act Registration....................................................................................... 35 14. Certain Conditions of the Offer.................................................................... 36 15. Certain Legal Matters and Regulatory Approvals..................................................... 40 16. Fees and Expenses.................................................................................. 45 17. Miscellaneous...................................................................................... 45
Schedule I -- Directors and Executive Officers of the Purchaser and the Parent.......................... I-1
i To the Holders of Common Stock (including the associated Preferred Stock Purchase Rights) of AMERICAN CYANAMID COMPANY INTRODUCTION AC Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of American Home Products Corporation, a Delaware corporation (the "Parent"), hereby offers to purchase all of the outstanding shares of Common Stock, $5.00 par value per share (the "Shares"), of American Cyanamid Company, a Maine corporation (the "Company"), and (unless and until the Purchaser declares that the Rights Condition (as defined below) is satisfied) the associated Preferred Stock Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of March 10, 1986, as amended as of April 29, 1986 and as of April 21, 1987 (the "Rights Agreement"), between the Company and Mellon Bank, N.A., as successor Rights Agent (the "Rights Agent"), at a purchase price of $95.00 per Share (and associated Right), net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in this Offer to Purchase and in the related Letter of Transmittal (which together constitute the "Offer"). Unless the context requires otherwise, all references in this Offer to Purchase to "Shares" shall be deemed to refer also to the associated Rights, and all references to "Rights" shall be deemed to include all benefits that may inure to the shareholders of the Company or to holders of the Rights pursuant to the Rights Agreement. Based on publicly available information, the Purchaser believes that one-half of one Right is currently associated with each Share as a result of a stock split by the Company on June 12, 1987. Tendering shareholders will not be obligated to pay brokerage fees or commissions or, subject to Instruction 6 of the Letter of Transmittal, stock transfer taxes on the transfer and sale of Shares and Rights pursuant to the Offer. The Purchaser will pay all fees and expenses of Gleacher & Co. Inc., which is acting as Dealer Manager for the Offer (in such capacity, the "Dealer Manager"), Chemical Bank (the "Depositary") and D.F. King & Co., Inc. (the "Information Agent") incurred in connection with the Offer. See Section 16. The purpose of the Offer is to acquire control of, and the entire equity interest in, the Company. The Purchaser intends to propose, and to seek to have the Company consummate as soon as practicable after consummation of the Offer, a merger or similar business combination (the "Merger") with the Purchaser or another direct or indirect subsidiary of the Parent, pursuant to which each then outstanding Share (other than Shares held by the Parent, the Purchaser or any other wholly owned subsidiary of the Parent, Shares held in the treasury of the Company and Shares held by shareholders who properly exercise appraisal rights under Maine law) would be converted into the right to receive in cash the price per Share paid by the Purchaser pursuant to the Offer. Although the Purchaser will seek to have the Company consummate the Merger as soon as practicable after consummation of the Offer, if the Board of Directors of the Company opposes the Offer and the Merger, certain terms of the Rights and certain provisions of the Maine Business Corporation Act (the "MBCA"), the Company's Restated Articles of Incorporation (the "Articles") and the Company's By-Laws (the "By-Laws") may affect the ability of the Purchaser to obtain control of the Company and to effect the Merger. Accordingly, the timing and details of the Merger will depend on a variety of factors and legal requirements, the actions of the Board of Directors of the Company, the number of Shares acquired by the Purchaser pursuant to the Offer, and whether the Minimum Condition, the Rights Condition, the Maine Takeover Statute Condition and/or the Financing Condition (each as defined below) is satisfied or waived. Depending upon the Company's response to the Offer and other factors that the Purchaser may deem relevant, the Purchaser presently intends to seek to have a shareholders meeting called and to obtain proxies from shareholders for the purpose of adopting resolutions of shareholders or taking other actions (which may be non-binding) instructing the Board of 1 Directors to approve and effectuate the consummation of the Offer and the Merger and/or removing the current Board of Directors of the Company from office and electing new directors nominated by the Purchaser, in order that such new Board of Directors would take all such actions necessary or appropriate to approve and effectuate the consummation of the Offer and the Merger. Upon consummation of the Offer, assuming the Minimum Condition, the Rights Condition, the Maine Takeover Statute Condition and the Financing Condition, and the other conditions to the Offer set forth in Section 14, are satisfied, the Parent and the Purchaser will own sufficient Shares, subject to the procedures described in Section 11, ultimately to remove and/or replace the Company's Board of Directors and to approve the Merger without the vote of any other shareholder. For a discussion of certain appraisal rights available to shareholders upon consummation of each of the Offer and the Merger, see Section 11. THE OFFER IS CONDITIONED, AMONG OTHER THINGS, UPON SATISFACTION, IN THE PURCHASER'S SOLE DISCRETION, OF THE FOLLOWING CONDITIONS: (1) THE MINIMUM CONDITION, (2) THE RIGHTS CONDITION, (3) THE MAINE TAKEOVER STATUTE CONDITION AND (4) THE FINANCING CONDITION, EACH OF WHICH IS DESCRIBED BELOW. CERTAIN OTHER CONDITIONS TO THE OFFER ARE DESCRIBED IN SECTION 14. The Purchaser has commenced a lawsuit in the United States District Court for the District of Maine (the "Defensive Tactics Litigation") against the Company and certain of its directors in connection with the Offer, which, if successful, would permit certain conditions of the Offer to be satisfied. See "Defensive Tactics Litigation" below and Section 15. The Minimum Condition. The Offer is subject to the condition (the "Minimum Condition") that there shall have been validly tendered and not properly withdrawn on or prior to the Expiration Date (as defined below) a number of Shares which constitutes at least 80% of the voting power (determined on a fully diluted basis), on the date of purchase, of all securities of the Company entitled to vote generally in the election of directors or in a merger. According to the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994 (the "March 1994 Form 10-Q"), at March 31, 1994, 89,754,355 Shares were outstanding. According to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1993 (the "1993 Form 10-K"), at December 31, 1993, options covering a total of 5,723,992 Shares were outstanding under the Company's various stock option plans (collectively, the "Company Option Plans"). The Parent currently beneficially owns an aggregate of 10,000 Shares, representing less than .1 percent of the Shares outstanding, based on the number of Shares outstanding at March 31, 1994. See Section 8. Based on this information and assuming exercise of all outstanding options under the Company Option Plans, the Purchaser believes that the Minimum Condition will be satisfied if approximately 76,480,000 Shares are validly tendered pursuant to the Offer and not properly withdrawn. The Articles provide that, in addition to any affirmative vote required by applicable law (currently, the affirmative vote of holders of at least a majority of the outstanding Shares), the affirmative vote of the holders of at least 80% of the outstanding Shares is required to approve certain business combinations (including mergers) between the Company and a person who or which is the beneficial owner of more than 15% of the outstanding Shares (an "Interested Stockholder"), unless either (i) the business combination is approved by a majority of the directors who are not affiliated with or nominees of the Interested Stockholder and who were directors prior to the time the Interested Stockholder became an Interested Stockholder or (ii) certain price and procedural requirements are satisfied, some of which are beyond the control of the Purchaser and the Parent in the context of the Offer and the Merger (the "80% Charter Provision"). The acquisition of in excess of 15% of the outstanding Shares by the Purchaser in the Offer would make the Purchaser an "Interested Stockholder" for purposes of the 80% Charter Provision. As such, the Purchaser and the Parent could be prohibited from consummating the Merger without the approval of the current Board of Directors of the Company. See Section 11. 2 The Minimum Condition is included, among other reasons, so that the Purchaser will be able to satisfy the provisions of the Articles described above and other provisions of the Articles, By-Laws and applicable law that might adversely affect the Purchaser's ability to consummate the Offer and the Merger. In the event that such provisions of the Articles, the By-Laws and applicable law would no longer require or make advisable the ownership of the percentage of Shares required to satisfy the Minimum Condition in order to approve or take necessary steps in furtherance of the Offer or the Merger or any other transactions contemplated hereby, then the Purchaser reserves the right, at its option (but in compliance with the rules of the Securities and Exchange Commission (the "Commission")), to reduce the minimum number of Shares required to be validly tendered and not properly withdrawn to a lower percentage (but not below a majority) deemed advisable by the Purchaser, taking into account that percentage which is necessary (without any affirmative vote of any other Shares or other securities of the Company) under the Articles, the By-Laws and applicable law to cause, under circumstances then present, nominees of the Purchaser to be elected as a majority of the Board of Directors (including by calling a meeting of shareholders, removal and/or replacement or otherwise) and to approve the Offer and the Merger. The Purchaser is hereby requesting that the Company's Board of Directors approve the Offer and the Merger for purposes of the 80% Charter Provision. The Purchaser believes that, under the circumstances of the Offer and under applicable law, the Board of Directors of the Company is obligated by its fiduciary responsibilities to approve the Offer and the Merger in order to permit the Offer and the Merger to be consummated. However, there can be no assurance that the Board will do so. Upon consummation of the Offer and assuming the Minimum Condition is satisfied, the Purchaser will own sufficient Shares to enable it to effect shareholder approval of the Merger (subject to the requirements of the Maine Takeover Statute described below) with the affirmative vote of at least 80% of the Shares outstanding, thereby satisfying the 80% Charter Provision. The Rights Condition. The Offer is subject to the condition (the "Rights Condition") that the Rights shall have been redeemed by the Company's Board of Directors, or the Purchaser shall be satisfied, in its sole discretion, that such Rights have been invalidated or are otherwise inapplicable to the Offer and the Merger. The Rights are described in the Company's Registration Statement on Form 8-A filed with the Commission on March 19, 1986, as amended by the Company's amendment on Form 8 filed with the Commission on May 1, 1986 (the "May 1 Form 8"), as further amended by the Company's amendment on Form 8 filed with the Commission on May 19, 1987 (as so amended, the "Form 8-A"). A more detailed description of the Rights is contained in Section 11. To the Purchaser's knowledge, the publicly available information regarding the Rights and Rights Agreement is incomplete in that the May 1 Form 8 was filed with the Commission without including Exhibit A of the amendment to the Rights Agreement (which included the substantive modifications made to the Rights Agreement by such amendment). Accordingly, the descriptions herein of the Rights and the Rights Agreement are qualified to the extent that information relating thereto is not publicly available. The following discussion is based on information contained in the Form 8-A. In the event that at any time following the Distribution Date (as defined in Section 11), (i) the Company is the surviving corporation in a merger with an Acquiring Person (as defined in Section 11) and the Shares are not changed or exchanged, (ii) a person becomes the beneficial owner of 50% or more of the then outstanding Shares (the "Ownership Flip-in") or (iii) during such time as there is an Acquiring Person, certain other events occur, provision shall be made so that each holder of one-half of a Right will thereafter have the right to receive, upon exercise thereof, two Shares (or, in certain circumstances, a combination of cash, other property, Shares and/or other securities) at 25% of the then per share market price of the Shares. In the event that at any time following the Distribution Date, the Company is acquired in a merger or other business combination transaction or (within a two-year period) more than 50% of its assets or earning power is sold, provision will be made so that each holder of a Right will thereafter have the right to receive, upon the exercise thereof at the then current Purchase Price (as defined in the Rights Agreement) of such one-half of a Right (as defined in the 3 Rights Agreement), common stock of the acquiring entity which has a value of two times the Purchase Price of such one-half of a Right. Following the occurrence of any of the events described above in this paragraph, any Rights that are or were beneficially owned by an Acquiring Person or affiliates or associates of any Acquiring Person will immediately become null and void. The Purchaser believes that the consummation of the Offer likely would trigger the Ownership Flip-in and, as a result, cause significant dilution to the Purchaser's interest in the Company and render the Offer and the Merger economically unattractive for the Purchaser. Based on the Company's filings with the Commission, at any time until 30 days following the Stock Acquisition Date (as defined in the Rights Agreement), the Company may redeem the Rights in whole, but not in part, at a price of $.02 per Right, subject to adjustment. Until the Distribution Date, the Rights will be transferred with and only with the Shares. Until the Distribution Date, the surrender for transfer of any of the certificates representing Shares (the "Share Certificates") will also constitute the surrender for transfer of the Rights associated with the Shares represented by such Share Certificates. As soon as practicable following the Distribution Date, separate certificates evidencing the Rights ("Rights Certificates") will be mailed to holders of record of Shares as of the close of business on the Distribution Date; after the Distribution Date, such separate Rights Certificates alone will evidence the Rights. The Purchaser believes that, as of August 9, 1994, the Rights were not exercisable, Rights Certificates had not been issued and the Rights were evidenced by the Share Certificates. The Purchaser believes that, under the Rights Agreement, as a result of the commencement of the Offer, the Distribution Date will be as early as August 23, 1994, unless prior to such date the Company's Board of Directors redeems the Rights or takes action to delay the Distribution Date. Unless and until the Purchaser declares that the Rights Condition is satisfied, holders of Shares will also be required to tender one-half of one Right for each Share tendered in order to effect a valid tender of such Share. If separate certificates for the Rights are not issued, a tender of Shares will also constitute a tender of associated Rights. The Purchaser further believes that, under the circumstances of the Offer and under applicable law, the Board of Directors of the Company is obligated by its fiduciary responsibilities to redeem the Rights in order to permit the Offer and the Merger to be consummated. However, there can be no assurance that the Board will do so. In the Defensive Tactics Litigation, the Purchaser has requested the court to require that the Board of Directors redeem the Rights. The Purchaser is hereby requesting that the Company's Board of Directors redeem the Rights. The Maine Takeover Statute Condition. The Offer is subject to the condition (the "Maine Takeover Statute Condition") that the Purchaser shall be satisfied, in its sole discretion, that the restrictions on business combinations contained in Section 611-A (the "Maine Takeover Statute") of the MBCA (or any similar provision) are invalid or otherwise inapplicable to the Merger (as a result of action by the Company's Board of Directors, final judicial action or otherwise). In general, the Maine Takeover Statute prohibits any person who is the beneficial owner of 25% or more of the outstanding voting stock of a corporation (a "Statutory Interested Shareholder") from engaging in certain business combinations with such corporation for a period of five years following the date on which such person became a Statutory Interested Shareholder, unless the business combination is (i) approved by the board of directors of the corporation prior to the date on which such person became a Statutory Interested Shareholder or (ii) approved, subsequent to the date on which such person became a Statutory Interested Shareholder, by the board of directors of the corporation and authorized by the affirmative vote, at a meeting called for that purpose, of at least a majority of the outstanding voting stock not beneficially owned by that Statutory Interested Shareholder or any affiliate or associate of that Statutory Interested Shareholder or by persons who are either directors or officers and also employees of that corporation. Consequently, under the Maine Takeover Statute, unless the 4 Board of Directors of the Company approves the Offer and the Merger in advance of the consummation of the Offer, the Merger could not occur for five years unless it is approved by a majority vote of the Shares that were not tendered in the Offer. This requirement fundamentally interferes with the practical ability of the Purchaser to acquire Shares in light of the severe financial and operational burdens that would be placed on the Parent if it were to consummate the Offer, but be unable to consummate the Merger. A more detailed description of the Maine Takeover Statute is contained in Section 11. The Purchaser believes that, in light of this interference with its ability to consummate the Offer, the Maine Takeover Statute is unconstitutional under the United States Constitution. Whether or not invalidated by the court in the Defensive Tactics Litigation, under the circumstances of the Offer and under applicable law, the Purchaser believes that the Board of Directors of the Company is obligated by its fiduciary responsibilities to approve, pursuant to the Maine Takeover Statute, the acquisition of Shares pursuant to the Offer and the Merger. However, there can be no assurance that the Board of Directors will do so. The Purchaser is hereby requesting that the Board of Directors approve the Offer and the Merger for purposes of the Maine Takeover Statute. The Financing Condition. The Offer is subject to the condition (the "Financing Condition") that the Purchaser shall be satisfied, in its sole discretion, that the Purchaser has obtained sufficient financing to enable it to consummate the Offer and the Merger and to pay related fees and expenses. Chemical Securities Inc. ("CSI"), as advisor and arranger to the Parent, has agreed to use its best efforts to form a syndicate of financial institutions to provide a bank credit facility in connection with the consummation of the Offer and the Merger. The Parent has received a commitment letter (the "Commitment Letter") from Chemical Bank, which provides that Chemical Bank will provide, on specified terms and subject to specified conditions, $1.2 billion of the bank financing. This bank financing is more fully described in Section 9. The Parent believes that the Purchaser will have sufficient funds necessary to consummate the Offer and the Merger and to pay related costs. * * * The Purchaser expressly reserves the right to waive any one or more of the conditions to the Offer. See Sections 11, 14 and 15. Defensive Tactics Litigation. The Purchaser has commenced the Defensive Tactics Litigation, which names the Company and certain of its directors as defendants and seeks declaratory and injunctive relief in connection with the Offer and the Merger. The Defensive Tactics Litigation asks the court either to invalidate or cause the Company's Board of Directors to remove several defense mechanisms embodied in the MBCA, the Articles and the By-Laws which, absent the relief sought, could seriously impede the Purchaser's ability to consummate the Merger and the Offer. In particular, the Defensive Tactics Litigation seeks a judgment declaring, among other things, that (i) the Maine Takeover Statute is unconstitutional; (ii) any attempt to apply any other state's takeover statute to the Offer is constitutionally impermissible; (iii) the directors would be in breach of their fiduciary duties if they fail to redeem the Rights in response to the Offer; (iv) the 80% Charter Provision is void and unlawful and otherwise inapplicable to the Offer, and the Board of Directors of the Company is obligated by its fiduciary responsibilities to approve the Offer and the Merger; and (v) the provision of the By-Laws, which provides that, in order to qualify for election as, and remain, a director, such director must have been a registered holder of at least one Share for a six-month period prior to election (unless such minimum holding period requirement is waived by the Company's Board of Directors), is void and unlawful. The Defensive Tactics Litigation also seeks a preliminary and permanent order: (i) enjoining the Company and its agents from taking any actions to invoke, apply or enforce the Maine Takeover Statute or any similar provision; (ii) enjoining the defendants from honoring the Rights or from otherwise enforcing or amending or altering the Rights Agreement; (iii) enjoining and ordering 5 the defendants to redeem the Rights; and (iv) enjoining the Company and its agents from taking any action (including by changing the Articles or the By-Laws or otherwise) improperly to impede the Offer. In order to provide a possible method of consummating the Offer and the Merger even if the Defensive Tactics Litigation is unsuccessful, depending upon the Company's response to the Offer and other factors that the Purchaser may deem relevant, including whether or not the Company takes actions to permit the consummation of the Offer and the Merger by causing the conditions described herein to be satisfied, the Purchaser presently intends to seek to have a special shareholders meeting called and to obtain proxies from shareholders for the purpose of adopting resolutions of shareholders or taking other actions (which may be non-binding) instructing the Board of Directors to approve and effectuate the consummation of the Offer and the Merger and/or removing the current Board of Directors of the Company from office and electing new directors nominated by the Purchaser, in order that such new Board of Directors would take all such actions necessary or appropriate to approve and effectuate the consummation of the Offer and the Merger. THIS OFFER TO PURCHASE DOES NOT CONSTITUTE A SOLICITATION OF A PROXY, CONSENT OR AUTHORIZATION FOR OR WITH RESPECT TO ANY SPECIAL MEETING OR OTHER MEETING OF THE COMPANY'S SHAREHOLDERS OR ANY ACTION IN LIEU THEREOF. ANY SUCH SOLICITATION WHICH THE PURCHASER MAY MAKE WILL BE MADE ONLY PURSUANT TO SEPARATE PROXY MATERIALS IN COMPLIANCE WITH THE REQUIREMENTS OF SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"). In the event that the Offer is not consummated, the Purchaser intends to explore all options which may be available to it at such time, which may include, without limitation, the acquisition of Shares through open market purchases, privately negotiated transactions, a tender offer or exchange offer or otherwise, upon such terms and at such prices as it shall determine, which may be more or less than the price to be paid pursuant to the Offer. The Purchaser also reserves the right to dispose of Shares. THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO THE OFFER. 6 THE TENDER OFFER 1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of such extension or amendment), the Purchaser will accept for payment and pay for all Shares validly tendered on or prior to the Expiration Date and not properly withdrawn as permitted by Section 4. The term "Expiration Date" means 12:00 Midnight, New York City time, on Wednesday, September 7, 1994, unless and until the Purchaser, in its sole discretion, shall have extended the period during which the Offer is open, in which event the term "Expiration Date" shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SATISFACTION OF EACH OF THE CONDITIONS SET FORTH ABOVE IN THE INTRODUCTION AND IN SECTION 14. THE PURCHASER RESERVES THE RIGHT (BUT SHALL NOT BE OBLIGATED) TO WAIVE ANY OR ALL OF SUCH CONDITIONS. If by the Expiration Date, any or all of such conditions have not been satisfied or waived, the Purchaser reserves the right (but shall not be obligated) (i) to decline to purchase any of the Shares tendered and terminate the Offer, (ii) to waive all of the unsatisfied conditions and, subject to complying with applicable rules and regulations of the Commission, to purchase all Shares validly tendered or (iii) to extend the Offer and, subject to the right of shareholders to withdraw Shares until the Expiration Date, retain the Shares which have been tendered during the period or periods for which the Offer is extended. In the event that the Purchaser waives any of the conditions set forth in Section 14, the Commission may, if the waiver is deemed to constitute a material change to the information previously provided to the shareholders, require that the Offer remain open for an additional period of time and/or that the Purchaser disseminate information concerning such waiver. The Purchaser expressly reserves the right, in its sole discretion, at any time and from time to time, to extend the period during which the Offer is open for any reason, including the occurrence of any of the conditions specified in Section 14, by giving oral or written notice of such extension to the Depositary. During any such extension, all Shares previously tendered and not properly withdrawn will remain subject to the Offer, subject to the rights of a tendering shareholder to withdraw such shareholder's Shares. See Section 4. Subject to the applicable regulations of the Commission, the Purchaser also reserves the right, in its sole discretion, at any time or from time to time to (i) delay acceptance for payment of or, regardless of whether such Shares were theretofore accepted for payment, payment for any Shares pending receipt of any regulatory approvals specified in Section 15, (ii) terminate the Offer (whether or not any Shares have theretofore been accepted for payment) if any of the conditions referred to in Section 14 has not been satisfied or upon the occurrence of any of the events specified in Section 14 and (iii) waive any condition or otherwise amend the Offer in any respect, in each case, by giving oral or written notice of such delay, termination, waiver or amendment to the Depositary and by making a public announcement thereof. The Purchaser acknowledges (i) that Rule 14e-1(c) under the Exchange Act requires the Purchaser to pay the consideration offered or return the Shares tendered promptly after the termination or withdrawal of the Offer and (ii) that the Purchaser may not delay acceptance for payment of, or payment for (except as provided in clause (i) of the preceding sentence), any Shares upon the occurrence of any of the conditions specified in Section 14 without extending the period of time during which the Offer is open. Any such extension, delay, termination, waiver or amendment will be followed as promptly as practicable by public announcement thereof, and such announcement, in the case of an extension, will be made no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date. Without limiting the manner in which the Purchaser may choose to make any public announcement, except as provided by applicable law (including Rules 14d-4(c) and 14d-6(d) under the Exchange Act, which require that material changes be promptly disseminated to holders of 7 Shares), the Purchaser shall have no obligation to publish, advertise or otherwise communicate any such public announcement other than by issuing a release to the Dow Jones News Service. If the Purchaser makes a material change in the terms of the Offer, or if it waives a material condition of the Offer, the Purchaser will extend the Offer to the extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act. The minimum period during which an offer must remain open following material changes in the terms of the offer, other than a change in price or a change in the percentage of securities sought, will depend upon the facts and circumstances, including the materiality, of the changes. With respect to a change in price or, subject to certain limitations, a change in the percentage of securities sought, a minimum ten business day period from the day of such change is generally required to allow for adequate dissemination to shareholders. Accordingly, if prior to the Expiration Date, the Purchaser decreases the number of Shares being sought, increases or decreases the consideration offered pursuant to the Offer or adds a dealer's soliciting fee, and if the Offer is scheduled to expire at any time earlier than the period ending on the tenth business day from the date that notice of such increase, decrease or addition is first published, sent or given to shareholders, the Offer will be extended at least until the expiration of such ten business day period. For purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or a federal holiday and consists of the time period from 12:01 A.M. through 12:00 Midnight, New York City time. A request pursuant to Rule 14d-5 under the Exchange Act is being made to the Company for the use of its shareholder list, list of the holders of Rights, if any, and security position listings for the purpose of disseminating the Offer to holders of Shares. Upon compliance by the Company with such request, this Offer to Purchase and the related Letter of Transmittal and, if required, other relevant materials will be mailed to record holders of Shares and Rights whose names appear on the Company's shareholder list and list of holders of Rights and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the shareholder list and list of holders of Rights, if applicable, or who are listed as participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares. A demand under Maine law for the Company's shareholder list is also being made to the Company. 2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and subject to the conditions of the Offer (including, if the Offer is extended or amended, the terms and conditions of any such extension or amendment), the Purchaser will accept for payment, and will pay for, all Shares validly tendered and not properly withdrawn on or prior to the Expiration Date as soon as practicable after the later to occur of (i) the Expiration Date and (ii) the satisfaction or waiver of the conditions of the Offer set forth in Section 14, including, without limitation, the expiration or termination of the waiting period applicable to the acquisition of Shares pursuant to the Offer under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"). In addition, subject to applicable rules of the Commission, the Purchaser expressly reserves the right to delay acceptance for payment of, or payment for, Shares pending receipt of any other regulatory approvals specified in Section 15. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) Share Certificates and, if applicable, Rights Certificates, or timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such Shares and Rights into the Depositary's account at The Depository Trust Company, the Midwest Securities Trust Company or the Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility" and, collectively, the "Book-Entry Transfer Facilities") pursuant to the procedures set forth in Section 3, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message (as defined below) in connection with a book-entry transfer, and (iii) any other documents required by the Letter of Transmittal. The term "Agent's Message" means a message, transmitted by a Book-Entry Transfer Facility to, and received by, the Depositary and forming a part of a Book-Entry Confirmation, which states that 8 such Book-Entry Transfer Facility has received an express acknowledgment from the participant in such Book-Entry Transfer Facility tendering the Shares and, if applicable, Rights which are the subject of such Book-Entry Confirmation, that such participant has received and agrees to be bound by the terms of the Letter of Transmittal and that the Purchaser may enforce such agreement against such participant. Unless and until the Purchaser declares that the Rights Condition is satisfied, if Rights Certificates have been distributed to holders of Shares, such holders are required to tender Rights Certificate(s) representing a number of Rights equal to one-half the number of Shares being tendered in order to effect a valid tender of such Shares. The Parent intends to file on the date hereof with the Federal Trade Commission (the "FTC") and the Antitrust Division of the Department of Justice (the "Antitrust Division") a Premerger Notification and Report Form under the HSR Act with respect to the Offer. Accordingly, it is anticipated that the waiting period under the HSR Act applicable to the Offer will expire at 11:59 P.M., New York City time, on Thursday, August 25, 1994. However, prior to the expiration or termination of the waiting period, the FTC or the Antitrust Division may extend the waiting period applicable to the Offer by requesting additional information from the Parent. If such a request is made, the waiting period applicable to the Offer will expire on the tenth calendar day after the date of substantial compliance by the Parent with such request. Thereafter, the waiting period may only be extended by court order. The waiting period under the HSR Act may be terminated by the FTC and the Antitrust Division prior to its expiration. The Parent has requested early termination of the waiting period applicable to the Offer, although there can be no assurance that this request will be granted. See Section 15 for additional information regarding the HSR Act and other potentially applicable regulatory provisions. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment (and thereby purchased) Shares validly tendered and not properly withdrawn as, if and when the Purchaser gives oral or written notice to the Depositary of the Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payments from the Purchaser and transmitting such payments to shareholders whose Shares have been accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR SHARES BE PAID, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT. If, for any reason whatsoever, acceptance for payment of or payment for any Shares tendered pursuant to the Offer is delayed, or the Purchaser is unable to accept for payment or pay for Shares tendered pursuant to the Offer, then, without prejudice to the Purchaser's rights set forth herein, the Depositary may, nevertheless, on behalf of the Purchaser and subject to Rule 14e-1(c) under the Exchange Act, retain tendered Shares and such Shares may not be withdrawn except to the extent that the tendering stockholder is entitled to and duly exercises withdrawal rights as described in Section 4. If any tendered Shares are not accepted for payment for any reason or if Share Certificates are submitted for more Shares than are tendered, Share Certificates evidencing unpurchased or untendered Shares will be returned, without expense to the tendering shareholder (or, in the case of Shares tendered by book-entry transfer into the Depositary's account at a Book-Entry Transfer Facility pursuant to the procedures set forth in Section 3, such Shares will be credited to an account maintained at such Book-Entry Transfer Facility), in each case with the related Rights Certificates, if any, as promptly as practicable following the expiration, termination or withdrawal of the Offer. If, prior to the Expiration Date, the Purchaser increases the consideration offered to shareholders pursuant to the Offer, such increased consideration will be paid to all shareholders whose Shares are purchased pursuant to the Offer, whether or not such Shares were tendered or accepted for payment prior to such increase in consideration. 9 The Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its affiliates, the right to purchase all or any portion of the Shares and Rights tendered pursuant to the Offer, but any such transfer or assignment will not relieve the Purchaser of its obligations under the Offer and will in no way prejudice the rights of tendering shareholders to receive payment for Shares validly tendered and accepted for payment pursuant to the Offer. 3. PROCEDURE FOR TENDERING SHARES AND RIGHTS. Except as set forth below, in order for Shares and Rights to be validly tendered pursuant to the Offer, the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, together with any required signature guarantees, or an Agent's Message in connection with a book-entry delivery of Shares and Rights, and any other documents required by the Letter of Transmittal, must be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase on or prior to the Expiration Date and either (i) Share Certificates and Rights Certificates, if applicable, evidencing tendered Shares and Rights must be received by the Depositary at such address or such Shares and Rights must be tendered pursuant to the procedure for book-entry transfer described below and a Book-Entry Confirmation must be received by the Depositary, in each case on or prior to the Expiration Date, or (ii) the guaranteed delivery procedures described below must be complied with. Rights Certificates. If the Purchaser declares that the Rights Condition is satisfied, the Purchaser will not require delivery of Rights Certificates. Unless and until the Purchaser declares that the Rights Condition is satisfied, holders of Shares will be required to tender one-half of one Right for each Share tendered in order to effect a valid tender of such Share. Accordingly, shareholders who sell their Rights separately from their Shares and do not otherwise acquire Rights may not be able to satisfy the requirements of the Offer for a valid tender of Shares. If the Distribution Date has occurred and Rights Certificates have been distributed to such holders prior to the date of tender pursuant to the Offer, Rights Certificates representing a number of Rights equal to one-half the number of Shares being tendered must be delivered to the Depositary or, if available, a Book-Entry Confirmation must be received by the Depositary with respect thereto, in order for such Shares to be validly tendered. If the Distribution Date has occurred and Rights Certificates have not been distributed prior to the time Shares are tendered pursuant to the Offer, Rights may be tendered prior to a shareholder receiving Rights Certificates by use of the guaranteed delivery procedures described below. A tender of Shares without Rights Certificates constitutes an agreement by the tendering shareholder to deliver Rights Certificates representing a number of Rights equal to one-half the number of Shares tendered pursuant to the Offer to the Depositary within five business days after the date such Rights Certificates are distributed. If the Rights Condition is not satisfied, the Purchaser reserves the right to require that it receive such Rights Certificates prior to accepting Shares for payment. In that event, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of, among other things, Rights Certificates, if Rights Certificates have been distributed to holders of Shares. See Section 1. THE METHOD OF DELIVERY OF SHARE CERTIFICATES OR OF RIGHTS CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. Book-Entry Transfer. The Depositary will make a request to establish accounts with respect to the Shares at the Book-Entry Transfer Facilities for purposes of the Offer within two business days after the date of this Offer to Purchase. Any financial institution that is a participant in the system of any Book-Entry Transfer Facility may make book-entry delivery of Shares by causing such Book-Entry Transfer Facility to transfer such Shares into the Depositary's account at such Book-Entry Transfer Facility in accordance with such Book-Entry Transfer Facility's procedures for such transfer. However, although delivery of Shares may be effected through book-entry transfer at a Book-Entry Transfer Facility, the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, together with any 10 required signature guarantees, or an Agent's Message in connection with a book-entry transfer, and any other documents required by the Letter of Transmittal, must, in any case, be received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase on or prior to the Expiration Date, or the guaranteed delivery procedures described below must be complied with. If the Distribution Date occurs, to the extent that the Rights become eligible for book-entry transfer under procedures established by a particular Book-Entry Transfer Facility, the Depositary will make a request to establish an account with respect to the Rights at such Book-Entry Transfer Facility as soon as practicable. No assurance can be given, however, that book-entry delivery of Rights will be available. If book-entry delivery of Rights is available, the foregoing book-entry transfer procedure will also apply to Rights. If book-entry delivery is not available and if separate Rights Certificates have been issued, a tendering shareholder is not relieved of delivery requirements hereunder and thus will be required to tender Rights by means of actual physical delivery of Rights Certificates or pursuant to the guaranteed delivery procedures set forth below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY. Signature Guarantees. Signatures on Letters of Transmittal must be guaranteed by a firm which is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., or by a commercial bank or trust company having an office or correspondent in the United States (each of the foregoing being referred to as an "Eligible Institution"), except in cases where Shares or Rights are tendered (i) by a registered holder of Shares and Rights who has not completed either the box labeled "Special Payment Instructions" or the box labeled "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the account of an Eligible Institution. See Instruction 1 of the Letter of Transmittal. If the Share Certificates or the Rights Certificates are registered in the name of a person other than the signer of the Letter of Transmittal, or if payment is to be made, or Share Certificates or Rights Certificates not accepted for payment or not tendered are to be returned, to a person other than the registered holder(s), the Share Certificates or Rights Certificates, as the case may be, must be endorsed or accompanied by appropriate stock powers, in either case, signed exactly as the name(s) of the registered holder(s) appear on such certificates, with the signature(s) on such certificates or stock powers guaranteed as aforesaid. See Instructions 1 and 5 of the Letter of Transmittal. If Share Certificates and Rights Certificates are forwarded separately to the Depositary, a properly completed and duly executed Letter of Transmittal (or a facsimile thereof) must accompany each such delivery. Guaranteed Delivery. If a shareholder desires to tender Shares and Rights pursuant to the Offer and such shareholder's Share Certificates or Rights Certificates are not immediately available (including because Rights Certificates have not yet been distributed by the Company), or such shareholder cannot deliver the Share Certificates or Rights Certificates and all other required documents to reach the Depositary on or prior to the Expiration Date, or such shareholder cannot complete the procedure for delivery by book-entry transfer on a timely basis, such Shares and Rights may nevertheless be tendered, provided that all of the following conditions are satisfied: (i) such tender is made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Purchaser, is received by the Depositary, as provided below, on or prior to the Expiration Date; and (iii) the Share Certificates or Rights Certificates, as the case may be (or a Book-Entry Confirmation), representing all tendered Shares or Rights, in proper form for transfer, in each case together with the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry transfer, an 11 Agent's Message) and any other documents required by the Letter of Transmittal are received by the Depositary within (x) in the case of Shares, five New York Stock Exchange, Inc. ("NYSE") trading days after the date of execution of such Notice of Guaranteed Delivery or (y) in the case of Rights, a period ending on the later of (1) five NYSE trading days after the date of execution of such Notice of Guaranteed Delivery and (2) five business days after the date the Rights Certificates are distributed to shareholders of the Company. The Notice of Guaranteed Delivery may be delivered by hand or transmitted by telegram, telex, facsimile transmission or mail to the Depositary and must include a guarantee by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery. Notwithstanding any other provision hereof, payment for Shares accepted for payment pursuant to the Offer will in all cases be made only after timely receipt by the Depositary of Shares Certificates for, or of Book-Entry Confirmation with respect to, such Shares, and if the Distribution Date has occurred, Rights Certificates for, or a Book-Entry Confirmation, if available, with respect to, the associated Rights (unless the Purchaser elects, in its sole discretion, to make payment for such Shares pending receipt of the Rights Certificates for, or a Book-Entry Confirmation with respect to, such Rights), a properly completed and duly executed Letter of Transmittal (or a facsimile thereof), together with any required signature guarantees (or, in the case of a book-entry transfer, an Agent's Message), and any other documents required by the Letter of Transmittal. Accordingly, payment might not be made to all tendering shareholders at the same time, and will depend upon when Share Certificates (or Rights Certificates) or Book-Entry Confirmations of such Shares (or Rights, if available) are received into the Depositary's account at a Book-Entry Transfer Facility. If the Rights Condition is satisfied, the guaranteed delivery procedure with respect to Rights Certificates and the requirement for the tender of Rights will no longer apply. Appointment as Proxy. By executing the Letter of Transmittal, a tendering shareholder irrevocably appoints designees of the Purchaser, and each of them, as such shareholder's attorneys-in-fact and proxies, with full power of substitution, in the manner set forth in the Letter of Transmittal, to the full extent of such shareholder's rights with respect to the Shares and Rights tendered by such shareholder and accepted for payment by the Purchaser (and with respect to any and all other Shares or Rights or other securities issued or issuable in respect of such Shares on or after the date hereof). All such powers of attorney and proxies shall be considered irrevocable and coupled with an interest in the tendered Shares and Rights. Such appointment will be effective when, and only to the extent that, the Purchaser accepts such Shares and Rights for payment. Upon such acceptance for payment, all prior powers of attorney and proxies given by such shareholder with respect to such Shares and Rights (and such other shares and securities) will be revoked without further action, and no subsequent powers of attorney and proxies may be given nor any subsequent written consents executed (and, if given or executed, will not be deemed effective). The designees of the Purchaser will be empowered to exercise all voting and other rights of such shareholder as they in their sole discretion may deem proper at any annual or special meeting of the Company's shareholders or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise. The Purchaser reserves the right to require that, in order for Shares and Rights to be deemed validly tendered, immediately upon the Purchaser's payment for such Shares, the Purchaser must be able to exercise full voting rights with respect to such Shares, Rights and other securities, including voting at any meeting of shareholders. Determination of Validity. All questions as to the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares and Rights will be determined by the Purchaser, in its sole discretion, which determination shall be final and binding on all parties. The Purchaser reserves the absolute right to reject any and all tenders determined by it not to be in proper form or the acceptance for payment of which may, in the opinion of its counsel, be unlawful. The Purchaser also reserves the absolute right to waive any of the conditions of the Offer or any defect or irregularity in any tender of Shares and Rights of any particular shareholder whether or not similar 12 defects or irregularities are waived in the case of other shareholders. No tender of Shares will be deemed to have been validly made until all defects and irregularities have been cured or waived. None of the Purchaser, the Parent, any of their affiliates or assigns, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in tenders or incur any liability for failure to give any such notification. The Purchaser's interpretation of the terms and conditions of the Offer (including the Letter of Transmittal and the instructions thereto) will be final and binding. BACKUP FEDERAL TAX WITHHOLDING. UNDER THE FEDERAL INCOME TAX LAWS, THE DEPOSITARY WILL BE REQUIRED TO WITHHOLD 31 PERCENT OF THE AMOUNT OF ANY PAYMENTS MADE TO CERTAIN SHAREHOLDERS PURSUANT TO THE OFFER. TO PREVENT BACKUP FEDERAL INCOME TAX WITHHOLDING WITH RESPECT TO PAYMENT TO CERTAIN SHAREHOLDERS OF THE PURCHASE PRICE OF SHARES PURCHASED PURSUANT TO THE OFFER, EACH SUCH SHAREHOLDER MUST PROVIDE THE DEPOSITARY WITH SUCH SHAREHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND CERTIFY THAT SUCH SHAREHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED IN THE LETTER OF TRANSMITTAL. SEE INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL. Other Requirements. The Purchaser's acceptance for payment of Shares and, if applicable, Rights tendered pursuant to any of the procedures described above will constitute a binding agreement between the tendering shareholder and the Purchaser upon the terms and subject to the conditions of the Offer. 4. WITHDRAWAL RIGHTS. Tenders of Shares and Rights made pursuant to the Offer are irrevocable, except that Shares and Rights tendered pursuant to the Offer may be withdrawn at any time on or prior to the Expiration Date and, unless theretofore accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after October 8, 1994. If the Purchaser extends the Offer, is delayed in its acceptance for payment of Shares and Rights or is unable to purchase Shares and Rights validly tendered pursuant to the Offer for any reason, then, without prejudice to the Purchaser's rights under the Offer, the Depositary may nevertheless, on behalf of the Purchaser, retain tendered Shares and Rights, and such Shares and Rights may not be withdrawn except to the extent that tendering shareholders are entitled to withdrawal rights as described in this Section 4. Any such delay will be accompanied by an extension of the Offer to the extent required by law. For a withdrawal to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of this Offer to Purchase. Any notice of withdrawal must specify the name of the person who tendered the Shares or Rights to be withdrawn, the number of Shares or Rights to be withdrawn and the name of the registered holder, if different from that of the person who tendered such Shares or Rights. If Share Certificates or Rights Certificates to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution unless such Shares or Rights have been tendered for the account of any Eligible Institution. If Shares or Rights have been tendered pursuant to the procedure for book-entry transfer as set forth in Section 3, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares or Rights, in which case a notice of withdrawal will be effective if delivered to the Depositary by any method of delivery described in the first sentence of this paragraph. A withdrawal of Shares or Rights shall also constitute a withdrawal of the associated Rights or Shares, as applicable. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination will be final and binding. None of the Purchaser, the Parent, any of their affiliates or assigns, the Dealer Manager, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give any such notification. Any Shares or Rights properly withdrawn will thereafter be deemed not to have been validly tendered for purposes of the Offer. However, withdrawn Shares or Rights may be re-tendered at any time prior to the Expiration Date by following one of the procedures described in Section 3. 13 5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The summary of tax consequences set forth below is for general information only. The tax treatment of each shareholder will depend in part upon his particular situation. Special tax consequences not described herein may be applicable to particular classes of taxpayers, such as financial institutions, broker-dealers, persons who are not citizens or residents of the United States, shareholders who acquired their Shares through the exercise of an employee stock option or otherwise as compensation, and persons who received payments in respect of options to acquire Shares. ALL SHAREHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL AND FOREIGN TAX LAWS. The receipt of cash pursuant to the Offer or the Merger will be a taxable transaction for federal income tax purposes and may also be a taxable transaction under applicable state, local, foreign or other tax laws. Generally, a shareholder will recognize gain or loss in an amount equal to the difference between the cash received and the shareholder's adjusted tax basis in the Shares and the Rights. For federal income tax purposes, such gain or loss will be a capital gain or loss if the Shares are a capital asset in the hands of the shareholder, and a long-term capital gain or loss if the shareholder's holding period is more than one year as of the date the Purchaser accepts such Shares for payment pursuant to the Offer or the effective date of the Merger, as the case may be. There are limitations on the deductibility of capital losses. New York Real Estate Transfer Taxes. The New York State Real Property Transfer Gains Tax, the New York State Real Estate Transfer Tax and the New York City Real Property Transfer Tax (collectively, the "Real Estate Transfer Taxes") are imposed on the transfer or acquisition, directly or indirectly, of controlling interests in an entity which owns interests in real property located in New York State or New York City, as the case may be. The Offer and the Merger will result in the taxable transfer of controlling interests in entities which own New York State or New York City real property for purposes of the Real Estate Transfer Taxes. Although any Real Estate Transfer Taxes could be imposed directly on the shareholders of the Company, the Purchaser will complete and file any necessary tax returns, and the Purchaser will pay all Real Estate Transfer Taxes that are imposed as a result of the Offer and the Merger. Upon receipt of the consideration for either the Offer or the Merger, each shareholder of the Company will be deemed to have agreed to be bound by the Real Estate Transfer Tax returns filed by the Purchaser. 6. PRICE RANGE OF SHARES; DIVIDENDS. According to the 1993 Form 10-K, the Shares are listed and traded principally on the NYSE. The following table sets forth, for the quarters indicated, the high and low sales prices per Share on the NYSE as reported by the Dow Jones News Service and the amount of cash dividends paid or declared per share for each quarter based on publicly available sources.
HIGH LOW DIVIDENDS --------- --------- ----------- Year Ended December 31, 1992: First Quarter.................................................................... $ 66 3/8 $ 56 1/4 $ .3750 Second Quarter................................................................... 64 3/4 53 .4125 Third Quarter.................................................................... 62 5/8 54 1/4 .4125 Fourth Quarter................................................................... 59 1/4 52 1/8 .4125 Year Ended December 31, 1993: First Quarter.................................................................... 58 1/4 46 .4125 Second Quarter................................................................... 54 1/4 49 1/4 .4375 Third Quarter.................................................................... 56 3/8 46 1/2 .4375 Fourth Quarter................................................................... 59 1/4 49 3/8 .4375 Year Ended December 31, 1994: First Quarter.................................................................... 50 5/8 42 1/4 .4375 Second Quarter................................................................... 56 7/8 45 1/4 .4625 Third Quarter (through August 9, 1994)........................................... 93 7/8 54 3/4 --
On August 8, 1994, the last full trading day prior to announcement of the Offer, the closing sale price per Share reported on the NYSE was $91. On August 1, 1994, the last full trading day prior to the 14 Parent's issuance of the press release announcing the transmission of a letter to the Company containing an offer to acquire the Company in a transaction in which shareholders would receive $95.00 per Share in cash, the closing sale price per Share reported on the NYSE was $63. The Offer represents a 125% premium over the closing sale price per Share reported on the NYSE of $42 1/4 on March 14, 1994. SHAREHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES. The Rights are currently attached to the outstanding Shares and may not be traded separately. As a result, the sales prices per Share set forth above are also the high and low sales prices per Share and associated Right. As a result of the commencement of the Offer, the Distribution Date may be as early as August 23, 1994, after which the Rights could begin trading separately from the Shares. See Section 11. In such event, shareholders are urged to obtain a current market quotation, if any, for the Rights. Unless and until the Purchaser declares that the Rights Condition is satisfied, holders of Shares will be required to tender one-half of one Right for each Share tendered in order to effect a valid tender of such Share. Accordingly, shareholders who sell their Rights separately from their Shares and do not otherwise acquire Rights may not be able to satisfy the requirements of the Offer for a valid tender of Shares. 7. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning the Company contained in this Offer to Purchase, including financial information, has been taken from or based upon publicly available documents and records on file with the Commission and other public sources. The summary information concerning the Company in this Section 7 and elsewhere in this Offer to Purchase is derived from the Company's 1993 Form 10-K, the Company's Proxy Statement for the Annual Meeting of Shareholders held on April 18, 1994, the March 1994 Form 10-Q, the Company's Registration Statement on Form S-3 filed with the Commission on March 31, 1994 relating to $600 million aggregate principal amount of debt securities and information made publicly available by the Company through the Dow Jones News Service. The summary information set forth below is qualified in its entirety by reference to such reports and registration statement (which may be obtained and inspected as described below), and such information made available through the Dow Jones News Service, and should be considered in conjunction with the more comprehensive financial and other information in such reports and other publicly available reports and documents filed by the Company with the Commission and such other publicly available information. Although the Purchaser and the Parent do not have any knowledge that would indicate that any statements contained herein based upon such documents and records and other publicly available information are untrue, neither the Purchaser nor the Parent assumes any responsibility for the accuracy or completeness of the information contained therein, or for any failure by the Company to disclose events that may have occurred and may affect the significance or accuracy of any such information but which are unknown to the Purchaser and the Parent. General. The Company is a Maine corporation, incorporated in 1907, with its principal executive offices at One Cyanamid Plaza, Wayne, New Jersey 07470. The Company is a research-based life sciences company which, together with its subsidiaries, discovers and develops medical and agricultural products and manufactures and markets them throughout the world. The Company's medical products encompass LEDERLE branded and generic pharmaceutical products; over-the-counter products including CENTRUM and other multivitamins; LEDERLE-PRAXIS vaccines; DAVIS & GECK wound management devices and instruments for minimally invasive surgery; STORZ ophthalmic, ear, nose and throat surgical devices, ophthalmic pharmaceuticals and intraocular lenses; and ACUFEX orthopedic instruments and equipment. The Company's agricultural business encompasses herbicides, such as the imidazolinone herbicides marketed as SCEPTER, PURSUIT, and PURSUIT Plus, PROWL (marketed as STOMP outside the 15 United States) for soybeans, cotton, corn, rice and small grains, ARSENAL for vegetation control, and ASSERT for wheat and barley; insecticides, such as COUNTER and THIMET and, outside of North America, TORQUE, FASTAC, RIPCORD and CASCADE; fungicides outside of North America, such as DELAN and ACROBAT; plant growth regulators, such as CYCOCEL; animal feed supplements and health products, such as AUREOMYCIN and, outside of the United States, AVOTAN, CYDECTIN and CYGRO; and animal vaccines. Product designations appearing in differentiated type are trademarks. Financial Information. Set forth below is certain selected consolidated financial data for the Company's last five fiscal years and the three months ended March 31, 1994 and 1993, which was derived from the 1993 Form 10-K and the March 1994 Form 10-Q. Certain capsule financial information for the three months and six months ended June 30, 1994 and 1993 has been derived from information made publicly available by the Company through the Dow Jones News Service in a press release dated July 19, 1994. More comprehensive financial information is included in the reports (including management's discussion and analysis of financial condition and results of operations) and other documents filed by the Company with the Commission, and in such press release, and the following financial data is qualified in its entirety by reference to such reports and other documents and press release, including the financial information and related notes contained therein. Such reports and other documents may be examined and copies thereof may be obtained from the offices of the Commission and the NYSE in the manner set forth below. AMERICAN CYANAMID COMPANY SELECTED CONSOLIDATED FINANCIAL DATA (IN MILLIONS, EXCEPT PER SHARE DATA)
FOR THE THREE MONTHS ENDED MARCH 31, FOR THE YEAR ENDED DECEMBER 31, -------------------- ------------------------------------------ 1994 1993 1993 1992 1991 1990 --------- --------- --------- --------- --------- --------- INCOME STATEMENT DATA Net Sales................................................. $ 1,255 $ 1,146 $ 4,277 $ 4,194 $ 3,821 $ 3,380 Earnings (Loss) From Continuing Operations and Before Accounting Changes.......................................... 117 115 (164) 350 329 240 Earnings (Loss) From Discontinued Operations.............. -- (216) (622) 45 30 113 Cumulative Effect of Accounting Changes................... -- (333) (333) -- -- -- Net Earnings (Loss)....................................... 117 (434) (1,119) 395 359 353 PER SHARE Earnings (Loss) From Continuing Operations and Before Accounting Changes.......................................... $1.30 $1.28 ($1.82) $3.85 $3.53 $2.52 Earnings (Loss) From Discontinued Operations.............. -- (2.40) (6.92) 0.50 0.32 1.19 Cumulative Effect of Accounting Changes................... -- (3.70) (3.70) -- -- -- Net Earnings (Loss)....................................... 1.30 (4.82) (12.44) 4.35 3.85 3.71 BALANCE SHEET DATA (At Period End) Working Capital........................................... $ 399 NA $ 356 $ 839 $ 794 $ 824 Total Assets.............................................. 6,276 NA 6,057 5,067 4,689 4,729 Total Indebtedness........................................ 1,096 NA 960 674 NA NA Shareholders' Equity...................................... 1,487 NA 1,367 2,721 2,604 2,563 1989 --------- INCOME STATEMENT DATA Net Sales................................................. $ 3,014 Earnings (Loss) From Continuing Operations and Before Accounting Changes.......................................... 232 Earnings (Loss) From Discontinued Operations.............. 60 Cumulative Effect of Accounting Changes................... -- Net Earnings (Loss)....................................... 292 PER SHARE Earnings (Loss) From Continuing Operations and Before Accounting Changes.......................................... $2.48 Earnings (Loss) From Discontinued Operations.............. 0.64 Cumulative Effect of Accounting Changes................... -- Net Earnings (Loss)....................................... 3.12 BALANCE SHEET DATA (At Period End) Working Capital........................................... $ 547 Total Assets.............................................. 4,687 Total Indebtedness........................................ NA Shareholders' Equity...................................... 2,321
June 30, 1994 and 1993 Information. The Company's earnings from continuing operations and net earnings in the second quarter of 1994 were $185 million, or $2.06 per share, compared to a second quarter 1993 loss from continuing operations of $235 million, or $2.61 per share, and a net loss of 16 $229 million, or $2.54 per share. Second quarter 1993 results included a one-time charge of $378 million, or $4.21 per share, related to the Company's acquisition of a majority interest in Immunex Corporation and net earnings from discontinued operations of $6 million, or $.07 per share. Excluding these items, net earnings per share and earnings per share from continuing operations in the second quarter of 1993 would have been $1.60. Worldwide sales were $1.50 billion in the second quarter of 1994, compared to $1.25 billion in the same period of 1993. The Company's earnings from continuing operations and net earnings in the first six months of 1994 were $302 million, or $3.36 per share, compared to a first half 1993 loss from continuing operations of $120 million, or $1.33 per share, and a net loss of $662 million, or $7.36 per share. The results reported in the first six months of 1993 included the one-time charge of $378 million, or $4.21 per share, related to the Immunex acquisition; a $210 million, or $2.33 per share, net loss from discontinued operations; and a $333 million, or $3.70 per share, net charge for the cumulative effect of accounting changes applicable to continuing operations. Excluding these items, earnings per share from continuing operations and net earnings per share in the first six months of 1993 would have been $2.88. Worldwide sales were $2.75 billion in the six months of 1994, compared to $2.39 billion in the same period of 1993. The Shares are registered under the Exchange Act. Accordingly, the Company is subject to the informational filing requirements of the Exchange Act and, in accordance therewith, is obligated to file periodic reports, proxy statements and other information with the Commission relating to its business, financial condition and other matters. Information, as of particular dates, concerning the Company's directors and officers, their remuneration, options granted to them, the principal holders of the Company's securities and any material interest of such persons in transactions with the Company is required to be disclosed in such proxy statements and distributed to the Company's shareholders and filed with the Commission. Such reports, proxy statements and other information should be available for inspection at the public reference facilities of the Commission located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and should also be available for inspection and copying at prescribed rates at the regional offices of the Commission located at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of this material may also be obtained by mail, upon payment of the Commission's customary fees, from the Commission's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, such material should also be available for inspection at the library of the New York Stock Exchange, 20 Broad Street, New York, New York 10005. Except as otherwise noted in this Offer to Purchase, all of the information with respect to the Company set forth in this Offer to Purchase has been derived from publicly available information. 8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND THE PARENT. The Purchaser, a Delaware corporation and a wholly owned subsidiary of the Parent, was organized in connection with the Offer and has not carried on any activities to date other than those incident to its formation and the commencement of the Offer. The Parent is a Delaware corporation organized in 1926. The Parent, together with its subsidiaries, is a leading manufacturer and marketer of health care products (including pharmaceuticals, consumer health care products, medical supplies and diagnostic products) and food products. The Parent's and the Purchaser's principal offices are located at Five Giralda Farms, Madison, New Jersey 07940. The Parent's health care products operations are conducted primarily through the following divisions and subsidiaries: Wyeth-Ayerst Laboratories Division, a worldwide manufacturer and marketer of ethical pharmaceuticals, with major products in such categories as female health care, cardiovascular products, infant formulas, hospital injectable products, vaccines, anti-inflammatory agents, psychotropic products and prescription cough/cold/allergy products; Whitehall-Robins Healthcare Division, a manufacturer and marketer of self-medication and personal care products in the U.S., Canada and other international markets; Sherwood Medical Company, a manufacturer and marketer 17 of medical supplies and clinical laboratory products worldwide; and Fort Dodge Laboratories, a manufacturer and marketer of animal biologicals and pharmaceuticals in the U.S. and internationally. Significant product segments include small animal vaccines, pharmaceuticals and anesthetics, large animal vaccines, and mastitis preventative and treatment products. In addition, the Parent is also the beneficial owner of approximately 64% of the outstanding equity of Genetics Institute, Inc., a leading biopharmaceutical firm. The Parent's food products operations are conducted through its American Home Food Products subsidiary which manufactures and markets entrees, side dishes, snacks and other food products in the U.S. and Canada. The Parent's consumer-oriented product lines include the well known health care brand names ADVIL, ANBESOL, CHAP STICK, DENOREX, DIMETAPP, DRISTAN, PRIMATENE MIST, PREPARATION H and ROBITUSSIN, as well as the food brands CHEF BOYARDEE, CRUNCH 'N MUNCH, GULDEN'S, JIFFY-POP, PAM and POLANER. Product designations appearing in differentiated type are trademarks. Until immediately prior to the time that the Purchaser will purchase Shares pursuant to the Offer, it is not anticipated that the Purchaser will have any significant assets or liabilities or engage in activities other than those incident to its formation and capitalization and the transactions contemplated by the Offer. Because the Purchaser has minimal assets and capitalization, no meaningful financial information is available. The name, citizenship, business address, principal occupation or employment, and five year employment history of each of the directors and executive officers of the Purchaser and the Parent and certain other information are set forth in Schedule I hereto. Set forth below are certain selected consolidated financial data relating to the Parent and its subsidiaries for the Parent's last five fiscal years and the three months ended March 31, 1994 and 1993 which have been derived from the financial statements contained in the Parent's Annual Report on Form 10-K for the fiscal year ended December 31, 1993 and from the unaudited financial statements contained in the Parent's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1994, in each case filed by the Parent with the Commission. Certain capsule financial information for the three months and six months ended June 30, 1994 and 1993 has been derived from information made publicly available through the Dow Jones News Service in a press release dated July 21, 1994. More comprehensive financial information is included in the reports (including management's discussion and analysis of financial condition and results of operations) and other documents filed by the Parent with the Commission, and in such press release, and the following financial data is qualified in its entirety by reference to such reports and other documents and press release, including the financial information and related notes contained therein. Such reports and other documents may be examined and copies thereof may be obtained from the offices of the Commission and the NYSE in the same manner as set forth with respect to information about the Company in Section 7. 18 AMERICAN HOME PRODUCTS CORPORATION SELECTED CONSOLIDATED FINANCIAL DATA (IN MILLIONS, EXCEPT PER SHARE DATA)
FOR THE THREE MONTHS ENDED MARCH 31, FOR THE YEAR ENDED DECEMBER 31, -------------------- ----------------------------------------------------- 1994 1993 1993 1992 1991 1990 1989 --------- --------- --------- --------- --------- --------- --------- INCOME STATEMENT DATA Net Sales.......................................... $ 2,144 $ 2,111 $ 8,305 $ 7,874 $ 7,079 $ 6,775 $ 6,747 Income Before Accounting Changes................... 416 402 1,469 1,151 1,375 1,231 1,102 Cumulative Effect of Accounting Changes............ -- -- -- 310 -- -- -- Net Income......................................... 416 402 1,469 1,461 1,375 1,231 1,102 PER SHARE OF COMMON STOCK Income Before Accounting Changes................... $1.34 $1.29 $4.73 $3.66 $4.36 $3.92 $3.54 Cumulative Effect of Accounting Changes............ -- -- -- 0.99 -- -- -- Net Income......................................... 1.34 1.29 4.73 4.65 4.36 3.92 3.54 BALANCE SHEET DATA (At Period End) Working Capital.................................... $ 3,151 $ 3,127 $ 3,223 $ 3,059 $ 2,849 $ 2,132 $ 2,424 Total Assets....................................... 7,684 7,290 7,687 7,141 5,939 5,637 5,681 Total Indebtedness................................. 863 864 864 613 110 790 1,920 Shareholders' Equity............................... 3,902 3,462 3,876 3,563 3,301 2,675 1,970
June 30, 1994 and 1993 Information. The Parent's net sales were $1,978 million for the 1994 second quarter, 4% above year ago levels. Net sales for the 1994 first half were $4,122 million, 3% higher than 1993 results. Net income and net income per share were $300 million and $0.98 for the 1994 second quarter, 4% and 5% above 1993 levels. Net income and net income per share for the 1994 first half were $716 million and $2.32, also 4% and 5% above 1993 levels. The Parent currently owns 10,000 Shares, representing less than .1 percent of the 89,754,355 Shares outstanding at March 31, 1994, all of which were acquired by the Parent on August 2, 1994 in a single open market transaction at $64.00 per Share. Except as described in this Offer to Purchase and in Schedule I, none of the Purchaser, the Parent nor, to the best knowledge of the Purchaser and the Parent, any of the persons listed on Schedule I hereto or any associate or majority-owned subsidiary of the Purchaser, the Parent or any of the persons so listed, beneficially owns or has a right to acquire directly or indirectly any Shares, and none of the Purchaser, the Parent nor, to the best knowledge of the Purchaser and the Parent, any of the persons or entities referred to above, or any of the respective executive officers, directors or subsidiaries of any of the foregoing, has effected any transactions in the Shares during the past 60 days. On June 15, 1990, the Parent and the Company entered into an agreement (the "Verelan Agreement") under which the Parent and the Company co-market in the United States the Company's calcium channel blocker antihypertensive, VERELAN (verapamil hydrochloride), through their respective pharmaceutical divisions. Under the Verelan Agreement, the Parent and the Company each agreed to promote the product through detailing presentations to physicians and medical residents in order to maximize sales of VERELAN and to share in the income therefrom in specified percentages. In addition, under the Verelan Agreement, the Parent and the Company agreed not to promote a specified type of antihypertensive product for a three-year period and calcium channel blockers for the duration of the Verelan Agreement. The Verelan Agreement has an initial term of 17 years from its date and may be extended for additional five year terms. If the Parent desires to extend the Verelan 19 Agreement and the Company does not, the Company is required to make certain payments to the Parent as liquidated damages. In addition, from time to time in the ordinary course of business, executives of the Parent and/or its subsidiaries and divisions discuss and may enter into arrangements with executives of various companies in the pharmaceutical industry, including the Company and/or its subsidiaries and divisions, typically with respect to the possibility of cooperative ventures relating to research, development and marketing of their respective products. Except as set forth in this Offer to Purchase, neither the Purchaser nor the Parent or, to the best knowledge of the Purchaser and the Parent, any of the persons listed on Schedule I hereto, has any contract, arrangement, understanding or relationship with any other person with respect to any securities of the Company, including, but not limited to, contracts, arrangements, understandings or relationships concerning the transfer or voting of such securities, joint ventures, loan or option arrangements, puts or calls, guarantees of loans, guarantees against loss or the giving or withholding of proxies. Except as set forth in this Offer to Purchase, neither the Purchaser nor the Parent or, to the best knowledge of the Purchaser and the Parent, any of the persons listed on Schedule I hereto, has had since January 1, 1991, any business relationships or transactions with the Company or any of its executive officers, directors or affiliates that are required to be reported under the rules and regulations of the Commission applicable to the Offer. Except as set forth in this Offer to Purchase, since January 1, 1991, there have been no contacts, negotiations or transactions between any of the Parent, the Purchaser or, to the best knowledge of the Purchaser and the Parent, any of the persons listed in Schedule I hereto, on the one hand, and the Company or its affiliates, on the other hand, concerning a merger, consolidation or acquisition, a tender offer or other acquisition of securities, an election of directors, or a sale or other transfer of a material amount of assets. 9. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by the Purchaser to purchase all of the outstanding Shares and pay related fees and expenses is expected to be approximately $9.2 billion. The Purchaser will obtain such funds through capital contributions by the Parent and/or various wholly owned direct or indirect subsidiaries of the Parent. The Parent and/or such subsidiaries will obtain such funds through borrowings by such entities (collectively, the "Borrower") from commercial banks and from their respective general corporate funds. CSI, as advisor and arranger to the Parent, has agreed to use its best efforts to form a syndicate of financial institutions to provide a $9 billion bank credit facility. The Parent has received the Commitment Letter from Chemical Bank, which provides that until May 31, 1995 (unless extended), Chemical Bank will provide, on specified terms and subject to specified conditions, up to $1.2 billion of the bank financing and act as administrative agent (the "Administrative Agent") thereunder. The Parent believes that the Purchaser will have sufficient funds necessary to consummate the Offer and the Merger and to pay related costs. See Sections 7 and 8. The Commitment Letter contemplates (i) a 364-day revolving credit and bid loan facility in the amount of $6 billion (the "A Credit Facility"), which is extendable by the Borrower for successive 364-day periods effective upon the consent of the Majority Lenders (as defined in the Commitment Letter) and only with respect to such consenting lenders, and (ii) a five year revolving credit and bid loan facility in the amount of $3 billion (the "B Credit Facility," and, together with the A Credit Facility, the "Facilities"). The proceeds of the Facilities may be used by the Borrower (i) to finance the Offer and the Merger, (ii) to replace the Parent's existing $1 billion credit facility (under which there are no amounts currently outstanding) and (iii) for the Parent's general corporate and working capital purposes, including commercial paper back-up. Each revolving credit loan under the A Credit Facility or the B Credit Facility, as the case may be, must be repaid on its maturity date. Each bid loan (whether under the A Credit Facility or the B Credit 20 Facility) will have an interest period (as selected by the Borrower) of between seven and 180 days, and will mature on the last day of such interest period. Interest on revolving credit loans borrowed under the Facilities will be payable at Chemical Bank's Alternate Base Rate or, at the Borrower's election, at specified spreads (adjusted based on the Parent's securities ratings) above a CD Rate or Eurodollar Rate (adjusted for reserves), as established by the Administrative Agent. Interest on bid loans will be determined through a customary bid process. Chemical Bank's commitment to provide up to $1.2 billion of the Facilities and CSI's agreement to use its best efforts to syndicate the remaining portion thereof is expressly subject to satisfaction of certain customary conditions, including without limitation (a) satisfactory completion of due diligence (which, with respect to the Company, will be based solely on public information and information made available by the Company to the Parent, if any), (b) absence of certain material adverse changes, (c) the successful syndication of the Facilities and (d) the appropriate markets being clear of certain competing transactions on behalf of the Parent. The conditions to the effective date under the Facilities include (a) execution and delivery of satisfactory loan documentation, (b) the Administrative Agent's reasonable satisfaction with legal matters relating to the Facilities and (c) consummation of the Offer in compliance with the terms and conditions (including the price paid for each Share pursuant thereto) set forth in this Offer to Purchase, as the same may be modified to the extent not materially adverse (in the reasonable opinion of the Administrative Agent) to the interests of the lenders. It is a further condition precedent to the effective date of the Facilities that, after giving effect to the consummation of the Offer, the Purchaser shall own and control that number of Shares as shall be necessary to permit the Purchaser to approve the Merger without the affirmative vote or approval of any other shareholders, and there shall be no applicable statute or other restriction which would prohibit, restrict or materially delay the consummation of the Merger or which would be reasonably likely to make the consummation of the Merger economically unfeasible. The definitive documentation relating to the Facilities also will contain representations, warranties, covenants (including, without limitation, a covenant that the Merger occur within 180 days of the consummation of the Offer), events of default (including with respect to certain change of control events) and conditions customary in the Administrative Agent's loan agreements for transactions of this size and type. The Borrower also has agreed to pay certain expenses of, and provide customary indemnities to, CSI and Chemical Bank and (under certain circumstances) the other lenders under the Facilities. The Purchaser has agreed to pay certain fees to CSI and Chemical Bank with respect to the Facilities and participation and facility fees to the lenders, in connection with the Facilities which, in the aggregate, are not material to the transactions described herein. The foregoing summary of the source and amount of funds is qualified in its entirety by reference to the text of the Commitment Letter, a copy of which is filed as an exhibit to the Tender Offer Statement on Schedule 14D-1 of the Purchaser and the Parent filed with the Commission in connection with the Offer (the "Schedule 14D-1") and is incorporated herein by reference and may be inspected in the same manner as set forth in Section 7. If and when definitive agreements relating to the Facilities are executed, copies will be filed as exhibits to amendments to the Schedule 14D-1. Although no definitive plan or arrangement for repayment of borrowings under the Facilities has been made, the Parent anticipates such borrowings will be repaid with internally generated funds (including, if the Merger is accomplished, those of the Company) and from other sources which may include the proceeds of future borrowings or financings. No plans or arrangements have been made for any future borrowings or financings. 21 10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. For more than one year prior to the Offer, members of the Parent's senior management have discussed, among other things, potential transactions that might enhance the value of the Parent for its shareholders, including the possibility of a strategic acquisition of a pharmaceutical company or business, such as the Company. By early June 1994, the Parent's discussions regarding possible acquisitions began to focus particularly on the Company and actions were taken to effect a more formal analysis of the Company. Thereafter, during July 1994, John R. Stafford, Chairman, President and Chief Executive Officer of the Parent, and Albert J. Costello, Chairman and Chief Executive Officer of the Company, had a telephone conversation in which they discussed informally the industry and in which Mr. Stafford, referring to the Verelan Agreement between the companies, stated that he would like to meet with Mr. Costello to discuss a broadening of the companies' relationship. In the course of such conversations, Mr. Stafford and Mr. Costello scheduled a meeting for August 15, 1994, after Mr. Costello was expected to return from a vacation. During late July 1994, rumors regarding a possible transaction involving the Company circulated in the industry and in the financial press and marketplace. Mr. Stafford subsequently confirmed the scheduled August 15 meeting in a letter to Mr. Costello dated July 27, 1994, which included the following statement: As I mentioned there have been some reports lately related to American Cyanamid and possible shifts in your strategic direction. In light of our ongoing and successful venture with VERELAN, I would like to suggest that you not take any definitive steps involving your pharmaceutical business before we can have a meeting. We have a keen interest in talking with you about the future of the pharmaceutical industry and how both our companies might work together to maximize shareholder value. At a scheduled meeting of the Parent's Board of Directors on July 28, 1994, Mr. Stafford presented to the Board a summary of potential acquisition transactions, including a possible acquisition of the Company, and described for the Board the substance of his conversation with Mr. Costello, the scheduling of their meeting and the mailing of the July 27, 1994 letter. Neither the Parent nor Mr. Stafford received a response to the July 27, 1994 letter. The rumors regarding a possible transaction involving the Company continued, however, and were reported in an article that appeared on the front page of The Wall Street Journal on August 2, 1994, which indicated that the Company might announce imminently a transaction involving an exchange of its pharmaceutical and consumer products business assets for assets and cash from another entity. Such a transaction would have affected the Parent's willingness to proceed with a transaction and might also have prohibited the Company from entertaining the Parent's transaction proposal, even if the Company determined that it was a proposal worthy of pursuit. In the meantime, the Parent's senior management increased its analytical efforts regarding the Company, including having its investment bankers and other advisors study the Company in greater depth, with a view to recommending a proposal regarding possible transaction structures. By August 1, 1994 and continuing into August 2, 1994, such analysis led to the formulation of a potential acquisition proposal for the Company at $95.00 per share. On August 2, 1994, the Parent's senior management finalized its analysis and, following favorable discussions with various directors who would constitute a majority of the Parent's Board of Directors, the Parent issued the following press release: Madison, NJ, August 2, 1994--American Home Products Corporation (NYSE:AHP) announced today that it is transmitting a letter to Albert J. Costello, Chairman and Chief Executive Officer of American Cyanamid Company, offering to acquire American Cyanamid for 22 $95 per share in cash, representing a premium of more than 50% over yesterday's closing market price, which has increased in excess of 50% from trading levels less than six months ago. American Home Products is prepared to complete the transaction expeditiously subject to formal approval by its Board of Directors at a special board meeting scheduled for August 16; Hart-Scott-Rodino antitrust clearance; there being no significant asset sales or other transactions by American Cyanamid prior to closing; and the elimination or satisfaction of applicable anti-takeover provisions. Shortly thereafter, the Parent's Board of Directors in a telephonic Board meeting approved the press release and the sending of the following letter: August 2, 1994 BY FACSIMILE Mr. Albert J. Costello Chairman and Chief Executive Officer American Cyanamid Company One Cyanamid Plaza Wayne, New Jersey 07470 Dear Al: We are writing to offer to acquire American Cyanamid Company (the "Company") in a transaction in which your stockholders would receive $95 in cash for each share of common stock. We believe our offer represents an extremely attractive opportunity for your stockholders at a price which represents a premium in excess of 50% over yesterday's closing market price of the Company's common stock (which, as you know, is already up in excess of 50% from its trading levels less than six months ago). We have been advised by our financial advisors that the offer price is at a level which both your financial advisors and stockholders should enthusiastically support. As I am sure you are aware, American Home Products Corporation is an important participant in the pharmaceutical industry and other healthcare and food products industries, with annual sales in excess of $8 billion. We have, as you do, a well deserved reputation for quality products and excellent customer service. We have been studying your company for quite a while and are extremely impressed with the businesses you have so ably built up. The combination of our companies would result in an enterprise with the strength and breadth required to prosper in times of uncertainty for the healthcare industry. As I have indicated to you in our earlier communications, we have been keenly interested in discussing with you opportunities for American Home Products to assist the Company in maximizing value for its stockholders. Given our financial strength and longstanding supportive banking relationships, we are highly confident that financing will not represent any impediment to the consummation of the transaction. According to recent press reports, the Company may be considering entering into a significant transaction involving its pharmaceutical operations and possibly other assets. Since any such transaction would affect our willingness to proceed with this proposed transaction, we urge you not to enter into or to agree to any significant transactions, or to take any additional defensive measures or other actions, that would adversely affect the ability of your stockholders to receive the benefits of our proposed transaction. Our offer is subject, among other things, to the receipt of any required regulatory approvals and third-party consents and the taking of all necessary actions to eliminate the applicability of, or to satisfy, any anti-takeover or other defensive provisions contained in the applicable corporate 23 statutes or the Company's charter and by-laws (including the Company's poison pill). I have discussed our offer at length with the members of our senior management and with a majority of our Board members, all of whom share my enthusiasm for the proposed transaction. However, our offer remains subject to the formal approval of our Board of Directors at its scheduled meeting on August 16. We hope that you and your Board of Directors will view this offer as we do--an excellent opportunity for the stockholders of the Company to realize full value for their shares to an extent not likely to be available to them in the marketplace or in the context of the rumored alternative transactions. We are both prepared and desirous to enter into immediate discussions with you and your directors, management and advisors to answer any questions you have about our offer. We hope that you and your Board of Directors will give our offer prompt and serious consideration so that we may move forward, in our preferred course, to a negotiated transaction which can be presented to your stockholders as the joint effort of American Home Products and the Company's Board of Directors and management. Sincerely, /s/ Jack Stafford cc: Members of the Board of Directors of American Cyanamid Company On August 3, 1994, Mr. Stafford sent a further letter to Mr. Costello, the text of which is set forth below: August 3, 1994 Mr. Albert J. Costello Chairman and Chief Executive Officer American Cyanamid Company One Cyanamid Plaza Wayne, NJ 07470 Dear Al: Recognizing that my letter to you yesterday was formal in nature, I wanted to write to you personally to indicate my desire to conclude a friendly merger of AHP and American Cyanamid. I regret that events overtook our plan to meet in person later this month when I planned to discuss possible structures wherein our companies could collaborate. However, I continue to hope that we can meet to talk about how we might structure the merger of our companies on a negotiated basis. I am enthusiastic about the combined company our two businesses could create. Our two companies have shared associations that are valuable to both of us and, in this context, I hope that we will be able to meet as soon as possible to discuss a broader combination. 24 I can be available whenever it is convenient for you, including, of course, on August 15th as we originally scheduled. Best regards, Sincerely, /s/ Jack Since August 2, 1994, the date of the offer letter, neither the Parent nor Mr. Stafford has received a response to either of Mr. Stafford's letters or any other communications aimed at commencing substantive discussions with respect to the Parent's offer. On August 4, 1994, the Company was quoted as having said that "Cyanamid has been considering a number of strategic alternatives in light of the dramatic changes occurring in the health care industry and will in due course review the American Home Products unsolicited proposal." Notwithstanding the Parent's continued desire (as expressed in both the August 2, 1994 and the August 3, 1994 letters) to engage in a negotiated transaction, as time passed, the Parent began to believe that the Company's lack of a constructive response, combined with the market speculation about possible alternative transactions, necessitated a more direct approach in order to ensure that the offer would be brought to the Company's shareholders. Consequently, the Parent accelerated the timing of its formal Board of Directors' consideration of the offer by convening a special meeting on August 9, 1994. At the meeting, the Board of Directors unanimously approved the Offer as the first step in implementing the acquisition proposal described in the August 2, 1994 letter. 11. PURPOSE OF THE OFFER; THE MERGER; PLANS FOR THE COMPANY. The purpose of the Offer is to acquire control of, and the entire equity interest in, the Company. The Merger. The Purchaser intends to propose, and to seek to have the Company consummate, the Merger as soon as practicable after consummation of the Offer. However, certain terms of the Rights and certain provisions of the MBCA, the Articles and the By-Laws may affect the ability of the Purchaser to obtain control of the Company and to consummate the Merger. Accordingly, the timing and details of the Merger will depend on a variety of factors and legal requirements, the actions of the Board of Directors of the Company, the number of Shares acquired by the Purchaser pursuant to the Offer and whether the Minimum Condition, the Rights Condition, the Maine Takeover Statute Condition and/or the Financing Condition have been satisfied or waived. Board Approval. Except in the case of a short form merger in accordance with Section 904 of the MBCA described below, the MBCA requires that the Merger be approved by the Company's Board of Directors. In order to provide a possible method of consummating the Offer and the Merger, depending upon the Company's response to the Offer and other factors that the Purchaser may deem relevant, including whether or not the Company takes actions to permit the consummation of the Offer and the Merger by causing the conditions described herein to be satisfied, the Purchaser presently intends to seek to have a special shareholders meeting called and to obtain proxies from shareholders for the purpose of adopting resolutions of shareholders or taking other actions (which may be non-binding) instructing the Board of Directors to approve and effectuate the consummation of the Offer and the Merger and/or removing the current Board of Directors of the Company from office and electing new directors nominated by the Purchaser, in order that such new Board of Directors would take all such actions necessary or appropriate to approve and effectuate the consummation of the Offer and the Merger. There are currently eleven members of the Company's Board of Directors, divided into two classes of four directors each and one class of three directors. At each annual meeting of the Company, one 25 class of directors is elected to the Board of Directors for a term of three years. The Articles and By-Laws provide that any director, or the entire Board of Directors, may be removed from office by the affirmative vote of at least 66 2/3% of the outstanding Shares. The vacancy caused by any such removal may be filled at such meeting by the vote of the holders of a majority of the Shares present in person or by proxy and entitled to vote, except that any vacancy not so filled may be filled by a majority of the remaining directors. Under the Company's By-Laws, only holders of at least one share of Common Stock registered in their own names on the books of the Company for a period of at least six months prior to the date of their election are eligible for election or can retain their seats as directors (unless such minimum holding period requirement is waived by the Board of Directors). Among other things, the Defensive Tactics Litigation seeks the court to declare this provision of the By-Laws null and void and that the Board of Directors' failure to waive this provision of the By-Laws would constitute a breach of fiduciary duty. In the event that the Purchaser owns more than 90% of the Shares following the consummation of the Offer and assuming that the Maine Takeover Statute Condition and the Rights Condition have been satisfied, the Purchaser may elect to consummate a short form merger in accordance with Section 904 of the MBCA. If the Purchaser chooses not to seek the removal and replacement of the Company's Board of Directors prior to consummation of the Offer, or is unsuccessful in doing so, the Purchaser presently intends to request as soon as practicable following consummation of the Offer that some or all of the then-current members of the Board of Directors resign and to cause nominees of the Purchaser to be elected to fill the resulting vacancies. Should such request be refused, the Purchaser intends to take such action as may be necessary and lawful to secure control of the Board of Directors of the Company. In this connection, in the event that a shareholders meeting is held after the Minimum Condition has been satisfied and the Offer has been consummated, the Purchaser will control sufficient votes to remove and replace the Company's entire Board of Directors to the extent that the Purchaser is able to establish a forum for such election. In the event that the Purchaser waives the Minimum Condition or the Rights Condition and is unable to obtain a vote sufficient to remove and replace the entire Board, the Purchaser could seek to gain control of the Company by obtaining a majority vote of the outstanding Shares in two successive annual meetings. In the event the Purchaser obtains control of the Company's Board of Directors, the Purchaser would expect to seek approval of the Merger as soon as practicable thereafter, consistent with the fiduciary obligations of the Board. THIS OFFER TO PURCHASE DOES NOT CONSTITUTE A SOLICITATION OF A PROXY, CONSENT OR AUTHORIZATION FOR OR WITH RESPECT TO ANY SPECIAL OR OTHER MEETING OF THE COMPANY'S SHAREHOLDERS OR ANY ACTION IN LIEU THEREOF. ANY SUCH SOLICITATION WHICH THE PURCHASER MAY MAKE WILL BE MADE ONLY PURSUANT TO SEPARATE PROXY MATERIALS IN COMPLIANCE WITH THE REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE ACT. Shareholder Approval; Formula Price Provision. Generally, the MBCA requires that, unless otherwise provided by the Company's Articles, the Merger be approved by the affirmative vote of the holders of at least a majority of the outstanding Shares. However, the Articles provide that, in addition to any affirmative vote required by applicable law, the affirmative vote of the holders of at least 80% of the outstanding Shares is required to approve certain business combinations (including mergers) between the Company and an Interested Stockholder, unless either (i) the business combination is approved by a majority of those directors (the "Disinterested Directors") who are not affiliated with or nominees of the Interested Stockholder and who were directors prior to the time the Interested Stockholder became an Interested Stockholder and any successors of Disinterested Directors who are not affiliated with or nominees of the Interested Stockholder and are recommended to succeed the Disinterested Directors by a majority of the Disinterested Directors then on the Board (the "Continuing Director Condition") or (ii) certain price and procedural requirements are met, some of which are beyond the control of the Parent and the Purchaser (the "Formula Price Conditions"). 26 The Formula Price Conditions require that the aggregate amount of the cash and the fair market value (as defined below) as of the date of the consummation of the business combination of the consideration other than cash to be received per share by holders of Shares in such business combination shall be an amount at least equal to the highest applicable of the following: (i) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees, but adjusted to reflect stock splits, stock dividends, combinations and similar transactions) paid by the Interested Stockholder for any Share acquired by it (1) within the two-year period immediately prior to the first public announcement of the proposal of the business combination (the "announcement date") or (2) in the transaction in which it became an Interested Stockholder, whichever is higher; or (ii) the fair market value (as defined below) per Share (adjusted to reflect stock splits, stock dividends, combinations and similar transactions) (1) on the announcement date or (2) on the date on which the Interested Stockholder became an Interested Stockholder, whichever is higher; or (iii) in the case of capital stock other than the Shares, the price determined pursuant to subparagraphs (i), (ii) (if applicable) or the highest preferential amount per share to which the holders of shares of such class or series of stock are then entitled, in cash, in the event of any voluntary or involuntary redemption of such classes or series of stock or any voluntary or involuntary liquidating, dissolution or winding up of the Company. For purposes of the Articles, the term "fair market value" means, in the case of the Shares, so long as the Shares are listed for trading on the NYSE, the highest closing sale price during the 30-day period immediately preceding the date in question on the NYSE Composite Tape. The Formula Price Conditions also require, among other things, that (i) the consideration to be received by holders of Shares must be in cash or in the same form as previously paid by or on behalf of the Interested Stockholder for the largest number of Shares previously acquired by the Interested Stockholder; (ii) after such Interested Stockholder has become an Interested Stockholder and prior to the consummation of such business combination, (x) there shall have been no failure to declare and pay at the regular dates therefor any full quarterly dividend (whether or not cumulative) on any outstanding preferred stock, (y) there shall have been (1) no reduction in the annual rate of dividends paid on the Shares (except as approved by a majority of the Disinterested Directors) and (2) an increase in such annual rate of dividends as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction which has the effect of reducing the number of outstanding Shares (unless otherwise approved by a majority of the Disinterested Directors) and (z) such Interested Stockholder shall not have become the beneficial owner of any additional Shares except as part of the transaction which results in such Interested Stockholder becoming an Interested Stockholder and except in a transaction that, after giving effect thereto, would not result in any increase in the Interested Stockholder's percentage beneficial ownership of the Shares; and (iii) after such Interested Stockholder has become an Interested Stockholder, such Interested Stockholder shall not have received the benefit, directly or indirectly (except proportionately as a stockholder), of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by the Company or any subsidiary, whether in anticipation of, or in connection with, such business combination or otherwise. The Minimum Condition requires that there shall have been validly tendered and not properly withdrawn on or prior to the Expiration Date a number of Shares which constitutes at least 80% of the voting power (determined on a fully diluted basis), on the date of purchase, of all securities entitled to vote generally in the election of directors or in a merger. Upon consummation of the Offer and assuming the Minimum Condition is satisfied, the Purchaser will own sufficient Shares to enable it to effect shareholder approval of the Merger (subject to the requirements of the Maine Takeover Statute) with the affirmative vote of the Shares owned by it, thereby rendering the Continuing Director Condition and Formula Price Conditions inapplicable to the Merger. 27 The foregoing description of the Articles and the By-Laws is qualified in its entirety by reference to the text of the Articles and By-Laws, copies of which have been filed by the Company as exhibits to documents filed with the Commission and may be obtained in the manner described in Section 7. The Rights. The following discussion is based on information contained in the Company's Form 8-A. Although the Purchaser and the Parent do not have any knowledge (except as otherwise described herein) that would indicate that any statements contained herein based upon such document are untrue, neither the Purchaser nor the Parent assumes any responsibility for the accuracy or completeness of the information contained in such document, or for any failure by the Company to disclose events that may have occurred and may affect the significance or accuracy of any such information but which are unknown to the Purchaser and the Parent. To the Purchaser's knowledge, the publicly available information regarding the Rights and the Rights Agreement is incomplete in that the May 1 Form 8 was filed with the Commission without including Exhibit A of the amendment to the Rights Agreement (which included the substantive modifications made to the Rights Agreement by such amendment). Accordingly, without limiting the generality of the foregoing provisions of this paragraph, the descriptions herein of the Rights and the Rights Agreement are qualified to the extent that information relating thereto is not publicly available. The Board of Directors of the Company, on March 10, 1986, declared a dividend distribution of one Right for each outstanding Share to the shareholders of record at the close of business on March 25, 1986 (the "Record Date"). Each Right entitles the registered holder to purchase from the Company a unit consisting of one two-hundredth of a share (a "Unit") of Series A Junior Participating Preferred Stock, $1.00 par value (the "Preferred Stock"), at a price of $200 per Unit, subject to adjustment. On March 25, 1986, each outstanding Share received one Right and, as a result of a stock split on June 12, 1987, according to publicly available information, one-half of one Right is currently associated with each Share. As long as the Rights are attached to the Shares, the Company will issue one-half of one Right for each Share issued between the Record Date and the Distribution Date so that all such Shares will have attached Rights. Initially, Rights are attached to all Share Certificates outstanding, and no separate Right Certificates are distributed. A "Distribution Date" for the Rights will occur upon the earlier of (i) 10 days following the date (the "Stock Acquisition Date") of a public announcement that a person, entity or group of affiliated or associated persons (an "Acquiring Person") has acquired beneficial ownership of 20% or more of the outstanding Shares or (ii) 10 business days following the commencement of a tender offer or exchange offer if, upon consummation thereof, the person or group proposing such offer would be beneficial owner of 30% or more of the outstanding Shares. Until the Distribution Date, the Rights will be transferred with and only with Share Certificates and until the Distribution Date (or earlier redemption or expiration of the Rights), new Share Certificates issued after March 25, 1986 upon transfer or new issuance of Shares will contain a notation incorporating the Rights Agreement by reference. Until the Distribution Date (or earlier redemption or expiration of the Rights), the surrender for transfer of any Share Certificate will also constitute the transfer of the Rights associated with the Shares represented by such Share Certificate. The Rights are not exercisable until the Distribution Date (or the expiration of the Company's redemption rights, as described below) and will expire on March 25, 1996, unless earlier redeemed by the Company as described below. As soon as practicable following the Distribution Date, separate Rights Certificates will be mailed to holders of record of the Shares as of the close of business on the Distribution Date; after the Distribution Date, such separate Rights Certificates alone will evidence the Rights. 28 In the event that at any time following the Distribution Date, (i) the Company is the surviving corporation in a merger with an Acquiring Person and the Shares are not changed or exchanged, (ii) a person becomes the beneficial owner of 50% or more of the then outstanding Shares, or (iii) during such time as there is an Acquiring Person, one of the events set forth in Section 11(a)(ii)(C) of the Rights Agreement occurs (e.g., a reverse stock split), provision shall be made so that each holder of one-half of a Right will thereafter have the right to receive, upon exercise thereof, two Shares (or, in certain circumstances, a combination of cash, other property, Shares and/or other securities), at 25% of the then per share market price of the Shares. In the event that, at any time following the Distribution Date, the Company is acquired in a merger or other business combination transaction or (within a two-year period) more than 50% of its assets or earning power is sold, provision shall be made so that each holder of one-half of a Right will thereafter have the right to receive, upon the exercise thereof at the then current Purchase Price (as defined in the Rights Agreement) of such one-half of a Right, common stock of the acquiring entity which has a value of two times the Purchase Price of such one-half of a Right. Following the occurrence of any of the events described above in this paragraph, any Rights that are or were beneficially owned by an Acquiring Person or affiliates or associates of any Acquiring Person will immediately become null and void. The Purchase Price payable, and the number of Shares or other securities or property issuable, upon exercise of Rights are subject to adjustment from time to time to prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or reclassification of the Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of certain rights or warrants to subscribe for Preferred Stock or convertible securities at less than the current market price of the Preferred Stock or (iii) upon the distribution to holders of the Preferred Stock of evidences of indebtedness or assets (excluding dividends payable in Preferred Stock) or cash (excluding regular quarterly cash dividends) or of subscription rights or warrants (other than those referred to above). With certain exceptions, no adjustment in the Purchase Price will be required until cumulative adjustments require an adjustment of at least 1% in the Purchase Price. No fractional Units will be issued and, in lieu thereof, an adjustment in cash will be made based on the market price of the Preferred Stock on the last trading date prior to the date of issuance of a Right. At any time until 30 days following the Stock Acquisition Date, the Company may redeem the Rights in whole, but not in part, at a price of $.02 per Right (the "Redemption Price"). Immediately upon the action of the Board of Directors of the Company ordering redemption of the Rights, the Rights will terminate and the only right of the holders of Rights will be to receive the Redemption Price. Rights will not be exercisable prior to the expiration of the Company's right of redemption described above. Until a Right is exercised, it will not entitle the holder thereof to any rights as a shareholder of the Company (other than those of an existing shareholder), including, without limitation, the right to vote or to receive dividends. The terms of the Rights may be amended by the Board of Directors of the Company, but (following the Distribution Date) no amendment may adversely affect the interests of holders of the Rights. Under the Rights Agreement, as a result of the commencement of the Offer, the Distribution Date will be as early as August 23, 1994, unless prior to such date the Company's Board of Directors redeems the Rights or takes action to delay the Distribution Date. The Purchaser believes that the consummation of the Offer likely would trigger the Ownership Flip-in and, as a result, cause significant dilution to the Purchaser's interest in the Company and render the Offer and the Merger economically unattractive for the Purchaser. 29 The Purchaser hereby requests that the Company's Board of Directors redeem the Rights. The Purchaser believes that, under the circumstances of the Offer and under applicable law, the Board of Directors of the Company is obligated by its fiduciary responsibilities to redeem the Rights in order to permit the Offer and the Merger to be consummated. However, there can be no assurance that the Board will do so. In the Defensive Tactics Litigation, the Purchaser has requested the court to require that the Company redeem the Rights. UNLESS THE RIGHTS ARE REDEEMED, HOLDERS OF SHARES WILL ALSO BE REQUIRED TO TENDER ONE-HALF OF ONE RIGHT FOR EACH SHARE TENDERED IN ORDER TO EFFECT A VALID TENDER OF SUCH SHARE. If separate certificates for the Rights are not issued, a tender of Shares will also constitute a tender of associated Rights. Maine Takeover Statute. The Maine Takeover Statute may have the effect of significantly delaying the Merger. In general, the Maine Takeover Statute prohibits any person who is the beneficial owner of 25% or more of the outstanding voting stock of a corporation (a "Statutory Interested Shareholder") from engaging in certain business combinations (including mergers, as set forth below) with such corporation for a period of five years following the date on which such person became a Statutory Interested Shareholder, unless the business combination is: (i) approved by the board of directors of the corporation prior to the date on which such person became a Statutory Interested Shareholder; or (ii) approved, subsequent to the date on which such person became a Statutory Interested Shareholder, by the board of directors of the corporation and authorized by the affirmative vote, at a meeting called for that purpose, of at least a majority of the outstanding voting stock not beneficially owned by that Statutory Interested Shareholder or any affiliate or associate of that Statutory Interested Shareholder or by persons who are either directors or officers and also employees of that corporation. The Maine Takeover Statute provides that, during the five-year period following the date the Statutory Interested Shareholder became such, neither the corporation nor any of its subsidiaries may engage in any of the following business combinations: (i) any merger or consolidation with (A) that Statutory Interested Shareholder, (B) any other corporation which is, or after the merger or consolidation would be, an affiliate or associate of that Statutory Interested Shareholder or (C) any other corporation if the merger or consolidation is caused by that Statutory Interested Shareholder and as a result of that merger or consolidation the Maine Takeover Statute is not applicable to the surviving corporation; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other disposition of assets (A) having an aggregate market value (as defined in the Maine Takeover Statute) equal to 10% or more of the aggregate market value, or book value determined in accordance with good accounting practices, of all the assets determined on a consolidated basis of the corporation, (B) having an aggregate market value equal to 10% or more of the aggregate market value of all the outstanding stock of the corporation or (C) representing 10% or more of the earning power or income, determined on a consolidated basis, of the corporation proposed by, on behalf of or pursuant to any agreement or understanding with that Statutory Interested Shareholder or any affiliate or associate of that Statutory Interested Shareholder; (iii) the issuance or transfer of any stock of the corporation or such subsidiary which has an aggregate market value equal to 5% or more of the aggregate market value of all the outstanding stock of the corporation to that Statutory Interested Shareholder (with certain exceptions); (iv) the adoption of any plan or proposal for the liquidation or dissolution of the corporation proposed by, on behalf of or pursuant to any agreement, arrangement or understanding with that Statutory Interested Shareholder or any affiliate or associate of that Statutory Interested Shareholder; (v) any transaction proposed by, on behalf of or pursuant to any agreement, arrangement or understanding with that Statutory Interested Shareholder or any affiliate or associate of that Interested Shareholder, which has the effect of increasing the proportionate share of the outstanding shares of any class or series of voting stock or securities convertible into voting stock of the corporation or any such subsidiary which is directly or indirectly owned by that Statutory Interested Shareholder (with certain exceptions); or (vi) any receipt by that Statutory Interested Shareholder or any affiliate or associate of that Statutory Interested 30 Shareholder of the benefit (with certain exceptions) of any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by or through the corporation. The Offer is subject to satisfaction of, among other things, the Maine Takeover Statute Condition. The Maine Takeover Condition will be satisfied if the court in the Defensive Tactics Litigation deems the statute unconstitutional as applied to the Offer or orders the Company's Board of Directors to take all actions necessary to render the restrictions on business combinations contained in the Maine Takeover Statute inapplicable to the Merger. Alternatively, the Maine Takeover Statute Condition will be satisfied if, prior to the acceptance for payment of Shares pursuant to the Offer, the Company's Board of Directors approves the Offer and the Merger with respect to the Company. The Purchaser hereby requests that the Company's Board of Directors approve the Offer and the Merger for all purposes, including the Maine Takeover Statute. In order to provide a possible method of consummating the Offer and the Merger even if the Defensive Tactics Litigation is unsuccessful with regard to the Maine Takeover Statute, depending upon the Company's response to the Offer and other factors that the Purchaser may deem relevant, including whether or not the Company takes actions to permit the consummation of the Offer and the Merger by causing the conditions to the Offer and the Merger described herein to be satisfied, the Purchaser presently intends to seek to have a special shareholders meeting called and to obtain proxies from shareholders for the purpose of adopting resolutions of shareholders or taking other actions (which may be non-binding) instructing the Board of Directors to approve and effectuate the consummation of the Offer and the Merger and/or removing the current Board of Directors of the Company from office and electing new directors nominated by the Purchaser, in order that such new Board of Directors would take all such actions necessary or appropriate to approve and effectuate the consummation of the Offer and the Merger. THIS OFFER TO PURCHASE DOES NOT CONSTITUTE A SOLICITATION OF A PROXY, CONSENT OR AUTHORIZATION FOR OR WITH RESPECT TO ANY SPECIAL OR OTHER MEETING OF THE COMPANY'S SHAREHOLDERS OR ANY ACTION IN LIEU THEREOF. ANY SUCH SOLICITATION WHICH THE PURCHASER MAY MAKE WILL BE MADE ONLY PURSUANT TO SEPARATE PROXY MATERIALS IN COMPLIANCE WITH THE REQUIREMENTS OF SECTION 14(A) OF THE EXCHANGE ACT. The Purchaser reserves the right to waive the Maine Takeover Statute Condition, although there can be no assurance that the Purchaser will do so, and the Purchaser has not determined whether it would be willing to do so under any circumstances. In the event that the Purchaser were to waive the Maine Takeover Statute Condition, purchase Shares pursuant to the Offer and become a Statutory Interested Shareholder, the Maine Takeover Statute would cease to be applicable if thereafter the Merger were approved by the Company's Board of Directors and authorized by the affirmative vote, at a meeting called for that purpose, of at least a majority of the outstanding Shares not beneficially owned by the Purchaser and its affiliates and associates or by persons who are either directors or officers and also employees of the Company. Short Form Merger. Under Section 904 of the MBCA and subject to the Maine Takeover Statute, a parent corporation owning at least 90% of the outstanding shares of each class of a subsidiary corporation may merge the subsidiary corporation into itself without the approval of the shareholders of the parent corporation or of the board of directors or shareholders of the subsidiary corporation. In the event that the Purchaser owns more than 90% of the Shares following the consummation of the Offer and assuming that the Maine Takeover Statute Condition and the Rights Condition have been satisfied, the Purchaser may elect to consummate a short form merger in accordance with Section 904 of the MBCA. THE OFFER IS CONDITIONED UPON THE MAINE TAKEOVER STATUTE CONDITION BEING SATISFIED. 31 Appraisal Rights in Connection with the Offer. Following the acquisition of 25% of the outstanding Shares by the Purchaser pursuant to the Offer or otherwise (a "Control Transaction"), Section 910 of the MBCA would give each shareholder of the Company the right to receive cash for such shareholder's Shares in an amount equal to the fair value of such Shares as of the day prior to the Control Transaction, taking into account all relevant factors, including an increment representing a proportion of any value payable for acquisition of control of the Company. Under Section 910, the Purchaser would be required to give notice to each shareholder of record within 15 days after the Control Transaction, and each shareholder would then be entitled, prior to or within 30 days after such notice is given, to make written demand on the Purchaser for payment for such shareholder's Shares. Within 10 days after such 30-day period, the Purchaser would be required to make a written offer to each demanding shareholder to pay for such Shares at a price deemed by the Purchaser to be the fair value of the Shares. If, within 30 days after such 30-day period, the fair value of the Shares is agreed upon between any demanding shareholder and the Purchaser, payment for such Shares shall be made within 90 days after the written offer was made by the Purchaser. If no agreement is reached within such period, the Purchaser may, or shall upon receipt of a written demand for suit from any demanding shareholder, bring an action in state court to determine the fair value of the Shares within 60 days after the date on which Purchaser's written offer was made. In any such action, all demanding shareholders (except those who have agreed with the Purchaser upon the price for their Shares) are to be made parties to the proceedings as an action against their Shares quasi in rem. All such shareholders shall be entitled to judgment against the Purchaser for the amount of the fair value of their Shares as fixed by the court. The judgment shall include an allowance for interest at such rate as the court may find to be fair and equitable in all the circumstances, from the date of the Control Transaction to the date of payment. Certain costs and expenses of any such proceeding would be assessed against the Purchaser, and may be assessed against demanding shareholders if the court finds that their failure to accept the Purchaser's offer was arbitrary, vexatious or in bad faith. The value so determined in any appraisal proceeding could be more or less than the per Share price paid pursuant to the Offer or the Merger. The foregoing description of Section 910 of the MBCA is not necessarily complete and is qualified in its entirety by reference to such Section of the MBCA. The Purchaser reserves the right to attempt to make Section 910 of the MBCA inapplicable to the Offer by seeking to amend the Articles to provide that Section 910 shall not be applicable to the Company. The Purchaser does not know whether such an amendment of the Articles which is made after a Control Transaction would affect the rights and remedies of shareholders under Section 910 with respect to such Control Transaction. If the Articles are not amended to provide that Section 910 shall not be applicable to the Company, the Purchaser currently intends to comply with the terms of Section 910. The Offer is not conditioned upon the inapplicability of Section 910. Dissenters' Rights in Connection with the Merger. Sections 908 and 909 of the MBCA provide that a shareholder has the right to dissent from any plan of merger, except in certain situations which would not be applicable to the Merger. If the Merger is consummated, dissenting shareholders who comply with the applicable statutory procedures will be paid the fair value of their Shares. The fair value of Shares shall be determined as of the day prior to the date on which the vote of shareholders was taken approving the Merger, excluding any appreciation or depreciation of Shares in anticipation of the Merger. Shareholders who comply with the applicable statutory procedures would be entitled to a judicial determination of the fair value of their Shares. The value so determined in any appraisal proceeding could be more or less than the per Share price paid pursuant to the Offer or the Merger. The Maine Supreme Judicial Court, which is the highest court in the state, has concluded in another case that the "fair value" of shares under Section 909 is determined by reference not just to the stock market price, but also to the net asset value and investment value as appropriately weighted. In that case the Court held that the "fair value" under Section 909 does not include any payment for a tender offer premium. 32 In addition, the Merger may be found to be subject to other applicable procedural and substantive requirements for the existence of "fairness." Several judicial decisions in other jurisdictions, which may or may not be followed under Maine law, have held that a controlling shareholder of a company involved in a merger has a fiduciary duty to other shareholders which requires that the merger be fair to such other shareholders. In determining whether the controlling shareholder has fulfilled such duty to the shareholders, certain courts have considered, among other things, the type and amount of the consideration to be received by such shareholders, whether there was fair dealing among the parties and whether the other shareholders are accorded appraisal rights. At least one such decision provides that, in most cases involving a merger in which the consideration is found not to be "fair" to minority shareholders, the remedy available to minority shareholders is the right to appraisal described above or a damage remedy based on essentially the same principles. Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act which is applicable to certain "going private" transactions and which may, under certain circumstances, be applicable to the Merger following the purchase of Shares pursuant to the Offer in which the Purchaser seeks to acquire any remaining Shares. Rule 13e-3 should not be applicable to the Merger if the Merger is consummated within one year after the expiration or termination of the Offer and the price paid in the Merger is not less than the per Share price paid pursuant to the Offer. However, in the event that the Purchaser is deemed to have acquired control of the Company pursuant to the Offer and if the Merger is consummated more than one year after completion of the Offer or an alternative acquisition transaction is effected whereby shareholders of the Company receive consideration less than that paid pursuant to the Offer, in either case at a time when the Shares are still registered under the Exchange Act, the Purchaser may be required to comply with Rule 13e-3 under the Exchange Act. If applicable, Rule 13e-3 would require, among other things, that certain financial information concerning the Company, and certain information relating to the fairness of the Merger or such alternative transaction and the consideration offered to minority shareholders in the Merger or such alternative transaction, be filed with the Commission and disclosed to shareholders prior to consummation of the Merger or such alternative transaction. The purchase of a substantial number of Shares pursuant to the Offer may result in the Company being able to terminate its Exchange Act registration. See Section 13. If such registration were terminated, Rule 13e-3 would be inapplicable to any such future Merger or such alternative transaction. Defensive Tactics Litigation. The Purchaser commenced the Defensive Tactics Litigation in the United States District Court for the District of Maine on August 9, 1994, which names the Company and certain of its directors as defendants and seeks declaratory and injunctive relief in connection with the Offer. The Defensive Tactics Litigation asks the court either to invalidate or cause the Company's Board of Directors to remove several defense mechanisms embodied in the MBCA, the Articles and the By-Laws which, absent the relief sought, could seriously impede the Purchaser's ability to consummate the Merger and thereby the Offer. In particular, the Defensive Tactics Litigation seeks a judgment declaring, among other things, that (i) the Maine Takeover Statute is unconstitutional; (ii) any attempt to apply any other state's takeover statute to the Offer is constitutionally impermissible; (iii) the Directors would be in breach of their fiduciary duties if they fail to redeem the Rights in response to the Offer; (iv) the 80% Charter Provision is void and unlawful and otherwise inapplicable to the Offer, and the Board of Directors of the Company is obligated by its fiduciary responsibilities to approve the Offer and the Merger; and (v) the provision of the By-Laws, which provides that, in order to qualify for election as, and remain, a director, such director must have been a registered holder of at least one Share for a six-month period prior to election (unless such minimum holding period requirement is waived by the Board of Directors), is void and unlawful. The Defensive Tactics Litigation also seeks a preliminary and permanent order: (i) enjoining the Company and its agents from taking any actions to invoke, apply or enforce the Maine Takeover Statute or any similar provision; (ii) enjoining the defendants from honoring the Rights or from otherwise enforcing or amending or altering the Rights Agreement; (iii) enjoining and ordering the defendants to redeem the Rights; and (iv) enjoining the 33 Company and its agents from taking any action (including by changing the Articles or the By-Laws or otherwise) improperly to impede the Offer. Other. The timing and details of the Merger will depend on a variety of factors and legal requirements, the action of the Company's Board of Directors and the number of Shares acquired by the Purchaser pursuant to the Offer and whether the Minimum Condition, the Rights Condition, the Maine Takeover Statute Condition and/or the Financing Condition is satisfied or waived. Although the Purchaser has proposed the Merger to the Company and seeks to have the Company consummate the Merger as soon as practicable after consummation of the Offer, the Purchaser can give no assurance that the Merger will be consummated or as to the timing of the Merger if it is consummated. Although the Purchaser has proposed the Merger on the terms described above, it is possible that, as a result of substantial delays in the Purchaser's ability to effect the Merger, information hereafter obtained by the Purchaser, changes in general economic or market conditions or in the business, operations or financial condition or prospects of the Company, any of the Minimum Condition, the Rights Condition, the Maine Takeover Statute Condition or the Financing Condition not being satisfied or any other currently unforeseen factors, the Merger may not be so proposed, may be delayed or abandoned or may be proposed on different terms. Although it has no current intention to do so, the Purchaser expressly reserves the right to propose a Merger on terms other than those described above and the right to withdraw any Merger proposal. The Purchaser reserves the right to purchase, following consummation or termination of the Offer, additional Shares or Rights in the open market, in privately negotiated transactions, in another tender offer or exchange offer or otherwise. In addition, in the event that the Purchaser decides not to propose the Merger, to propose a Merger on terms other than those described above or to withdraw any Merger previously proposed, the Purchaser will evaluate its other alternatives. Such alternatives could include purchasing additional Shares or Rights in the open market, in privately negotiated transactions, in another tender offer or exchange offer or otherwise, or taking no further action to acquire additional Shares or Rights. Any additional purchases of Shares or Rights could be at a price greater or less than the price to be paid for Shares and Rights in the Offer and could be for cash or other consideration. Alternatively, the Purchaser and the Parent may sell or otherwise dispose of any or all Shares or Rights acquired pursuant to the Offer or otherwise. Such transactions may be effected on terms and at prices then determined by the Purchaser and the Parent, which may vary from the price paid for Shares and Rights in the Offer. Plans for the Company. Based on the Parent's current understanding of the Company's business, derived solely from publicly available information, the Parent believes that significant operating efficiencies and synergies may be able to be achieved by the combined entity, which could include reduction of then excess selling, general and administrative and other expenses. If and to the extent the Parent acquires control of the Company or otherwise obtains access to the books and records of the Company, the Parent intends to conduct a detailed review of the Company and its assets, businesses, labor practices, operations, properties, dividend and other policies, corporate structure, capitalization and management and personnel and consider what changes the Parent deems desirable in light of the circumstances which then exist. It is the Parent's current intention to seek to cause the Company to eliminate dividend payments on the Shares following consummation of the Offer. Except as described in this Offer to Purchase, none of the Purchaser, the Parent nor, to the best knowledge of the Purchaser and the Parent, any of the persons listed on Schedule I have any present plans or proposals that would relate to or result in an extraordinary corporate transaction such as a merger, reorganization or liquidation involving the Company or any of its subsidiaries or a sale or other transfer of a material amount of assets of the Company or any of its subsidiaries, any material change in the capitalization or dividend policy of the Company or any other material change in the Company's corporate structure or business or the composition of its Board of Directors or management. 34 12. DIVIDENDS AND DISTRIBUTIONS. If the Company should, during the pendency of the Offer, split, combine or otherwise change the Shares or its capitalization, or disclose that it has taken any such action, then, without prejudice to the Purchaser's rights under Section 14, the Purchaser may make such adjustments to the purchase price and other terms of the Offer as it deems appropriate to reflect such split, combination or other change. If, on or after August 2, 1994, the Company should declare or pay any cash or stock dividend or other distribution on, or issue any rights with respect to, the Shares (other than regular quarterly cash dividends not in excess of $.4625 per Share having a customary and usual record date) that is payable or distributable to shareholders of record on a date prior to the transfer to the name of the Purchaser or the nominee or transferee of the Purchaser on the Company's stock transfer records of such Shares that are purchased pursuant to the Offer (except that if the Rights are redeemed by the Board of Directors in accordance with the terms of the Rights Agreement, tendering shareholders who are holders of record as of the applicable record date will be entitled to receive and retain the redemption price of $.02 per Right in accordance with the Rights Agreement), then, without prejudice to the Purchaser's rights under Section 14, (i) the purchase price payable per Share by the Purchaser pursuant to the Offer will be reduced to the extent any such dividend or distribution is payable in cash and (ii) any non-cash dividend, distribution (including additional Shares) or right received and held by a tendering shareholder shall be required to be promptly remitted and transferred by the tendering shareholder to the Depositary for the account of the Purchaser, accompanied by appropriate documentation of transfer. Pending such remittance or appropriate assurance thereof, the Purchaser will be, subject to applicable law, entitled to all rights and privileges as owner of any such non-cash dividend, distribution or right and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by the Purchaser in its sole discretion. 13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, STOCK EXCHANGE LISTING AND EXCHANGE ACT REGISTRATION. The purchase of Shares pursuant to the Offer will reduce the number of Shares that might otherwise trade publicly and will reduce the number of holders of Shares. This could adversely affect the liquidity and market value of the remaining Shares held by the public. Depending upon the number of Shares purchased pursuant to the Offer, the Shares may no longer meet the requirements for continued listing on the NYSE, and may, therefore, be delisted from the NYSE. According to the NYSE's published guidelines, the NYSE would consider delisting the Shares if, among other things: (i) the number of record holders of 100 or more Shares should fall below 1,200; (ii) the number of publicly held Shares (exclusive of holdings of the Parent and the Purchaser and any other subsidiaries or affiliates of the Parent and of officers or directors of the Company or their immediate families or other concentrated holdings of 10% or more ("Excluded Holdings")) should fall below 600,000; or (iii) the aggregate market value of such publicly held Shares (exclusive of Excluded Holdings) should fall below $5,000,000. According to the 1993 Form 10-K, as of February 18, 1994, there were 41,704 holders of record of Shares. If, as a result of the purchase of Shares pursuant to the Offer or otherwise, the Shares no longer meet the requirements of the NYSE for continued listing and the listing of the Shares is discontinued, the market and prices for such Shares could be adversely affected. If the NYSE were to delist the Shares, it is possible that such Shares would continue to trade on other securities exchanges or in the over-the-counter market and that price quotations would be reported by such exchanges or through the National Association of Securities Dealers Automated Quotation System ("NASDAQ") or other sources. The extent of the public market for the Shares and the availability of such quotations would depend, however, upon such factors as the number of shareholders and/or the aggregate market value of the Shares remaining at such time, the interest in maintaining a market in the Shares on the part of securities firms, the possible termination of registration under the Exchange Act as described below and other factors. The Purchaser cannot predict whether the reduction in the number of Shares that might otherwise trade publicly would have an adverse or beneficial effect on the market price for or marketability of the Shares. 35 The Shares are currently "margin securities" under the rules of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), which has the effect, among other things, of allowing brokers to extend credit on the collateral of such Shares for the purpose of buying, carrying, or trading in securities ("purpose loans"). Depending upon factors similar to those described above with respect to stock exchange listing and market quotations, the Shares might no longer constitute "margin securities" for the purposes of the Federal Reserve Board's margin regulations and therefore could no longer be used as collateral for purpose loans made by brokers. The Shares, along with certain of the Company's other securities, are currently registered under the Exchange Act. The purchase of Shares pursuant to the Offer may result in the Shares becoming eligible for deregistration under the Exchange Act. Registration of the Shares may be terminated upon application of the Company to the Commission if the Shares are not listed on a national securities exchange and there are fewer than 300 record holders. The termination of the registration of the Shares under the Exchange Act would substantially reduce the information required to be furnished by the Company to holders of the Shares and would make certain provisions of the Exchange Act, such as the short-swing profit recovery provisions of Section 16(b), the requirement of furnishing a proxy statement in connection with shareholders' meetings and the requirements of Rule 13e-3 under the Exchange Act with respect to "going private" transactions, no longer applicable to the Shares. Furthermore, "affiliates" of the Company and persons holding "restricted securities" of the Company may be deprived of the ability to dispose of the securities pursuant to Rule 144 under the Securities Act of 1933. If registration of the Shares under the Exchange Act were terminated, the Shares would no longer be "margin securities" or eligible for NASDAQ reporting. The Purchaser intends to seek to cause the Company to terminate the registration of the Shares as soon after the consummation of the Offer or Merger as the requirements for termination of registration are met. 14. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of the Offer, the Purchaser shall not be required to accept for payment or, subject to any applicable rules and regulations of the Commission, including Rule 14e-1(c) under the Exchange Act (relating to the Purchaser's obligation to pay for or return tendered Shares promptly after termination or withdrawal of the Offer), pay for any Shares or Rights tendered pursuant to the Offer, and may postpone the acceptance for payment or, subject to the restriction referred to above, payment for any Shares or Rights tendered pursuant to the Offer, and may amend or terminate the Offer (whether or not any Shares have theretofore been purchased or paid for) if, in the sole judgment of the Purchaser, the Minimum Condition, the Rights Condition, the Maine Takeover Statute Condition and/or the Financing Condition shall not have been satisfied or if, at any time on or after April 1, 1994 (except to the extent publicly disclosed by the Company with specificity in documents filed with the Commission since April 1, 1994 and prior to August 2, 1994) and prior to the acceptance for payment of or payment for Shares, any one or more of the events listed below shall have occurred or shall be determined by the Parent or the Purchaser to have occurred: (a) there shall have been threatened, instituted or pending any action, proceeding, claim or application by any government or governmental regulatory or administrative authority or agency, domestic, foreign or supranational, or by any other person, domestic or foreign, before any court or governmental, regulatory or administrative agency, authority or tribunal, domestic, foreign or supranational, that (i) challenges or seeks to make illegal, to delay or otherwise directly or indirectly to restrain or prohibit, or which is likely to impose, in the sole judgment of the Purchaser, voting, procedural, price or other requirements in addition to those required by the provisions of the MBCA described in Section 11 and federal securities law (each as in effect on the date of this Offer to Purchase) in connection with the acquisition of Shares by the Purchaser or any of its affiliates, the making of the Offer, the acceptance for payment of or payment for Shares by the Purchaser or any of its affiliates or the consummation of the Merger or any other business combination involving the Company or the performance of any of the contracts or other arrangements entered into by the Purchaser or any of its affiliates in connection with the acquisition of the Company, seeking to 36 obtain any material damages as a result thereof or otherwise directly or indirectly relating to the Offer or the Merger or such other business combination, (ii) seeks to restrain, prohibit or limit the exercise of full rights of ownership or operation by the Purchaser or any of its affiliates of all or any portion of the business or assets of the Company or any of its subsidiaries or the Purchaser or any of its affiliates or to compel the Purchaser or any of its affiliates to dispose of or to hold separately all or any portion of the business or assets of the Company or any of its subsidiaries or the Purchaser or any of its affiliates, (iii) seeks to impose or confirm limitations on the ability of the Purchaser or any of its affiliates effectively to acquire or hold or to exercise full rights of ownership of Shares, including, without limitation, the right to vote the Shares acquired or owned by the Parent or the Purchaser or any of its affiliates on all matters properly presented to the shareholders of the Company, or the right to vote any shares of capital stock of any subsidiary directly or indirectly owned by the Company, (iv) seeks to require divestiture by the Parent or the Purchaser or any of its affiliates of any Shares, (v) might result, in the sole judgment of the Purchaser, in a diminution of the benefits expected to be derived by the Purchaser or any of its affiliates as a result of the Offer or the Merger or any other business combination involving the Company, or in a diminution of the value of the Shares or the Company or any of its subsidiaries to the Purchaser or any of its affiliates or (vi) challenges or adversely affects the financing of the Offer or the Merger or any other business combination involving the Company; or (b) other than the application of the waiting periods under the HSR Act and the necessity for the approvals and other actions by domestic (federal and state) or foreign or supranational governmental, administrative or regulatory agency described in Section 15, there have been proposed, sought, promulgated, enacted, entered, enforced or deemed applicable to the Offer, the Merger or any other business combination involving the Company, by any government or governmental, regulatory or administrative agency or authority or by any court or tribunal, in each case whether domestic, foreign or supranational, any statute, rule, regulation, judgment, decree, decision, order or injunction that, in the sole judgment of the Purchaser, might, directly or indirectly, result in any of the consequences referred to in clauses (i) through (vi) of paragraph (a) above; or (c) any change (or any condition, event or development involving a prospective change) shall have occurred or been threatened in the business, properties, assets, liabilities, shareholders' equity, condition (financial or otherwise), capitalization, licenses, franchises, permits, operations, results of operations or prospects of the Company or any of its subsidiaries or affiliates (or the Purchaser shall have become aware thereof) or in general economic or financial market conditions in the United States or abroad that, in the sole judgment of the Purchaser, is or may be materially adverse to the Company or any of its subsidiaries or affiliates, or the Purchaser shall have become aware of any facts that, in the sole judgment of the Purchaser, have or may have material adverse significance with respect to either the value of the Company or any of its subsidiaries or affiliates or the value of the Shares to the Parent or the Purchaser or any of its affiliates; or (d) there shall have occurred (i) any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the United States over-the-counter market, (ii) the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, (iii) any material adverse change (or any existing or threatened condition, event or development involving a prospective material adverse change) in United States or any other currency exchange rates or a suspension of, or a limitation on, the markets therefor, (iv) any other material adverse change in the market price of the Shares or in the United States securities or financial markets generally, including, without limitation, a decline of at least 15% in either the Dow Jones Average of Industrial Stocks or the Standard & Poor's 500 index from August 2, 1994 through the date of termination or expiration of the Offer, (v) the commencement of a war, armed hostilities or other international or national calamity directly or indirectly involving the United States, (vi) any limitation (whether or not mandatory) by any governmental authority or any other 37 event that, in the sole judgment of the Purchaser, may have material adverse significance with respect to the extension of credit by banks or other lending institutions or the financing of the Offer or the Merger or any other business combination involving the Company or (vii) in the case of any of the situations described in clauses (i) through (vi) above existing at the time of the commencement of the Offer, a material acceleration or worsening thereof; or (e) a tender or exchange offer for some or all of the Shares shall have been publicly proposed to be made or shall have been made by another person (including the Company or any of its subsidiaries or affiliates), or it shall have been publicly disclosed or the Purchaser shall have otherwise learned that (i) any person, entity (including the Company or any of its subsidiaries or affiliates) or "group" (within the meaning of Section 13(d)(3) of the Exchange Act) shall have acquired or proposed to acquire beneficial ownership of more than 5% of any class or series of capital stock of the Company (including the Shares) through the acquisition of stock, the formation of a group or otherwise, or shall have been granted any option, right or warrant, conditional or otherwise, to acquire beneficial ownership of more than 5% of any class or series of capital stock of the Company (including the Shares) other than acquisitions for bona fide arbitrage purposes only and other than as disclosed in a Schedule 13D or 13G on file with the Commission prior to August 2, 1994, (ii) any such person, entity or group which, prior to such date, had filed such a Schedule with the Commission, shall have acquired or proposed to acquire, through the acquisition of stock, the formation of a group or otherwise, beneficial ownership of additional shares of any class or series of capital stock of the Company (including the Shares) constituting 1% or more of any such class or series, or shall have been granted any option, right or warrant, conditional or otherwise, to acquire beneficial ownership of shares of any class or series of capital stock of the Company (including the Shares) constituting 1% or more of any such class or series, (iii) any person, entity or group shall have entered into a definitive agreement or an agreement in principle or made a proposal with respect to a tender or exchange offer for some or all the Shares or a merger, consolidation or other business combination with or involving the Company or any of its subsidiaries or affiliates or (iv) any person, entity or group shall have filed a Notification and Report Form under the HSR Act or made a public announcement reflecting an intent to acquire the Company or any of its subsidiaries or any assets or securities of the Company or any of its subsidiaries; or (f) the Company or any of its subsidiaries shall have, directly or indirectly, (i) split, combined or otherwise changed, or authorized or proposed the split, combination or other change of, the Shares or its capitalization, (ii) acquired or otherwise caused a reduction in the number of, or authorized or proposed the acquisition or other reduction in the number of, any outstanding Shares (other than a redemption of the Rights in accordance with the terms of the Rights Agreement as publicly disclosed to be in effect on August 1, 1994) or other securities of the Company or any subsidiary thereof, (iii) issued, distributed or sold, or authorized, proposed or announced the issuance, distribution or sale of, (A) any additional Shares, shares of any other class or series of capital stock, other voting securities, or any securities convertible into or exchangeable or exercisable for any of the foregoing, or options, rights or warrants, conditional or otherwise, to acquire any of the foregoing, except for the issuance of 5,723,992 Shares reserved for issuance prior to December 31, 1993 pursuant to the exercise of then outstanding employee stock options, in accordance with their terms as disclosed in publicly available filings filed with the Commission prior to August 2, 1994 or (B) any other securities or rights in respect of, in lieu of or in substitution or exchange for any shares of its capital stock, (iv) permitted the issuance or sale of any shares of any class of capital stock or other debt or equity securities of any subsidiary of the Company or any securities convertible into or exchangeable or exercisable for any of the foregoing, (v) declared, paid or proposed to declare or pay any dividend or other distribution, whether payable in cash, securities or other property, on, or in respect of, any Shares (other than regular cash dividends on the Shares at a quarterly rate not in excess of $.4625 per Share or a distribution of the Rights Certificates or a redemption of the Rights in accordance with the Rights Agreement as 38 publicly disclosed to be in effect on August 1, 1994), (vi) altered or proposed to alter any material term of any outstanding security of the Company or any of its subsidiaries (including the Rights), (vii) issued, distributed or sold, or authorized or proposed the issuance, distribution or sale of, any debt securities or securities convertible into or exchangeable or exercisable for debt securities or any rights, warrants or options entitling the holder thereof to purchase or otherwise acquire any debt securities, or otherwise incurred, authorized or proposed the incurrence of, any debt other than in the ordinary course of business and consistent with past practice or any debt containing burdensome covenants, (viii) authorized, recommended, proposed, effected or announced its intention to engage in any merger (other than the Merger), consolidation, liquidation, dissolution, business combination, acquisition (including by way of exchange) of assets or securities, disposition (including by way of exchange) of assets or securities, joint venture, any release or relinquishment of any material contract or other rights of the Company or any of its affiliates or any comparable event not in the ordinary course of business, (ix) authorized, recommended, proposed or announced its intent to enter into, or entered into any agreement or arrangement with any person, entity or group that in the sole judgment of the Purchaser, has or may have material adverse significance with respect to the value of the Company or any of its affiliates, or the value of the Shares to the Purchaser or any of its affiliates, (x) amended or proposed, adopted or authorized any amendment (other than any amendment which provides that the Rights are inapplicable to the Offer and the Merger) to the Articles or the By-laws or similar organizational documents of the Company or any of its subsidiaries or the Rights Agreement or the Purchaser shall have learned that the Company or any of its subsidiaries shall have proposed or adopted any such amendment which shall not have been previously disclosed, (xi) entered into or amended any employment, severance or similar agreement, arrangement or plan with or for the benefit of any employee of the Company or any of its subsidiaries (other than in the ordinary course of business) or so as to provide for increased or accelerated benefits to employees as a result of or in connection with the making of the Offer, the acceptance for payment of or payment for Shares by the Purchaser or the consummation by the Purchaser or any of its affiliates of the Merger or any other business combination involving the Company, (xii) except as may be required by law, taken any action to terminate or amend any employee benefit plan (as defined in Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended) of the Company or any of its affiliates, or the Purchaser shall have become aware of any such action which shall not have been previously disclosed or (xiii) agreed in writing or otherwise to take any of the foregoing actions; or (g) the Purchaser shall become aware (i) that any material contractual right of the Company or any of its subsidiaries shall be impaired or otherwise adversely affected or that any material amount of indebtedness of the Company or any of its subsidiaries shall become accelerated or otherwise become due or become subject to acceleration prior to its stated due date, in each case with or without notice or the lapse of time or both, as a result of or in connection with the Offer or the consummation by the Purchaser or any of its affiliates of the Merger or any other business combination involving the Company, (ii) of any covenant, term or condition in any of the instruments or agreements of the Company or any of its subsidiaries that, in the sole judgment of the Purchaser, is or may be (whether considered alone or in the aggregate with other such covenants, terms or conditions) materially adverse to either the value of the Company or any of its subsidiaries (including, without limitation, any event of default that may occur as a result of or in connection with the Offer, the consummation by the Purchaser or any of its affiliates of the Merger or any other business combination involving the Company) or the value of the Shares to the Purchaser or any of its affiliates or the consummation by the Purchaser or any of its affiliates of the Merger or any other business combination involving the Company or (iii) that any report, document, instrument, financial statement or schedule of the Company filed with the Commission contained, when filed, an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading; or 39 (h) any waiting periods under the HSR Act applicable to the purchase of Shares pursuant to the Offer shall not have expired or been terminated, or any approval, permit, authorization or consent of any domestic or foreign or supranational governmental, administrative or regulatory agency (federal, state, local, provincial or otherwise) (including those described or referred to in Section 15) shall not have been obtained on terms satisfactory to the Parent in its sole discretion; or (i) (i) the Purchaser or any of its affiliates shall have entered into a definitive agreement or announced an agreement in principle with respect to the Merger or any other business combination with the Company or any of its affiliates or the purchase of any material portion of the securities or assets of the Company or any of its subsidiaries or (ii) the Purchaser or any of its affiliates and the Company shall have agreed that the Purchaser shall amend or terminate the Offer or postpone the payment for the Shares pursuant thereto; which, in the sole judgment of the Purchaser with respect to each and every matter referred to above and regardless of the circumstances (including any action or inaction by the Purchaser or any of its affiliates) giving rise to any such condition, makes it inadvisable to proceed with the Offer or with such acceptance for payment of or payment for Shares. The foregoing conditions are for the sole benefit of the Purchaser and may be waived by the Purchaser in whole or in part at any time and from time to time in its sole discretion. Any determination by the Purchaser concerning the events described above shall be final and binding upon all parties including tendering shareholders. The failure by the Purchaser at any time to exercise any of the foregoing rights shall not be deemed a waiver of any such right and each such right shall be deemed an ongoing right which may be asserted at any time and from time to time. A public announcement shall be made of a material change in, or waiver of, such conditions, to the extent required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act, and the Offer will be extended in connection with any such change or waiver to the extent required by such rules. 15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS. General. Except as set forth below, based upon its examination of publicly available filings by the Company with the Commission and other publicly available information concerning the Company, neither the Purchaser nor the Parent is aware of any licenses or other regulatory permits that appear to be material to the business of the Company and its subsidiaries, taken as a whole, that might be adversely affected by the Purchaser's acquisition of Shares (and the indirect acquisition of the stock of the Company's subsidiaries) as contemplated herein, or of any filings, approvals or other actions by or with any domestic (federal or state), foreign or supranational governmental authority or administrative or regulatory agency that would be required prior to the acquisition of Shares (or the indirect acquisition of the stock of the Company's subsidiaries) by the Purchaser pursuant to the Offer as contemplated herein. Should any such approval or other action be required, it is the Purchaser's present intention to seek such approval or action. The Purchaser does not presently intend, however, to delay the purchase of Shares tendered pursuant to the Offer pending the receipt of any such approval or the taking of any such action (subject to the Purchaser's right to delay or decline to purchase Shares if any of the conditions in Section 14 shall have occurred). There can be no assurance that any such approval or other action, if needed, would be obtained without substantial conditions or that adverse consequences might not result to the business of the Company, the Parent or the Purchaser or that certain parts of the businesses of the Company, the Parent or the Purchaser might not have to be disposed of or held separate or other substantial conditions complied with in order to obtain such approval or other action or in the event that such approval was not obtained or such other action was not taken, any of which could cause the Purchaser to elect to terminate the Offer without the purchase of the Shares thereunder. The Purchaser's obligation under the Offer to accept for payment and pay for Shares is subject to certain conditions, including conditions relating to the legal matters discussed in this Section 15. See Section 14. 40 State Takeover Laws. A number of states (including Maine, where the Company is incorporated) have adopted takeover laws and regulations which purport, to varying degrees, to be applicable to attempts to acquire securities of corporations which are incorporated in such states or which have, or whose business operations have substantial economic effects in such states, or which have substantial assets, security holders, principal executive offices or principal places of business therein. To the extent that certain provisions of certain of these state takeover statutes purport to apply to the Offer, the Purchaser believes that such laws conflict with federal law and constitute an unconstitutional burden on interstate commerce. In 1982, the Supreme Court of the United States, in Edgar v. Mite Corp., invalidated on constitutional grounds the Illinois Business Takeovers Act, which, as a matter of state securities law, made takeovers of corporations meeting certain requirements more difficult, and the reasoning in such decision is likely to apply to certain other state takeover statutes. In 1987, however, in CTS Corp. v. Dynamics Corp. of America, the Supreme Court of the United States held that the State of Indiana could, as a matter of corporate law and, in particular, those aspects of corporate law concerning corporate governance, constitutionally disqualify a potential acquiror from voting on the affairs of a target corporation without the prior approval of the remaining stockholders, provided that such laws were applicable only under certain conditions. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a federal district court in Oklahoma ruled that the Oklahoma statutes were unconstitutional insofar as they applied to corporations incorporated outside Oklahoma in that they would subject such corporations to inconsistent regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a federal district court in Tennessee ruled that four Tennessee takeover statutes were unconstitutional as applied to corporations incorporated outside Tennessee. This decision was affirmed by the United States Court of Appeals for the Sixth Circuit. In December 1988, a federal district court in Florida held in Grand Metropolitan PLC v. Butterworth that the provisions of the Florida Affiliated Transactions Act and the Florida Control Share Acquisition Act were unconstitutional as applied to corporations incorporated outside of Florida. Except as described herein, the Purchaser has not attempted to comply with any state takeover statutes in connection with the Offer. The Purchaser reserves the right to challenge the validity or applicability of any state law allegedly applicable to the Offer and nothing in this Offer to Purchase nor any action taken in connection herewith is intended as a waiver of that right. Among other things, the Defensive Tactics Litigation seeks the court to declare that no state's takeover laws or regulations can be constitutionally applied to the Offer or the Merger. In the event that any state takeover statute is found applicable to the Offer, the Purchaser might be unable to accept for payment or purchase Shares tendered pursuant to the Offer or be delayed in continuing or consummating the Offer. In such case, the Purchaser may not be obligated to accept for purchase, or pay for, any Shares tendered. See Section 14. Antitrust. Under the HSR Act and the rules that have been promulgated thereunder by the FTC, certain acquisition transactions may not be consummated unless certain information has been furnished to the Antitrust Division and the FTC and certain waiting period requirements have been satisfied. The acquisition of Shares pursuant to the Offer is subject to such requirements. See Section 2. The Parent intends to file on the date hereof with the FTC and the Antitrust Division a Premerger Notification and Report Form in connection with the purchase of Shares pursuant to the Offer. Under the provisions of the HSR Act applicable to the Offer, the purchase of Shares pursuant to the Offer may not be consummated until the expiration of a 15-calendar day waiting period following the filing by the Purchaser. Accordingly, the waiting period under the HSR Act applicable to such purchases of Shares pursuant to the Offer should expire at 11:59 p.m., New York City time, on Thursday, August 25, 1994, unless such waiting period is earlier terminated by the FTC and the Antitrust Division or extended by a request from the FTC or the Antitrust Division for additional information or documentary material prior to the expiration of the waiting period. Pursuant to the HSR Act, the Parent has requested early termination of the waiting period applicable to the Offer. There can be no assurance, however, that the 15-day HSR Act waiting period will be terminated early. If, however, either the FTC or the Antitrust Division were to request additional information or documentary material from the Parent, the waiting 41 period would expire at 11:59 p.m., New York City time, on the tenth calendar day after the date of substantial compliance by the Parent with such request. Thereafter, the waiting period could be extended only by court order. If the acquisition of Shares is delayed pursuant to a request by the FTC or the Antitrust Division for additional information or documentary material pursuant to the HSR Act, the Offer may, but need not, be extended and, in any event, the purchase of and payment for Shares will be deferred until 10 days after the request is substantially complied with, unless the 10-day extended period expires on or before the date when the initial 15-day period would otherwise have expired or unless the waiting period is sooner terminated by the FTC and the Antitrust Division. See Section 2. Only one extension of such waiting period pursuant to a request for additional information is authorized by the HSR Act and the rules promulgated thereunder, except by court order. Any such extension of the waiting period will not give rise to any withdrawal rights not otherwise provided for by applicable law. See Section 4. Although the Company is required to file certain information and documentary material with the Antitrust Division and the FTC in connection with the Offer, neither the Company's failure to make such filings nor a request from the Antitrust Division or the FTC for additional information or documentary material made to the Company will extend the waiting period. The FTC and the Antitrust Division frequently scrutinize the legality under the antitrust laws of transactions such as the proposed acquisition of Shares by the Purchaser pursuant to the Offer. At any time before or after the purchase by the Purchaser of Shares pursuant to the Offer, the FTC and the Antitrust Division could take such action under the antitrust laws as it deems necessary or desirable in the public interest, including seeking to enjoin the purchase of Shares pursuant to the Offer or seeking the divestiture of Shares purchased by the Purchaser or the divestiture of substantial assets of the Parent, its subsidiaries or the Company. Private parties and state attorneys general may also bring legal action under federal or state antitrust laws under certain circumstances. Based upon an examination of publicly available information relating to the businesses in which the Parent and its subsidiaries and the Company and its subsidiaries are engaged, the Parent and the Purchaser believe that the Offer will not violate the antitrust laws. Nevertheless, there can be no assurance that a challenge to the Offer on antitrust grounds will not be made or, if such a challenge is made, of the result. See Section 14 for certain conditions to the Offer, including conditions with respect to litigation. New Jersey Industrial Site Recovery Act. The New Jersey Industrial Site Recovery Act (formerly known as the Environmental Cleanup Responsibility Act, or ECRA) and the implementing regulations thereunder (collectively "ISRA") subjects the "transfer" of an "industrial establishment" in New Jersey to various requirements concerning the identification of certain environmental matters and their remediation. Requirements include the timely submission to the New Jersey Department of Environmental Protection (the "NJDEP") of detailed information about environmental matters at the industrial establishment. The NJDEP may also require additional investigation of environmental conditions at the industrial establishment, the development of an NJDEP-approved cleanup plan to address environmental conditions, and the implementation of the plan, along with a financial guarantee, such as a surety bond, self guarantee or a letter of credit, of the implementation of the cleanup plan. Under specified conditions, the NJDEP may defer actual implementation of the cleanup plan if the entity acquiring control of the industrial establishment is certified to have the financial ability to implement the plan. Under ISRA, the acquisition of a controlling stock interest in a company which is the owner or operator of an industrial establishment is generally a "transfer" subject to ISRA. According to publicly available information, the Company has certain facilities located in New Jersey, including certain laboratory facilities and its corporate headquarters. The Purchaser has no knowledge of the size of these facilities or whether the activities conducted there make any of them industrial establishments subject to ISRA. If these facilities are industrial establishments subject to ISRA, the acquisition of more than a majority of the outstanding Shares by the Purchaser pursuant to the Offer may constitute a "transfer" subject to ISRA. 42 After consummation of the Offer and after the Purchaser has reviewed the nature and extent of the Company's operations in New Jersey and consulted with counsel, the Purchaser will determine whether any of the Company's properties are establishments subject to ISRA and, if so, the Purchaser will comply, or seek to cause the Company to comply, with the act in the time frame set forth in the act. Connecticut Environmental Transfer Law. The Connecticut Transfer Act, Conn. Gen. Stat. Sec. 22a-134 et seq. ("CTA"), requires that prior to the transfer of ownership of an establishment subject to the act, the transferor must submit a "Negative Declaration" to the transferee stating (i) that there has been no spillage or discharge of hazardous waste on the property or that any such spillage or discharge has been cleaned up according to the procedures and requirements of the state Department of Environmental Protection (the "DEP") and (ii) that any hazardous waste remaining on-site is being managed in accordance with all applicable regulations. If the transferor cannot submit a "Negative Declaration," the transferee or another party to the transfer must certify to the Commissioner of the DEP that such transferee or other party will contain or otherwise mitigate the effects of any spillage or discharge in accordance with the procedures and timetable approved by the Commissioner pursuant to an order or consent decree. Based on publicly available information, the Purchaser understands that the Company operates a manufacturing plant in Connecticut. The Purchaser will seek to determine whether any of the Company's properties are establishments subject to the CTA and, if so, the Purchaser will comply, or seek to cause the Company to comply, with the CTA as promptly as practicable following consummation of the Offer. See Section 14. EEA Merger Regulation. According to the Company's 1993 Form 10-K, the Purchaser conducts substantial operations within the European Economic Area ("EEA") and certain of the individual member states of the EEA. Regulation (EEC) No. 4064/89 (the "Merger Regulations") and Article 57 of the EEA Agreement require that notices of concentrations with a "Community dimension" be provided to the European Commission for review and approval for compatibility with the common market prior to being put into effect. The Offer would be deemed to have a "Community dimension" if the combined aggregate worldwide consolidated annual revenues of both the Parent and the Company exceed ECU 5 billion, if the Community-wide annual revenues of each of the Parent and the Company exceed ECU 250 million, and if both the Parent and the Company do not receive more than two-thirds of their respective Community-wide revenues from one and the same member state. Based upon information contained in the 1993 Form 10-K, the Purchaser believes that the Offer may be considered to have a "Community dimension." If the Offer falls within the Merger Regulation, the European Commission, as opposed to individual member states, has exclusive jurisdiction to review it, subject to certain exceptions. Under the Merger Regulation, a concentration that meets the foregoing criteria requires the filing of a notification in a prescribed form with the European Commission. This filing must normally be made within seven days of the earlier of the announcement of a public bid, the conclusion of the relevant agreement or acquisition of a controlling interest. Transactions subject to the filing requirements of the Merger Regulation are suspended automatically until three weeks after receipt of the notification. The European Commission may extend the suspension period for such period as it finds necessary to make a final decision on the legality of the transaction. In the case of a public bid, the bidder may acquire shares of the target company during the suspension period, but may not vote such shares until after the end of the period unless the European Commission grants permission to do so in order to maintain the full value of the bidder's investment. The European Commission must decide whether to initiate proceedings within one month after the receipt of the notification, subject to certain extensions for holidays or if an individual member state has requested a referral of the transaction (or part of it) to itself. If proceedings are initiated, the European Commission must reach a decision in the proceedings within four months of the commencement of the proceedings. If the European Commission fails to reach a decision within either of these time periods the transaction will be deemed to be compatible with the common market. 43 If the European Commission declares the Offer to be not compatible with the common market, it may prevent the consummation of the transaction, order a divestiture if the transaction has already been consummated or impose conditions or other obligations. In the event that the transaction is found not to be subject to the Merger Regulation, various national merger control regimes of the member states of the EEA may apply, resulting in the possibility that approvals may be necessary from the various national authorities. There can be no assurance that a challenge to the Offer will not be made pursuant to the Merger Regulation or, alternatively, pursuant to the merger regulations of one or more of the various member states, or, if such a challenge is made, what the outcome will be. See Section 14. Investment Canada Act. According to the Company's 1993 Form 10-K, the Company conducts certain operations in Canada, including pharmaceuticals research and production. The Investment Canada Act (the "ICA") requires that notice of the acquisition of "control" (as defined in the ICA) by "non-Canadians" (as defined in the ICA) of any "Canadian business" (as defined in the ICA) be furnished to Investment Canada, a Canadian governmental agency. The acquisition of Shares by the Purchaser pursuant to the Offer may constitute an indirect acquisition of a "Canadian business" within the meaning of the ICA. The Purchaser intends to file any required notice under the ICA. Canadian Pre-Merger Notification Requirements. Certain provisions of Canada's Competition Act require pre-notification to the Director of Investigation and Research appointed under the Competition Act (the "Canadian Director") of significant corporate transactions, such as the acquisition of a large percentage of the stock of a public company which has Canadian operations, or a merger or consolidation involving such an entity. Pre-notification is generally required with respect to transactions in which the parties to the transactions and their affiliates have assets in Canada, or annual gross revenues from sales in, from or into Canada, in excess of Cdn. $400 million and which involve the direct or indirect acquisition of an operating business, the value of the assets of which, or the gross revenues from sales in or from Canada generated from these assets, exceed Cdn. $35 million per year. For transactions subject to the notification requirements, notice must be given seven or 21 days prior to the completion of the transaction depending on the information provided to the Canadian Director. The Canadian Director may waive the waiting period. After the applicable waiting period expires or is waived, the transaction may be completed. If the Canadian Director determines that the proposed transaction prevents or lessens, or is reasonably likely to prevent or lessen, competition substantially in a definable market, the Canadian Director may apply to the Competition Tribunal, a special purpose Canadian tribunal, to, among other things, require the disposition of the Canadian assets acquired in such transaction. The Purchaser intends to file any required notice and information with respect to its proposed acquisition with the Canadian Director and, to the extent necessary, observe the applicable waiting period and/or apply to the Canadian Director for an advance ruling certificate to the effect that the Offer or Proposed Merger would not prevent or lessen, or be likely to prevent or lessen, competition substantially. Other Foreign Approvals. According to the Company's 1993 Form 10-K, the Company also owns property and conducts business in a number of other foreign countries and jurisdictions including, without limitation, Germany, Australia, France, Spain, Brazil, Mexico, South Korea, Italy and the United Kingdom. In connection with the acquisition of the Shares pursuant to the Offer, the laws of certain of those foreign countries and jurisdictions may require the filing of information with, or the obtaining of the approval of, governmental authorities in such countries and jurisdictions. The governments in such countries and jurisdictions might attempt to impose additional conditions on the Company's operations conducted in such countries and jurisdictions as a result of the acquisition of the Shares pursuant to the Offer. There can be no assurance that the Purchaser will be able to cause the Company or its subsidiaries to satisfy or comply with such laws or that compliance or non-compliance 44 will not have adverse consequences for the Company or any subsidiary after purchase of the Shares pursuant to the Offer. Margin Credit Regulations. Federal Reserve Board Regulations G, T, U and X (the "Margin Credit Regulations") restrict the extension or maintenance of credit for the purpose of buying or carrying margin stock, including the Shares, if the credit is secured directly or indirectly thereby. Such secured credit may not be extended or maintained in an amount that exceeds the maximum loan value of the margin stock. Under the Margin Credit Regulations, the Shares are presently margin stock, and the maximum loan value thereof is generally 50% of their current market value. The definition of "indirectly secured" contained in the Margin Credit Regulations provides that the term does not include an arrangement with a customer if the lender, in good faith, has not relied upon margin stock as collateral in extending or maintaining the particular credit. 16. FEES AND EXPENSES. Gleacher & Co. Inc. ("Gleacher & Co.") is acting as Dealer Manager in connection with the Offer and serving as financial advisor to the Parent and the Purchaser in connection with the proposed acquisition of the Company. The Parent has paid to Gleacher & Co. an initial fee of $1.5 million and has agreed to pay to Gleacher & Co. an additional fee of $8.5 million upon the consummation of the Offer or an acquisition of all or substantially all of the assets of the Company. The Parent and the Purchaser will also reimburse Gleacher & Co. for reasonable out-of-pocket expenses, including reasonable attorneys' fees, and have also agreed to indemnify Gleacher & Co. against certain liabilities and expenses in connection with the Offer, including certain liabilities under the federal securities laws. The Purchaser has retained D.F. King & Co., Inc. to act as the Information Agent and Chemical Bank to act as the Depositary in connection with the Offer. The Information Agent may contact holders of Shares by mail, telephone, telex, telegraph and personal interview and may request brokers, dealers and other nominee stockholders to forward the Offer materials to beneficial owners. The Information Agent and the Depositary will receive reasonable and customary compensation for services relating to the Offer and will be reimbursed for certain out-of-pocket expenses. The Purchaser and the Parent have also agreed to indemnify the Information Agent and the Depositary against certain liabilities and expenses in connection with the Offer, including certain liabilities under the federal securities law. The Purchaser will not pay any fees or commissions to any broker or dealer or any other person for soliciting tenders of Shares pursuant to the Offer (other than to the Dealer Manager, the Information Agent and the Depositary). Brokers, dealers, commercial banks and trust companies will, upon request, be reimbursed by the Purchaser for customary mailing and handling expenses incurred by them in forwarding offering materials to their customers. 17. MISCELLANEOUS. The Offer is being made solely by this Offer to Purchase and the related Letter of Transmittal and is being made to all holders of Shares. The Purchaser is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If the Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, the Purchaser will make a good faith effort to comply with any such state statute. If, after such good faith effort, the Purchaser cannot comply with such state statute, the Offer will not be made to nor will tenders be accepted from or on behalf of the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by the Dealer Manager or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. The Purchaser and the Parent have filed with the Commission the Schedule 14D-1 (including exhibits) pursuant to Rule 14d-3 under the Exchange Act, furnishing certain additional information with respect to the Offer. Such statement and any amendments thereto, including exhibits, may be inspected and copies may be obtained from the offices of the Commission (except that they will not be 45 available at the regional offices of the Commission) in the manner set forth in Section 7 of this Offer to Purchase. NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION ON BEHALF OF THE PURCHASER OR THE PARENT NOT CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. AC ACQUISITION CORP. August 10, 1994 46 SCHEDULE I DIRECTORS AND EXECUTIVE OFFICERS OF THE PURCHASER AND THE PARENT 1. Directors and Executive Officer of the Purchaser. The name and position with the Purchaser of each director and executive officer of the Purchaser are set forth below. The other required information with respect to each such person is set forth under Directors and Executive Officers of the Parent below. All directors and executive officers listed below are citizens of the United States.
NAME POSITION - --------------------------------------------------- -------------------------------------------------- John R. Stafford................................... Director and President. Robert G. Blount................................... Director and Vice President. Louis L. Hoynes, Jr................................ Director. John R. Considine.................................. Vice President. Thomas M. Nee...................................... Vice President.
2. Directors and Executive Officers of the Parent. The name, business address, present principal occupation or employment and material occupations, positions, offices or employments during the last five years of each director and executive officer of the Parent and certain other information are set forth below. Unless otherwise indicated, the business address of each such director and executive officer is Five Giralda Farms, Madison, New Jersey 07940. Unless otherwise indicated, each occupation set forth opposite an individual's name refers to employment with the Parent. All directors and executive officers listed below are citizens of the United States.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES NAME AND ADDRESS OR EMPLOYMENT HELD DURING THE LAST 5 YEARS - --------------------------------------------------- -------------------------------------------------- John R. Stafford................................... Director of the Parent since 1980; Chairman of the Board, President and Chief Executive Officer of the Parent since 1986 (except for the period between May 1990 and January 31, 1994 when he did not have the additional ]title of President); Director, AlliedSignal Inc., Chemical Banking Corporation, Metropolitan Life Insurance Company and NYNEX Corporation; Chairman of the Executive and Nominating Committees of the Board and Chairman of the Finance, Operations and Retirement Committees. Robert G. Blount................................... Director of the Parent since 1990; Executive Vice President of the Parent since 1987; member of the Executive Committee of the Board and member of the Finance, Operations and Retirement Committees. Stanley F. Barshay................................. Senior Vice President of the Parent since 1989; member of the Finance, Operations and Retirement Committees.
I-1
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES NAME AND ADDRESS OR EMPLOYMENT HELD DURING THE LAST 5 YEARS - --------------------------------------------------- -------------------------------------------------- Louis L. Hoynes, Jr................................ Senior Vice President and General Counsel of the Parent since November 1990; Partner at Willkie, Farr & Gallagher prior to 1990; member of the Finance, Operations and Retirement Committees. Joseph J. Carr..................................... Senior Vice President of the Parent since May 1993; Group Vice President of the Parent from April 1991 to May 1993; Vice President of the Parent from November 1989 to April 1991; Executive Vice President-- Operations, Wyeth-Ayerst Laboratories Division prior to November 1989; member of the Finance and Operations Committees. Fred Hassan........................................ Senior Vice President of the Parent since May 1993; Group Vice President of the Parent from March to May of 1993; President of Wyeth-Ayerst Laboratories Division from 1989 to 1993; member of the Finance and Operations Committees. On July 28, 1994, Noreen Hassan, Mr. Hassan's wife, sold 955 shares of the Company at $60 5/8 per share on the NYSE. John R. Considine.................................. Vice President--Finance of the Parent since February 1992; Vice President and Treasurer of the Parent from February 1989 to 1992; Vice President and Comptroller of the Parent prior to February 1989; member of the Finance, Operations and Retirement Committees. Rene R. Lewin...................................... Vice President--Human Resources of the Parent since May 1994; Executive Director, Human Resources--Worldwide Pharmaceutical Division, Corporate Administration and Worldwide Manufacturing of Eli Lilly & Company, Inc. from 1992 to May 1994; Executive Director, Human Resources-- Worldwide Manufacturing and Corporate Administration of Eli Lilly & Company, Inc. from 1990 to 1992; Executive Director, Human Resources--Eli Lilly International from 1986 to 1990; member of the Finance and Retirement Committees. Thomas M. Nee...................................... Vice President--Taxes of the Parent from 1989 to date; member of the Finance and Retirement Committees.
I-2
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES NAME AND ADDRESS OR EMPLOYMENT HELD DURING THE LAST 5 YEARS - --------------------------------------------------- -------------------------------------------------- Clifford L. Alexander, Jr. Director of the Parent since 1993; President of Alexander & Associates, Inc. Alexander & Associates, Inc. (consulting firm 400 C Street, N.E. specializing in Workforce Inclusiveness); Washington, D.C. 20002............................. Director, Dreyfus General Family of Funds, Dreyfus Third Century Fund, Dreyfus Premier Family of Funds, Dun and Bradstreet Corporation, Equitable Resources, Inc., MCI Communications Corporation and Mutual of America Life Insurance Company; member of the Corporate Issues and Nominating Committees. Frank A. Bennack, Jr............................... Director of the Parent since 1988; President and The Hearst Corporation Chief Executive Officer of The Hearst Corporation 959 Eighth Avenue (owns and operates communications media); New York, NY 10019 Director, Chemical Banking Corporation; Chairman of the Compensation and Benefits Committee and member of the Nominating Committee. K. Roald Bergethon................................. Director of the Parent since 1974; Educational Consultant; President-Emeritus of Lafayette College since August 1978; member of the Corporate Issues and Nominating Committees. John W. Culligan................................... Director of the Parent since 1970; retired November 1988; former Chairman of the Board and Chief Executive Officer of the Corporation (from 1981 to 1986); member of the Executive, Audit and Nominating Committees. Robin Chandler Duke................................ Director of the Parent since 1975; National Chair, Population Action International; Director, International Flavors and Fragrances, Inc. and Rockwell International Corporation; member of the Compensation and Benefits and Nominating Committees. John D. Feerick.................................... Director of the Parent since 1987; Dean, Fordham Fordham University School University School of Law since 1982; Director, of Law Sentinel Group Funds, Inc. and Sentinel 140 West 62nd Street Pennsylvania Tax Free Trust; member of the Audit New York, NY 10023 and Nominating Committees.
I-3
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES NAME AND ADDRESS OR EMPLOYMENT HELD DURING THE LAST 5 YEARS - --------------------------------------------------- -------------------------------------------------- Edwin A. Gee....................................... Director of the Parent since 1978; former Chairman and Chief Executive Officer, International Paper Company; Director, Cambrex Corp., Oncogene Science, Inc., and Director Emeritus of Salomon Brothers Capital Fund, Inc., Salomon Brothers Fund, Inc. and Salomon Brothers Investors Fund, Inc.; member of the Audit and Nominating Committees. Robert W. Sarnoff.................................. Director of the Parent since 1969; Director/Consultant; retired Chairman and Chief Executive Officer, RCA Corporation; former Director, New York Stock Exchange and Manufacturers Hanover Corporation; member of the Compensation and Benefits and Nominating Committees. John R. Torell..................................... Director of the Parent since 1982; Chairman, Torell Management, Inc. Torell Management, Inc. (financial advisory 767 Fifth Avenue company); former Chairman of the Board, President Suite 4605 and Chief Executive Officer of CalFed Inc.; former New York, NY 10153 President, Manufacturers Hanover Corporation and Manufacturers Hanover Trust Company; Director, Volt Information Sciences, Inc., and various investment companies for which PaineWebber, Inc. or Mitchell Hutchins, Inc. serves as investment advisor; Chairman of the Audit Committee and member of the Nominating Committee. William Wrigley.................................... Director of the Parent since 1981; President, Wm. Wrigley Jr. Company Chief Executive Officer and member of the Board, 410 North Michigan Avenue Wm. Wrigley Jr. Company (international Chicago, Ill 60611 manufacturer of chewing gum products); Director, Texaco, Inc.; Chairman of the Corporate Issues Committee and member of the Nominating Committee.
I-4 Facsimile copies of the Letter of Transmittal, properly completed and duly executed, will be accepted. The Letter of Transmittal, certificates for Shares and/or Rights and any other required documents should be sent or delivered by each shareholder of the Company or his broker, dealer, commercial bank, trust company or other nominee to the Depositary as follows: THE DEPOSITARY FOR THE OFFER IS: CHEMICAL BANK By Mail: By Facsimile Transmission: By Hand or Overnight Delivery: Chemical Bank (for Eligible Institutions only) Chemical Bank Reorganization Department (212) 629-8015 55 Water Street P.O. Box 3085 (212) 629-8016 Second Floor--Room 234 G.P.O. Station Confirm by Telephone: New York, New York 10041 New York, New York (212) 613-7137 Attention: 10116-3085 Reorganization Department
Any questions and requests for assistance may be directed to the Information Agent or the Dealer Manager at their respective telephone numbers and addresses listed below. Additional copies of this Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained from the Information Agent. You may also contact your broker, dealer, commercial bank or trust company for assistance concerning the Offer. THE INFORMATION AGENT FOR THE OFFER IS: D.F. KING & CO., INC. UNITED STATES EUROPE 77 Water Street Royex House, Aldermanbury Square New York, New York 10005 London, England EC2V 7HR 1-800-755-3106 (Toll Free) (44) 71 600 5005 (Collect)
THE DEALER MANAGER FOR THE OFFER IS: GLEACHER & CO. INC. 667 Madison Avenue New York, New York 10021 (212) 418-4281 (Collect) EX-99.11(A)(2) 3 Exhibit 11(a)(2) LETTER OF TRANSMITTAL TO TENDER SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF AMERICAN CYANAMID COMPANY PURSUANT TO THE OFFER TO PURCHASE DATED AUGUST 10, 1994 BY AC ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF AMERICAN HOME PRODUCTS CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, SEPTEMBER 7, 1994, UNLESS THE OFFER IS EXTENDED. The Depositary for the Offer is: CHEMICAL BANK By Mail: By Facsimile Transmission: By Hand or Overnight Delivery: Chemical Bank (for Eligible Institutions only) Chemical Bank Reorganization Department (212)629-8015 55 Water Street P.O. Box 3085 (212)629-8016 Second Floor--Room 234 G.P.O. Station Confirm by Telephone: New York, New York 10041 New York, New York (212)613-7137 Attention: 10116-3085 Reorganization Department
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED. This Letter of Transmittal is to be completed by shareholders, either if certificates for Shares or Rights (as such terms are defined below) are to be forwarded herewith or, unless an Agent's Message (as defined in the Offer to Purchase) is utilized, if tenders of Shares or Rights are to be made by book-entry transfer into the account of Chemical Bank, as Depositary (the "Depositary"), at The Depository Trust Company ("DTC"), the Midwest Securities Trust Company ("MSTC") or the Philadelphia Depository Trust Company ("PDTC") (each a "Book-Entry Transfer Facility" and collectively the "Book-Entry Transfer Facilities") pursuant to the procedures set forth in Section 3 of the Offer to Purchase (as defined below). Shareholders who tender Shares or Rights by book- entry transfer are referred to herein as "Book-Entry Shareholders". Unless and until AC Acquisition Corp., a Delaware corporation (the "Purchaser"), declares that the Rights Condition (as defined in the Offer to Purchase) is satisfied, holders of Shares will be required to tender one-half of one Right for each Share tendered in order to effect a valid tender of such Share. If the Distribution Date (as defined in the Offer to Purchase) has not occurred prior to the time Shares are tendered pursuant to the Offer, a tender of Shares will also constitute a tender of the associated Rights. See Section 3 of the Offer to Purchase. If the Distribution Date has occurred, and certificates representing Rights (the "Rights Certificates") have been distributed to holders of Shares, such holders of Shares will be required to tender Rights Certificates representing a number of Rights equal to one-half of the number of Shares being tendered in order to effect a valid tender of such Shares. Holders of Shares and Rights whose certificates for such Shares (the "Share Certificates") and, if applicable, Rights Certificates are not immediately available or who cannot deliver their Share Certificates or, if applicable, Rights Certificates and all other required documents to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase), or who cannot complete the procedure for book-entry transfer on a timely basis, must tender their Shares and Rights according to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
DESCRIPTION OF SHARES TENDERED SHARE CERTIFICATE(S) AND SHARE(S) NAME(S) & ADDRESS(ES) OF REGISTERED HOLDER(S) TENDERED (PLEASE FILL IN, IF BLANK, EXACTLY AS (ATTACH ADDITIONAL SIGNED LIST IF NAME(S) APPEAR(S) ON CERTIFICATE(S)) NECESSARY) TOTAL NUMBER OF SHARES SHARE REPRESENTED CERTIFICATE BY NUMBER(S)* CERTIFICATE(S)* Total Shares.......................... DESCRIPTION OF SHARES TENDERED NAME(S) & ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S)) NUMBER OF SHARES TENDERED**
* Need not be completed by Book-Entry Shareholders. ** Unless otherwise indicated, all Shares represented by certificates delivered to the Depositary will be deemed to have been tendered. See Instruction 4.
DESCRIPTION OF RIGHTS TENDERED* RIGHTS CERTIFICATE(S) AND RIGHTS NAME(S) & ADDRESS(ES) OF REGISTERED HOLDER(S) TENDERED (PLEASE FILL IN, IF BLANK, EXACTLY AS (ATTACH ADDITIONAL SIGNED LIST IF NAME(S) APPEAR(S) ON CERTIFICATE(S)) NECESSARY) TOTAL NUMBER OF RIGHTS RIGHTS REPRESENTED CERTIFICATE BY RIGHTS NUMBER(S)** CERTIFICATE(S)** Total Rights.......................... DESCRIPTION OF RIGHTS TENDERED* NAME(S) & ADDRESS(ES) OF REGISTERED HOLDER(S) (PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE(S)) NUMBER OF RIGHTS TENDERED***
* Need not be completed if the Distribution Date (as defined below) has not occurred. ** Need not be completed by Book-Entry Shareholders. *** Unless otherwise indicated, all Rights represented by certificates delivered to the Depositary will be deemed to have been tendered. See Instruction 4. / / CHECK HERE IF SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER): Name of Tendering Institution _________________________________________ Check box of Book-Entry Transfer Facility: / / The Depository Trust Company / / Midwest Securities Trust Company / / Philadelphia Depository Trust Company Account Number _________________________________Transaction Code Number _________________________________ / / CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Owner(s): _____________________________________________________________________ Window Ticket Number (if any): _________________________________________________________________________ Date of Execution of Notice of Guaranteed Delivery: ________________________________________________________ Name of Institution that Guaranteed Delivery: _______________________________________________________________ If delivered by Book-Entry Transfer check box of Book-Entry Transfer Facility: / / The Depository Trust Company / / Midwest Securities Trust Company / / Philadelphia Depository Trust Company Account Number _________________________________Transaction Code Number _________________________________ / / CHECK HERE IF RIGHTS ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER): Name of Tendering Institution ___________________________________________________________________ Check box of Book-Entry Transfer Facility: / / The Depository Trust Company / / Midwest Securities Trust Company / / Philadelphia Depository Trust Company Account Number _________________________________Transaction Code Number _________________________________ / / CHECK HERE IF RIGHTS ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING: Name(s) of Registered Owner(s): _____________________________________________________________________ Window Ticket Number (if any): _________________________________________________________________________ Date of Execution of Notice of Guaranteed Delivery: ________________________________________________________ Name of Institution that Guaranteed Delivery: _______________________________________________________________ If delivered by Book-Entry Transfer check box of Book-Entry Transfer Facility: / / The Depository Trust Company / / Midwest Securities Trust Company / / Philadelphia Depository Trust Company Account Number ________________________________ Transaction Code Number ________________________________ NOTE: SIGNATURES MUST BE PROVIDED BELOW PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY Ladies and Gentlemen: The undersigned hereby tenders to AC Acquisition Corp., a Delaware corporation (the "Purchaser"), a wholly owned subsidiary of American Home Products Corporation, a Delaware corporation ("Parent"), the above-described shares of Common Stock, $5.00 par value per share (the "Shares"), of American Cyanamid Company, a Maine corporation (the "Company"), and (unless and until the Purchaser declares that the Rights Condition (as defined in the Offer to Purchase described below) is satisfied), the associated Preferred Stock Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of March 10, 1986, as amended as of April 29, 1986 and as of April 21, 1987 (the "Rights Agreement"), between the Company and Mellon Bank, N.A., as successor Rights Agent (the "Rights Agent"), at a purchase price of $95.00 per Share (and associated Right), net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 10, 1994 (the "Offer to Purchase") and in this Letter of Transmittal (which together constitute the "Offer"). Unless the context requires otherwise, all references to Shares shall be deemed to refer also to the associated Rights, and all references to Rights shall be deemed to include all benefits that may inure to the shareholders of the Company or to holders of the Rights pursuant to the Rights Agreement. The undersigned understands that the Purchaser reserves the right to transfer or assign, in whole or from time to time in part, to one or more of its affiliates, the right to purchase all or any portion of the Shares and Rights tendered pursuant to the Offer, receipt of which is hereby acknowledged. The undersigned understands that if the Distribution Date (as defined in the Offer to Purchase) has occurred and certificates representing Rights (the "Rights Certificates") have been distributed to holders of Shares prior to the date of tender of the Shares and Rights tendered herewith, Rights Certificates representing a number of Rights equal to one-half of the number of Shares being tendered herewith must be delivered to the Depositary or, if available, a Book-Entry Confirmation received with respect thereto, in order for the Shares tendered herewith to be validly tendered. If the Distribution Date has occurred and Rights Certificates have not been distributed prior to the time Shares and Rights are tendered herewith, the undersigned agrees to deliver Rights Certificates representing a number of Rights equal to one-half of the number of Shares tendered herewith to Chemical Bank (the "Depositary") within five business days after the date such Rights Certificates are distributed. A tender of shares without Rights Certificates constitutes an agreement by the tendering shareholder to deliver Rights Certificates representing a number of Rights equal to one-half the number of Shares tendered pursuant to the Offer to the Depositary within five business days after the date such Rights Certificates are distributed. The undersigned understands that if the Rights Condition is not satisfied the Purchaser reserves the right to require that the Depositary receive such Rights Certificates prior to accepting Shares for payment. In that event, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of, among other things, Rights Certificates, if Rights Certificates have been distributed to holders of Shares. Subject to, and effective upon, acceptance for payment for the Shares and Rights tendered herewith in accordance with the terms of the Offer, the undersigned hereby sells, assigns and transfers to, or upon the order of, the Purchaser all right, title and interest in and to all of the Shares and Rights that are being tendered hereby and any and all dividends, except for regular quarterly cash dividends not in excess of $.4625 per Share having a customary and usual record date, distributions (including additional Shares) or rights declared, paid or issued with respect to the tendered Shares on or after August 9, 1994 and payable or distributable to the undersigned on a date prior to the transfer to the name of the Purchaser or nominee or transferee of the Purchaser on the Company's stock transfer records of the Shares tendered herewith (except that if the Rights are redeemed by the Company's Board of Directors in accordance with the terms of the Rights Agreement, tendering shareholders who are holders of record as of the applicable record date will be entitled to receive and retain the redemption price of $.02 per Right in accordance with the Rights Agreement) (collectively, a "Distribution"), and appoints the Depositary the true and lawful agent and attorney-in-fact of the undersigned with respect to such Shares and Rights (and any Distribution) with full power of substitution (such power of attorney being deemed to be an irrevocable power coupled with an interest) to (a) deliver such Share Certificates (as defined herein) and Rights Certificates (and any Distribution) or transfer ownership of such Shares and Rights (and any Distribution) on the account books maintained by a Book-Entry Transfer Facility, together in either case with appropriate evidences of transfer, to the Depositary for the account of the Purchaser, (b) present such Shares and Rights (and any Distributions) for transfer on the books of the Company and (c) receive all benefits and otherwise exercise all rights of beneficial ownership of such Shares and Rights (and any Distribution), all in accordance with the terms and subject to the conditions of the Offer. The undersigned irrevocably appoints designees of the Purchaser as such shareholder's proxy, with full power of substitution, to the full extent of such shareholder's rights with respect to the Shares and Rights tendered by such shareholder and accepted for payment by the Purchaser and with respect to any and all other Shares or other securities issued or issuable in respect of such Shares on or after August 9, 1994. Such appointment will be effective when, and only to the extent that, the Purchaser accepts such Shares for payment. Upon such acceptance for payment, all prior proxies given by such shareholder with respect to such Shares and Rights (and such other shares and securities) will be revoked without further action, and no subsequent proxies may be given nor any subsequent written consents executed (and, if given or executed, will not be deemed effective). The designees of the Purchaser will be empowered to exercise all voting and other rights of such shareholder as they in their sole discretion may deem proper at any annual or special meeting of the Company's shareholders or any adjournment or postponement thereof, by written consent in lieu of any such meeting or otherwise. The Purchaser reserves the right to require that, in order for Shares and Rights to be deemed validly tendered, immediately upon the Purchaser's payment for such Shares, the Purchaser must be able to exercise full voting rights with respect to such Shares and Rights. The undersigned hereby represents and warrants that (a) the undersigned has full power and authority to tender, sell, assign and transfer the Shares and Rights tendered hereby (and any Distribution) and (b) when the Shares and Rights are accepted for payment by the Purchaser, the Purchaser will acquire good, marketable and unencumbered title to the Shares and Rights (and any Distribution), free and clear of all liens, restrictions, charges and encumbrances, and the same will not be subject to any adverse claim. The undersigned, upon request, will execute and deliver any additional documents deemed by the Depositary or the Purchaser to be necessary or desirable to complete the sale, assignment and transfer of the Shares and Rights tendered hereby (and any Distribution). In addition, the undersigned shall promptly remit and transfer to the Depositary for the account of the Purchaser any and all Distributions in respect of the Shares and Rights tendered hereby, accompanied by appropriate documentation of transfer; and pending such remittance or appropriate assurance thereof, the Purchaser will be, subject to applicable law, entitled to all rights and privileges as owner of any such Distribution and may withhold the entire purchase price or deduct from the purchase price the amount or value thereof, as determined by the Purchaser in its sole discretion. All authority herein conferred or agreed to be conferred shall not be affected by and shall survive the death or incapacity of the undersigned and any obligation of the undersigned hereunder shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned. Tenders of Shares and Rights made pursuant to the Offer are irrevocable, except that Shares and Rights tendered pursuant to the Offer may be withdrawn at any time prior to the Expiration Date (as defined in the Offer to Purchase) and, unless theretofore accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after October 8, 1994. See Section 4 of the Offer to Purchase. The undersigned understands that tenders of Shares and Rights pursuant to any of the procedures described in Section 3 of the Offer to Purchase and in the instructions hereto will constitute a binding agreement between the undersigned and the Purchaser upon the terms and subject to the conditions set forth in the Offer, including the undersigned's representation that the undersigned owns the Shares and Rights being tendered. Unless otherwise indicated herein under "Special Payment Instructions", please issue the check for the purchase price and/or issue or return any certificate(s) for Shares and Rights not tendered or not accepted for payment in the name(s) of the registered holder(s) appearing under "Description of Shares Tendered" and "Description of Rights Tendered", respectively. Similarly, unless otherwise indicated herein under "Special Delivery Instructions", please mail the check for the purchase price and/or any certificate(s) for Shares and Rights not tendered or not accepted for payment (and accompanying documents, as appropriate) to the address(es) of the registered holder(s) appearing under "Description of Shares Tendered" and "Description of Rights Tendered", respectively. In the event that both the Special Delivery Instructions and the Special Payment Instructions are completed, please issue the check for the purchase price and/or any certificate(s) for Shares and Rights not tendered or accepted for payment in the name of, and deliver such check and/or such certificates to, the person or persons so indicated. Unless otherwise indicated herein under "Special Payment Instructions", please credit any Shares and Rights tendered herewith by book-entry transfer that are not accepted for payment by crediting the account at the Book-Entry Transfer Facility designated above. The undersigned recognizes that the Purchaser has no obligation, pursuant to the Special Payment Instructions, to transfer any Shares or Rights from the name(s) of the registered holder(s) thereof if the Purchaser does not accept for payment any of the Shares or Rights so tendered. SPECIAL PAYMENT INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be competed ONLY if certificate(s) for Shares and Rights not tendered or not accepted for payment and/or the check for the purchase price of Shares and Rights accepted for payment are to be issued in the name of someone other than the undersigned or if Shares or Rights tendered by book-entry transfer which are not accepted for payment are to be returned by credit to an account maintained at a Book-Entry Transfer Facility. Issue / / check / / certificates to: Name............................................................................ (PLEASE PRINT) Address......................................................................... ............................................................................... (INCLUDE ZIP CODE) ............................................................................... (TAX ID. OR SOCIAL SECURITY NO.) (SEE SUBSTITUTE FORM W-9 ON THE REVERSE SIDE) Credit Shares tendered by book-entry transfer that are not accepted for payment to (Check one): / / DTC / / MSTC / / PDTC ............................................................................... (DTC, MSTC or PDTC Account No.) SPECIAL DELIVERY INSTRUCTIONS (SEE INSTRUCTIONS 1, 5, 6 AND 7) To be completed ONLY if certificate(s) for Shares and Rights not tendered or not accepted for payment and/or the check for the purchase price of Shares and Rights accepted for payment are to be sent to someone other than the undersigned or to the undersigned at an address other than that shown above. Mail / / check / / certificates to: Name............................................................................ (PLEASE PRINT) Address......................................................................... ............................................................................... (INCLUDE ZIP CODE) ............................................................................... (TAX ID. OR SOCIAL SECURITY NO.) (SEE SUBSTITUTE FORM W-9 ON THE REVERSE SIDE) SIGN HERE AND COMPLETE SUBSTITUTE FORM W-9 ON REVERSE SIGN SIGN HERE HERE X................................................................. X................................................................. (SIGNATURE(S) OF HOLDER(S)) Dated: .......................... , 19 .......................... (Must be signed by the registered holder(s) exactly as name(s) appear(s) on Share Certificate(s) or Rights Certificate(s) or on a security position listing or by person(s) authorized to become registered holder(s) by certificates and documents transmitted herewith. If signature is by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, please provide the following information and see Instruction 5.) Name(s)........................................................... .................................................................. (PLEASE PRINT) Capacity (full title)........................................... Address........................................................... .................................................................. (INCLUDE ZIP CODE) Area Code and Telephone Number.................................. Tax Identification or Social Security No....................................... COMPLETE SUBSTITUTE FORM W-9 ON REVERSE GUARANTEE OF SIGNATURE(S) (SEE INSTRUCTIONS 1 AND 5) Authorized Signature............................................ Name.............................................................. Name of Firm.................................................... (PLEASE PRINT) Address........................................................... .................................................................. (INCLUDE ZIP CODE) Area Code and Telephone Number.................................. Dated: ......................... , 19 ......................... INSTRUCTIONS FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER 1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this Letter of Transmittal (a) if this Letter of Transmittal is signed by the registered holder(s) of Shares and Rights (which term, for purposes of this document, shall include any participant in a Book-Entry Transfer Facility whose name appears on a security position listing as the owner of Share(s) and/or Rights) tendered herewith, unless such holder(s) has completed either the box entitled "Special Payment Instructions" or the box entitled "Special Delivery Instructions" above, or (b) if such Share(s) and/or Right(s) are tendered for the account of a firm which is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc., or by a commercial bank or trust company having an office or correspondent in the United States (each of the foregoing being referred to as an "Eligible Institution"). In all other cases, all signatures on this Letter of Transmittal must be guaranteed by an Eligible Institution. See Instruction 5 of this Letter of Transmittal. 2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by shareholders either if certificates are to be forwarded herewith or, unless an Agent's Message is utilized, if tenders are to be made pursuant to the procedure for tender by book-entry transfer set forth in Section 3 of the Offer to Purchase. Share Certificates, or timely confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such Shares into the Depositary's account at a Book-Entry Transfer Facility, as well as this Letter of Transmittal (or a facsimile hereof), properly completed and duly executed, with any required signature guarantees, or an Agent's Message in the case of a book-entry delivery, and any other documents required by this Letter of Transmittal, must be received by the Depositary at one of its addresses set forth herein prior to the Expiration Date and, unless and until the Purchaser declares that the Rights Condition (as defined in the Offer to Purchase) is satisfied, Rights Certificates or timely confirmation of a book-entry transfer of Rights into the Depositary's account at a Book-Entry Transfer Facility, if available (together with, if Rights are forwarded separately from Shares, a properly completed and duly executed Letter of Transmittal (or a facsimile hereof) with any required signature guarantees, or an Agent's Message in the case of a book-entry delivery, and any other documents required by this Letter of Transmittal), must be received by the Depositary at one of its addresses set forth herein prior to the Expiration Date or, if later, within five business days after the date such Rights Certificates are distributed. Shareholders whose Share Certificates or Rights Certificates are not immediately available (including Rights Certificates that have not yet been distributed by the Company) or who cannot deliver their Share Certificates or Rights Certificates and all other required documents to the Depositary prior to the Expiration Date or who cannot complete the procedure for delivery by book-entry transfer on a timely basis may tender their Shares and Rights by properly completing and duly executing a Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by or through an Eligible Institution; (ii) a properly completed and duly executed Notice of Guaranteed Delivery, substantially in the form made available by the Purchaser, must be received by the Depositary prior to the Expiration Date; (iii) the Share Certificates (or a Book-Entry Confirmation) representing all tendered Shares, in proper form for transfer, in each case together with the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees (or, in the case of a book-entry delivery, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary within five New York Stock Exchange, Inc. ("NYSE") trading days after the date of execution of such Notice of Guaranteed Delivery; and (iv) unless and until the Purchaser declares that the Rights Condition is satisfied, the Rights Certificates, if issued, representing the appropriate number of Rights or a Book Entry Confirmation, if available, in each case together with a properly completed and duly executed Letter of Transmittal (or a facsimile thereof), with any required signature guarantees (or, in the case of a book-entry delivery, an Agent's Message) and any other documents required by this Letter of Transmittal, must be received by the Depositary within five NYSE trading days after the date of execution of such Notice of Guaranteed Delivery or, if later, five NYSE trading days after Rights Certificates are distributed to shareholders, all as provided in Section 3 of the Offer to Purchase. If Share Certificates and Rights Certificates are forwarded separately to the Depositary, a properly completed and duly executed Letter of Transmittal must accompany each such delivery. THE METHOD OF DELIVERY OF SHARE CERTIFICATES OR OF RIGHTS CERTIFICATES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING SHAREHOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY. No alternative, conditional or contingent tenders will be accepted and no fractional Shares and Rights will be purchased. All tendering shareholders, by execution of this Letter of Transmittal (or a facsimile hereof), waive any right to receive any notice of the acceptance of their Shares and Rights for payment. 3. INADEQUATE SPACE. If the space provided herein is inadequate, the certificate numbers and/or the number of Shares and Rights and any other required information should be listed on a separate signed schedule attached hereto. 4. PARTIAL TENDERS. (Not Applicable to Book-Entry Stockholders) If fewer than all the Shares evidenced by any Share Certificate submitted are to be tendered, fill in the number of Shares which are to be tendered in the box entitled "Number of Shares Tendered". If fewer than all the Rights evidenced by any Rights Certificates submitted are to be tendered, fill in the number of Rights which are to be tendered in the box entitled "Number of Rights Tendered". In such cases, new Share Certificates or Rights Certificates, as the case may be, for the Shares or Rights that were evidenced by your old Share Certificates or Rights Certificates, but were not tendered by you, will be sent to you, unless otherwise provided in the appropriate box on this Letter of Transmittal, as soon as practicable after the Expiration Date. All Shares represented by Share Certificates and all Rights represented by Rights Certificates delivered to the Depositary will be deemed to have been tendered unless otherwise indicated. 5. SIGNATURES ON LETTER OF TRANSMITTAL, STOCK POWERS AND ENDORSEMENTS. If this Letter of Transmittal is signed by the registered holder(s) of the Shares and Rights tendered hereby, the signature(s) must correspond with the name(s) as written on the face of the certificate(s) without alteration, enlargement or any change whatsoever. If any of the Shares and Rights tendered hereby are owned of record by two or more joint owners, all such owners must sign this Letter of Transmittal. If any of the tendered Shares and Rights are registered in different names on several certificates, it will be necessary to complete, sign and submit as many separate Letters of Transmittal as there are different registrations of certificates. If this Letter of Transmittal or any certificates or stock powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations or others acting in a fiduciary or representative capacity, such persons should so indicate when signing, and proper evidence satisfactory to the Purchaser of their authority so to act must be submitted. If this Letter of Transmittal is signed by the registered holder(s) of the Shares and Rights listed and transmitted hereby, no endorsements of certificates or separate stock powers are required unless payment is to be made to or certificates for Shares or Rights not tendered or not purchased are to be issued in the name of a person other than the registered holder(s). Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. If this Letter of Transmittal is signed by a person other than the registered holder(s) of the certificate(s) listed, the certificate(s) must be endorsed or accompanied by appropriate stock powers, in either case signed exactly as the name(s) of the registered holder(s) appear on the certificate(s). Signatures on such certificates or stock powers must be guaranteed by an Eligible Institution. Unless and until the Purchaser declares the Rights Condition to be satisfied, if Rights Certificates have been distributed to holders of Shares, such holders are required to tender Rights Certificate(s) representing a number of Rights equal to one-half of the number of Shares tendered in order to effect a valid tender of such Shares. It is necessary that shareholders follow all signature requirements of this Instruction 5 with respect to the Rights in order to tender such Rights. 6. STOCK TRANSFER TAXES. The Purchaser will pay any stock transfer taxes with respect to the transfer and sale of Shares and Rights to it or its order pursuant to the Offer. If, however, payment of the purchase price is to be made to, or if certificates for Shares and Rights not tendered or accepted for payment are to be registered in the name of, any person other than the registered holder(s), or if tendered certificates are registered in the name of any person other than the person(s) signing this Letter of Transmittal, the amount of any stock transfer taxes (whether imposed on the registered holder(s) or such person) payable on account of the transfer to such person will be deducted from the purchase price unless satisfactory evidence of the payment of such taxes or an exemption therefrom, is submitted. EXCEPT AS PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATE(S) LISTED IN THIS LETTER OF TRANSMITTAL. 7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in the name of, and/or certificates for Shares and Rights not tendered or not accepted for payment are to be issued or returned to, a person other than the signer of this Letter of Transmittal or if a check and/or such certificates are to be returned to a person other than the signer of this Letter of Transmittal or to an address of the signer other than that shown in this Letter of Transmittal, the appropriate boxes on this Letter of Transmittal must be completed. Book-Entry Shareholders may request that Shares and/or Rights not accepted for payment be credited to such account maintained at a Book-Entry Transfer Facility as such Book-Entry Shareholder may designate under "Special Payment Instructions". If no such instructions are given, such Shares or Rights not accepted for payment will be returned by crediting the account at the Book-Entry Transfer Facility designated above. 8. WAIVER OF CONDITIONS. The conditions of the Offer may be waived by the Purchaser in whole or in part at any time and from time to time in its sole discretion. 9. 31% BACKUP WITHHOLDING; SUBSTITUTE FORM W-9. Under U.S. Federal income tax law, a shareholder whose tendered Shares or Rights are accepted for payment is required to provide the Depositary with such shareholder's correct taxpayer identification number ("TIN") on Substitute Form W-9 below. If the Depositary is not provided with the correct TIN, the Internal Revenue Service may subject the shareholder or other payee to a $50 penalty. In addition, payments that are made to such shareholder or other payee with respect to Shares or Rights purchased pursuant to the Offer may be subject to 31% backup withholding. Certain shareholders (including, among others, all corporations and certain foreign individuals) are not subject to these backup withholding and reporting requirements. In order for a foreign individual to qualify as an exempt recipient, the shareholder must submit a Form W-8, signed under penalties of perjury, attesting to that individual's exempt status. A Form W-8 can be obtained from the Depositary. See the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for more instructions. If backup withholding applies, the Depositary is required to withhold 31% of any such payments made to the shareholder or other payee. Backup withholding is not an additional tax. Rather, the tax liability of persons subject to backup withholding will be reduced by the amount of tax withheld. If withholding results in an overpayment of taxes, a refund may be obtained from the Internal Revenue Service. The box in Part 3 of the Substitute Form W-9 may be checked if the tendering shareholder has not been issued a TIN and has applied for a TIN or intends to apply for a TIN in the near future. If the box in Part 3 is checked, the shareholder or other payee must also complete the Certificate of Awaiting Taxpayer Identification Number below in order to avoid backup withholding. Notwithstanding that the box in Part 3 is checked and the Certificate of Awaiting Taxpayer Identification Number is completed, the Depositary will withhold 31% of all payments made prior to the time a properly certified TIN is provided to the Depositary. The shareholder is required to give the Depositary the TIN (e.g., social security number or employer identification number) of the record owner of the Shares and Rights or of the last transferee appearing on the transfers attached to, or endorsed on, the Shares and Rights. If the Shares or Rights are in more than one name or are not in the name of the actual owner, consult the enclosed "Guidelines for Certification of Taxpayer Identification Number on Substitute Form W-9" for additional guidance on which number to report. 10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions or requests for assistance may be directed to the Dealer Manager or the Information Agent at their respective addresses and telephone numbers set forth below. Additional copies of the Offer to Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may also be obtained from the Information Agent or from brokers, dealers, commercial banks or trust companies. 11. LOST, DESTROYED OR STOLEN CERTIFICATES If any certificate representing Shares or Rights has been lost, destroyed or stolen, the shareholder should promptly notify the Depositary. The shareholder will then be instructed as to the steps that must be taken in order to replace the certificate(s). This Letter of Transmittal and related documents cannot be processed until the procedures for replacing lost or destroyed certificates have been followed. IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS, OR THE NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE. PAYER'S NAME: CHEMICAL BANK Part 1--PLEASE PROVIDE YOUR TIN IN Social Security Number SUBSTITUTE THE BOX AT THE RIGHT AND CERTIFY or Employer Form W-9 BY SIGNING AND DATING BELOW Identification Number ----------------------------- Part 2--Certification--Under penalties of perjury, I certify that: (1) The number shown on this form is my correct Taxpayer Identification Number (or I am waiting for a number to be issued to me) and Department of the Treasury Internal Revenue Service (2) I am not subject to backup withholding because: (a) I am exempt from backup withholding, or (b) I have not been notified by the Internal Revenue Service (the "IRS") that I am subject to backup withholding as a result of a failure to report all interest or dividends, or (c) the IRS has notified me that I am no longer subject to backup withholding. PAYER'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER ("TIN") Certification Instructions--You must cross out item (2) above if you have been notified by the IRS that you are currently subject to backup withholding because of under-reporting interest or dividends on your tax return. However, if after being notified by the IRS that you were subject to backup withholding you received another notification from the IRS that you are no longer subject to backup withholding, do not cross out such Item (2). SIGN HERE SIGNATURE..................................... Part 3-- Awaiting TIN / / DATE.........................., 1994
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS. YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF SUBSTITUTE FORM W-9. CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER I certify under penalties of perjury that a taxpayer identification number has not been issued to me, and either (1) I have mailed or delivered an application to receive a taxpayer identification number to the appropriate Internal Revenue Service Center or Social Security Administration Office, or (2) I intend to mail or deliver an application in the near future. I understand that if I do not provide a taxpayer identification number by the time of payment, 31% of all reportable payments made to me will be withheld, but that such amounts will be refunded to me if I then provide a Taxpayer Identification Number within sixty (60) days. Signature................................................... Date......................... , 1994
The Information Agent for the Offer is: D.F. KING & CO., INC. UNITED STATES EUROPE 77 Water Street Royex House, Aldermanbury Square New York, New York 10005 London, England EC2V 7HR 1-800-755-3106 (Toll Free) (44) 71 600 5005 (Collect)
The Dealer Manager for the Offer is: GLEACHER & CO. INC. 667 Madison Avenue New York, New York 10021 (212) 418-4281 (Collect) August 10, 1994 EX-99.11(A)(3) 4 Exhibit 11(a)(3) NOTICE OF GUARANTEED DELIVERY TO TENDER SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF AMERICAN CYANAMID COMPANY As set forth in Section 3 of the Offer to Purchase described below, this instrument or one substantially equivalent hereto must be used to accept the Offer (as defined below) if certificates for Shares (as defined below) and the associated Preferred Stock Purchase Rights (the "Rights") are not immediately available or the certificates for Shares or Rights and all other required documents cannot be delivered to the Depositary prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase) or if the procedure for delivery by book-entry transfer cannot be completed on a timely basis. This instrument may be delivered by hand or transmitted by facsimile transmission or mail to the Depositary. The Depositary for the Offer is: CHEMICAL BANK By Mail: By Facsimile: By Hand or Overnight Delivery: Chemical Bank (for Eligible Institutions only) Chemical Bank Reorganization Department (212) 629-8015 55 Water Street P.O. Box 3085 (212) 629-8016 Second Floor--Room 234 G.P.O. Station New York, New York 10041 New York, New York Confirm by Telephone: Attention: 10116-3085 (212) 613-7137 Reorganization Department
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. This form is not to be used to guarantee signatures. If a signature on a Letter of Transmittal is required to be guaranteed by an Eligible Institution under the instructions thereto, such signature guarantee must appear in the applicable space provided in the signature box in the Letter of Transmittal. Ladies and Gentlemen: The undersigned hereby tenders to AC Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of American Home Products Corporation, a Delaware corporation, upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 10, 1994 (the "Offer to Purchase"), and in the related Letter of Transmittal (which together constitute the "Offer"), receipt of which is hereby acknowledged, the number of shares of Common Stock, $5.00 par value per share (the "Shares"), and the number of Rights, indicated below of American Cyanamid Company, a Maine corporation, pursuant to the guaranteed delivery procedure set forth in Section 3 of the Offer to Purchase. Signature(s) ................................................................... Name(s) of Record Holders ............................................................................... PLEASE TYPE OR PRINT Number of Shares and Rights..................................................... Certificate Nos. (If Available) ............................................................................... ............................................................................... Dated.......................................................................1994 Address(es)..................................................................... ............................................................................... ZIP CODE Area Code and Tel. No(s)........................................................ (Check one box if Shares and Rights will be tendered by book-entry transfer) / / The Depository Trust Company / / Midwest Securities Trust Company / / Philadelphia Depository Trust Company Account Number.................................................................. ............................................................................... GUARANTEE (NOT TO BE USED FOR SIGNATURE GUARANTEE) The undersigned, a firm that is a member of a registered national securities exchange or of the National Association of Securities Dealers, Inc. or a commercial bank or trust company having an office, branch or agency in the United States, (a) represents that the above named person(s) "own(s)" the Shares and/or Rights tendered hereby within the meaning of Rule 14e-4 under the Securities Exchange Act of 1934, as amended ("Rule14e-4"), (b) represents that such tender of Shares complies with Rule 14e-4, (c) guarantees to deliver to the Depositary either the certificates evidencing all tendered Shares, in proper form for transfer, or to deliver Shares pursuant to the procedure for book-entry transfer into the Depositary's account at The Depository Trust Company, the Midwest Securities Trust Company or the Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility"), in either case together with the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase) in the case of a book-entry delivery, and any other required documents, all within five New York Stock Exchange, Inc. ("NYSE") trading days after the date hereof and (d) guarantees, if applicable, to deliver certificates representing the Rights ("Rights Certificates") in proper form for transfer, or to deliver such Rights pursuant to the procedure for book-entry transfer into the Depositary's account at a Book-Entry Transfer Facility together with, if Rights are forwarded separately, the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed with any required signature guarantees or an Agent's Message (as defined in the Offer to Purchase) in the case of a book-entry delivery, and any other required documents, all within five NYSE trading days after the date hereof or, if later, five business days after Rights Certificates are distributed to holders of Shares. ............................................................................... NAME OF FIRM ............................................................................... ADDRESS ............................................................................... ZIP CODE Area Code and Tel. No. ......................................................... ............................................................................... AUTHORIZED SIGNATURE Name ........................................................................... PLEASE TYPE OR PRINT Title .......................................................................... Dated.......................................................................1994 NOTE: DO NOT SEND CERTIFICATES FOR SHARES OR RIGHTS WITH THIS NOTICE. CERTIFICATES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL. EX-99.11(A)(4) 5 Exhibit 11(a)(4) GLEACHER & CO. INC. 667 MADISON AVENUE NEW YORK, NEW YORK 10021 (212) 418-4281 OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF AMERICAN CYANAMID COMPANY AT $95.00 NET PER SHARE BY AC ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF AMERICAN HOME PRODUCTS CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, SEPTEMBER 7, 1994, UNLESS THE OFFER IS EXTENDED. August 10, 1994 To Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees: We have been appointed by AC Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of American Home Products Corporation, a Delaware corporation (the "Parent"), to act as Financial Advisor and Dealer Manager in connection with the Purchaser's offer to purchase for cash all the outstanding shares of Common Stock, par value $5.00 per share (the "Shares"), of American Cyanamid Company, a Maine corporation (the "Company"), and (unless and until the Purchaser declares the Rights Condition (as defined in the Offer to Purchase) is satisfied) the associated Preferred Stock Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of March 10, 1986, as amended as of April 29, 1986 and as of April 21, 1987 (the "Rights Agreement"), between the Company and Mellon Bank, N.A., as successor Rights Agent, at a purchase price of $95.00 per Share (and associated Right), net to the seller in cash without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase, dated August 10, 1994 (the "Offer to Purchase") and in the related Letter of Transmittal (which together constitute the "Offer") enclosed herewith. Unless and until the Purchaser declares that the Rights Condition is satisfied, holders of Shares will be required to tender one-half of one Right for each Share tendered in order to effect a valid tender of such Share. If the Distribution Date (as defined in the Offer to Purchase) has not occurred prior to the time Shares are tendered pursuant to the Offer, a tender of Shares will constitute a tender of the associated Rights. If the Distribution Date has occurred and certificates representing Rights ("Rights Certificates") have been distributed by the Company to holders of Shares, such holders of Shares shall be required to tender Rights Certificates representing a number of Rights equal to one-half of the number of Shares being tendered in order to effect valid tender of such Shares. Holders of Shares and Rights whose certificates for such Shares (the "Share Certificates") and, if applicable, Rights Certificates are not immediately available or who cannot deliver their Share Certificates or, if applicable, their Rights Certificates, and all other required documents to the Depositary (as defined below) prior to the Expiration Date (as defined in the Offer to Purchase), or who cannot complete the procedures for book-entry transfer on a timely basis, must tender their Shares and Rights according to the guaranteed delivery procedures set forth in Section 3 of the Offer to Purchase. Unless the context otherwise requires, all references to Shares shall include the associated Rights. All References to the Rights shall include all benefits that may inure to holders of Rights pursuant to the Rights Agreement. Please furnish copies of the enclosed materials to those of your clients for whose accounts you hold Shares registered in your name or in the name of your nominee. The Offer is conditioned upon, among other things: (1) there being validly tendered and not properly withdrawn prior to the expiration of the Offer a number of Shares which constitutes at least 80% of the voting power (determined on a fully diluted basis), on the date of purchase, of all securities of the Company entitled to vote generally in the election of directors or in a merger; (2) the Rights having been redeemed by the Company's Board of Directors or the Purchaser being satisfied, in its sole discretion, that the Rights have been invalidated or are otherwise inapplicable to the Offer and the Merger (as defined in the Offer to Purchase); (3) the Purchaser being satisfied, in its sole discretion, that the restrictions on business combinations contained in Section 611-A of the Maine Business Corporation Act (or any similar provision) are invalid or otherwise inapplicable to the Merger (as a result of action by the Company's Board of Directors, final judicial action or otherwise); and (4) the Purchaser being satisfied, in its sole discretion, that the Purchaser has obtained sufficient financing to enable it to consummate the Offer and the Merger and to pay related fees and expenses. The Offer is also subject to other terms and conditions. See the Introduction and Sections 1, 9 and 14 of the Offer to Purchase. Enclosed herewith for your information and forwarding to your clients are copies of the following documents: 1. The Offer to Purchase, dated August 10, 1994. 2. The green Letter of Transmittal to tender Shares for your use and for the information of your clients. Facsimile copies of the Letter of Transmittal may be used to tender Shares. 3. The gold Notice of Guaranteed Delivery for Shares and Rights to be used to accept the Offer if Share Certificates or Rights Certificates are not immediately available or if such certificates and all other required documents cannot be delivered to Chemical Bank (the "Depositary") by the Expiration Date or if the procedure for book-entry transfer cannot be completed by the Expiration Date. 4. A gray printed form of letter which may be sent to your clients for whose accounts you hold Shares registered in your name or in the name of your nominee, with space provided for obtaining such clients' instructions with regard to the Offer. 5. Guidelines of the Internal Revenue Service for Certification of Taxpayer Identification Number on Substitute Form W-9. 6. A return envelope addressed to Chemical Bank, the Depositary. YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, SEPTEMBER 7, 1994, UNLESS THE OFFER IS EXTENDED. In order to take advantage of the Offer, (i) a duly executed and properly completed Letter of Transmittal and any required signature guarantees, or an Agent's Message (as defined in the Offer to Purchase) in connection with a book-entry delivery of Shares or Rights, and other required documents should be sent to the Depositary, and (ii) either Share Certificates representing the tendered Shares (and, if applicable, tendered Rights) should be delivered to the Depositary, or such Shares (and, if applicable, tendered Rights) should be tendered by book-entry transfer into the Depositary's account maintained at one of the Book-Entry Transfer Facilities (as described in the Offer to Purchase), all in accordance with the instructions set forth in the Letter of Transmittal and the Offer to Purchase. 2 If holders of Shares wish to tender, but it is impracticable for them to forward their Share Certificates or, if applicable, Rights Certificates, or other required documents on or prior to the Expiration Date or to comply with the book-entry transfer procedures on a timely basis, a tender may be effected by following the guaranteed delivery procedures specified in Section 3 of the Offer to Purchase. The Purchaser will not pay any commissions or fees to any broker, dealer or other person (other than the Dealer Manager, the Depositary and D.F. King & Co., Inc. (the "Information Agent") (as described in the Offer to Purchase)) for soliciting tenders of Shares pursuant to the Offer. The Purchaser will, however, upon request, reimburse you for customary clerical and mailing expenses incurred by you in forwarding any of the enclosed materials to your clients. The Purchaser will pay or cause to be paid any stock transfer taxes payable on the transfer of Shares to it, except as otherwise provided in Instruction 6 of the Letter of Transmittal. Any inquiries you may have with respect to the Offer should be addressed to Gleacher & Co. Inc., the Dealer Manager, or the Information Agent, at their respective addresses and telephone numbers set forth on the back cover of the Offer to Purchase. Additional copies of the enclosed material may be obtained from the Information Agent. Very truly yours, GLEACHER & CO. INC. NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY OTHER PERSON THE AGENT OF THE PURCHASER, THE PARENT, THE DEALER MANAGER, THE COMPANY, THE DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN. 3 EX-99.11(A)(5) 6 Exhibit 11(a)(5) OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF AMERICAN CYANAMID COMPANY AT $95.00 NET PER SHARE BY AC ACQUISITION CORP. A WHOLLY OWNED SUBSIDIARY OF AMERICAN HOME PRODUCTS CORPORATION THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, SEPTEMBER 7, 1994, UNLESS THE OFFER IS EXTENDED. To Our Clients: Enclosed for your consideration is an Offer to Purchase dated August 10, 1994 (the "Offer to Purchase"), and the related Letter of Transmittal relating to an offer by AC Acquisition Corp., a Delaware corporation (the "Purchaser") and a wholly owned subsidiary of American Home Products Corporation, a Delaware corporation (the "Parent"), to purchase all of the outstanding shares of Common Stock, $5.00 par value per share (the "Shares"), of American Cyanamid Company, a Maine corporation (the "Company"), and (unless and until the Purchaser declares that the Rights Condition (as defined in the Offer to Purchase) is satisfied) the associated Preferred Stock Purchase Rights (the "Rights") issued pursuant to the Rights Agreement, dated as of March 10, 1986, as amended as of April 29, 1986 and as of April 21, 1987 (the "Rights Agreement"), between the Company and Mellon Bank, N.A., as successor Rights Agent, at a purchase price of $95.00 per Share (and associated Right), net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal (which together constitute the "Offer"). Unless the context requires otherwise, all references to "Shares" shall be deemed to refer also to the associated Rights. We are the holder of record of Shares held by us for your account. A tender of such Shares can be made only by us as the holder of record and pursuant to your instructions. The Letter of Transmittal is furnished to you for your information only and cannot be used by you to tender Shares held by us for your account. Unless and until the Purchaser declares that the Rights Condition (as defined below) is satisfied, if certificates representing Rights (the "Rights Certificates") have been distributed to holders of Shares, such holders are required to tender Rights Certificate(s) representing a number of Rights equal to one-half the number of Shares being tendered in order to effect a valid tender of such Shares. Based on the Company's filings with the Commission, until the Distribution Date (as defined in the Offer to Purchase), the surrender for transfer of any of the certificates representing Shares (the "Share Certificates") will also constitute the surrender for transfer of the Rights associated with the Shares represented by such Share Certificates. Based on the Company's filings with the Commission, as soon as practicable following the Distribution Date, the Rights Certificates will be mailed to holders of record of Shares as of the close of business on the Distribution Date; after the Distribution Date, such separate Rights Certificates alone will evidence the Rights. See Section 3 of the Offer to Purchase. We request instructions as to whether you wish to have us tender on your behalf any or all of such Shares held by us for your account, pursuant to the terms and subject to the conditions set forth in the Offer to Purchase. Your instructions to tender Shares held by us for your account will also constitute a direction to us to tender a number of Rights held by us for your account equal to one-half of the number of Shares tendered. Your attention is directed to the following: 1. The tender price is $95.00 per share, net to the seller in cash. 2. The Offer is made for all of the outstanding Shares. 3. The Offer and withdrawal rights will expire at 12:00 Midnight, New York City time, on Wednesday,, September 7, 1994, unless the Offer is extended. 4. The Offer is conditioned upon, among other things: (1) there being validly tendered and not properly withdrawn prior to the expiration of the Offer a number of Shares which constitutes at least 80% of the voting power (determined on a fully diluted basis) on the date of purchase of all securities of the Company entitled to vote generally in the election of directors or in a merger; (2) the Rights having been redeemed by the Company's Board of Directors or the Purchaser being satisfied, in its sole discretion, that the Rights have been invalidated or are otherwise inapplicable to the Offer and the Merger (as defined in the Offer to Purchase); (3) the Purchaser being satisfied, in its sole discretion, that the restrictions on business combinations contained in Section 611-A of the Maine Business Corporation Act (or any similar provision) are invalid or otherwise inapplicable to the Merger (as a result of action by the Company's Board of Directors, final judicial action or otherwise); and (4) the Purchaser being satisfied, in its sole discretion, that the Purchaser has obtained sufficient financing to enable it to consummate the Offer and the Merger and to pay related fees and expenses. The Offer is also subject to other terms and conditions. See the Introduction and Sections 1, 9 and 14 of the Offer to Purchase. 5. Tendering shareholders will not be obligated to pay brokerage fees or commissions or, except as set forth in Instruction 6 of the Letter of Transmittal, stock transfer taxes on the purchase of Shares pursuant to the Offer. The Offer is being made solely by the Offer to Purchase and the related Letter of Transmittal and is being made to all holders of Shares. The Purchaser is not aware of any state where the making of the Offer is prohibited by administrative or judicial action pursuant to any valid state statute. If the Purchaser becomes aware of any valid state statute prohibiting the making of the Offer or the acceptance of Shares pursuant thereto, the Purchaser will make a good faith effort to comply with any such state statute. If, after such good faith effort, the Purchaser cannot comply with such state statute, the Offer will not be made to nor will tenders be accepted from or on behalf of the holders of Shares in such state. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by the Dealer Manager or one or more registered brokers or dealers that are licensed under the laws of such jurisdiction. If you wish to have us tender any or all of the Shares held by us for your account, please instruct us by completing, executing and returning to us the instruction form contained in this letter. If you authorize a tender of your Shares, all such Shares will be tendered unless otherwise specified in such instruction form. Your instructions should be forwarded to us in ample time to permit us to submit a tender on your behalf prior to the expiration of the Offer. INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK (INCLUDING THE ASSOCIATED PREFERRED STOCK PURCHASE RIGHTS) OF AMERICAN CYANAMID COMPANY The undersigned acknowledge(s) receipt of your letter enclosing the Offer to Purchase dated August 10, 1994 (the "Offer to Purchase") and the related Letter of Transmittal pursuant to an offer by AC Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of American Home Products Corporation, a Delaware corporation, to purchase all outstanding shares of Common Stock, $5.00 par value per share (the "Shares"), of American Cyanamid Company, a Maine corporation, and (unless and until the Purchaser declares that the Rights Condition (as defined in the Offer to Purchase) is satisfied) the associated Preferred Stock Purchase Rights (the "Rights"). This will instruct you to tender the number of Shares and Rights indicated below (or, if no number is indicated below, all Shares and Rights) which are held by you for the account of the undersigned, upon the terms and subject to the conditions set forth in the Offer to Purchase and in the related Letter of Transmittal furnished to the undersigned. Number of Shares (and Rights) to be Tendered* ..........................................................Shares (and Rights) Dated: , 19 SIGN HERE ............................................................................. ............................................................................. Signature(s) ............................................................................. Please print name(s) ............................................................................. Address ............................................................................. Area Code and Telephone Number ............................................................................. Tax Identification or Social Security Number - --------------- * Unless otherwise indicated, it will be assumed that all of your Shares (and Rights) held by us for your account are to be tendered. EX-99.11(A)(6) 7 GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE PAYER.--Social Security numbers have nine digits separated by two hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits separated by only one hyphen: i.e. 00-0000000. The table below will help determine the number to give the payer. - -------------------------------------------------------- -------------------------------------------------------- GIVE THE GIVE THE EMPLOYER SOCIAL SECURITY IDENTIFICATION FOR THIS TYPE OF ACCOUNT: NUMBER OF-- FOR THIS TYPE OF ACCOUNT: NUMBER OF-- - -------------------------------------------------------- -------------------------------------------------------- 1. An individual's account The individual 8. Sole proprietorship account The owner(4) 2. Two or more individuals The actual owner of the 9. A valid trust, estate, or The legal entity (Do not (joint account) account or, if combined pension trust furnish the identifying funds, the first number of the personal individual on the representative or account(1) trustee unless the legal 3. Husband and wife (joint The actual owner of the entity itself is not account) account or, if joint designated in the funds, either person(1) account title.)(5) 4. Custodian account of a The minor(2) 10. Corporate account The corporation minor (Uniform Gift to 11. Religious, charitable, or The organization Minors Act) educational organization 5. Adult and minor (joint The adult or, if the account account) minor is the only 12. Partnership account held The partnership contributor, the in the name of the minor(1) business 6. Account in the name of The ward, minor, or 13. Association, club, or The organization guardian or committee for a incompetent person(3) other tax-exempt designated ward, minor, or organization incompetent person 14. A broker or registered The broker or nominee 7. a. The usual revocable The grantor-trustee(1) nominee savings trust account 15. Account with the The public entity (grantor is also Department of Agriculture trustee) in the name of a public b. So-called trust account The actual owner(1) entity (such as a State or that is not a legal or local government, school valid trust under State law district, or prison) that receives agricultural program payments - -----------------------------------------------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. (2) Circle the minor's name and furnish the minor's social security number. (3) Circle the ward's, minor's or incompetent person's name and furnish such person's social security number. (4) Show the name of the owner. If the owner does not have an employer identification number, furnish the owner's social security number. (5) List first and circle the name of the legal trust, estate or pension trust. NOTE: If no name is circled when there is more than one name, the number will be considered to be that of the first name listed. GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 PAGE 2 OBTAINING A NUMBER If you do not have a taxpayer identification number or you do not know your number, obtain Form SS-5, Application for a Social Security Number Card (for individuals), or Form SS-4, Application for Employer Identification Number (for businesses and all other entities), at the local office of the Social Security Administration or the Internal Revenue Service. To complete Substitute Form W-9 if you do not have a taxpayer identification number, write "Applied For" in the space for the taxpayer identification number in Part I, sign and date the Form, and give it to the requester. Generally, you will then have 60 days to obtain a taxpayer identification number and furnish it to the requester. If the requester does not receive your taxpayer identification number within 60 days, backup withholding, if applicable, will begin and continue until you furnish your taxpayer identification number to the requester. PAYEES EXEMPT FROM BACKUP WITHHOLDING Payees specifically exempted from backup withholding on ALL payments include the following: . A corporation. . A financial institution. . An organization exempt from tax under section 501(a), or an individual retirement plan, or a custodial account under section 403(b)(7). . The United States or any agency or instrumentality thereof. . A State, the District of Columbia, a possession of the United States, or any political subdivision or instrumentality thereof. . A foreign government or a political subdivision, agency or instrumentality thereof. . An international organization or any agency or instrumentality thereof. . A registered dealer in securities or commodities registered in the United States or a possession of the United States. . A real estate investment trust. . A common trust fund operated by a bank under section 584(a). . An entity registered at all times during the tax year under the Investment Company Act of 1940. . A foreign central bank of issue. Payments of dividends and patronage dividends not generally subject to backup withholding include the following: . Payments to nonresident aliens subject to withholding under section 1441. . Payments to partnerships not engaged in a trade or business in the United States and which have at least one nonresident partner. . Payments of patronage dividends where the amount received is not paid in money. . Payments made by certain foreign organizations. . Payments made to a nominee. Payments of interest not generally subject to backup withholding include the following: . Payments of interest on obligations issued by individuals. Note: You may be subject to backup withholding if this interest is $600 or more and is paid in the course of the payer's trade or business and you have not provided your correct taxpayer identification number to the payer. . Payments of tax-exempt interest (including exempt-interest dividends under section 852). . Payments described in section 6049(b)(5) to nonresident aliens. . Payments on tax-free covenant bonds under section 1451. . Payments made by certain foreign organizations. . Payments made to a nominee. EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE A SUBSTITUTE FORM W-9 TO AVOID POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER. Certain payments other than interest, dividends, and patronage dividends, that are not subject to information reporting are also not subject to backup withholding. For details, see the regulations under sections 6041, 6041A(a), 6045, and 6050A. PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends, interest, or other payments to give taxypayer identification numbers to payers who must report the payments to IRS. IRS uses the numbers for identification purposes and to help verify the accuracy of your tax return. Payers must be given the numbers whether or not recipients are required to file tax returns. Payers must generally withhold 31% of taxable interest, dividends, and certain other payments to a payee who does not furnish a taxpayer identification number to a payer. Certain penalties may also apply. PENALTIES (1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail to furnish your taxpayer identification number to a payer, you are subject to a penalty of $50 for each such failure unless your failure is due to reasonable cause and not to willful neglect. (2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING.--If you make a false statement with no reasonable basis which results in no imposition of backup withholding, you are subject to a penalty of $500. (3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--Falsifying certifications or affirmations may subject you to criminal penalties including fines and/or imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE SERVICE 2 EX-99.11(A)(7) 8 This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares. The Offer is being made solely by the Offer to Purchase dated August 10, 1994 and the related Letter of Transmittal and is being made to all holders of Shares. The Offer is not being made to (nor will tenders be accepted from or on behalf of) holders of Shares in any jurisdiction in which the making of the Offer or the acceptance thereof would not be in compliance with the laws of such jurisdiction. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on behalf of the Purchaser by Gleacher & Co. Inc. or one or moreregistered brokers or dealers that are licensed under the laws of such jurisdiction. Notice of Offer to Purchase for Cash All Outstanding Shares of Common Stock (Including the Associated Preferred Stock Purchase Rights) of American Cyanamid Company at $95.00 Net Per Share by AC Acquisition Corp. a wholly owned subsidiary of American Home Products Corporation AC Acquisition Corp., a Delaware corporation (the _Purchaser_) and a wholly owned subsidiary of American Home Products Corporation, a Delaware corporation (the _Parent_), hereby offers to purchase all of the outstanding shares of common stock, $5.00 par value per share (the _Shares_), of American Cyanamid Company, a Maine corporation (the _Company_), and (unless and until the Purchaser declares that the Rights Condition (as defined below) is satisfied) the associated Preferred Stock Purchase Rights (the _Rights_) issued pursuant to the Rights Agreement, dated as of March 10, 1986, as amended as of April 29, 1986 and as of April 21, 1987, between the Company and Mellon Bank, N.A., as successor Rights Agent (the _Rights Agreement_), at a purchase price of $95.00 per Share (and associated Right), net to the seller in cash, without interest thereon, upon the terms and subject to the conditions set forth in the Offer to Purchase dated August 10, 1994 (the _Offer to Purchase_) and in the related Letter of Transmittal (which together constitute the _Offer_). Unless the context requires otherwise, all references to Shares shall be deemed to refer also to the associated Rights, and all references to Rights shall be deemed to include all benefits that may inure to the shareholders of the Company or to holders of Rights pursuant to the Rights Agreement. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON WEDNESDAY, SEPTEMBER 7, 1994, UNLESS THE OFFER IS EXTENDED. The Offer is conditioned upon, among other things: (1) there being validly tendered and not properly withdrawn prior to the expiration of the Offer a number of Shares which constitutes at least 80% of the voting power (determined on a fully diluted basis), on the date of purchase, of all securities of the Company entitled to vote generally in the election of directors or in a merger; (2) the Company_s Preferred Stock Purchase Rights having been redeemed by the Company_s Board of Directors, or the Purchaser being satisfied, in its sole discretion, that such Preferred Stock Purchase Rights have been invalidated or are otherwise inapplicable to the Offer and the proposed Merger described below (the _Rights Condition_); (3) the Purchaser being satisfied, in its sole discretion, that the restrictions on business combinations contained in Section 611-A of the Maine Business Corporation Act (or any similar provision) are invalid or otherwise inapplicable to the proposed Merger described below (as a result of action by the Company_s Board of Directors, final judicial action or otherwise); and (4) the Purchaser being satisfied, in its sole discretion, that the Purchaser has obtained sufficient financing to enable it to consummate the Offer and the proposed Merger and to pay related fees and expenses. The Offer is also subject to other terms and conditions. See the Introduction and Sections 1, 9 and 14 of the Offer to Purchase. The purpose of the Offer is to acquire control of, and the entire equity interest in, the Company. The Purchaser intends to propose, and to seek to have the Company consummate as soon as practicable after consummation of the Offer, a merger or similar business combination (the _Merger_) with the Purchaser or another direct or indirect subsidiary of the Parent, pursuant to which each then outstanding Share (other than Shares held by the Parent, the Purchaser or any other wholly owned subsidiary of the Parent, Shares held in the treasury of the Company and Shares held by shareholders who properly exercise appraisal rights under Maine law) would be converted into the right to receive in cash the price per Share paid by the Purchaser pursuant to the Offer. The consummation of the Merger would be subject to a number of factors (including satisfaction of various conditions) discussed in the Introduction and in Sections 9, 11 and 14 of the Offer to Purchase. Section 11 of the Offer to Purchase also discusses certain appraisal rights available to shareholders upon consummation of each of the Offer and the Merger. Unless and until the Purchaser declares that the Rights Condition is satisfied, if certificates representing Rights (_Rights Certificates_) have been distributed to holders of Shares, such holders will be required to tender Rights Certificate(s) representing a number of Rights equal to one-half the number of Shares being tendered in order to effect a valid tender of such Shares. For purposes of the Offer, the Purchaser will be deemed to have accepted for payment (and thereby purchased) Shares validly tendered and not properly withdrawn as, if and when the Purchaser gives oral or written notice to the Depositary of the Purchaser_s acceptance for payment of such Shares pursuant to the Offer. Upon the terms and subject to the conditions of the Offer, payment for Shares accepted for payment pursuant to the Offer will be made by deposit of the purchase price therefor with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payments from the Purchaser and transmitting such payments to shareholders whose Shares have been accepted for payment. Under no circumstances will interest on the purchase price for Shares be paid, regardless of any delay in making such payment. In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made only after timely receipt by the Depositary of (i) certificates representing shares (_Share Certificates_) and, if applicable, Rights Certificates, or timely confirmation of a book-entry transfer of such Shares and Rights into the Depositary_s account at The Depository Trust Company, the Midwest Securities Trust Company or the Philadelphia Depository Trust Company (each a _Book-Entry Transfer Facility_) pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed and duly executed, with any required signature guarantees, or an Agent_s Message (as defined in Section 2 of the Offer to Purchase) in connection with a book-entry transfer, and (iii) any other documents required by the Letter of Transmittal. The Purchaser expressly reserves the right, in its sole discretion, at any time and from time to time, to extend the period during which the Offer is open for any reason, including the occurrence of any of the events specified in Section 14 of the Offer to Purchase, by giving oral or written notice of such extension to the Depositary. Any such extension will be followed as promptly as practicable by public announcement thereof, such announcement to be made no later than 9:00 A.M., New York City time, on the next business day after the previously scheduled Expiration Date. The term _Expiration Date_ means 12:00 Midnight, New York City time, on Wednesday, September 7, 1994, unless and until the Purchaser, in its sole discretion, shall have extended the period during which the Offer is open, in which event the term _Expiration Date_ shall mean the latest time and date at which the Offer, as so extended by the Purchaser, shall expire. Tenders of Shares and Rights made pursuant to the Offer are irrevocable, except that Shares and Rights tendered pursuant to the Offer may be withdrawn at any time on or prior to the Expiration Date and, unless theretofore accepted for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any time after October 8, 1994. For a withdrawal to be effective, a written, telegraphic, telex or facsimile transmission notice of withdrawal must be timely received by the Depositary at one of its addresses set forth on the back cover of the Offer to Purchase. Any such notice of withdrawal must specify the name of the person who tendered the Shares or Rights to be withdrawn, the number of Shares or Rights to be withdrawn and the name of the registered holder, if different from that of the person who tendered such Shares or Rights. If Share Certificates or Rights Certificates to be withdrawn have been delivered or otherwise identified to the Depositary, then, prior to the physical release of such certificates, the serial numbers shown on such certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution (as defined in Section 3 of the Offer to Purchase) unless such Shares or Rights have been tendered for the account of any Eligible Institution. If Shares or Rights have been tendered pursuant to the procedure for book-entry transfer as set forth in Section 3 of the Offer to Purchase, any notice of withdrawal must specify the name and number of the account at the Book-Entry Transfer Facility to be credited with the withdrawn Shares or Rights, in which case a notice of withdrawal will be effective if delivered to the Depositary by any method of delivery described in the second sentence of this paragraph. A withdrawal of Shares or Rights shall also constitute a withdrawal of the associated Rights or Shares, as applicable. All questions as to the form and validity (including time of receipt) of any notice of withdrawal will be determined by the Purchaser, in its sole discretion, whose determination will be final and binding. The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the _Exchange Act_), is contained in the Offer to Purchase and is incorporated herein by reference. A request pursuant to Rule 14d-5 under the Exchange Act is being made to the Company for the use of its shareholder list, list of the holders of Rights, if any, and security position listings for the purpose of disseminating the Offer to holders of Shares. Upon compliance by the Company with such request, the Offer to Purchase and the related Letter of Transmittal and, if required, other relevant materials will be mailed to record holders of Shares and Rights whose names appear on the Company_s shareholder list and list of holders of Rights and will be furnished to brokers, dealers, commercial banks, trust companies and similar persons whose names, or the names of whose nominees, appear on the shareholder list and list of holders of Rights, if applicable, or who are listed as participants in a clearing agency_s security position listing for subsequent transmittal to beneficial owners of Shares. The Offer to Purchase and the related Letter of Transmittal contain important information which should be read before any decision is made with respect to the Offer. Questions and requests for assistance may be directed to the Dealer Manager or the Information Agent as set forth below. Requests for copies of the Offer to Purchase and the related Letter of Transmittal and all other tender offer materials may be directed to the Information Agent, and copies will be furnished promptly at the Purchaser_s expense. The Purchaser will not pay any fees or commissions to any broker or dealer or any other person (other than the Dealer Manager and the Information Agent) for soliciting tenders of Shares and Rights pursuant to the Offer. The Information Agent for the Offer is:D.F. King & Co., Inc. United States: Europe: 77 Water Street Royex House, Aldermanbury Square New York, New York 10005 London, England EC2V 7HR 1-800-755-3106 (Toll Free) (44) 71 600 5005 (Collect) The Dealer Manager for the Offer is: Gleacher & Co. Inc. 667 Madison Avenue New York, New York 10021 (212) 418-4281 (Collect) August 10, 1994 EX-99.11(A)(8) 9 [LOGO] AMERICAN HOME PRODUCTS CORPORATION FIVE GIRALDA FARMS,MADISON,NEW JERSEY 07940, (201) 660-5000 EXECUTIVE OFFICES FOR IMMEDIATE RELEASE: Investor Contact: Media Contact: John R. Considine Louis V. Cafiero (201) 660-6429 (201) 660-5013 AMERICAN HOME PRODUCTS TO COMMENCE CASH TENDER OFFER FOR AMERICAN CYANAMID AT $95 PER SHARE Madison, N.J., August 9, 1994 -- American Home Products Corporation (NYSE:AHP) announced today that its Board of Directors has formally approved the Company's previously announced offer to purchase American Cyanamid Company for $95 per share in cash. In furtherance of this offer, the Board authorized the commencement of a cash tender offer for all of the outstanding stock of American Cyanamid at that price, subject to customary conditions for an offer of this nature. John R. Stafford, Chairman, President and Chief Executive Officer of American Home Products, stated that "although we are starting our tender offer, we are confident that American Cyanamid's Board of Directors will recognize the inherent value of our offer to their stockholders, and we hope they will quickly accept our invitation to begin meaningful discussions for a negotiated transaction." American Home Products also announced that it was commencing litigation designed to eliminate the applicability to its offer of certain of American Cyanamid's anti-takeover and other defensive provisions. In addition, American Home Products stated that it intends to solicit other American Cyanamid stockholders to join it in calling for a special stockholders meeting to act on matters relating to the American Home Products offer. # # # # # EX-99.11(A)(9) 10 EXHIBIT 11.(a)(9) [LOGO] AMERICAN HOME PRODUCTS CORPORATION FIVE GIRALDA FARMS,MADISON,NEW JERSEY 07940, (201) 660-5000 FOR IMMEDIATE RELEASE: Investor Contact: Media Contact: John R. Considine Louis V. Cafiero (201) 660-6429 (201) 660-5013 AMERICAN HOME PRODUCTS ANNOUNCES COMMENCEMENT $95 PER SHARE CASH TENDER OFFER FOR AMERICAN CYANAMID AND RELATED STEPS Madison, N.J., August 10, 1994 -- American Home Products Corporation (NYSE:AHP) announced today that it has commenced its previously announced tender offer for all outstanding shares of common stock of American Cyanamid Company at $95.00 per share in cash. American Home Products also announced that in connection with the tender offer, it has filed in the United States District Court for the District of Maine, the previously announced litigation against Cyanamid with respect to certain anti-takeover and other defensive provisions, and has sent to Cyanamid a demand under Maine Law for a shareholder list. The tender offer and withdrawal rights thereunder will expire at 12:00 Midnight, New York City time, on Wednesday, September 7, 1994, unless the tender offer is extended. # # # EX-99.11(B)(1) 11 August 9, 1994 American Home Products Corporation Five Giralda Farms Madison, New Jersey 07940 Attention: John Considine Vice President -- Finance re Acquisition Financing -- Commitment Letter - ---------------------------------------------- Dear Sirs: You have advised us that American Home Products Corporation (the "Company") may, directly or through an acquisition subsidiary, commence an all cash tender offer (the "Tender Offer") for all of the issued and outstanding shares (the "Shares") of common stock of American Cyanamid Company ("AC") which will be subsequently followed by a merger of AC with the Company (or a newly created subsidiary of the Company) (the "Merger", and together with the Tender Offer, the "Acquisition "). We understand that up to $9.0 billion of senior bank financing (the "Bank Financing") is required to finance the Acquisition, to replace an existing working capital facility of the Company, to pay related costs and expenses and to provide for ongoing general corporate purposes, including commercial paper back-up. Such Bank Financing is to include a (i) a 364-day extendable revolving credit and bid loan facility in the amount of $6 billion (the "A Credit Facility") and (ii) a five year revolving credit and bid loan facility in the amount of $3 billion (the "B Credit Facility", and together with the A Credit Facility, the "Credit Facilities"). You have requested that the Bank Financing be made available through the Credit Facilities extended on the terms and subject to the conditions set forth on Annex I hereto (the "Term Sheet"). Chemical Bank ("Chemical") is pleased to confirm that it is willing to provide, on the terms and subject to the conditions set forth herein and in the Term Sheet, up to $1.2 billion of the Bank Financing. Chemical Securities Inc. ("CSI"), as advisor and arranger to you, hereby agrees to use its best efforts to form a syndicate of financial institutions (together with Chemical, the "Lenders") to provide the balance of the Bank Financing. The commitments of each of the Lenders (including Chemical's commitment) will be made on a pro rata basis between the A --- ---- Credit Facility and the B Credit Facility. Chemical's commitment to provide up to $1.2 billion of the Bank Financing is expressly subject to (i) Chemical's satisfactory completion of its business and legal due diligence analysis and review with respect to the assets, liabilities, businesses, operations or condition (financial and otherwise) of the Company and its sub- sidiaries and (to the extent of publicly available information and information that may be made available by or on behalf of AC to the Company (collectively, "Available AC Information")) of AC and its subsidiaries, (ii) the absence of any event or occurrence having a material adverse effect on the assets, liabilities, businesses, operations or condition (financial or otherwise) of the Company on a consolidated basis or of AC on a consolidated basis, (iii) the successful syndication of the Bank Financing and (iv) the appropriate markets being clear of competing transactions by or on behalf of the Company at the time of the proposed syndication of the Bank Financing (other than to the extent coordinated with CSI's syndication efforts in respect of the Bank Financing). In addition, Chemical's commitment hereunder shall terminate on May 31, 1995, unless the date on which all of the conditions to the effectiveness of the Credit Agreements set forth in the Term Sheet (including the consummation of the Tender Offer) have been satisfied (the "Effective Date") has occurred on or before such date. It is also a condition of our commitments that Chemical act as the sole Administrative Agent, and that CSI -2- act as the sole advisor to the Company and arranger, for the Credit Facilities and perform all functions and exercise all authority (including, without limitation, selecting counsel for the Lenders, serving as manager of the syndication effort and negotiating definitive credit documentation) customarily performed and exercised by each of us in such capacities. It is agreed that CSI will manage all aspects of the syndication, including, without limitation, decisions as to the selection and number of institutions to be approached and when they will be approached, when their commitments will be accepted, which institutions will participate, the allocations of the commitments among the syndicate lenders and the amount and distribution of fees among the syndicate lenders, provided that CSI's decisions in such matters are to be acceptable to the Company. To assist CSI in its syndication efforts, you agree promptly to provide, and to cause your advisors to provide, Chemical and/or CSI upon request with all information reasonably deemed necessary by Chemical and/or CSI to complete successfully the syndication, including but not limited to projections and pro forma combined balance sheets prepared by you relating to the transactions contemplated hereby but limited in the case of AC and its subsidiaries to Available AC Information. Chemical reserves the right, prior to or after the execution of definitive documentation with respect to the Bank Financing and as part of the primary syndication or otherwise, to assign part of its commitment to one or more financial institutions that will become Lenders and will be parties to such definitive documentation. It is agreed that no Lender will receive compensation outside the terms contained herein and in the Fee Letter referred to below in order to obtain its commitment to participate in the Bank Financing. You understand that CSI intends to commence syndication efforts promptly, and you agree actively to assist Chemical and CSI in completing promptly a syndication which is satisfactory to us and you. Such assistance shall include your using your diligent efforts to ensure that our syndication efforts benefit materially from the lending and other banking relationships of the Company and its subsidiaries. This will be accomplished by a variety of means, including direct contact during the syndication between senior management and advisors of the Company and the proposed syndicate lenders. As consideration for our commitments hereunder and for the agreements contained herein as to the management, structuring and syndication of the Credit Facilities, you -3- agree to pay the fees set forth in the Fee Letter dated the date hereof and delivered herewith (the "Fee Letter"). To induce Chemical and CSI to issue this letter, you hereby agree that the reasonable out-of-pocket fees and expenses (including the reasonable fees and expenses of consultants, if any, selected by Chemical with the consent of the Company and syndication costs)of Chemical, CSI and their affiliates, together with the reasonable fees and expenses of counsel, arising in connection with this letter (and our due diligence in connection herewith) and in connection with the transactions described herein shall be for your account, whether or not the Acquisition is consummated, the Bank Financing is made available or definitive credit documents are executed. You further agree to indemnify and hold harmless Chemical, CSI and each director, officer, employee and affiliate of each thereof (each an "indemnified person") from and against any and all actions, suits, proceedings (including any investigations or inquiries), claims, losses, damages, liabilities or expenses of any kind or nature whatsoever which may be incurred by or asserted against or involve any such indemnified person as a result of or arising out of or in any way related to or resulting from this letter, the Acquisition or any eventual extension of the Bank Financing, and, upon demand, to pay and reimburse each indemnified person for any reasonable legal or other out-of-pocket expenses incurred in connection with investigating, defending or preparing to defend any such action, suit, proceeding (including any inquiry or investigation) or claim (whether or not any such person is a party to any action or proceeding out of which any such expenses arise), provided that you shall have no obligation to indemnify any indemnified person for any of the foregoing to the extent determined by a judgment to have arisen from its gross negligence, willful misconduct or bad faith. This letter is addressed solely to you, and neither Chemical nor CSI, on the one hand, nor the Company, on the other hand, shall be liable to the other or any other person for any consequential damages which may be alleged as a result of this letter or any of the transactions referred to herein. You may terminate this letter at any time upon written notice thereof to us, provided that the provisions -------- of the preceding paragraph shall survive any termination of this letter. You are not authorized to show or circulate this letter or the Term Sheet to any other person or entity (other than your legal and financial advisors in connection with -4- your evaluation hereof and except as required by law or applicable judicial process) until such time as you have accepted this letter as provided in the immediately succeeding paragraph. Without in any way limiting the foregoing, in the event that you show or circulate the terms of this letter or the Term Sheet prior to your acceptance of this letter as provided below, you shall be deemed to have accepted the terms of this letter and the enclosed Fee Letter. If you are in agreement with the foregoing, please sign and return to us (including by way of telecopier) the enclosed copy of this letter and a copy of the enclosed Fee Letter no later than 5:00 p.m., New York time, on August 9, 1994. If you decline to take the foregoing actions, our commitment and agreements hereunder shall terminate and you are to return all copies of this letter, the Term Sheet and the Fee Letter to us as promptly as possible and in such event you are not authorized to disclose this letter or the contents thereof to any other party. Very truly yours, CHEMICAL BANK By_________________________ Title: CHEMICAL SECURITIES INC. By_________________________ Title: Accepted and Agreed to this ____ day of August, 1994 AMERICAN HOME PRODUCTS CORPORATION By________________________ Title: -5- ANNEX I ------- AMERICAN HOME PRODUCTS CORPORATION $9,000,000,000 Credit Facilities Statement of Terms and Conditions* --------------------------------- I. Documentation and Parties. ------------------------- Type of Agree- ments: The A Credit Facility and the B Credit Facility shall be provided pursuant to two separate Revolving Credit and Bid Loan Facility Agreements (the "A Credit Agreement" and the "B Credit Agreement," respectively). Borrower: American Home Products Corporation, a Delaware corporation (the "Company") or a domestic wholly-owned direct or indirect subsidiary of the Company reasonably satisfactory to the Administrative Agent to the extent the Company has entered into an appropriate guaranty in respect thereof. Arranger: Chemical Securities Inc. (the "Arranger"). Lenders: Chemical and a syndicate of financial institutions to be formed by the Company and the Arranger. Administrative Agent: Chemical (the "Administrative Agent"). II. Amount and Terms of the Credit Facilities. ----------------------------------------- Type of Facilities: Revolving Credit and Bid Loan Facilities available for usage through borrowings -------------------- * Defined terms shall have the meaning provided in the Commitment Letter to which this Term Sheet is attached. under each Credit Facility, pro rata --- ---- from the Lenders under such Credit Facility ("Committed Rate Loans") and/or bid loan borrowings under each Credit Facility from one or more Lenders ("Bid Loans", and together with the Committed Rate Loans, the "Loans"). Aggregate Commitments: A Credit Facility - $6,000,000,000 (the "Aggregate A Commitments"). B Credit Facility - $3,000,000,000 (the "Aggregate B Commitments" and together with the Aggregate A Commitments, the "Aggregate Commitments"). Purpose: The proceeds of Loans will be used (i) to finance the Acquisition, (ii) to replace the Company's existing $1,000,000,000 credit facility, and (iii) for the Company's general corporate and working capital purposes, including commercial paper back-up. Termination Dates: A Credit Facility - 364 days after the Effective Date (the "A Termination Date"), subject to extensions as provided below. B Credit Facility - Five years after the Effective Date (the "B Termination Date"). Commitment Periods: The period from and including the Effective Date to but not including the respective Termination Date for each Credit Agreement, or such earlier date on which the Commitments shall terminate as provided in such Credit Agreement. Maturity Dates: A Credit Facility - As to any Committed Rate Loan which shall be outstanding on the A Termination Date, the first anni- versary of the date immediately preceding the date on which such Committed Rate Loan shall have been made or most recently converted or continued under the Credit Agreement for the A Credit Facility. -2- B Credit Facility - The B Termination Date. Repayment: Each Committed Rate Loan must be repaid on its applicable Maturity Date and each Bid Loan must be repaid on its applicable maturity date. Extension Provisions For The A Credit Agreement will contain a A Credit mechanism for the Company to request Facility: successive 364-day extensions of the A Termination Date, which will become effective only with the consent of the Majority-A Lenders (50.1% of the Aggregate A Commitments) and only with respect to such Lenders that so consent. The Company shall pay any Lender that does not consent to any such extension of the Termination Date (an "Exiting Lender") all amounts then owing to such Exiting Lender under the A Credit Agreement on the existing A Termination Date applicable to such Exiting Lender. The Company may, with the consent of the Administrative Agent (which consent shall not be unreasonably withheld), replace any Exiting Lender with another financial institution which shall become a party to the A Credit Agreement and, at the Company's option, to the B Credit Agreement (in replacement of such Exiting Lender's total B Commitments). The Company may arrange for any such financial institution to purchase all or any portion of the Loans owing to any Exiting Lender on the existing A Termination Date applicable to such Exiting Lender. The Arranger and the Administrative Agent will use diligent efforts to assist the Company in identifying replacement Lenders for the purposes of this Section and "Lender Replacement" below. Optional Reduction of Aggregate Commitments: The unused portion of the Aggregate A Commitments and/or Aggregate B Commitments may be reduced at any time -3- in minimum amounts of $50,000,000 and whole multiples of $5,000,000 in excess thereof upon five Business Days' written notice. Use of the Credit Facilities: (a) Committed Rate Loans: The Company may use the Aggregate Commitments from time to time prior to the applicable Termination Dates for Committed Rate Loans under either or both Credit Facilities. The Company may borrow, repay and reborrow Committed Rate Loans from time to time during the applicable Commitment Period up to the available amount of the Aggregate Commitments applicable to each Credit Facility. (b) Bid Loans: The Credit Agreements will include provisions permitting the Company from time to time prior to the applicable Termination Date (i) to invite Lenders to submit bids to the Company which shall offer Bid Loans (a) bearing interest at a fixed rate or a rate based upon the Eurodollar Rate and (b) having an interest period, as selected by the Company, of between 7 days and 180 days and (ii) to borrow, in its sole discretion, one or more of the Bid Loans offered in submitted bids on the terms set forth in such bids. The aggregate principal amount of the outstanding Bid Loans of a Lender under any Credit Facility may exceed its portion of the respective Aggregate Commitments under such Credit Facility. The minimum aggregate principal amount of Bid Loans that the Company may request the Lenders to offer on any one occasion will be $50,000,000, and the minimum principal amount of a Bid Loan that a Lender may offer to make will be $10,000,000. -4- Aggregate Loans: The aggregate outstanding principal amount of Loans under any Credit Facility may not at any time during the Commitment Period exceed the respective Aggregate Commitments under such Credit Facility. Facility Fees: The Company shall pay to the Administra- tive Agent, for the ratable benefit of the Lenders (or to the Bid Loan Lenders alone in the case of Bid Loans covered by clause (ii) below), a Facility Fee at the applicable percentages per annum set forth on the Pricing Grid attached hereto as Schedule I (the "Pricing Grid") (i) of the respective Aggregate Commitments under each Credit Facility from and including the Allocation Date (as defined below) to but excluding the Termination Date applicable thereto, and (ii) with respect to Loans under the A Credit Agreement, of the average principal amount of Loans outstanding under such Credit Facility from and after the A Termination Date, payable quarterly in arrears on the last day of each March, June, September and December, on the applicable Termination Date (in respect of the fee relating to the Aggregate Commitments) and on the date on which the Loans are fully repaid (in respect of the fee relating to Loans outstanding after the A Termination Date under the A Credit Agreement). "Allocation Date" shall mean the date (not more than five days after the date identified by the Arranger to the Company as the date on which the syndication of the Credit Facilities has been completed) on which the commitments of the Lenders have been accepted by the Company and allocated. Interest on Committed Rate Loans: Committed Rate Loans will bear interest at a rate equal to the Borrowing Rates plus the Applicable Margins (as defined ---- below). The Borrowing Rates available to the Company are: -5- (a) the average of the rates (grossed- up for reserve requirements as described herein) at which eurodollar deposits for one, two, three or six months (as selected by the Company) are offered by each of the three Lenders to be designated by the Company as the Reference Lenders (a "Reference Lender") in the interbank eurodollar market in the approximate amount of such Reference Lender's share of the relevant Loan (the "Eurodollar Rate"); or (b) the sum of (i) the average of the rates (grossed-up for reserve requirements as described herein) reported by each Reference Lender as the rate bid by certificate of deposit dealers for the purchase at face value in the secondary market of certificates of deposit of such Reference Lender having a term of 30, 60, 90 or 180 days (as selected by the Company) in the approximate amount of such Reference Lender's share of the relevant Loan and (ii) the relevant FDIC assessment rate applicable to Chemical Bank (the "C/D Rate"); or (c) the higher of (i) the rate from time to time publicly announced by Chemical in New York City as its prime rate, (ii) Chemical's "Base CD Rate" plus 1% and (iii) the federal funds rate from time to time in effect plus 1/2 of 1% (such higher rate, the "Alternate Base Rate"; this rate is not intended to be the lowest rate charged by Chemical to its borrowers). Interest will be payable on the last day of each interest period in respect of Eurodollar Rate Loans and C/D Rate Loans (except in the case of interest periods of 6 months or 180 days where interest will also be payable on the date which is 3 months or 90 days, as the case may be, from the commencement date thereof) -6- and quarterly in respect of Alternate Base Rate Loans. Applicable The "Applicable Margin" shall be as set Margin: forth on the Pricing Grid. Reserve The rate quoted as the C/D Rate will be Requirements; grossed-up for the maximum reserve Yield requirements prescribed by the Board of Protection: Governors of the Federal Reserve System for certificates of deposit from time to time. The Company will pay to each Lender the cost of eurocurrency reserve liabilities actually incurred. In addition, the Credit Agreements will contain customary provisions relating to increased costs, capital adequacy protection, withholding, indemnity for "breakage" costs and other taxes and illegality. Lender If any Lender submits a request for Replacement: reimbursement to the Company under the increased cost, withholding, indemnity, capital adequacy or reserve requirements provisions referred to above, the Company may, with the consent of the Administrative Agent (which consent shall not be unreasonably withheld), substitute another financial institution to acquire the Loans (other than Bid Loans) and Commitments of such Lender under both Credit Facilities. The Company will in any event be required to make such requested reimbursement to such Lender, provided that no such reimbursement shall be required in respect of periods commencing (i) prior to the commencement of the interest period in respect of which such reimbursement is requested, in the case of eurocurrency liability reserve requirements or (ii) prior to the date 60 days prior to the date of such re- quest, in all other cases. The Company will also be required to provide addi- tional reimbursement to such Lender for periods subsequent to such request through the date of replacement. III. Conditions Precedent. -------------------- -7- (a) To the 1. Execution and delivery of the Effective Credit Agreements and related Date: documents and guaranties, if any, in form reasonably satisfactory to the Company, the Administrative Agent and the Lenders. 2. Receipt by the Administrative Agent of certificates as to required corporate resolutions, certificates of incorporation, bylaws, the incumbency of officers of the Company. 3. An opinion, reasonably satisfactory to the Lenders, of the General Counsel of the Company, as to the authorization, execution and enforceability of the Credit Agreements and all related documents, legal and regulatory compliance and such other matters as the Lenders may reasonably specify. 4. The Tender Offer shall have been consummated in compliance with the terms and conditions (including the price paid for each Share pursuant thereto) set forth in the Offer to Purchase as the same may be modified to the extent not materially adverse (in the reasonable opinion of the Administrative Agent) to the interests of the Lenders, or such other terms and conditions as shall be reasonably satisfactory to the Administrative Agent and the Majority Lenders. After giving effect to the consummation of the Tender Offer, the Company shall own and control that number of shares of AC as shall be necessary to permit the Company to approve the Merger without the affirmative vote or approval of any other shareholders, and there shall be no applicable statute or other restriction which would prohibit, materially restrict or materially delay the consummation of the Merger or which would be reasonably -8- likely to make the consummation of the Merger economically unfeasible. 5. All legal matters incident to the Credit Facilities (including, with- out limitation, opinions of counsel) must be reasonably satisfactory to counsel to the Administrative Agent (determined when delivered thereto). (b) The 1. Accuracy of representations and Effective warranties. Date and the Date 2. No existing Default or Event of of each Default. Loan: 3. The Company must give the Adminis- trative Agent not less than 3 Business Days' written notice of each Eurodollar Rate borrowing, 2 Business Days' written notice of each C/D Rate borrowing and same- day written notice of each Alternate Base Rate borrowing. The Company shall request Bid Loans by delivering a written request therefor (i) not later than 4 Business Days prior to the proposed borrowing date in the case of Eurodollar Rate Bid Loans and (ii) not later than 1 Business Day prior to the proposed borrowing date in the case of fixed rate Bid Loans. IV. Representations --------------- and Warranties: -------------- Customary in transactions of this type, including, without limitation, those relating to the Acquisition, no material adverse change in the Company's consolidated business or financial condition and no material litigation, and no material restrictions on dividends payable by material subsidiaries of the Company. V. Covenants. --------- Reporting 1. Financial statements: Requirements: -9- (a) Quarterly Report on Form 10-Q of the Company due within 60 days after the end of each of the first three quarters of each fiscal year. (b) Audited consolidated annual statements of the Company due within 120 days after the end of each fiscal year. 2. Certificate of no Default or Event of Default due with delivery of the annual statements and the Quarterly Report for the Company's second quarter as set forth above. 3. All other non-confidential reports and financial information filed by the Company with the SEC will be furnished to the Lenders within 30 days after they are sent to the SEC. 4. Any material Default, Event of Default or litigation and any material adverse change must be reported. 5. Such other information as the Administrative Agent on behalf of any Lender may reasonably request. Maintenance of Maintain existence, pay taxes, maintain Existence: properties, maintain insurance, comply with applicable legal requirements. Inspection: Permit inspection of properties, books and records by the Administrative Agent at any reasonable time. Cooperate in furnishing information. Maintenance of Books and Records: Maintain books and records in accordance with GAAP. Merger: Consummate the Merger within 180 days of consummation of the Tender Offer pursuant to documentation reasonably satisfactory to the Administrative Agent. -10- Financial Covenant: Maximum Total Debt to Total Capitalization at the end of each quarter, or another financial covenant, in each case to be mutually acceptable to the Company and Chemical. VI. Events of Default. ----------------- 1. Failure to pay any principal on any Loan when due or to pay any interest on any Loan, any fee or any other sum under either Credit Agreement within 5 Business Days after the same becomes due. 2. Cross-default to other indebtedness in excess of $100,000,000 (with any defaults under indebtedness of AC and its subsidiaries resulting from the Acquisition not to be events of defaults for a period after the Effective Date to be determined). 3. If any representation is incorrect, false or misleading in any material respect on or as of the date made or deemed made. 4. Default in the observance or per- formance of any agreement (other than as provided above) contained in either Credit Agreement which shall continue unremedied for 30 days except that there shall be no grace period for breaches of the financial covenant (provided if the Company is in compliance with such covenant (on a pro forma basis) prior to time required to be reported to the Lenders, then no default shall be deemed to have existed). 5. Any one or more judgments (not paid when due or covered by insurance) in excess of $100,000,000 are rendered against the Company or any of its subsidiaries and remain undischarged, unstayed or unbonded pending appeal for 30 days. 6. Other usual defaults, including -11- insolvency and bankruptcy defaults. 7. Either (i) a "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Securi- ties Exchange Act of 1934) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of more than 50% (25% after the Effective Date) of the then outstanding voting stock of the Company or (ii) a majority of the Board of Directors of the Company shall consist of individuals who are not Continuing Directors. "Continuing Directors" means, as of any date, (i) individuals who on the date two years prior to such date were members of the Company's Board of Directors and (ii) any new Director whose nomination for election by the Company's shareholders was approved by a vote of at least 75% of the Directors then still in office who either were Directors on the date two years prior to such date or whose nomination for election was previously so approved. VII. Other Terms: ----------- Transfer The Lenders may sell, assign or Provisions: otherwise transfer all or any part of their Loans, Commitments and other rights and duties to one or more other financial institutions; provided, -------- however, that any such sale, assignment ------- or transfer shall be subject to the consent of the Company and the Administrative Agent (in each case, which consent shall not be unreasonably withheld) if any such sale, assignment or transfer is to any financial institution that is not a Lender or an affiliate of a Lender; and provided -------- further, that any such sale, assignment ------- or transfer relating to the Credit Facilities shall be made with respect to both the A Credit Facility and the B Credit Facility, on a pro rata basis. --- ---- Each partial assignment shall be in an -12- amount equal to at least $25,000,000, or, if less, the entire amount of the assignor Lender's Commitment. In addition, the Lenders may at the time without the consent of the Company grant participations in all or any part of their Loans, Commitments and other rights and duties to one or more other financial institutions, subject to customary restrictions on voting rights. Majority Lenders with majority of Aggregate Lenders: Commitments. Governing Law: State of New York. All documentation for the Credit Facilities to be prepared by White & Case, counsel to the Administrative Agent. -13- SCHEDULE I ---------- PRICING GRID ------------ The Applicable Facility Fee, Applicable Eurodollar Margin, Applicable CD Margin and Applicable ABR Margin at any time will be determined based on the highest Category set forth below for each of the Credit Facilities for which the Company meets either of the criteria set forth below under such Category (the highest category being Category A). I. A Credit Facility - --------------------- Applicable Applicable Applicable Applicable Facility Eurodollar CD ABR Criteria Fee Margin* Margin* Margin* -------- ---------- ---------- ---------- ---------- Category A: AAA or Aaa .05% .125% .25% .0% -- Category B: AA or better or .05% .15% .275% .0% -- Aa2 or better Category C: A- or better or .08% .22% .345% .0% -- A3 or better Category D: BBB or better or .10% .30% .425% .0% -- Baa2 or better Category E: BBB- or below or .125% .375% .50% .0% -- Baa3 or below SCHEDULE I Page 2 II. B Credit Facility - ---------------------- Applicable Applicable Applicable Applicable Facility Eurodollar CD ABR Criteria Fee Margin* Margin* Margin* -------- ---------- ---------- ---------- ---------- Category A: AAA or Aaa .075% .10% .225% .0% -- Category B: AA or better or .08% .12% .245% .0% -- Aa2 or better Category C: A- or better or .10% .20% .325% .0% -- A3 or better Category D: BBB or better or .15% .25% .375% .0% -- Baa2 or better Category E: BBB- or below or .20% .30% .425% .0% -- Baa3 or below ______________________ * The Applicable Eurodollar Margin, Applicable CD Margin and Applicable ABR Margin set forth above for each of the Credit Facilities shall be increased by the amounts set forth below at any time that any of the Categories set forth below is in effect and outstanding Loans exceed 66% of the Aggregate Commitments: Category A-.0%, Category B-.05%, Category C-.075%, Category D-.10% and Category E-.125% EX-99.11(G) 12 UNITED STATES DISTRICT COURT DISTRICT OF MAINE AMERICAN HOME PRODUCTS ) CORPORATION, a Delaware Corporation, ) and AC ACQUISITION CORP., a ) Delaware Corporation, ) Civil Action ) Docket No. 94-______P Plaintiffs, ) ) v. ) ) AMERICAN CYANAMID COMPANY, a ) Maine Corporation, ALBERT J COSTELLO, ) FRANK V. ATLEE, DAVID M. CULVER, ) ALLAN R. DRAGONE, SIR RONALD ) HALSTEAD, ARNOLD J. LEVINE, ) PAUL W. MACAVOY, VINCENT T. ) MARCHESI, GEORGE J. SELLA, JR., ) and ANNE WEXLER. ) ) ) Defendants. ) COMPLAINT FOR DECLARATORY JUDGMENT AND INJUNCTIVE RELIEF Plaintiffs American Home Products Corporation and AC Acquisition Corp. (referred to collectively hereafter as "AHP"), by their undersigned attorneys, allege as follows: Nature of Action ---------------- 1. This action seeks declaratory as well as injunctive relief in connection with an offer (the "Tender Offer") AHP announced on August 9, 1994 for all outstanding shares of Defendant American Cyanamid Company ("Cyanamid"). 1 2. Cyanamid's incumbent directors and management stand mute in the face of repeated overtures by AHP seeking a negotiated business combination of the two companies. On August 2, 1994, John R. Stafford, Chairman and Chief Executive Officer of AHP, wrote a letter to Albert J. Costello, Chairman and Chief Executive Officer of Cyanamid, proposing an all-cash, all-shares acquisition of Cyanamid by AHP. That letter stated AHP's desire "to enter into immediate discussions with [Cyanamid's] directors, management and advisors to answer any questions" about the proposal. 3. The following day, on August 3, 1994, Mr. Stafford wrote again to Mr. Costello, indicating his "desire to conclude a friendly merger of AHP and . . . Cyanamid" and proposing a meeting to "talk about how we might structure the merger of our companies on a negotiated basis." 4. Cyanamid has not responded to either of Mr. Stafford's letters or any other communications aimed a commencing substantive discussions with respect to a merger between AHP and Cyanamid. Cyanamid's sole published comment with respect to AHP's proposal was that it would consider AHP's premium offer "in due course." 5. Notwithstanding AHP's continued desire to conclude a negotiated transaction, Cyanamid's lack of a constructive response combined with the myriad market reports about Cyanamid's pursuit of possible alternative transactions led AHP to announce its Tender Offer in order to ensure that its $95 premium bid would be brought to Cyanamid's shareholders. 6. Pursuant to the Tender Offer, AHP seeks to purchase for cash all outstanding shares of common stock (including the associated preferred stock purchase rights) of Cyanamid at $95 per share. The price AHP is offering Cyanamid shareholders represents a premium of over 50% over the reported closing price of Cyanamid's Common Stock on August 1, 1994, the day before AHP offered to acquire Cyanamid, and a premium of 125% over the $42 1/4 reported closing sale price of 2 Cyanamid's common stock as recently as March 14, 1994. That closing price itself was more than 50% higher than the trading levels of Cyanamid's shares less than six months earlier. The Tender Offer is made in contemplation of a business combination between Plaintiffs and Cyanamid at $95 per share (the "Merger"). The Tender Offer is not "front-end loaded" -- that is, the consideration it offers is not part cash and part stock and it does not offer a higher price than non-tendering shareholders would receive in the Merger. The Tender Offer is also not coercive, since it offers all cash consideration for all shares and treats all Cyanamid shareholders equally. 7. Consistent with the requirements of Sections 14(d)-(e) of the Securities Exchange Act of 1934 (also referred to as the Williams Act), 15 U.S.C. Sec. 78n(d)-(e), and the rules and regulations promulgated thereunder by the Securities and Exchange Commission (the "SEC"), the Tender Offer, a significant transaction in interstate commerce, is scheduled to expire on September 7, 1994. 8. Cyanamid's shareholders -- the owners of the company -- have an undeniable right to consider AHP's premium offer without interference by Defendants and to accept the offer if they deem it to be in their own best interests. AHP's all-cash, equal treatment premium bid offers Cyanamid shareholders an important investment opportunity they might very well deem beneficial. The Tender Offer in no way threatens the interests of Cyanamid or its shareholders. Consequently, there is no justification for interference by the Defendants with AHP's premium bid. 9. In light of Cyanamid's failure to respond to AHP's proposals for a negotiated transaction, and in light of Cyanamid's extensive history of incumbency protection, as evidenced by an unusually restrictive array of defensive weapons in provisions of Cyanamid's by-laws (the "By-Laws") and Restated Articles of Incorporation (the "Charter"), and by extensive lobbying and other legislative activities, Cyanamid's incumbent directors and management are likely to persist in making determined and continuing efforts to deprive Cyanamid shareholders of the substantial benefits AHP's 3 bid provides. 10. The present federal action is brought to oppose and prevent such acts. This action seeks declaratory and injunctive relief concerning (i) the constitutionality of the Maine Business Combination Act, Me. Rev. Stat. Ann. tit. 13-A, Sec. 611-A (1988) (the "Maine Business Combination Act"); (ii) the applicability of similar legislation adopted by states other than Maine either as "business combination" statutes, "control share" statutes or otherwise (the "Foreign State Business Combination Acts"); and (iii) the legality of a number of measures and of conduct through which Cyanamid management and directors, in derogation of their duty to exercise informed and loyal business judgment, improperly endeavor to prevent Cyanamid shareholders from considering freely and on its merits AHP's all-cash, equal treatment premium offer. The Maine Act - ------------- 11. The Tender Offer is conditioned upon, among other things, the enjoining of the operation of the Maine Business Combination Act or other relief or actions satisfying Plaintiffs that the Act will not serve as an impediment to the Tender Offer. This condition is necessitated by the fact that the Act would impose a five-year bar to the effectuation of any second-step merger between AHP and Cyanamid absent approval by the incumbent board of Cyanamid. 12. While purporting to regulate solely the merger component of a tender offer transaction, the Act, in reality, forecloses the tender offer itself. The inevitable, practical effect of the five-year moratorium on mergers is to significantly deter, if not preclude altogether, the making of a tender offer. Few, if any, companies would be willing or able to invest billions of dollars to acquire another company's stock without the corresponding ability to conclude a merger. And few, if any, financial institutions would be willing to provide financing for such a transaction. 13. By granting existing management effective power to block tender offers, the Maine 4 Business Combination Act irreconcilably conflicts with the Williams Act, 15 U.S.C. Sec.Sec. 78m(d) and 78n(d)-(e). The Williams Act seeks to regulate tender offers in a comprehensive and neutral fashion, favoring neither an offeror nor incumbent management. The structure and content of the Maine Business Combination Act, in contrast, overwhelmingly favors incumbent directors, giving them a virtual veto over any offer they do not approve. The Maine Business Combination Act is one of the most restrictive statutes of its kind and, unlike other states' laws, contains no provision exempting transactions that are supported by the vast majority of a company's shareholders. As a result, the Maine Business Combination Act is preempted by federal law and violative of Article VI, Clause 2 (the Supremacy Clause) of the United States Constitution. 14. In addition, the Maine Business Combination Act violates Article I, Section 8, Clause 3 (the Commerce Clause) of the United States Constitution. The Tender Offer constitutes an interstate transaction of billions of dollars. If the Maine Business Combination Act is applied to the Tender Offer and Merger, the burden on interstate commerce will clearly be excessive in relation to the limited and local interest that the Act purports to serve. Other State Statutes - -------------------- 15. This action also seeks relief against business combination provisions enacted by a number of states other than Maine that purport to regulate the internal affairs of Cyanamid, a Maine corporation. Subject to the constitutional constraints set forth below, Maine is the only state possessing authority to regulate Cyanamid's internal corporate affairs. Nevertheless, a number of states have adopted anti-takeover legislation purporting to control the internal affairs of out-of-state companies such as Cyanamid by, among other things, purporting to control the ability of a tender offeror to make a tender offer for the shares of Cyanamid; the ability of such a tender offeror to vote shares sold to it during a tender offer; and the ability of such a tender offeror to merge or otherwise 5 combine with Cyanamid after a tender offer. 16. Any such Foreign Business Combination Act, if applied to the Tender Offer, would substantially and unconstitutionally burden interstate commerce. Indeed, the substantial burden of attempting to comply with those multiple and potentially inconsistent systems of state regulation will unconstitutionally burden the right of Plaintiffs to complete the Tender Offer and the right of Cyanamid's stockholders to consider and accept the Tender Offer. Thus, if applied to the Tender Offer, these Acts would conflict with the Williams Act and violate the Commerce Clause, the Full Faith and Credit Clause, the Due Process Clause, and the Supremacy Clause of the United States Constitution. 17. In order to avoid the unconstitutional application of inconsistent statutes to the Tender Offer and to eliminate the uncertainty concerning the laws with which Plaintiffs must comply to complete the Tender Offer and Merger, Plaintiffs also seek a judgment (a) declaring that any purported application of any Foreign Business Combination Act to the Tender Offer violates the United States Constitution and the Williams Act; and (b) enjoining defendants from commencing any action, claim or proceeding in order to invoke any Foreign Business Combination Act with respect to the Tender Offer. 6 18. Finally, Plaintiffs also seek this Court's intervention to restrain Defendants from deploying one or more of the many defensive measures through which Cyanamid's directors have vested themselves with absolute veto power over any potential acquiror's offer and from making any changes or amendments to Cyanamid's By-Laws or Charter that would impede or prevent the Tender Offer. In the context of AHP's offer, those defenses have no legitimate purpose and will only serve to stop AHP's shareholders from considering a very lucrative, premium offer. Parties ------- 19. Plaintiff American Home Products Corporation is a Delaware corporation with its principal place of business in Madison, New Jersey. AHP is an integrated manufacturer and distributor of a wide variety of pharmaceutical, medical and health care products. AHP is a holder of 10,000 shares of Cyanamid common stock. 20. AHP's common stock is registered with the SEC and is listed and traded on the New York Stock Exchange. 21. Plaintiff AC Acquisition Corp. is a Delaware corporation, which is a wholly- owned subsidiary of American Home Products Corporation. 22. Defendant Cyanamid is a Maine corporation with its principal executive offices in Wayne, New Jersey. Upon information and belief, 89,754,355 shares of Cyanamid stock are outstanding. Cyanamid is a manufacturer and distributor of a wide variety of pharmaceutical and agricultural products. Upon information and belief, Cyanamid has no material presence in Maine except for its appointed agent; it does not have any significant number of employees in Maine and no significant facilities or offices in Maine. 23. Cyanamid's common stock is registered with the SEC and is listed and traded on the New York Stock Exchange. 7 24. Defendant Albert J. Costello, is Chairman of the Board and Chief Executive Officer of Cyanamid. 25. Defendant Frank V. AtLee is President of Cyanamid and a Director of Cyanamid. 26. Defendants David M. Culver, Allan R. Dragone, Sir Ronald Halstead, Arnold J. Levine, Paul W. MacAvoy, Vincent T. Marchesi, George J. Sella, Jr., and Anne Wexler are Directors of Cyanamid. 27. The above-named individual defendants (the "Director Defendants"), as members of the Board of Directors of Cyanamid, owe the highest fiduciary duties of loyalty and care to Cyanamid shareholders. Jurisdiction and Venue ---------------------- 28. This action arises under the Commerce Clause (Art. I, Sec. 8, cl. 3), the Supremacy Clause (Art. VI, cl. 2), and the Fourteenth Amendment to the United States Constitution; the Williams Act, Sec.Sec. 14(d)-(e) and 28 of the Securities Exchange Act of 1934 (the "Exchange Act"), 15 U.S.C. Sec.Sec. 78n(d)-(e) and 78bb, the rules and regulations promulgated thereunder by the SEC, 17 C.F.R. Sec. 240.14d-1, et seq., and the federal Declaratory Judgments ------ Act, 28 U.S.C. Sec. 2201. Further, this action invokes the Court's supplemental jurisdiction pursuant to 28 U.S.C. Sec. 1367. 29. Jurisdiction over this action is conferred on the Court by Sec. 27 of the Exchange Act, 15 U.S.C. Sec. 78aa (federal securities laws), and under 28 U.S.C. Sec.Sec. 1331 (federal question), and 1337 (interstate commerce). 30. Venue is proper in this district pursuant to Sec. 27 of the Exchange Act, 15 U.S.C. Sec. 78aa and 28 U.S.C. Sec. 1391. FACTUAL BACKGROUND ------------------ 8 The Williams Act's Regulation of Interstate Tender Offers - --------------------------------------------------------- 31. The Williams Act establishes a comprehensive, uniform system for regulating interstate tender offers. In enacting the Williams Act, Congress unequivocally recognized the economic benefits created by tender offers, which include providing investors with an opportunity to sell their shares at advantageous premiums over prevailing market prices and/or providing a mechanism for the removal of entrenched management failing to generate maximum returns on shareholders' equity investments. 32. The Williams Act reflects Congress' judgment and philosophy that shareholders themselves should be able to determine when it is in their best interests to tender their shares to an offeror. Thus, the Williams Act deliberately strikes a neutral balance, favoring neither an offeror nor incumbent management, so that shareholders' interests receive maximum protection. 33. To achieve these ends, the Williams Act requires that shareholders be given specific information deemed by the SEC to be material to their intelligent decision to sell their securities or to decline an offer. Removing all artificial barriers to the exercise of shareholder choice, the Williams Act is specifically designed to enable shareholders to take advantage of tender offers that maximize their economic interests. 34. Pursuant to its authority under Sec. 23(a) of the Exchange Act, the SEC has promulgated comprehensive rules and regulations governing interstate tender offers in furtherance of Congress' purposes. The SEC regulations are designed to "ensure a balance between the interests of the person making a tender offer and the management of the company whose securities are being sought while providing disclosure and substantive protections to shareholders making investment decisions." (Exchange Act Release No. 1). Statutory Provisions That the Director Defendants May Try to Invoke to Retain Control of Cyanamid - ------------------------------------------------- 9 The Maine Business Combination Act (Sec. 611-A) -------------------------------------------- 35. The Maine Business Combination Act creates a bar to any "business combination" between an "interested stockholder" and a "domestic corporation" (i.e., a corporation like Cyanamid, whose shares "are formed under the laws of Maine") for a period of five (5) years from the date that the interested stockholder first acquires 25% of the corporation's stock. Generally, an "interested stockholder" is any person or entity that is the beneficial owner, directly or indirectly, of 25% or more of the outstanding voting stock of a domestic corporation, or is an affiliate or associate of a domestic corporation and at any time during the 5 year period prior to the date in question was the beneficial owner of 25% or more of the outstanding shares of that domestic corporation. 36. The five-year prohibition referred to in the paragraph above is automatic unless either: (a) the business combination is approved by the board of directors of the domestic corporation prior to the date that the interested stockholder ----- first acquires 25% of the corporation's stock; or (b) the business combination is approved by the board of the domestic corporation after the date the interested stockholder acquires 25% of the corporation's stock and is authorized by the affirmative vote of --- at least a majority of the outstanding voting stock not beneficially ---------------- owned by the interested stockholder; any affiliate or associate of the ---------------------------------------------------------------------- interested stockholder; or by persons who are either directors or ----------------------------------------------------------------- officers and also employees of the corporation. ---------------------------------------------- 10 The effect of the Maine Business Combination Act is to permit incumbent management and directors, rather than the shareholders as a whole, to decide whether a tender offer may proceed whenever -- as is virtually always the case - - - a tender offeror contemplates a subsequent merger. 37. Shareholders are not authorized under the Maine Business Combination Act to avoid the application of the Act even as to tender offers that they overwhelmingly desire to see consummated. Instead, in all instances in which an offeror contemplates a merger, the Act vests in the incumbent directors the power to determine whether shareholders should be given the opportunity to consider the merits of a tender offer. Even if a tender offeror receives director approval after it becomes an interested stockholder, the offeror must also obtain approval from a majority of the very shareholders that declined to -------- tender their shares. 38. The Maine Business Combination Act, as applied in this case, is patently inconsistent with federal law as embodied in the Williams Act and the SEC regulations promulgated thereunder and imposes an impermissible burden on interstate commerce. The Act operates as a substantial deterrent to the Tender Offer. The Act will deprive Plaintiffs of the ability to effect, among other things, a merger or other significant transaction involving the assets of Cyanamid unless Plaintiffs obtain the prior approval of the incumbent directors, even if the shareholders overwhelmingly tender to Plaintiffs the vast majority of the shares. The Act thereby impedes Plaintiffs from exercising effective control over the corporation. As a practical matter, in order for virtually any tender offer, including this Tender Offer, to succeed economically, the tender offeror must be able to control the acquired corporation's assets, including through a merger or other business combination, shortly after consummation of the offer. The Maine Business Combination Act is designed to -- and does -- deprive Plaintiffs of that crucial ability. 11 39. The Maine Business Combination Act thereby interferes with the conduct of tender offers and eliminates the most fundamental rights of shareholders to decide the fate of their company and to exercise the rights protected and fostered by the Williams Act. The Maine Business Combination Act decidedly and impermissibly tips the balance in this control contest in favor of entrenched management. Foreign Business Combination Acts --------------------------------- 40. Several other states have adopted statutes that purport to restrict both the right of Cyanamid's stockholders to vote their stock and the right of Cyanamid to engage in certain business combinations. These rights are core "internal corporate affairs" of Cyanamid in which states other than Maine have no constitutionally cognizable interest and into which states other than Maine may not constitutionally intrude. Foreign Business Combination Acts, if applied to the Tender Offer and Merger, would exceed federal constitutional constraints on state power. Nonetheless, Defendants may seek to invoke these statutes in order to block Plaintiffs' Tender Offer or the Merger. Additional Defensive Weapons that the Director Defendants Have Engrafted onto Cyanamid's Charter and By-Laws - -------------------------------------------------- Defendants' One-Share/Six Month Director Requirement ---------------------------------------------------- 41. Article II, section 2.01 of Cyanamid's By-Laws provides, in pertinent part: None but holders of at least one share of Common Stock registered in their own names on the books of the Company for a period of at least six months prior to the date of their election shall be eligible for election or shall retain their seats as Directors; provided that the requirement that such ownership of shares shall extend for a period of six months prior to election may be waived by vote of the Board of Directors. (Emphasis added). 42. This extraordinary provision allows the Director Defendants to prevent the election of 12 new directors who may favor a change of control transaction that would unseat incumbent management. 43. Cyanamid's Board of Directors conceded as much in a 1985 proxy statement, which listed the foregoing "One Share/Six Month" requirement as one of "several" by-law provisions "which may have the effect of impeding attempts to change control of the Board of Directors." 44. The One Share/Six Month requirement serves no other purpose than to inhibit efforts to replace incumbent directors. A share ownership requirement, let alone a requirement that one share be registered in a director's own name, clearly bears no imaginable, much less reasonable, relationship to a person's qualifications to serve as a director. 45. In fact, Cyanamid and the Director Defendants have waived the One Share/Six Month restriction in the past. The 80% Charter Provision ------------------------- 46. In the spring of 1985, Cyanamid's directors erected another barrier to any transactions that threatened their control over the company. The directors recommended to their shareholders that they amend the Charter to add an Article Six -- a provision that would drastically impair a wide variety of business combinations, including a sale or merger of Cyanamid, unless the transaction was either approved by the incumbent directors or received a favorable vote from 80% of the voting power of all of the outstanding shares of the company. 47. On April 15, 1985, 27,791,403 shares, approximately 57% of the company's 48,664,372 total outstanding shares, were voted in favor of Article Six and the measure was 13 adopted. 10,032,121 shares, representing over 20% of the Cyanamid's outstanding shares, were voted in opposition to the Charter amendment. 48. Pursuant to Article Six, applicable transactions not receiving the blessing of incumbent management or an 80% shareholder vote are subject to a complex array of price and procedural requirements, key elements of which are beyond the control of the offeror. Other portions constrain the bidder's conduct after the closing of the offer, such as the requirement that the bidder continue to pay dividends after the closing of the offer until the merger. 49. Under the pricing mechanism of Article Six, in order for a tender offeror to consummate a merger, the offeror is required to pay all shareholders an amount equal to the highest of, inter alia, the "fair market value per share" ----- ---- (i) on the date the offer was announced; or (ii) on the date on which the offeror became the beneficial owner of more than 15% of the Company's outstanding shares. Article Six defines "fair market value" to be the highest closing sale price of the stock during the 30-day period prior to the date in question. 50. Frequently, a tender offeror does not acquire more than 15% of an acquired company's stock until the tender period has expired and the offeror purchases or "takes down" the tendered shares. Such will be the case if AHP's Tender Offer is allowed to proceed. At the same time, it is very possible for the market price of the shares of a company that is subject to a tender offer to rise above the tender offer price during the pendency of the offer and then fall ----- back if no alternative transaction surfaces. 51. In this way, Article Six's so-called "fair price" provision really acts as a "random price" provision, rendering it impossible for a tender offeror to know the required price of its own merger until all shares have already been tendered into the offer. As a result, a tender offeror subject to Article Six's pricing requirements must incur the significant expense involved in making a tender 14 offer and wait until the time for tendering shares has expired before learning whether it will be able to conclude the transaction. 52. Under Article Six, if 79% of Cyanamid's shareholders are in favor of a merger, and the Board does not favor the merger, the shareholders may be powerless to effectuate that merger by replacing the Board. That is because approval by "disinterested directors", i.e., directors who were in office before ---- the subject business combination was proposed, is required to exempt that transaction from the 80% or pricing requirements. Thus, even if a majority of the Board is replaced by truly independent directors who are not at all affiliated with, but who are nominated by, the interested stockholder, Article Six prevents that majority from approving a merger. Instead, the power to approve a merger that is favored by a majority of the shareholders remains with the minority of the directors. 53. In seeking to convince shareholders to incorporate Article Six into Cyanamid's Charter, the company's directors touted the provision as a means to ensure that all shareholders were treated equally in the event of a "multi-step attempt to gain control of the Company." 1985 Proxy Statement issued by Cyanamid Board of Directors at 6. The proxy materials that Cyanamid used to solicit votes before the April 1985 Annual Meeting stated that Article Six would provide protection against "two-tiered" or "coercive" measures by "discourag[ing] purchasers whose objective is to take over the Company at a relatively cheap price, since acquiring the remaining equity interest would not be assured unless the requirements of [Article Six] were satisfied." Id. at 7- --- 8. 54. The Board further represented that adoption of the amendment was supported by the following considerations: 15 In recent years, purchases of controlling interests frequently have been followed by Business Combinations in which the purchaser has paid a lower price than it paid in acquiring its original controlling interest and has paid that lower price in a different, less desirable form of consideration, usually securities of the purchaser that do not have an established trading market. * * * In many cases, smaller long-term stockholders receive a lower price and a less desirable form of consideration paid in the second-step merger. Moreover, the Board believes that some two- tier offers are structured to be inherently coercive and unfair in that they pressure the long-term investor either to sell out quickly at what might be an inadequate price or to run the risk of having his shares become, by virtue of there being a majority stockholder, far less salable and far less desirable as an investment. Id. at 7. - --- 55. Thus, according to what Cyanamid's directors told the company's shareholders at the time, Article Six was specifically designed to defend against offers that threatened differential treatment among shareholders. The provision, as advertised, was not intended for the purpose of frustrating all- --- cash, all-shares, equal treatment premium tender offers, such as AHP's offer, where a clear majority of the holders wish to accept the offer. Indeed, in its proxy materials, Cyanamid expressly represented to its shareholders: The provisions of the Amendment would not discourage persons who are willing to seek control by acquiring 80 percent of the Voting Stock or who are prepared to pay the same price to all ------------------------------------------------ stockholders. ------------- Id. at 8 (emphasis added). - --- 56. AHP's Offer to Purchase expressly states that it is prepared to pay the same price to all stockholders. The Tender Offer is for "all of the outstanding shares" of Cyanamid at $95 per share. Offer to Purchase at 1. The Offer to Purchase also provides that any shares not 16 tendered will "be converted into the right to receive in cash the price per Share paid by [AHP] pursuant to the Offer." Id. --- The Poison Pill --------------- 57. In soliciting votes for adoption of the 80% Charter Provision, Cyanamid's Board of Directors told the shareholders that it had "no present intention" of adopting a "poison pill." One year later, however, in March 1986, the directors supplemented their arsenal of defensive devices by adopting a share purchase rights plan, or "poison pill" (the "Poisin Pill"), which also precludes the consummation of any tender offer or business combination not approved by the directors. The Poison Pill, which was adopted without a vote of ------- Cyanamid's owners -- the shareholders -- is designed to inflict massive economic penalties on a potential acquiror and to prevent the owners of Cyanamid from accepting an offer to purchase their shares without the prior approval of the incumbent Board. Thus, in implementing the Poison Pill, the directors bestowed upon themselves an unbridled veto power over any tender offer, including a non- coercive, fully-priced, all-cash, all shares offer such as AHP's. 58. Pursuant to the Poison Pill, a dividend of one preferred stock purchase right (a "Right") per share of common stock was distributed to each of Cyanamid's shareholders of record as of March 25, 1986. As the result of a 2 for 1 stock split on June 12, 1987, each stock purchase right was adjusted so that each share of common stock was thereafter accompanied by a one-half Right. 59. Each Right ostensibly entitles the registered holder to purchase from Cyanamid a unit consisting of one two-hundredth of a share (a "Unit") of Series A Junior Participating Preferred Stock, $1.00 par value, at a price of $200 per unit. The prohibitive exercise price, however, of $200 per Unit (equal to $40,000 for one preferred share) makes it clear that the Rights were never intended to provide the holders thereof with a meaningful opportunity to purchase the preferred stock 17 authorized under the Poison Pill. Instead, the directors instituted the Poison Pill so that its adjustment features described below can be deployed to punish any interested offeror whom the directors disfavor by drastically diluting Cyanamid's outstanding shares or ravaging the capital structure of the potential acquiror. 60. The Rights issued pursuant to the Poison Pill are not exercisable or transferable apart from Cyanamid common stock until after the "Distribution Date." The Distribution Date occurs upon the earlier of (i) ten days after a person or group announces that it has acquired beneficial ownership of 20% or more of Cyanamid's outstanding common shares; or (ii) ten business days after the commencement or announcement of a tender offer for more than 30% of the company's outstanding shares, unless the Board of Directors takes action to delay the occurrence of the Distribution Date. 61. Upon the Distribution Date, the Rights become exercisable and can be transferred separately from the shares of common stock to which they were linked. 62. After the Distribution Date, certain events, one or more of which would inevitably occur in an attempted acquisition of Cyanamid, trigger "flip- in" or "flip-over" rights that allow Cyanamid's shares and/or the shares of an acquiring company to be sold at deeply discounted prices. 63. The "flip-in" rights are triggered if: (i) Cyanamid is the surviving corporation in a merger and its common stock is not changed or exchanged; (ii) a person or entity becomes the beneficial owner of 50% or more of Cyanamid's outstanding shares; or (iii) a reclassification of securities, recapitalization of Cyanamid or merger or consolidation of Cyanamid with any of its subsidiaries occurs after a person or entity has acquired 20% of Cyanamid's shares. 18 64. Upon the happening of any of these "flip-in" events, all Rights holders, except the potential acquiror, are entitled to receive four shares of ----------------------------- common stock for 25% of the then market price of the stock. Any Rights held by the potential acquiror become void. At the same time, all other Right holders are entitled to purchase Cyanamid's common stock at one-fourth of its then ---------- market price. In this way, the "flip-in" feature flagrantly discriminates against an acquiror by diluting its holdings and increasing exponentially the number of shares the acquiror would have to purchase in order to consummate a merger. 65. The "flip-over" rights are triggered if: (i) Cyanamid engages in a merger or other business combination in which it is not the surviving corporation; (ii) Cyanamid engages in a merger or other business combination in which it is the surviving corporation, but in which its Common Stock is changed or exchanged; or (iii) 50% or more of Cyanamid's assets or earning power is sold or transferred. 66. Upon the happening of any of these "flip-over" events, each holder of a Right has the right to receive common stock of the acquiring company equal in --------- value to two times the exercise price. In this way, the "flip-over" feature subjects the acquiring company to a massive half-price sale of its own stock, drastically impairing its capital structure. 67. The obvious purpose of the Poison Pill is to render an attempted acquisition of Cyanamid financially impossible without the blessing of the incumbent Directors. As Cyanamid 19 itself explained in a Securities and Exchange Commission report on Form 8-A, dated March 18, 1986: The Rights have certain anti-takeover effects. The Rights will cause substantial dilution to a person or group that attempts to acquire the Company without also acquiring a substantial number of Rights. The Rights should not interfere with any merger or other business combination approved by the Board . . . . --------------------- 68. Unless the Poison Pill is redeemed, Cyanamid's shareholders will be deprived of the opportunity to decide whether they want to accept AHP's all- cash, all-shares, equal-treatment tender offer. Recognizing the insurmountable barriers posed by the Poison Pill, AHP has made its all-cash, all-shares premium tender offer conditional upon the voluntary or court-ordered redemption or removal of the Rights. 69. Cyanamid's Board has repeatedly represented to its shareholders that the Poison Pill is intended to protect against "coercive or abusive takeover tactics, such as two-tiered, partial or bust-up offers." Eg., Cyanamid Board's ---- 1987 Proxy Statement at 20. Cyanamid's Board has further assured the company's owners that the Poison Pill "should not affect any prospective offeror willing to make an all cash offer at a full and fair price or to negotiate with your Board." Id. Thus, the Poison Pill should not be deployed to block AHP's all- --- cash, all-shares Tender Offer, which offers a premium price and which AHP has repeatedly stated it is willing to negotiate with Cyanamid's Board. 70. The ability to remove the draconian effects of the Poison Pill and to provide Cyanamid's shareholders with an opportunity to accept AHP's offer rests solely in the hands of the Director Defendants, who, in devising the Poison Pill, granted themselves the authority to redeem the Rights at $.02 per Right. This power of redemption expires if it is not exercised by the thirtieth day following the acquisition by any person or entity of at least 20% of Cyanamid's outstanding shares. 71. While the Director Defendants may view Plaintiffs' offer as a threat to their continued incumbency, there is no reasonable basis for concluding that the Tender Offer poses a threat of any 20 kind to the shareholders of Cyanamid. If those shareholders deem the Tender Offer to be inadequate, they, the owners of Cyanamid, can just say no. 72. Indeed, the only risk of harm to the shareholders is that which would result if the Director Defendants succeeded in employing the Poison Pill to force Plaintiffs to withdraw their offer before the shareholders have the opportunity to decide whether to accept it. Plaintiffs and Cyanamid's Shareholders Will Suffer Irreparable Injury if Injunctive Relief Is Not Granted - ------------------------------------------------------ 73. Unless preliminary and permanent injunctive relief is granted, enjoining Defendants (a) from invoking the Maine Business Combination Act and/or any Foreign State Business Combination Acts, (b) from employing one or more of the above-described defensive weapons in order to deprive the Cyanamid shareholders of an opportunity to reap the benefits of AHP's Tender Offer, and (c) from altering or amending Cyanamid's By-Laws or Charter to hinder, impede or prevent AHP's Tender Offer, both Plaintiffs and Cyanamid's shareholders will be irreparably harmed. 74. In the absence of injunctive relief, Plaintiffs will be compelled to terminate their efforts to acquire control of Cyanamid, which is a unique business opportunity. 75. Absent injunctive relief, the shareholders of Cyanamid will also suffer irreparable harm by being deprived of their rights (i) to remove directors, (ii) to elect qualified directors, (iii) to otherwise exercise their franchise in an effective manner; and (iv) to decide for themselves whether to take advantage of a unique and valuable opportunity to maximize the return on their investment. 76. Plaintiffs have no adequate remedy at law. COUNT I ------- (The Maine Business Combination Act, Sec. 611-A, Is 21 Unconstitutional Because It Violates the Supremacy Clause) 77. Plaintiffs repeat and reallege the allegations set forth in Paragraphs 1 through 76 above as if set out in full. 78. The Supremacy Clause of the United States Constitution provides, in pertinent part: This Constitution, and the Laws of the United States which shall be made in Pursuance thereof . . . shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding. U.S. Const., Art. VI, cl. 2. 79. The structure and intent of the Maine Business Combination Act effectively frustrates the objectives of the Williams Act and the SEC rules and regulations promulgated thereunder. The Williams Act provides that the success or failure of an offer, otherwise in compliance with the comprehensive rules and regulations set forth in the Williams Act and the SEC rules promulgated thereunder, should be left to the judgment of shareholders and that neither the prospective purchaser nor incumbent management should be favored. 80. The Maine Business Combination Act substantially frustrates these objectives of the Williams Act and the SEC rules and regulations. The Maine Business Combination Act: (a) unfairly discourages acquisitions of stock, such as through the Tender Offer, by affording incumbent management and directors of a domestic corporation a powerful weapon with which to delay and possibly defeat such acquisitions to the detriment of shareholders; 22 (b) empowers the board of directors -- not the shareholders -- to derail a tender offer by withholding approval of a planned business combination, depriving shareholders of any opportunity to choose to accept a particular tender offer; (c) does not permit shareholders to evaluate the fairness of a tender offer that contemplates a subsequent merger or other business combination, but leaves that determination to management and directors; and (d) represents an attempt to assert the legislative power of the State of Maine in a fundamentally inconsistent manner over a subject matter for which the United States government has developed the governing, comprehensive body of law and regulations. 81. The Maine Business Combination Act is therefore preempted by the Williams Act. It is unconstitutional on its face and as applied to the Tender Offer because it violates the Supremacy Clause of the United States Constitution, Article VI, Clause 2, which accords supremacy to United States law over conflicting state laws. The Act is, and therefore should be declared to be, invalid, and its enforcement should be enjoined. COUNT II -------- (The Maine Business Combination Act Is Unconstitutional Because It Violates the Commerce Clause) 82. Plaintiffs repeat and re-allege the allegations set forth in Paragraphs 1 through 81 of this Complaint as if fully set forth herein. 83. The Commerce Clause of the United States Constitution provides that: "Congress shall have the power . . . [t]o regulate commerce . . . among the several states." U.S. Const., Art. 1, Sec. 8, cl. 3. 23 84. The Maine Business Combination Act imposes a substantial and adverse burden on interstate commerce because it: (a) deters and/or substantially eliminates nationwide tender offers for Maine corporations, except offers that are approved by incumbent management; (b) burdens AHP and other prospective tender offerors in their efforts to buy securities from willing sellers located throughout the United States; (c) burdens shareholders throughout the United States in their efforts to sell their shares at premium prices; (d) substantially interferes with and diminishes access to national securities markets; and (e) impedes the injection into interstate commerce of billions of dollars by means of tender offers and interferes with the efficient allocation of economic resources. 85. These burdens imposed on interstate commerce pursuant to the Maine Business Combination Act far outweigh any purported local benefits. In fact, the Act provides little, if any, additional protection to shareholders beyond the substantive protections and disclosure requirements of the Williams Act and the SEC rules and regulations promulgated thereunder. To the extent that it reduces or eliminates shareholder autonomy and entrenches existing management, the Act is detrimental to the interests of shareholders. 86. The great majority of the shareholders of Cyanamid reside outside the State of Maine. Upon information and belief, Cyanamid has no material presence in Maine and, except for its appointed agent, does not have any significant number of employees in Maine and maintains no significant facilities in Maine. 24 87. While Maine, as the state of Cyanamid's incorporation, has the right to regulate certain of Cyanamid's affairs, Maine has no legitimate interest in regulating investment opportunities offered to residents of other states in connection with interstate transactions such as the Tender Offer and Merger. The burden imposed upon interstate commence by the Maine Business Combination Act is substantial, while any benefit is modest or non-existent. Moreover, those few Maine shareholders are already protected by the disclosure and anti- fraud provisions of the Williams Act. 88. The Act is, and therefore should be declared to be, invalid, and its enforcement should be enjoined. COUNT III --------- (Defendants Should Be Barred from Invoking the Foreign State Business Combination Acts, Which, if Applied to the Tender Offer and Merger, Would Violate the Commerce, Full Faith and Credit and Supremacy Clauses) 89. Plaintiffs repeat and re-allege the allegations set forth in Paragraphs 1 through 88 of this Complaint as if fully set forth herein. 90. This claim for relief arises under the Commerce Clause, the Full Faith and Credit Clause, the Due Process Clause, and the Supremacy Clause of the United States Constitution, U.S. Const. Art. I Sec. 8, cl. 3; Art. IV Sec. 1; Amend. XIV Sec. 1; and Art. VI, cl. 2. 91. Because Cyanamid is a Maine corporation, any attempt by Defendants to invoke a Foreign State Business Combination Act in connection with the Tender Offer or Merger would create an unconstitutional burden on interstate commerce. If applied to the Tender Offer or Merger, Foreign State Business Combination Acts would impose substantial and adverse burdens upon interstate commerce, including, but not limited to, the following: 25 (a) inhibiting Plaintiffs from making a nationwide tender offer, as well as from engaging in the proposed Merger with Cyanamid; (b) depriving Cyanamid's stockholders throughout the United States of the opportunity to sell their shares at a premium above the unaffected market price in a transaction wholly in compliance with United States law; and (c) creating unnecessary, burdensome, and wasteful expenses for companies engaged in interstate commerce and for persons wishing to use interstate or national facilities as instrumentalities for the purchase and sale of securities. 92. Under the decisions of the United States Supreme Court in Edgar v. -------- MITE Corp., 457 U.S. 624 (1982), and CTS Corp. v. Dynamics Corp. of America, 481 - ---------- -------------------------------------- U.S. 69 (1987), the attempted regulation by states other than Maine of the internal affairs of a Maine corporation, imposing the burdens on interstate commerce described above, is constitutionally impermissible. Those burdens on interstate commerce and the absence of any legitimate state interest prohibit the application of Foreign State Business Combination Acts to the Tender Offer or Merger. 93. The voting rights of Cyanamid's stockholders (including Plaintiffs) are created and guaranteed by Maine law. Application of Foreign State Business Combination Acts to the Tender Offer or Merger would alter those voting rights or restrict them in ways that Maine law does not and, as such, fail to give full faith and credit to Maine law. 94. The threat of inconsistent regulation created by Foreign State Business Combination Acts and the burden of complying with those inconsistent regulations will impermissibly impede the Tender Offer in a manner inconsistent with the Williams Act. As a result, any attempt to apply any Foreign State Business Combination Act to the Tender Offer 26 and proposed Merger would conflict with the Williams Act and would thus violate the Supremacy Clause of the United States Constitution. COUNT IV -------- (The One Share/Six Month Director Requirement Is Unfair, Irrational and Contrary to Public Policy and Should Be Declared Void) 95. Plaintiffs repeat and reallege the allegations set forth in Paragraphs 1 through 94 of this Complaint as if fully set forth herein. 96. Section 403(1)(E)(3) of the Maine Business Corporation Act provides, in pertinent part, that a corporation's articles of incorporation shall set forth any provisions which the incorporators elect to include, provided that: Such provision relates to the business or affairs of the corporation, or the rights or powers of its shareholders, directors or officers, and, although not specifically authorized by this Act, is not inconsistent with law or contrary to public policy. 97. Section 601 of the Maine Business Corporation Act provides, in pertinent part: The bylaws of a corporation may contain any provisions for the regulation and management of the business and affairs of the corporation which are not inconsistent with law or with the articles of incorporation. 98. As a corporation's bylaws must be consistent with the corporation's articles of incorporation, a corporation's bylaws must not be contrary to public policy, unreasonable or arbitrary. 99. The bylaws of a corporation must be consistent with public policy, reasonable and rational, not only in and of themselves, but also in their practical application. 100. The statutory provision enabling the corporation's bylaws to prescribe qualifications for its directors is subject to the limitation that such prescriptions be fair, reasonable, and not be contrary to public policy. 27 101. Article II, section 2.01 of the By-Laws of Cyanamid violates Maine law, inasmuch as the One Share/Six Month director requirement is arbitrary and irrational. The requirement bears no reasonable relation to a person's qualifications to be a corporate director. 102. Article II, Section 2.01 arbitrarily excludes from the Board any person who has held shares through a nominee, regardless of how long those shares have been held: None but holders of at least one share of Common Stock registered in their own names on the books of the Company for a period of at least six months prior to the date of their election ... (Emphasis added). This requirement is entirely irrational and ignores the common practice whereby shares are held by nominees. 103. Because this requirement drastically and arbitrarily limits the pool of qualified directors with no corresponding benefit to the corporation, or, alternatively, would impose an arbitrary six month delay on the shareholders' exercise of their franchise, it is irrational, violative of public policy, and contrary to the provisions of the Maine Business Corporations Act and should be declared void. COUNT V ------- (The One Share/Six Month Restriction Is Not Authorized By Section 702 of the MBCA and Is Fundamentally Inconsistent With Section 707 of the MBCA) 104. Plaintiffs repeat and reallege the allegations set forth in Paragraphs 1 through 103 of this Complaint as if fully set forth herein. 105. Section 702 of the Maine Business Corporation Act grants corporations the right to prescribe qualifications for their directors. In pertinent part, Section 702 provides: Unless the articles of incorporation or the bylaws so require, the directors need not be residents of this State nor shareholders of the corporation. The articles of incorporation or the bylaws may prescribe other qualifications for directors. 28 106. Section 702 of the Maine Business Corporation Act states the general rule that directors need not be shareholders, unless the articles of incorporation or bylaws of the corporation so require. The legislature has thus recognized the limited right of a Maine corporation to require shareholder status of its directors during their tenure. The Maine legislature has not, ------------------- however, granted the corporation the right to require historic shareholder -------- status of its directors. 107. If Plaintiffs acquired proxies representing 66 2/3% of Cyanamid's shares, and therefore obtained an absolute right to remove the directors pursuant to 13-A M.R.S.A. Sec. 707 (2), the Director Defendants' refusal to waive the One Share/Six Month requirement would create an untenable situation whereby shareholders with a statutory right to remove directors would be effectively deprived of the ability to replace the removed directors with qualified persons. The arbitrary limitations imposed by the One Share/Six Month restriction are particularly damaging and inappropriate for directors of a multi-billion dollar international corporation such as Cyanamid. 108. Article II, section 2.01 of the By-Laws of Cyanamid is invalid because it establishes qualifications not permitted under state law and is fundamentally inconsistent with the shareholders' inalienable right to replace directors. COUNT VI -------- (The Director Defendants' Refusal to Waive the One Share/Six Month Requirement Constitutes a Breach of their Fiduciary Duty) 109. Plaintiffs repeat and reallege the allegations set forth in Paragraphs 1 through 108 of this Complaint as if fully set forth herein. 110. The Director Defendants have the power to waive the requirement that new directors must own Cyanamid shares for six months prior to their election. 29 111. Based upon their extensive history of incumbency protection set out above, there is a high likelihood that the Director Defendants would refuse to waive the One Share/Six Month requirement under these circumstances. Such a refusal would constitute a breach of the Director Defendants' fiduciary duties. COUNT VII --------- (Defendants' Attempt to Apply the 80% Charter Provision to the Tender Offer or Merger Constitutes a Breach of Their Fiduciary Duties) 112. Plaintiffs repeat and reallege the allegations set forth in Paragraphs 1 through 111 above as if set forth fully herein. 113. Article Six of Cyanamid's Charter requires an affirmative vote of at least 80% of the voting power of the outstanding shares before Cyanamid can engage in a business combination (i.e., a merger) with an interested stockholder, unless that business combination is approved by a majority of Cyanamid's directors who are not "an affiliate, representative, associate or nominee of the interested stockholder." 114. Pursuant to their fiduciary duties, the Director Defendants are obligated to render Article Six inapplicable to the AHP's proposed acquisition. The directors are obligated to live up to their representations that Article Six is intended only to deter two-tier and coercive offers, not all-cash, all- shares, equal treatment premium offers such as AHP's. A refusal to do so would be completely inconsistent with the representations made in the Board's 1985 Proxy Statement which, pursuant to federal law, were required to be accurate in all material respects. 30 115. The Director Defendants' refusal to render Article Six inapplicable to the Tender Offer and Merger would also breach their fiduciary duties, inasmuch as it would deprive Cyanamid's shareholders of the opportunity to reap the benefit of Plaintiffs' premium offer. COUNT VIII ---------- (The 80% Charter Provision Violates Section 710 of the MBCA) 116. Plaintiffs repeat and reallege the allegations set forth in Paragraphs 1 through 115 above as if set forth fully herein. 117. Section 710(3) of the MBCA states that the "vote of a majority of the directors ... shall be the act of the board of directors." Article Six of the Charter violates Section 710(3) of the MBCA because it illegally confers the Board of Directors' power to act upon a minority of the Board. 118. A majority of Cyanamid's shareholders may well be willing to sell their stock pursuant to the Tender Offer and to give Plaintiffs their proxy vote to replace the Board of Directors and to merge with Cyanamid. Article Six would frustrate the democratic decision of that majority by granting paramount authority to the "disinterested" directors who were entrenched on the Board before Plaintiffs' Tender Offer was announced. 119. Article Six violates Section 710(3) of the MBCA because under Article Six the vote of a majority of Cyanamid's duly elected directors, who happen to be affiliated with an interested stockholder, can be invalidated by a vote of the minority of directors. COUNT IX -------- (Failure to Redeem the Rights in the Present Circumstances Constitutes a Breach by the Directors of Their Fiduciary Duties) 120. Plaintiffs repeat and reallege the allegations contained in Paragraphs 1 through 119 of this Complaint as if fully set forth herein. 31 121. The Director Defendants, who vested themselves with the all-preclusive power of the Poison Pill, and did so in the absence of a single shareholder's vote and in derogation of their one-year earlier representation to the shareholders, are bound by their fiduciary obligations to observe the highest and most stringent duties of loyalty, care, candor and good faith in determining how and when that power should be used. This is especially true in the context of a proposed change-of-control transaction, which raises the specter that the directors may be acting primarily in their own interests, rather than those of the corporation and its shareholders. 122. Constituting as it does the ultimate corporate defense mechanism, the directors are obligated not to use the Poison Pill to rebuff acquisition proposals unless, after good faith and reasonable investigation, the Board has reasonable grounds for believing that the proposal poses a real and substantial threat to the shareholders. 123. Plaintiff has proposed an offer, in the Tender Offer, which treats all Cyanamid shareholders equally and allows them to decide for themselves whether to accept the substantial benefits of Plaintiffs' premium, all-cash, all-shares offer. The Tender Offer constitutes no threat of any kind to Cyanamid or to Cyanamid's shareholders. 124. Furthermore, the punitive consequences of the Poison Pill are disproportionate to any conceivable threat posed by Plaintiffs' premium offer that the Director Defendants could reasonably perceive. 125. Nonetheless, consistent with their long-standing practice of rebuffing acquisition proposals and implementing drastic, all-preclusive defensive devices, the defendants are likely to refuse to redeem the Rights in order to give Cyanamid's shareholders an opportunity to accept the Tender Offer. 126. The refusal to redeem the Rights serves an improper purpose -- entrenchment of the 32 defendants and Cyanamid's management -- at the direct expense of Cyanamid's shareholders. 127. Failure to redeem the Rights in the present circumstances constitutes a breach by the Director Defendants of their fiduciary duties. COUNT X ------- (Defendants Should Be Enjoined from Taking Any Further Action to Prevent Cyanamid's Shareholders from Receiving the Benefits of AHP's Tender Offer or Blocking the Merger) 128. Plaintiffs repeat and reallege the allegations set forth in Paragraphs 1 through 127 of this Complaint as if fully set forth herein. 129. As set out more fully above, Defendants have a long history of acts which are intended to prevent the shareholders of the company from having a fair and free opportunity to consider tender offers and to otherwise govern the corporation democratically. These acts include changes in the by-laws and Charter of the company, the creation of a draconian Poison Pill, without shareholder approval, and extensive lobbying efforts. 130. Based upon this past conduct, there exists a substantial likelihood that the Director Defendants will engage in similar conduct in the future intended to thwart the Tender Offer and Merger. 131. Defendants and their assigns and successors, agents, employees, attorneys, servants, and all persons acting in concert or participation with Defendants should be enjoined from undertaking any act, including changing, amending or otherwise altering the existing By-Laws and Charter of Cyanamid, which acts have either the purpose or effect of impeding, restraining or precluding the consummation of the Tender Offer and Merger, including the ability 33 of the shareholders to freely exercise their voting franchise in the context of any solicitation of proxies or calls related to the Tender Offer or Merger. 132. Defendants and their assigns and successors, agents, employees, attorneys, servants, and all persons acting in concert or participation with Defendants should also be enjoined from commencing or participating in any legal action or proceeding in any state or federal court, or before any state or federal administrative agency, which in any manner seeks to affect, impede, restrain, or concern in any manner the Tender Offer, the Merger, and all related activities. WHEREFORE, Plaintiffs pray that this Court: (i) declare and adjudge that the Maine Business Combination Act is unconstitutional and that it is null and void as applied; (ii) preliminarily and permanently enjoin Cyanamid, its assigns and successors, agents, employees, attorneys, servants, and all persons in active concert or participation with it, from taking any actions to invoke, apply or enforce the Maine Business Combination Act or from refusing to take actions that may be necessary to effect a business combination between the parties; (iii) declare and adjudge that the application of any Foreign State Business Combination Act to the Tender Offer or to any business combination between Plaintiffs and Cyanamid is unconstitutional; (iv) preliminarily and permanently enjoin Defendants, their assigns and successors, agents, employees, attorneys, servants, and all persons in active concert or 34 participation with them, from taking any actions to invoke, apply or enforce the provisions of any Foreign State Business Combination Acts; (v) preliminarily and permanently enjoin Defendants, their assigns and successors, agents, employees, attorneys, servants, and all persons in active concert or participation with them, from commencing any judicial proceeding, in any forum other than this Court, that would require litigation, by way of claim, defense or counterclaim, or any other claims, defenses, or counterclaims that may be asserted in this lawsuit regarding the applicability or validity of any state business combination statute, facially and as applied to the Tender Offer or any business combination between Plaintiffs and Cyanamid; (vi) declare and adjudge as unlawful and void the provision of Cyanamid's Charter requiring that directors must have held shares for six months prior to their election; (vii) declare and adjudge that in the event that AHP obtain two thirds of the shares of Cyanamid and announces its intention to discharge the then current directors pursuant to 13-A M.R.S.A. Sec. 702(2), then the Director Defendants' refusal to waive the requirement that new directors own shares for six months prior to thief election of the Board would constitute a breach of the then current Directors' fiduciary duty. (viii) declare and adjudge the Director Defendants to be in breach of their fiduciary duties if they fail to render Article Six of the Charter inapplicable to the Tender Offer and Merger; (ix) preliminarily and permanently enjoin the Director Defendants from applying Article Six of the Charter to the Tender Offer or Merger; (x) declare and adjudge as unlawful and void the 80% provision of Cyanamid's Charter; (xi) declare and adjudge the director defendants to be in breach of their fiduciary 35 duties if they fail to redeem the Rights in response to AHP's Tender Offer; (xii) preliminarily and permanently enjoin the defendants from honoring the Rights or from otherwise enforcing or amending or altering the Rights Plan (except to redeem the Rights) or from adopting yet another Rights Plan; (xiii) preliminary and permanently enjoin the defendants to redeem the Rights; (xiv) enjoin Defendants and their assigns and successors, agents, employees, attorneys, servants, and all persons in active concert or participation with them, from refusing to take actions that may be necessary under the Maine Business Combination Act to effect a business combination between Plaintiffs and Cyanamid; (xv) enjoin Defendants and their assigns and successors, agents, employees, attorneys, servants, and all persons in active concert or participation with them, from taking any action prohibited by applicable provisions of state or federal law in an effort to improperly impede the Tender Offer, or any act of any shareholder of Cyanamid to exercise its rights in connection with the Tender offer and all related activities; (xvi) enjoin Defendants and their assigns and successors, agents, employees, attorneys, servants, and all persons in active concert or participation with them, from commencing or participating in any legal action or proceeding in any state or federal court outside of Maine, or before any state or federal administrative agency, which in any manner seeks to affect, impede, restrain or concern in any manner the Tender Offer, the Merger, and all related activities; and 36 (xvii) award Plaintiffs such other and further relief as the Court shall deem just and proper, including reasonable attorneys' fees and other costs and disbursements of this action. ________________________________ Peter R. Rubin (Bar Number 110) John H. Montgomery (Bar Number 903) David A. Soley (Bar Number 748) Patricia A. Peard (Bar Number 758) BERNSTEIN, SHUR, SAWYER & NELSON 100 Middle Street Portland, Maine 04104-5029 207/774-1200 __________________________________ Kenneth R. Logan Michael J. Chepiga David J. Woll Jennifer K. Nelsen SIMPSON THACHER & BARTLETT 425 Lexington Avenue New York, New York 10017-3954 Attorneys for Plaintiffs American Home Products Corporation and AC Acquisition Corp. Dated: August 9, 1994 37 -----END PRIVACY-ENHANCED MESSAGE-----