PRELIMINARY COPIES
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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[X]Preliminary Proxy Statement
[_]Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[_]Definitive Proxy Statement
[_]Definitive Additional Materials
[_]Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
XXXXX-XXXXXXX XXXXX INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER AND PERSON FILING PROXY
STATEMENT)
Payment of Filing Fee (Check the appropriate box):
[_]No fee required.
[_]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1)Title of each class of securities to which transaction applies:
Common, Stock, Without Par Value
------------------------------------------------------------------------
2)Aggregate number of securities to which transaction applies:
49,963,233
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
$97.00
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4)Proposed maximum aggregate value of transaction:
$4,846,433,601.00
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5)Total fee paid:
$969,286.72
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[_]Fee previously paid by written preliminary materials.
[X]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1)Amount Previously Paid:
$969,286.72
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2) Form, Schedule or Registration Statement No.:
Schedule 14D-1 and Schedule 13D (Amendment No. 10)
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3)Filing Party:
Xxxxx-Xxxxxxx S.A. (Bidder)
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4)Date Filed:
August 22, 1997
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[RPR LOGO]
XXXXX-XXXXXXX XXXXX INC.
000 XXXXXX XXXX
XXXXXXXXXXXX, XXXXXXXXXXXX 19426
[ ] [ ], 1997
Dear Shareholder:
You are cordially invited to attend the Special Meeting of Shareholders of
Xxxxx-Xxxxxxx Xxxxx Inc. (the "Company") to be held on [ ] [ ], 1997, at
10:00 a.m., local time, at the Company's Executive Offices, 000 Xxxxxx Xxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx. At the Special Meeting, you will be asked to
consider and vote upon a proposal to approve and adopt the Agreement and Plan
of Merger, dated as of August 19, 1997 (the "Merger Agreement"), among the
Company, Xxxxx-Xxxxxxx S.A., a societe anonyme organized under the laws of the
Republic of France ("Purchaser"), and RP Vehicle, Inc., a Pennsylvania
corporation specifically organized for the purpose of effecting the Merger (as
defined below) and a direct, wholly owned subsidiary of Purchaser (the "Merger
Subsidiary").
Upon the terms and subject to the conditions of the Merger Agreement, the
Merger Subsidiary will be merged with and into the Company (the "Merger"),
with the Company as the surviving corporation, and each share ("Share") of
common stock, without par value per share ("Common Stock"), of the Company
issued and outstanding immediately prior to the effective time of the Merger
(other than Shares owned directly or indirectly by Purchaser) shall be
cancelled and, subject to dissenters rights, shall be converted automatically
into the right to receive from the Company $97 in cash (the "Merger
Consideration") payable, without interest, to the holder of such Share.
The Merger is the second and final step in the acquisition of the entire
common equity interest in the Company by Purchaser pursuant to the Merger
Agreement. In two transactions in 1990, Xxxxxxxxx acquired Shares representing
approximately 68.68% of the Company's then issued and outstanding Shares on a
fully diluted basis. The first step pursuant to the Merger Agreement was a
tender offer (the "Offer") by Purchaser pursuant to which Purchaser acquired
46,138,374 Shares for $97 per Share in cash. As a result of the completion of
the Offer and the purchase of Shares pursuant thereto and prior purchases of
Shares, Purchaser owns 141,222,394 Shares (representing approximately 98.53%
of the issued and outstanding Shares).
Shareholders who do not wish to accept the $97 per Share cash payment in the
Merger and who fully comply with the statutory procedures for asserting
dissenters rights set forth in the Pennsylvania Business Corporation Law of
1988 (the "PBCL"), the relevant portions of which are attached to the
accompanying Proxy Statement as Annex B, will be entitled to receive, in
connection with the Merger, cash for the fair value of their Shares as
determined pursuant to the procedures prescribed by the PBCL. For a
description of the rights of dissenting shareholders pursuant to the PBCL, see
"THE MERGER--Rights of Dissenting Shareholders" in the accompanying Proxy
Statement.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD"), BY UNANIMOUS
VOTE OF ALL DIRECTORS PRESENT AND VOTING, BASED UPON, AMONG OTHER THINGS, THE
UNANIMOUS RECOMMENDATION AND APPROVAL OF A COMMITTEE OF THE BOARD OF DIRECTORS
(THE "SPECIAL COMMITTEE") COMPRISED OF INDEPENDENT DIRECTORS (AS DEFINED IN
THE ACCOMPANYING PROXY STATEMENT) HAS DETERMINED THAT THE MERGER IS FAIR TO,
AND IN THE BEST INTERESTS OF, THE COMPANY AND RECOMMENDS THAT SHAREHOLDERS
VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
In arriving at its decision, the Board of Directors gave careful
consideration to a number of factors described in the accompanying Proxy
Statement, including the opinion of Xxxxxxx, Xxxxx & Co. addressed to the
Special Committee, dated August 19, 1997, to the effect that, as of such date
and based upon and subject to the assumptions stated therein, the $97 per
Share in cash to be received by the shareholders of the Company (other than
Purchaser and its subsidiaries) in the Offer and the Merger was fair to such
holders. Please read the enclosed material carefully.
Under the PBCL, the approval of the Company Board and the affirmative vote
of a majority of the votes cast by all shareholders entitled to vote thereon
are required to approve and adopt the Merger Agreement and the transactions
contemplated thereby, including the Merger. The Company Board has approved the
Merger Agreement and the transactions contemplated thereby, and the only
remaining required corporate action of the Company is the approval and
adoption of the Merger Agreement and the transactions contemplated thereby by
the affirmative vote of a majority of the votes cast by all shareholders
entitled to vote thereon.
PURCHASER ALREADY HAS SUFFICIENT VOTING POWER TO CAUSE THE APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT WITHOUT THE AFFIRMATIVE VOTE OF ANY OTHER
SHAREHOLDER OF THE COMPANY. PURCHASER WILL CAUSE ALL SHARES OWNED BY IT TO BE
VOTED IN FAVOR OF THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
Whether or not you are able to attend the Special Meeting, please complete,
sign and return the enclosed proxy card as soon as possible. A postage-paid
envelope is enclosed for your convenience. If you attend the Special Meeting,
you may revoke your proxy and, if you wish, vote your Shares in person.
PLEASE DO NOT SEND US YOUR STOCK CERTIFICATES AT THIS TIME. If the Merger
becomes effective, you will be advised of the procedure for surrendering your
certificates in exchange for the $97 per Share cash consideration.
Sincerely,
/s/ Xxxxxx xx Xxxxx
Xxxxxx xx Xxxxx
Chairman and Chief Executive Officer
2
XXXXX-XXXXXXX XXXXX INC.
000 XXXXXX XXXX
XXXXXXXXXXXX, XXXXXXXXXXXX 19426
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD [ ] [ ], 1997
To the Holders of Common Stock of Xxxxx-Xxxxxxx Xxxxx Inc.:
NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders of Xxxxx-
Xxxxxxx Xxxxx Inc. (the "Company") will be held on [ ] [ ], 1997, at
10:00 a.m., local time, at the Company's Executive Offices, 000 Xxxxxx Xxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx, for the following purposes:
(i) To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger, dated as of August 19, 1997 (the "Merger
Agreement"), among the Company, Xxxxx-Xxxxxxx S.A., a societe anonyme
organized under the laws of the Republic of France ("Purchaser"), and RP
Vehicle, Inc., a Pennsylvania corporation specifically organized for the
purpose of effecting the Merger (as defined below) and a direct, wholly
owned subsidiary of Purchaser (the "Merger Subsidiary"), pursuant to which:
(a) the Merger Subsidiary will be merged with and into the Company
(the "Merger"), with the Company as the surviving corporation; and
(b) each share ("Share") of common stock, without par value per share
("Common Stock"), of the Company issued and outstanding immediately
prior to the effective time of the Merger (other than Shares owned
directly or indirectly by Purchaser) shall be cancelled and, subject to
dissenters rights, shall be converted automatically into the right to
receive from the Company $97 in cash (the "Merger Consideration")
payable, without interest, to the holder of such Share; and
(ii) To transact such other business as may properly come before the
Special Meeting, including any adjournment or postponement thereof.
A conformed copy of the Merger Agreement appears as Annex A to, and is
described in, the accompanying Proxy Statement.
Shareholders who do not wish to accept the $97 per Share cash payment in the
Merger and who fully comply with the statutory procedures for asserting
dissenters rights set forth in the Pennsylvania Business Corporation Law of
1988 (the "PBCL"), the relevant portions of which are attached to the
accompanying Proxy Statement as Annex B, will be entitled to receive, in
connection with the Merger, cash for the fair value of their Shares as
determined pursuant to the procedures prescribed by the PBCL. For a
description of the rights of dissenting shareholders pursuant to the PBCL, see
"THE MERGER--Rights of Dissenting Shareholders" in the accompanying Proxy
Statement.
As a result of the completion of a tender offer and the purchase of shares
of Common Stock pursuant thereto and the prior purchases of shares of Common
Stock, Purchaser owns 141,222,394 Shares (representing approximately 98.53% of
the issued and outstanding Shares). Purchaser will cause all Shares owned by
it to be voted in favor of the approval and adoption of the Merger Agreement.
Under the PBCL, the approval of the Board of Directors of the Company (the
"Company Board") and the affirmative vote of a majority of the votes cast by
all shareholders entitled to vote thereon are required to approve and adopt
the Merger Agreement and the transactions contemplated thereby, including the
Merger. The Company Board has approved the Merger Agreement and the
transactions contemplated thereby, and the only remaining required corporate
action of the Company is the approval and adoption of the Merger Agreement and
the transactions contemplated thereby by the affirmative vote of a majority of
the votes cast by all shareholders entitled to vote thereon.
PURCHASER ALREADY HAS SUFFICIENT VOTING POWER TO CAUSE THE APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT WITHOUT THE AFFIRMATIVE VOTE OF ANY OTHER
SHAREHOLDER OF THE COMPANY. PURCHASER WILL CAUSE ALL SHARES OWNED BY IT TO BE
VOTED IN FAVOR OF THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
Only the holders of record of Common Stock at the close of business on
[ ] [ ], 1997 will be entitled to notice of and to vote at the Special
Meeting or any adjournment or postponement thereof. Such holders may vote in
person or by proxy.
Whether or not you expect to attend the Special Meeting in person, please
complete, sign, date and return the accompanying proxy in the enclosed prepaid
envelope to ensure that your vote will be counted. Your proxy may be revoked
in the manner described in the accompanying proxy statement at any time before
it has been voted at the Special Meeting.
BY ORDER OF THE BOARD OF DIRECTORS,
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Secretary
Collegeville, Pennsylvania
[ ] [ ], 1997
2
XXXXX-XXXXXXX XXXXX INC.
000 XXXXXX XXXX
XXXXXXXXXXXX, XXXXXXXXXXXX 19426
----------------
PROXY STATEMENT
----------------
FOR SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [ ] [ ], 1997
----------------
This proxy statement (the "Proxy Statement") and the accompanying proxy card
are first being mailed on or about [ ] [ ], 1997 to holders of shares
("Shares") of common stock, without par value per share ("Common Stock"), of
Xxxxx-Xxxxxxx Xxxxx Inc. (the "Company"). These materials are being furnished
in connection with the solicitation by the Board of Directors of the Company
(the "Company Board") of proxies to be voted at the Special Meeting of
Shareholders of the Company (the "Special Meeting") scheduled to be held on
[ ] [ ], 1997 at 10:00 a.m., local time, at the Company's Executive
Offices at 000 Xxxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, and at any
adjournment or postponement thereof.
At the Special Meeting, shareholders will be asked to consider and vote upon
a proposal to approve and adopt the Agreement and Plan of Merger, dated as of
August 19, 1997 (the "Merger Agreement"), among the Company, Xxxxx-Xxxxxxx
S.A., a societe anonyme organized under the laws of the Republic of France
("Purchaser"), and RP Vehicle, Inc., a Pennsylvania corporation specifically
organized for the purpose of effecting the Merger (as defined below) and a
direct, wholly owned subsidiary of Purchaser (the "Merger Subsidiary").
Pursuant to the terms and subject to the conditions of the Merger Agreement,
(i) the Merger Subsidiary will be merged with and into the Company (the
"Merger"), with the Company as the surviving corporation; and (ii) each Share
issued and outstanding immediately prior to the effective time of the Merger
(other than Shares owned directly or indirectly by Purchaser) shall be
cancelled and, subject to dissenters rights, shall be converted automatically
into the right to receive from the Company $97 in cash (the "Merger
Consideration") payable, without interest, to the holder of such Share. A
conformed copy of the Merger Agreement is included with this Proxy Statement
as Annex A. See "THE MERGER--The Merger Agreement". As a result of the Merger,
the Company will become a direct wholly owned subsidiary of Purchaser. If the
Merger is consummated, shareholders who fully comply with the statutory
procedures for asserting dissenters rights set forth in the Pennsylvania
Business Corporation Law of 1988 (the "PBCL"), the relevant portions of which
are attached to this Proxy Statement as Annex B, will be entitled to receive
cash for the fair value of their Shares as determined pursuant to the
procedures prescribed by the PBCL. Merely voting against the Merger Agreement
will not perfect a shareholder's dissenters rights. Shareholders are urged to
review carefully the dissenting shareholders' rights provisions of the PBCL, a
description of which is provided in this Proxy Statement under "THE MERGER--
Rights of Dissenting Shareholders" and the full text of which is attached to
this Proxy Statement as Annex B and incorporated herein by reference.
SHAREHOLDERS WHO FAIL TO COMPLY STRICTLY WITH THE APPLICABLE PROCEDURES WILL
FORFEIT THEIR DISSENTERS RIGHTS IN CONNECTION WITH THE MERGER. See "THE
MERGER--Rights of Dissenting Shareholders" and Annex B to this Proxy
Statement.
----------------
No person is authorized to give any information or to make any
representation not contained in this Proxy Statement or in the documents
incorporated herein by reference in connection with the solicitation made
hereby and, if given or made, such information or representations should not
be relied upon as having been authorized by the Company. The delivery of this
Proxy Statement shall not, under any circumstances, create any implication
that the information contained herein or in any document incorporated herein
by reference, is correct as of any time subsequent to the date hereof or the
date of such document, as the case may be, or that there has been no change in
the affairs of the Company since the date hereof or the date of such document,
as the case may be. This Proxy Statement does not constitute the solicitation
of a proxy from any person in any jurisdiction in which it is unlawful to make
such a proxy solicitation.
----------------
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR
MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY OF THE
INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
----------------
THE DATE OF THIS PROXY STATEMENT IS [ ] [ ], 1997.
ii
TABLE OF CONTENTS
SUMMARY OF PROXY STATEMENT................................................ v
The Special Meeting; Time, Date and Place............................... v
Parties to the Merger Agreement......................................... v
The Merger.............................................................. v
Vote Required; Record Date.............................................. vi
Recommendation of the Board of Directors................................ vi
Opinion of Xxxxxxx, Xxxxx & Co. ........................................ vi
Effective Time of the Merger; Payment for Shares of Common Stock........ vi
Conditions to Consummation of the Merger, Termination; Fees and
Expenses............................................................... vii
Financing of the Merger................................................. vii
Certain U.S. Federal and French Income Tax Consequences of the Merger... viii
Rights of Dissenting Shareholders....................................... viii
Market Prices and Dividends............................................. ix
Selected Summary Financial Information Concerning the Company........... x
INTRODUCTION.............................................................. 1
General................................................................. 1
Voting at the Special Meeting........................................... 2
THE MERGER................................................................ 3
Background of the Merger................................................ 3
Recommendation of the Company Board; Fairness of the Offer and the
Merger................................................................. 9
Opinion of Xxxxxxx, Xxxxx & Co. ........................................ 11
Interests of Certain Persons in the Merger.............................. 15
Payment for Shares of Common Stock...................................... 16
Position of Purchaser Regarding Fairness of the Offer and the Merger....
Purpose and Structure of the Offer and the Merger; Reasons of Purchaser
for the Offer and the Merger...........................................
Plans for the Company After the Merger; Certain Effects of the Offer and
the Merger............................................................. 16
Accounting Treatment of the Transaction................................. 17
Regulatory Approvals.................................................... 17
Certain Shareholder Litigation.......................................... 17
The Merger Agreement.................................................... 18
Applicability of Certain State Takeover Laws............................ 21
Certain U.S. Federal and French Income Tax Consequences of the Merger... 23
Rights of Dissenting Shareholders....................................... 23
Fees and Expenses.......................................................
FINANCING OF THE MERGER................................................... 26
BUSINESS OF THE COMPANY................................................... 27
SELECTED FINANCIAL INFORMATION OF THE COMPANY............................. 27
OWNERSHIP OF SHARES.......................................................
Share Ownership of Certain Beneficial Shareholders......................
Share Ownership of Directors and Executive Officers of the Company......
Share Ownership of Directors and Executive Officers of Purchaser and
Xxxxxx Xxxxxxxxxx......................................................
TRANSACTIONS BY CERTAIN PERSONS IN SHARES.................................
RELATED PARTY TRANSACTIONS................................................
iii
MANAGEMENT OF PURCHASER, MERGER SUBSIDIARY AND THE COMPANY..................
Directors and Executive Officers of Purchaser.............................
Directors and Executive Officers of Xxxxxx Xxxxxxxxxx.....................
Directors and Executive Officers of the Company...........................
PRINCIPAL SHAREHOLDERS AND SHARE OWNERSHIP OF MANAGEMENT.................... 33
INFORMATION CONCERNING PURCHASER AND MERGER SUBSIDIARY...................... 34
REVOCATION OF PROXIES....................................................... 34
INDEPENDENT PUBLIC ACCOUNTANTS.............................................. 34
PROXY SOLICITATION.......................................................... 34
INCORPORATION BY REFERENCE.................................................. 35
ADDITIONAL AVAILABLE INFORMATION............................................ 35
OTHER MATTERS; 1998 ANNUAL MEETING.......................................... 36
ANNEX A --Agreement and Plan of Merger
ANNEX B --Sections 1930(a) and 1571-80 (Subchapter D of Chapter 15) of the
Pennsylvania Business Corporation Law
ANNEX C --Opinion of Xxxxxxx, Xxxxx & Co.
iv
SUMMARY OF PROXY STATEMENT
The following is a brief summary of certain information contained elsewhere
in this Proxy Statement. Reference is made to, and this Summary is qualified in
its entirety by, the more detailed information contained elsewhere in this
Proxy Statement and the Annexes hereto. Cross-references in this Summary are to
captions in this Proxy Statement. Shareholders are urged to read this Proxy
Statement in its entirety.
THE SPECIAL MEETING; TIME, DATE AND PLACE
The Special Meeting of Shareholders of Xxxxx-Xxxxxxx Xxxxx Inc. (the
"Company") will be held on [ ] [ ], 1997, at 10:00 a.m., local time, at the
Company's Executive Offices, 000 Xxxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx. The
purpose of the Special Meeting is to consider and vote upon a proposal to
approve and adopt the Agreement and Plan of Merger, dated as of August 19, 1997
(the "Merger Agreement"), among Xxxxx-Xxxxxxx S.A., a societe anonyme organized
under the laws of the Republic of France ("Purchaser"), RP Vehicle, Inc., a
Pennsylvania corporation specifically organized for the purpose of effecting
the Merger (as defined below) and a direct, wholly owned subsidiary of
Purchaser (the "Merger Subsidiary"), and the Company. The Merger is the second
and final step in the acquisition of the entire common equity interest in the
Company by Purchaser.
PARTIES TO THE MERGER AGREEMENT
Purchaser. Purchaser and its affiliates comprise one of the leading groups
worldwide in life sciences and specialty chemicals. Purchaser's principal
executive offices are located at 00, xxxx Xxxx Xxxxxx, 00000 Xxxxxxxxxx Xxxxx,
Xxxxxx.
Merger Subsidiary. Merger Subsidiary is a newly incorporated Pennsylvania
corporation organized in connection with the Merger and has not carried on any
activities other than in connection with the Merger. Merger Subsidiary is a
direct wholly owned subsidiary of Purchaser. Merger Subsidiary's principal
executive offices are located at Twelfth Floor, Packard Building, 000 Xxxxx
00xx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000.
The Company. The Company is primarily engaged in the discovery, development,
manufacture and marketing of a broad line of pharmaceutical products for human
use. The Company's principal executive offices are located at 000 Xxxxxx Xxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 19426.
THE MERGER
Pursuant to the terms and subject to the conditions of the Merger Agreement,
(i) the Merger Subsidiary will be merged with and into the Company (the
"Merger"), with the Company as the surviving corporation; and (ii) each share
("Share") of common stock, without par value per share ("Common Stock"), of the
Company issued and outstanding immediately prior to the effective time of the
Merger (other than Shares owned directly or indirectly by Purchaser) shall be
cancelled and, subject to dissenters rights, shall be converted automatically
into the right to receive from the Company $97 in cash (the "Merger
Consideration") payable, without interest, to the holder of such Share. A
conformed copy of the Merger Agreement is included with this Proxy Statement as
Annex A. See "THE MERGER--The Merger Agreement".
On August 22, 1997, Purchaser commenced a cash tender offer (the "Offer") for
all issued and outstanding Shares at a purchase price of $97 per Share.
Pursuant to the Offer, which expired, as scheduled, at 5:00 p.m. New York City
time, on Wednesday, October 1, 1997, Purchaser acquired 46,138,374 Shares. As a
result of such purchase and prior acquisitions of Shares, Purchaser owns
141,222,394 Shares (representing approximately 98.53% of the issued and
outstanding Shares based on the number of Shares issued and outstanding on
October 1, 1997).
v
VOTE REQUIRED; RECORD DATE
A majority of the issued and outstanding shares of Common Stock entitled to
vote, represented in person or by proxy, is required for a quorum at the
Special Meeting. Under the Pennsylvania Business Corporation Law of 1988 (the
"PBCL"), the approval of the Board of Directors of the Company (the "Company
Board") and the affirmative vote of a majority of the votes cast by all
shareholders entitled to vote thereon are required to approve and adopt the
Merger Agreement and the transactions contemplated thereby, including the
Merger. The Company Board has approved the Merger Agreement and the
transactions contemplated thereby, and the only remaining required corporate
action of the Company is the approval and adoption of the Merger Agreement and
the transactions contemplated thereby by the affirmative vote of a majority of
the votes cast by all shareholders entitled to vote thereon.
PURCHASER ALREADY HAS SUFFICIENT VOTING POWER TO CAUSE THE APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT WITHOUT THE AFFIRMATIVE VOTE OF ANY OTHER
SHAREHOLDER OF THE COMPANY. PURCHASER WILL CAUSE ALL SHARES OWNED BY IT TO BE
VOTED IN FAVOR OF THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
Only the holders of record of Shares on [ ] [ ], 1997 (the "Record Date")
are entitled to vote at the Special Meeting or any adjournment or postponement
thereof. At the close of business on such date, there were [ ] Shares issued
and outstanding, held by approximately [ ] holders of record. Each Share is
entitled to one vote at the Special Meeting.
RECOMMENDATION OF THE BOARD OF DIRECTORS
On August 19, 1997, the Company Board by unanimous vote of all directors
present and voting, based in part on the unanimous recommendation and approval
of a committee of the Company Board (the "Special Committee") comprised of
Independent Directors (as defined herein) (i) determined that the Merger
Agreement and the transactions contemplated thereby, including the Merger, are
fair to, and in the best interests of, the Company, (ii) approved the Merger
Agreement and the transactions contemplated thereby, including the Merger, and
(iii) resolved to recommend that shareholders tender their Shares to Purchaser
and approve and adopt the Merger Agreement and the transactions contemplated
thereby. ACCORDINGLY, THE COMPANY BOARD RECOMMENDS THAT THE SHAREHOLDERS OF THE
COMPANY VOTE FOR APPROVAL AND ADOPTION OF THE MERGER AGREEMENT. See "THE
MERGER--Recommendation of the Company Board; Fairness of the Offer and the
Merger". In considering the recommendation of the Company Board and the Special
Committee with respect to the Merger, shareholders should be aware that certain
officers and directors of Purchaser and the Company have interests in the
Merger which may present them with certain potential conflicts of interest in
connection with the Merger. See "THE MERGER--Interests of Certain Persons in
the Merger".
OPINION OF XXXXXXX, XXXXX & CO.
Xxxxxxx, Xxxxx & Co. ("Xxxxxxx Xxxxx"), which acted as financial advisor to
the Special Committee in connection with the Offer and the Merger, delivered to
the Special Committee its opinion, dated August 19, 1997, that, as of such date
and based upon and subject to the assumptions and qualifications stated
therein, the $97 per Share in cash to be received by the shareholders of the
Company (other than Purchaser and its subsidiaries) in the Offer and the Merger
was fair to such holders. See Annex C for the full text of such opinion. For a
description of such opinion, including the procedures followed, the matters
considered and the assumptions made by Xxxxxxx Xxxxx in arriving at its
opinion, see "THE MERGER--Background of the Merger" and "THE MERGER--Opinion of
Xxxxxxx, Xxxxx & Co.".
EFFECTIVE TIME OF THE MERGER; PAYMENT FOR SHARES OF COMMON STOCK
The Merger will become effective at such time (the "Effective Time") as the
articles of merger are filed with the Secretary of the Commonwealth of
Pennsylvania in accordance with the laws of the Commonwealth of Pennsylvania.
The required filing is expected to be made as soon as practicable after the
approval of the Merger
vi
Agreement by the Company's shareholders at the Special Meeting and the
satisfaction or waiver of the other conditions to consummation of the Merger.
See "THE MERGER--The Merger Agreement". Detailed instructions with regard to
the surrender of certificates, together with a letter of transmittal, will be
forwarded to former holders of Shares by ChaseMellon Shareholder Services,
L.L.C. (the "Paying Agent") promptly following the Effective Time. Holders of
Shares should not submit their certificates to the Paying Agent until they have
received such materials. Payment for Shares will be made to former holders of
Shares as promptly as practicable following receipt by the Paying Agent of
their certificates and other required documents. No interest will be paid or
accrued on the cash payable upon the surrender of certificates. See "THE
MERGER--Payment for Shares of Common Stock". SHAREHOLDERS SHOULD NOT SEND ANY
SHARE CERTIFICATES AT THIS TIME.
CONDITIONS TO CONSUMMATION OF THE MERGER, TERMINATION; FEES AND EXPENSES
The respective obligations of Purchaser, Merger Subsidiary and the Company to
effect the Merger are subject to the satisfaction, at or prior to the Effective
Time, of certain conditions. See "THE MERGER--The Merger Agreement--Conditions
to the Merger".
The Merger Agreement may be terminated and the Merger and the other
transactions contemplated by the Merger Agreement may be abandoned at any time
prior to the Effective Time, notwithstanding any requisite approval and
adoption of the Merger Agreement and the transactions contemplated thereby by
the shareholders of the Company: (a) by mutual written consent duly authorized
by the Boards of Directors of Purchaser, the Merger Subsidiary and the Special
Committee on behalf of the Company; or (b) by either Purchaser or the Special
Committee on behalf of the Company if (i) the Effective Time shall not have
occurred on or before March 31, 1998; provided, however, that such right to
terminate the Merger Agreement shall not be available to any party whose
failure to fulfill any obligation under the Merger Agreement has been the cause
of, or resulted in, the failure of the Effective Time to occur on or before
such date or (ii) any court of competent jurisdiction or other governmental
authority shall have issued an order, decree, ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and nonappealable; or
(c) by the Company, upon approval of the Special Committee, (i) if any
representation or warranty of Purchaser and the Merger Subsidiary in the Merger
Agreement which is qualified as to materiality shall not be true and correct or
any such representation or warranty that is not so qualified shall not be true
and correct in any material respect, in each case as if such representation or
warranty was made as of such time on or after the date of the Merger Agreement,
or (ii) if Purchaser or the Merger Subsidiary shall have failed to perform in
any material respect any obligation or to comply in any material respect with
any agreement or covenant of Purchaser or the Merger Subsidiary to be performed
or complied with by it under the Merger Agreement. The Merger Agreement also
includes certain other termination rights of Purchaser and the Company which,
as a result of the purchase of Shares of Common Stock pursuant to the Offer,
are no longer applicable. See "THE MERGER--The Merger Agreement--Termination;
Fees and Expenses".
In the event of the termination of the Merger Agreement, the Merger Agreement
shall forthwith become void. All costs and expenses incurred in connection with
the Merger Agreement and the transactions contemplated thereby shall be paid by
the party incurring such fees and expenses, whether or not the transactions
contemplated by the Merger Agreement are consummated. See "THE MERGER--The
Merger Agreement--Termination; Fees and Expenses".
FINANCING OF THE MERGER
Approximately $4.49 billion was required to pay for the 46,138,374 Shares
purchased by Purchaser pursuant to the Offer. In addition, approximately $191
million will be required to purchase the remaining Shares pursuant to the
Merger and approximately $[ ] million will be required to pay related fees
and expenses incurred by Parent and Purchaser in connection with the Offer and
expected to be incurred by Purchaser
vii
in connection with the Merger (including debt-related costs). The foregoing
does not include an additional $[ ] million paid by the Company in connection
with the cancellation of employee stock options of the Company or approximately
$[ ] million in fees or expenses paid or to be paid by the Company in
connection with the Offer and Merger. See "THE FINANCING OF THE MERGER".
The total amount of funds required by Purchaser and the Company to consummate
the Offer and the Merger, respectively, and to pay related fees and expenses is
estimated to be approximately $4.8 billion. In connection with the Offer,
Purchaser entered into binding term sheets with Societe Generale, Banque
Nationale de Paris, Credit Lyonnais and Union Bank of Switzerland regarding
multicurrency credit facilities pursuant to which it borrowed an aggregate of
approximately [FF8.5 billion and $850 million] of unsecured indebtedness
maturing in less than one year. The all-in cost of such drawn short-term
indebtedness ranges from 0.10% to 0.125% the London Interbank Offer Rate
("LIBOR") or Paris Interbank Offer Rate ("PIBOR"). In addition, Purchaser has
entered into binding term sheets with the following banks creating
multicurrency credit facilities pursuant to which it borrowed an aggregate of
approximately [FF12.75 billion and $230 million] of unsecured indebtedness
maturing in five years: Societe Generale, Banque Nationale de Paris, Natexis,
Banque Paribas, Credit Agricole Indosuez, Bayerische Landesbank, Caisse
Centrale des Banques Populaires, Royal Bank of Canada, Credit Commercial de
France, Credit Commercial et Industriel de Paris, Midland Bank plc, Credit
Lyonnais, Citibank, N.A. and Union Bank of Switzerland. The all-in cost of such
drawn medium-term indebtedness ranges from 0.17% to 0.20% over LIBOR or PIBOR.
Funds required to purchase the remaining Shares pursuant to the Merger and to
pay associated fees and expenses will be obtained from funds available under
the above sources. See "FINANCING OF THE MERGER".
The indebtedness incurred through borrowings under the credit facilities
listed above will be repaid from a variety of sources, including, but not
limited to, funds generated internally by Purchaser and its affiliates
(including, following the Merger, funds generated by the Company), bank
refinancing, and the public or private sale of debt or equity securities.
Purchaser intends to repay a portion of the indebtedness related to the Offer
and the Merger from the proceeds of a public offering of shares of Purchaser
the proceeds of which were [FF7 billion (which is currently approximately
$1.155 billion)]. In addition, Purchaser expects to make a public offering of
shares of a new company (resulting from the possible combination of Purchaser's
chemicals and fibers and polymers businesses) in 1998, subject to, among other
things, market conditions, and to make dispositions of certain non-strategic
assets. The source and allocation of various methods of repayment will be
determined and may be modified by Purchaser based on market conditions and such
other factors as Purchaser may deem appropriate.
CERTAIN U.S. FEDERAL AND FRENCH INCOME TAX CONSEQUENCES OF THE MERGER
The receipt of cash for shares of Common Stock in the Merger or pursuant to
the exercise of dissenters rights will be a taxable transaction for U.S.
federal income tax purposes for U.S. tax residents and for French tax purposes
for French tax residents and may also be a taxable transaction under other
applicable state, local, foreign or other tax laws. SHAREHOLDERS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX CONSEQUENCES OF THE
MERGER, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN AND
OTHER TAXES. See "THE MERGER--Certain U.S. Federal and French Income Tax
Consequences of the Merger".
RIGHTS OF DISSENTING SHAREHOLDERS
If the Merger is consummated, shareholders who fully comply with the
statutory procedures for asserting dissenters rights set forth in the PBCL, the
relevant portions of which are attached to this Proxy Statement as Annex B,
will be entitled to receive cash for the fair value of their Shares as
determined pursuant to the procedures prescribed by the PBCL. Merely voting
against the Merger Agreement will not perfect a shareholder's dissenters
rights. Shareholders are urged to review carefully the dissenting shareholders'
rights provisions of the PBCL, a description of which is provided in this Proxy
Statement under "THE MERGER--
viii
Rights of Dissenting Shareholders" and the full text of which is attached to
this Proxy Statement as Annex B and incorporated herein by reference.
SHAREHOLDERS WHO FAIL TO COMPLY STRICTLY WITH THE APPLICABLE PROCEDURES WILL
FORFEIT THEIR DISSENTERS RIGHTS IN CONNECTION WITH THE MERGER. See "THE
MERGER--Rights of Dissenting Shareholders" and Annex B to this Proxy Statement.
MARKET PRICES AND DIVIDENDS
The Shares are listed and principally traded on the NYSE under the symbol
"RPR". The following table sets forth, for the quarters indicated, (i) the high
and low prices per Share on NYSE as reported by the Dow Xxxxx News Service and
(ii) the quarterly dividends paid per Share:
DIVIDEND
HIGH LOW PAID
-------- ------- --------
1995:
First Quarter.................................... $43 1/2 $35 7/8 $.30
Second Quarter................................... 43 1/4 40 1/8 .30
Third Quarter.................................... 45 7/8 40 3/8 .30
Fourth Quarter................................... 54 1/2 43 3/4 .30
1996:
First Quarter.................................... $66 7/8 $50 1/2 $.30
Second Quarter................................... 69 1/4 58 .32
Third Quarter.................................... 77 3/4 62 1/8 .32
Fourth Quarter................................... 80 1/2 66 .32
1997:
First Quarter.................................... $78 1/8 $70 1/8 $.32
Second Quarter................................... 91 9/16 68 .32
Third Quarter.................................... 96 7/8 90 3/4 .32
Fourth Quarter (through [ ] [ ], 1997)......
On June 25, 1997, the last full trading day prior to the public announcement
of Purchaser's consideration of a possible business combination with the
Company, the closing price per Share as reported on the NYSE was $79 7/16. On
August 19, 1997, the last full trading day prior to announcement of the
commencement of the Offer, the closing price per Share as reported on the NYSE
was $95 1/8. On October 1, 1997, the last full trading day prior to the
acceptance of Shares by Purchaser under the Offer, the closing price per Share
as reported on the NYSE was $96 7/8. On [ ] [ ], 1997, the last full
trading day prior to the mailing of this Proxy Statement, the closing price per
Share as reported on the NYSE was $[ ].
ix
SELECTED SUMMARY FINANCIAL INFORMATION CONCERNING THE COMPANY
Set forth below is certain selected financial information relating to the
Company which has been excerpted or derived from the audited financial
statements contained in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996 (the "Form 10-K") and the unaudited financial
statements contained in the Company's June 30 Form 10-Q. More comprehensive
financial information is included in the Form 10-K and the Company's June 30
Form 10-Q and other documents filed by the Company with the Commission. The
financial information that follows is qualified in its entirety by reference to
such reports and other documents may be examined and copies may be obtained
from the offices of the Commission in the manner set forth below.
XXXXX-XXXXXXX XXXXX INC.
SELECTED FINANCIAL INFORMATION
(DOLLARS IN MILLIONS, EXCEPT PER SHARE INFORMATION)
SIX MONTHS ENDED FISCAL YEAR ENDED
JUNE 30, DECEMBER 31,
------------------ --------------------
1997 1996 1996 1995
-------- -------- -------- --------
(UNAUDITED)
INCOME STATEMENT DATA:
Net sales......................... $2,323.8 $2,618.5 $5,420.6 $5,142.1
Cost of products sold............. 691.4 878.0 1,666.0 1,746.4
Selling, delivery and
administrative expenses.......... 946.2 1,046.7 2,109.7 1,863.7
Research and development
expenses......................... 405.2 414.3 882.1 766.2
Restructuring and other charges... -- -- 102.6 126.5
-------- -------- -------- --------
Operating income................ 281.0 279.5 60.2 639.3
Interest expense, net............. 76.2 84.5 169.6 84.9
Other (income) expense, net....... (20.8) (77.4) (199.8) 16.4
-------- -------- -------- --------
Income before income taxes...... 225.6 272.4 690.4 538.0
Provision for income taxes........ 70.1 85.2 216.9 181.5
-------- -------- -------- --------
Net income...................... 155.5 187.2 473.5 356.5
Dividends on preferred stock and
remunerations on capital equity
notes............................ 21.9 21.3 44.8 18.7
-------- -------- -------- --------
Net income available to common
shareholders................... $ 133.6 $ 165.9 $ 428.7 $ 337.8
======== ======== ======== ========
PER SHARE DATA:
Average number of shares issued
and outstanding during
period(1)........................ 137.0 135.3 135.8 134.2
Primary earnings per common
share............................ $ .98 $ 1.23 $ 3.16(2) $ 2.50(3)
======== ======== ======== ========
--------
(1) Does not include shares held in the Company's treasury or Employee Benefits
Trust.
(2) Net income available to common shareholders.
(3) Net income available to common shareholders, pro forma.
x
AT JUNE 30, AT DECEMBER 31,
------------------ ------------------
1997 1996 1996 1995
-------- -------- -------- --------
(UNAUDITED)
BALANCE SHEET DATA:
ASSETS
Cash and cash equivalents.............. $ 114.4 $ 60.9 $ 100.6 $ 115.4
Cash pooling arrangements with Xxxxx-
Xxxxxxx S.A. ......................... 4.2 10.4 3.2 16.0
Short-term investments and notes
receivable............................ 63.1 66.7 38.7 --
Trade accounts receivable, less
reserves.............................. 858.6 870.6 984.1 956.8
Inventories............................ 796.7 832.8 800.7 765.6
Other current assets................... 762.3 797.1 846.2 935.8
-------- -------- -------- --------
Total current assets................. 2,599.3 2,638.5 2,773.5 2,789.6
Time deposits, at cost................. 128.4 83.0 128.4 83.0
Property, plant and equipment, net of
accumulated depreciation.............. 1,426.5 1,556.5 1,525.9 1,621.0
Goodwill, net of accumulated
amortization.......................... 2,601.0 2,836.9 2,739.0 2,953.5
Intangibles, net of accumulated
amortization.......................... 707.4 849.2 766.7 866.8
Other assets........................... 839.1 769.1 834.6 673.2
-------- -------- -------- --------
Total assets......................... $8,301.7 $8,733.2 $8,768.1 $8,987.1
======== ======== ======== ========
LIABILITIES
Short-term debt........................ $ 157.9 $ 414.6 $ 126.7 $ 511.8
Accounts payable....................... 427.1 529.8 594.7 601.8
Other current liabilities.............. 1,109.4 1,143.4 1,331.5 1,291.5
-------- -------- -------- --------
Total current liabilities............ 1,694.4 2,087.8 2,052.9 2,405.1
Long-term debt......................... 2,432.0 2,415.2 2,272.0 2,159.0
Notes payable to Xxxxx-Xxxxxxx S.A. and
affiliates............................ 187.9 249.5 253.0 525.4
Deferred income taxes.................. 241.6 363.1 218.0 365.5
Other liabilities, including minority
interests............................. 1,208.4 1,201.5 1,322.4 1,174.9
-------- -------- -------- --------
Total liabilities.................... $5,764.3 $6,317.1 $6,118.3 $6,629.9
======== ======== ======== ========
SHAREHOLDERS' EQUITY
Money market preferred stock without
par value (liquidation preference
$100,000 per share); authorized,
issued and outstanding 1,750 shares... 175.0 175.0 175.0 175.0
Capital equity notes................... 500.0 500.0 500.0 500.0
Common stock, without par value; stated
value $1 per share; authorized
600,000,000 shares.................... 142.6 141.0 141.6 139.5
Capital in excess of stated value...... 273.9 204.2 234.8 153.2
Retained earnings...................... 1,883.8 1,662.3 1,837.9 1,580.3
Employee Benefits Trust................ (198.1) (185.7) (185.7) (185.7)
Cumulative translation adjustments..... (239.8) (80.7) (53.8) (5.1)
-------- -------- -------- --------
Total shareholders' equity........... 2,537.4 2,416.1 2,649.8 2,357.2
-------- -------- -------- --------
Total liabilities and shareholders'
equity.............................. $8,301.7 $8,733.2 $8,768.1 $8,987.1
======== ======== ======== ========
xi
INTRODUCTION
GENERAL
This proxy statement (the "Proxy Statement") and the accompanying proxy card
are first being mailed on or about [ ] [ ], 1997 to holders of Common
Shares ("Shares"), without par value per share ("Common Stock"), of Xxxxx-
Xxxxxxx Xxxxx Inc. (the "Company"). These materials are being furnished in
connection with the solicitation by the Company Board of proxies to be voted
at the Special Meeting of Shareholders of the Company ("Special Meeting")
scheduled to be held on [ ] [ ], 1997 and at any adjournment or
postponement thereof.
At the Special Meeting, shareholders will be asked to consider and vote upon
a proposal to approve and adopt the Agreement and Plan of Merger, dated as of
August 19, 1997 (the "Merger Agreement"), among Xxxxx-Xxxxxxx S.A., a societe
anonyme organized under the laws of the Republic of France ("Purchaser"), RP
Vehicle, Inc., a Pennsylvania corporation specifically organized for the
purpose of effecting the Merger (as defined below) and a direct, wholly owned
subsidiary of Purchaser (the "Merger Subsidiary"), and the Company. A
conformed copy of the Merger Agreement is included with this Proxy Statement
as Annex A. Upon the terms and subject to the conditions of the Merger
Agreement, the Merger Subsidiary will be merged with and into the Company (the
"Merger"), with the Company as the surviving corporation. As a result of the
Merger, the Company will become a direct, wholly owned subsidiary of
Purchaser.
On March 12, 1990, the Company and Purchaser entered into an Acquisition
Agreement (the "Acquisition Agreement") pursuant to which Purchaser acquired
approximately 68.68% of the outstanding Shares. Approximately 50.1% of such
Shares were acquired in a cash tender offer at a price which represented a
premium of approximately 58.4% to the pre-announcement price of the Shares,
with the remaining Shares acquired in consideration for the contribution to
the Company of Purchaser's human pharmaceutical business and certain other
consideration.
The Acquisition Agreement prohibited Purchaser from owning more than 68.68%
of the issued and outstanding Shares prior to July 31, 1997. At any time after
July 31, 1997, Purchaser is permitted to increase its ownership of Shares
above 75% of the issued and outstanding Shares, but only pursuant to a
Qualifying Tender Offer (as defined below).
On August 19, 1997, the Company entered into the Merger Agreement with
Purchaser and the Merger Subsidiary, and pursuant thereto, on August 22, 1997,
Purchaser commenced a cash tender offer for all outstanding Shares pursuant to
an Offer to Purchase (which, together with the related letter of transmittal,
constituted the "Offer") at a price per Share of $97. As discussed more fully
below, except with respect to the minimum offering period being reduced from
30 business days with the agreement of the Special Committee, the Offer was a
Qualifying Tender Offer under the Acquisition Agreement. Pursuant to the
Offer, which expired, as scheduled, at 5:00 p.m. New York City time, on
Wednesday, October 1, 1997, Purchaser accepted for payment 46,138,374 Shares.
The Merger follows the purchase of Shares pursuant to the Offer as the second
and final step in the acquisition of the entire common equity interest of the
Company by Purchaser under the Merger Agreement.
As a result of the completion of the Offer and the purchase of Shares
pursuant thereto and prior purchases of Shares, Purchaser owns 141,222,394
Shares (representing approximately 98.53% of the issued and outstanding
Shares). As required by the Merger Agreement, Purchaser will cause all Shares
of Common Stock owned by it to be voted in favor of the approval and adoption
of the Merger Agreement. Under the Pennsylvania Business Corporation Law of
1988 (the "PBCL"), the approval of the Company Board and the affirmative vote
of a majority of the votes cast by all shareholders entitled to vote thereon
are required to approve and adopt the Merger Agreement and the transactions
contemplated thereby, including the Merger. The Company Board has approved the
Merger Agreement and the transactions contemplated thereby, and the only
remaining required corporate action of the Company is the approval and
adoption of the Merger Agreement and the transactions contemplated thereby by
the affirmative vote of a majority of the votes cast by all shareholders
entitled to vote
thereon. PURCHASER ALREADY HAS SUFFICIENT VOTING POWER TO CAUSE THE APPROVAL
AND ADOPTION OF THE MERGER AGREEMENT WITHOUT THE AFFIRMATIVE VOTE OF ANY OTHER
SHAREHOLDER OF THE COMPANY. PURCHASER WILL CAUSE ALL SHARES OWNED BY IT TO BE
VOTED IN FAVOR OF THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
VOTING AT THE SPECIAL MEETING
The Company Board has fixed the close of business on [ ] [ ], 1997 as the
record date ("Record Date") for determining the holders of Shares who will be
entitled to notice of and to vote at the Special Meeting.
Only the holders of record of Shares on the Record Date will be entitled to
vote at the Special Meeting. On the Record Date, [ ] Shares were outstanding
for voting purposes. Shareholders are entitled to one vote per Share on each
matter to be voted upon. The presence, in person or by properly executed proxy,
of the holders of a majority of the Shares outstanding shall constitute a
quorum at the Special Meeting.
All Shares that are represented at the Special Meeting by properly executed
proxies received prior to or at the Special Meeting and not revoked will be
voted at the Special Meeting in accordance with the instructions indicated on
such proxies. If no instructions are indicated, such proxies will be voted FOR
the approval and adoption of the Merger Agreement.
Abstentions and Xxxxxx held of record by a broker or its nominee which are
voted on any matter are included in determining the number of votes present,
but Xxxxxx held of record by a broker or its nominee and not voted on any
matter will not be included in determining whether a quorum is present. The
Merger Agreement will be adopted and approved by the affirmative vote of a
majority of the votes cast by all shareholders entitled to vote thereon.
Proxy cards representing Shares held of record (i) under the Company's
Dividend Reinvestment Plan (the "DRIP") will be deemed to provide instructions
to the Bank of New York, the trustee of the DRIP, as to how such Shares shall
be voted, (ii) under the Company's 401(k) Savings Plan (the "401(k) Plan") will
be deemed to provide instructions to American Express Trust Company, the
trustee of the 401(k) Plan, as to how such Shares shall be voted, and (iii)
under the Centeon Employee Savings Plan (the "Centeon Plan") will be deemed to
provide instructions to the Vanguard Group, the trustee of the Centeon Plan, as
to how such Shares shall be voted. A participant in any of the foregoing plans
who is also a holder of record of Shares not held under any such plan will
receive a single proxy card representing all Shares held of record and in one
or more such plans provided that the account information of such participant
reflects both that such individual is a holder of record of Shares and a
participant in one or more such plans. If the account information does not
reflect that such individual is a holder of record of Xxxxxx and a participant
in one or more such plans, then the participant will receive separate proxy
cards. The number printed on the proxy card will reflect the total number of
Shares represented by that proxy card.
The Company Board does not know of any matters, other than the approval and
adoption of the Merger Agreement that are to come before the Special Meeting.
If any other matters are properly presented at the Special Meeting for
consideration, the persons named in the enclosed form of proxy and acting
thereunder will have discretion to vote on such matters in accordance with
their best judgment.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time before it is voted. Proxies may be revoked by (i) filing
with the Secretary of the Company, at or before the taking of the vote at the
Special Meeting, a written notice of revocation bearing a later date than the
proxy, (ii) duly executing a subsequent proxy relating to the same Shares and
delivering it to the Secretary of the Company before the Special Meeting or
(iii) attending the Special Meeting and voting in person (although attendance
at the Special Meeting will not in and of itself constitute a revocation of a
proxy). Any written notice of revocation or any subsequent proxy should be sent
so as to be delivered to: Xxxxx-Xxxxxxx Xxxxx Inc., 000 Xxxxxx Xxxx,
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000, Attention: Secretary, at or before the taking
of the vote at the Special Meeting.
2
Purchaser owns approximately 98.53% of the issued and outstanding shares of
the Common Stock as of the Record Date, and all of such shares owned by
Purchaser will be voted in favor of the adoption of the Merger Agreement and
the transactions contemplated thereby. As indicated above, Purchaser owns
sufficient Shares to cause the approval and adoption of the Merger Agreement
without the affirmative vote of any other shareholder of the Company.
Shareholders have the right to dissent from the Merger and to be paid the
"fair value" of their shares of Common Stock by following the procedures
prescribed in the PBCL. See Annex B and "THE MERGER--Rights of Dissenting
Shareholders". INSTRUCTIONS WITH REGARD TO THE SURRENDER OF SHARE CERTIFICATES
TO THE PAYING AGENT, TOGETHER WITH A LETTER OF TRANSMITTAL TO BE USED FOR THIS
PURPOSE, WILL BE FORWARDED TO THE COMPANY'S SHAREHOLDERS AS PROMPTLY AS
PRACTICABLE FOLLOWING THE EFFECTIVE TIME. SHAREHOLDERS SHOULD SURRENDER SHARE
CERTIFICATES ONLY AFTER RECEIVING A LETTER OF TRANSMITTAL. SHAREHOLDERS SHOULD
NOT SEND ANY STOCK CERTIFICATES AT THIS TIME.
THE MERGER
BACKGROUND OF THE MERGER
Pursuant to the Acquisition Agreement, Purchaser acquired, in two
transactions, Shares representing approximately 68.68% of the Company's then
issued and outstanding Shares on a fully diluted basis. First, upon expiration
on May 5, 1990 of its tender offer for Shares, Purchaser purchased Shares
tendered to it representing approximately 50.1% of the then issued and
outstanding Shares on a fully diluted basis. Then, on July 31, 1990, the
Company issued additional Shares to Purchaser in consideration of the
contribution by Purchaser to the Company of its human pharmaceutical business,
the issuance by Purchaser to the Company of certain contingent value rights
(which were subsequently transferred to holders of Shares other than
Purchaser) and certain other transactions.
In accordance with the terms of the Acquisition Agreement, the Company Board
is comprised of seven individuals selected by Purchaser, three executive
officers of the Company and three individuals (Messrs. Xxxx and Xxxxx and Xx.
Xxxxx), who are Independent Directors (as defined in the Acquisition
Agreement).
Pursuant to certain standstill provisions set forth in the Acquisition
Agreement, through July 31, 1997 and subject to certain conditions, Purchaser
was prohibited from making purchases of Shares that would increase its
ownership of Shares above 68.68% of the then issued and outstanding Shares. In
compliance with such provisions, Purchaser from time to time purchased Shares
in order to maintain its ownership interest in the Company at approximately
68.68%. The Acquisition Agreement provides that after July 31, 1997, Purchaser
is permitted to purchase Shares in open market transactions provided that such
purchases do not increase its ownership interest above 75% of the then issued
and outstanding Shares. Nevertheless, Purchaser is permitted under the
Acquisition Agreement to acquire Shares in excess of the 75% limitation
provided that it acquires such additional Shares pursuant to a tender offer
meeting the following conditions (a "Qualifying Tender Offer"): (i) the offer
must be conditioned upon there being validly tendered and not withdrawn prior
to the expiration of the offer such number of the then issued and outstanding
Shares, other than the Purchaser Shares, which, when taken together with the
Purchaser Shares, constitutes at least 90% of the then issued and outstanding
Shares; (ii) the offer must be a "tender offer" for purposes of, and must be
made in compliance with, Section 14(d)(1) of the Exchange Act; (iii) the offer
must not be permitted to expire without the purchase of any Shares pursuant to
the offer unless the offer has been open for a minimum of 30 business days;
and (iv) the offer must be proposed to be followed by a merger between the
Company and Purchaser or a subsidiary of Purchaser in which all Shares (other
than Shares beneficially owned by Purchaser or its subsidiaries) are converted
into the right to receive an amount in cash equal to the amount paid per Share
in the offer and in connection with which it is proposed that the Company
shall enter into agreements with the holders of any options to purchase Shares
pursuant to which such options shall be purchased at a cash price per option
equal to the excess of the amount paid per Share in the offer over the
exercise price of such option.
3
In the spring of 1997, as part of a long-term strategic planning process,
management of Purchaser began examining restructuring options, including the
possibility of accelerating its transformation into a life sciences company.
One option considered was a potential business combination with the Company.
During this period, management of Purchaser contacted UBS and Xxxxxx Xxxxxxx
to obtain financial advisory services in connection with management's study of
restructuring options for Purchaser's businesses.
On June 25, 1997, the Board of Directors of Purchaser (the "Purchaser
Board") met in Courbevoie, France, at which meeting Xx. Xxxx-Xxxx Xxxxxxx,
Chairman and Chief Executive Officer of Purchaser, and Xx. Xxxx Xxxxxx, a
director of Purchaser and Group President supervising the pharmaceuticals
segment, reported on management's study, including the possibility of a
business combination with the Company. At such meeting, the Purchaser Board
agreed with management's decision to proceed with the study. Following the
meeting, Xx. Xxxxxx contacted various members of the Company Board to inform
them of the meeting and of Purchaser's forthcoming press release.
On June 26, 1997, Xxxxxxxxx issued a press release (the "June 26, 1997
Announcement") announcing that, among other things, it was studying a
potential initiative to continue to strengthen its presence in life sciences
and to increase its strategic flexibility by increasing Purchaser's ownership
of the Company from approximately 68.3% to 100% through a business combination
with the Company at $92 per Share, which, if pursued, would be proposed after
the expiration, on July 31, 1997, of the standstill period under the
Acquisition Agreement. The press release reported that, if a business
combination were pursued, part of the financing would be obtained through a
capital increase by Purchaser. The press release also announced that Purchaser
was studying another potential initiative regarding a possible combination of
Purchaser's chemicals and fibers and polymers businesses into a new company
("NewChemco") and a public offering of shares of NewChemco, market conditions
permitting, with Purchaser retaining a substantial majority interest.
On June 26, 1997, the Company issued a press release indicating that it
intended to review the matters described in the June 26, 1997 Announcement
with the Company Board at a regularly scheduled meeting to be held on July 2,
1997.
On July 2, 1997 in Antony, France, during the regularly scheduled meeting of
the Company Board, Xx. Xxxxxx advised the Company Board of Purchaser's studies
and, in view thereof, recommended that the Company Board appoint a special
committee of Independent Directors. The Company Board then voted to form the
Special Committee, comprised of Messrs. Xxxx and Xxxxx and Xx. Xxxxx, the
three Independent Directors on the Company Board. The Company Board empowered
the Special Committee to use its best efforts to negotiate with Purchaser in
order to secure the best available transaction on terms and conditions which
the Special Committee believes are fair to and in the best interests of the
Company. In addition, the Company Board authorized, among other things, the
Special Committee to retain independent legal counsel and financial advisors
and the Company to enter into an agreement with each of the members of the
Special Committee requiring the Company to indemnify each of them to the
fullest extent permitted by law in connection with his service as a member of
the Special Committee.
Following the Company Board meeting on July 2, 1997, two members of the
legal department and a member of the finance department of the Company were
appointed by the Chairman and Chief Executive Officer of the Company to assist
the Special Committee in the administrative aspects of its function in order
to ensure that it and its advisors had full and open access to all Company
information and personnel (the "Company Representatives"). In addition, the
Special Committee met and determined to retain the law firms of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP ("Skadden, Arps"), as special counsel, and Xxxxxx
Xxxxx & Xxxxxxx LLP, as Pennsylvania counsel. The Special Committee also
determined to send requests for proposals to certain investment banking firms
to serve as financial advisor to the Special Committee. The firms were
selected based on their international reputation, expertise in the
pharmaceutical industry and the belief that they had no relationship with
Purchaser or any of its affiliates.
4
On July 8, 1997, the Special Committee met by telephone conference with its
legal advisors and the Company Representatives. The Special Committee was
briefed on the process and legal implications relating to any proposal to be
received from Purchaser following the expiration of the standstill period
under the Acquisition Agreement as well as their fiduciary responsibilities
under the PBCL. On July 9, 1997, the Special Committee convened with its legal
advisors and the Company Representatives to review the proposals submitted by
the investment banking firms and to select certain of such firms to interview.
On July 16, 1997 and July 17, 1997, members of the Special Committee met
with representatives of the investment banking firms and on July 21, 1997, the
Special Committee retained Xxxxxxx, Xxxxx & Co. ("Xxxxxxx Xxxxx") as its
financial advisor based on, among other things, its expertise in the
pharmaceutical industry, advisory experience in similar transactions and the
representation that Xxxxxxx Xxxxx did not have an existing engagement with
Purchaser nor would it accept an assignment from Purchaser during its
engagement by the Special Committee.
On July 23, 1997, members of the Special Committee met with Xxxxxxx Xxxxx,
the Company Representatives and Xxxxxxx, Arps to discuss, among other things,
due diligence and timing as well as strategy.
On July 25, 1997, Xx. Xxxxxx had a telephone discussion with Xx. Xxxxx,
Chairman of the Special Committee, during which Xx. Xxxxx noted that the
standstill period under the Acquisition Agreement was nearing completion and
stated that if Purchaser were to make a proposal concerning a transaction
involving the Company, the Special Committee would prefer that such a proposal
be made formally to the Special Committee. Xx. Xxxxxx endorsed this approach
but cautioned that any such proposal would be subject to certain timing
constraints imposed by Purchaser's need to arrange financing. Xx. Xxxxx later
reported the substance of his conversation to the other members of the Special
Committee, Xxxxxxx Xxxxx and Xxxxxxx, Xxxx.
On July 31 and August 1, Xx. Xxxxxx had two telephone discussions with Xx.
Xxxxx. In each of these conversations, Xx. Xxxxxx reiterated that, in the
event Purchaser went forward with a transaction involving the Company, it
would be subject to certain timing considerations in connection with
Purchaser's arrangements for financing such a transaction. In particular, the
capital increase described in the June 26, 1997 Announcement would be subject
to timing constraints in view of, among other things, expected market
conditions in France. As a result of these timing constraints, Xxxxxxxxx
believed it would need to reach a decision no later than August 10 as to
whether to proceed. Xx. Xxxxxx expressed Purchaser's preference to proceed
with a consensual transaction, but also indicated that Purchaser would
consider commencing a tender offer prior to obtaining the Special Committee's
agreement in order to retain the ability ultimately to close the tender offer
on Purchaser's desired schedule. In such a case Xx. Xxxxxx expected that
discussions with the Special Committee would continue. During the July 31,
1997 telephone conversation, Xx. Xxxxx explained to Xx. Xxxxxx that Xxxxxxx
Xxxxx was continuing its due diligence investigation of the Company but was
awaiting management projections in order to complete its valuation analysis of
the Company. Xx. Xxxxx also stated to Xx. Xxxxxx that any proposal made by
Purchaser needed to be fair to the Company and its minority shareholders, and
in order for the Special Committee and Purchaser to agree expeditiously on the
terms and conditions of any transaction it was essential that the per Share
consideration offered by Purchaser exceed $92 per Share. Messrs. Xxxxxx and
Xxxxx agreed that their respective advisors would have access to the same
Company information (including any projections prepared by management) and
would each participate in management due diligence sessions. Messrs. Xxxxxx
and Xxxxx also agreed that their respective financial advisors should discuss
any proposals before taking them up with the principals.
Shortly following these calls, Xx. Xxxxx updated Xxxxxxx Xxxxx and Xxxxxxx,
Xxxx on his conversations with Xx. Xxxxxx, and Xxxxxxx Xxxxx reported on the
progress of its due diligence investigation. Each of the other Special
Committee members was later contacted by Xxxxxxx Xxxxx to be updated on such
earlier conversation.
On August 7, 1997, Xx. Xxxxx conferred with Xxxxxxx Xxxxx and Xxxxxxx, Xxxx
for the purpose of receiving a status report on Xxxxxxx Xxxxx' due diligence
and general timing considerations.
5
On August 9, 1997, the August Projections (as defined below) were delivered
by the Company to Xxxxxxx Xxxxx, who in turn forwarded such projections to
Xxxxxx Xxxxxxx.
On Monday, August 11, 1997, Messrs. Xxxxxx and Xxxxx conferred by telephone
and agreed that Xxxxxx Xxxxxxx would have the opportunity to conduct
management due diligence sessions with Xxxxxxx Xxxxx in attendance during the
week of August 11, 1997. Xx. Xxxxxx informed Xx. Xxxxx that Purchaser believed
that August 18 would be the last possible date on which Purchaser would
consider announcing a tender offer if it determined to proceed. Messrs. Xxxxxx
and Xxxxx then agreed that their respective financial advisors should meet no
later than Thursday, August 14, 1997, to discuss valuation issues. Xx. Xxxxxx
repeated Purchaser's preference to commence a tender offer upon terms and
conditions agreed upon with the Special Committee, and proposed to travel to
the United States to meet with Xx. Xxxxx over the upcoming weekend, if Xx.
Xxxxx felt that such a meeting would be justified. Messrs. Xxxxxx and Xxxxx
agreed that the possibility of a meeting would be considered following the
results of the meeting between their respective financial advisors.
On August 12 and 13, 1997, Xxxxxxx Xxxxx and Xxxxxx Xxxxxxx met with the
Company's management for due diligence sessions.
On August 13, 1997, the Special Committee met by telephone conference with
Xxxxxxx Xxxxx and Xxxxxxx, Xxxx at which time Xxxxxxx Xxxxx advised the
Special Committee of the progress of its due diligence investigation and its
preliminary views on valuation of the Company. The Special Committee
authorized Xxxxxxx Xxxxx to discuss with Xxxxxx Xxxxxxx at their meeting to be
held the following day their preliminary view of value. In addition, the
Special Committee discussed at length the implications, process and strategy
in the event Purchaser were to commence a unilateral tender offer as Xx.
Xxxxxx had intimated to Xx. Xxxxx.
On August 14, 1997, Xxxxxx Xxxxxxx and Xxxxxxx Xxxxx held a meeting to
discuss valuation issues. Although Xxxxxx Xxxxxxx noted that Xxxxxxxxx was not
making a formal proposal, Xxxxxx Xxxxxxx informed Xxxxxxx Xxxxx that it
believed, based on the August Projections, that if a proposal were to be made,
such proposal would not exceed $92 per Share and that an unrecommended tender
offer could be commenced at a lower price. On August 15, 1997, Xxxxxx Xxxxxxx
confirmed to Xxxxxxx Xxxxx that any proposal that Purchaser might make would
not exceed $92 per Share for a transaction recommended by the Special
Committee and that, due to timing considerations, Purchaser was expected to
reach a decision on whether to make a proposal and, if made, to announce a
tender offer on Monday, August 18, 1997, regardless of whether agreement had
yet been reached with the Special Committee. Xxxxxx Xxxxxxx also reiterated
that Xxxxxxxxx and its advisors were prepared to negotiate and reach agreement
with the Special Committee before such date and, if an agreement was not
reached within such time frame, to continue to negotiate with the Special
Committee after commencement of a tender offer. Xxxxxxx Xxxxx advised Xxxxxx
Xxxxxxx that in the Special Committee's view a unilateral tender offer would
be detrimental to the Company and its various constituencies regardless of
Purchaser's intention to continue discussions in order to reach a consensual
transaction.
On August 15, 1997, members of the Special Committee met with Xxxxxxx Xxxxx
and Xxxxxxx, Xxxx by telephone conference. At this meeting Xxxxxxx Xxxxx
summarized the results of its meeting with Xxxxxx Xxxxxxx. The Special
Committee concluded that it was appropriate to send the following letter to
Purchaser, Xxxxxx Xxxxxxx and Xxxxxxxx & Xxxxxxxx, Purchaser's legal advisors:
Dear Xxxx:
As you are aware, at the request of Xxxxx-Xxxxxxx, on July 2, 1997, the
Board of Directors of Xxxxx-Xxxxxxx Xxxxx Inc. appointed a special
committee of independent directors of RPR to evaluate any proposal made by
Xxxxx-Xxxxxxx to acquire the remaining common shares of RPR which RP does
not own. Further, the Special Committee's mandate requires us to use our
best efforts to negotiate any proposal in order to secure the best
available transaction on terms and conditions which the Special Committee
believes are fair and in the best interest of RPR and the minority
shareholders. To that end, the Special Committee interviewed and selected
legal and financial advisors in anticipation of receiving a proposal after
the expiration date of the standstill agreement between RP and RPR.
6
Xxxxx-Xxxxxxx has expressed its desire to acquire the remaining
outstanding interest in RPR although to date RP has not made a formal
proposal to do so. Nonetheless, the Special Committee and its advisors
stand ready to continue discussions with the objective of developing a
transaction which the Special Committee would be in a position to recommend
to shareholders. You have indicated a preference for a transaction that is
accompanied by such a recommendation. Unfortunately, we understand from a
meeting between our financial advisors yesterday that RP will announce on
Monday its intention to commence a unilateral tender offer at a price at or
below $92.00 per share unless we agree to a transaction at $92.00 by no
later than Sunday evening.
The Special Committee does not believe that this approach is consistent
with RP's obligations as the controlling shareholder of RPR; and we are
confident that our acquiescence to such an approach would be affirmatively
detrimental to RPR and its minority shareholders and would not be
consistent with our fiduciary obligations. In addition, we believe a
unilateral offer by RPR's controlling shareholder which is not accompanied
by a recommendation of the Special Committee would be harmful to RPR's
other important constituencies, including its employees. If you wish to
proceed with a transaction recommended by the Special Committee, it is
incumbent upon Xxxxx-Xxxxxxx and its advisors to discuss with the Special
Committee and its advisors RP's views as to the valuation of RPR. If you
proceed on a unilateral basis, you will be attempting to circumvent the
protections afforded by a special committee's role in helping to ensure
that a transaction in the best interests of RPR and all of its relevant
constituencies will be completed successfully.
Xxxx, as you know, the Special Committee and its advisors have been
working as expeditiously and thoroughly as possible to complete our due
diligence process. Much has been accomplished in the last two weeks, yet
the Special Committee's advisors received RPR financial projections only
one week ago. Consistent with our mandate, we are ready, willing and able
to meet with you and your advisors to negotiate the terms and conditions of
a transaction to acquire the remaining outstanding shares on a basis
reflecting the full and fair value of RPR, provided RP is prepared to
negotiate in good faith and without the threat of a unilateral, below
market, imminent tender offer commenced on an arbitrary date.
Sincerely,
/s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, Chairman Special
Committee of the Board of Directors
In response to such letter, on August 16, 1997 Xx. Xxxxxx sent the following
letter to Xx. Xxxxx, the other members of the Special Committee and the
Special Committee's financial and legal advisors:
Dear Xxx,
Thank you for your letter of August 15, 1997. I would like to assure you
that I fully agree with you that it is our mutual responsibility to try to
achieve an agreement on the terms of an offer which reflects a fair
valuation of Xxxxx-Xxxxxxx Xxxxx. For this reason, Xxxxx-Xxxxxxx
recommended to RPR's Board of Directors the creation of the Special
Committee to represent the interests of the minority shareholders. The
Special Committee was appointed one and a half months ago, and its advisors
completed their due diligence on RPR's financial projections one week ago.
It therefore seems to us reasonable to expect that, at this time, the
Special Committee and its advisors have all the information they need to
negotiate and reach an agreement.
As you suggested in your letter, in order to proceed with a transaction
recommended by the Special Committee, we and our respective advisors need
to discuss with you our views as to the valuation of RPR. RP's advisors
have already communicated to the Special Committee's advisors our valuation
views. At this point, we are waiting to hear your views. In order to move
forward, I suggest that our respective advisors meet today to take the next
step in preparation for a meeting between you and me and our respective
advisors. I will be in Boston on Sunday for this purpose, as I proposed to
you one week ago.
7
To summarize, Xxxxx-Xxxxxxx, as you state in your letter with regard to
the Special Committee, is ready, willing and able to meet and negotiate in
good faith with the expectation of reaching an agreement on the terms and
conditions of an offer.
I look forward to meeting you tomorrow with our respective advisors.
Sincerely,
/s/ Xxxx Xxxxxx
Xxxx Xxxxxx
Directeur General
At a meeting of the Special Committee and its advisors on the morning of
August 16, 1997, the Special Committee discussed the letter received from Xx.
Xxxxxx. In addition, Xx. Xxxxx reported that several Company Board members had
called him to convey their belief that Purchaser preferred to engage in a
transaction which was recommended by the Special Committee, but that Purchaser
was concerned that the market price of the Shares could rise to unrealistic
levels in the near term and that Purchaser needed to commence promptly an
equity offering to finance any transaction. At this meeting, the Special
Committee concluded that it would not be willing to negotiate with the threat
of a unilateral tender offer; however, it would enter into negotiations and
consider reducing the 30-business day offer period required under the
definition of Qualifying Tender Offer if Purchaser agreed not to commence a
unilateral tender offer in the immediate future and gave the Special Committee
an indication of value, which could not be below market.
On August 16, 1997, in telephone conversations between Xxxxxx Xxxxxxx and
Xxxxxxx Xxxxx, Xxxxxxx Xxxxx communicated the terms upon which the Special
Committee was prepared to enter into negotiations with Purchaser.
Following those conversations, Xx. Xxxxxx spoke with Xx. Xxxxx by telephone,
and they agreed that it was in the interest of all parties concerned,
including the Company and its minority shareholders, that, if agreement were
to be reached on the terms and conditions of a transaction, such agreement be
reached as soon as possible and that the Special Committee should have
adequate opportunity to duly consider the proposed terms and conditions.
Messrs. Xxxxxx and Xxxxx further agreed to seek to finalize negotiations no
later than August 19. Messrs. Xxxxxx and Xxxxx decided to meet in Boston,
Massachusetts, on Sunday, August 17, 1997, if Xx. Xxxxx felt such a meeting
would be useful following further discussions with his financial advisors.
During the evening of August 16, 1997, Xxxxxx Xxxxxxx and Xxxxxxx Xxxxx met
to discuss their respective views on valuation. During the morning and
afternoon of August 17, 1997, the Special Committee met with its advisors in
Boston, Massachusetts to discuss in detail Xxxxxxx Xxxxx' views on valuation.
Following the Special Committee meeting and throughout the next day numerous
discussions and meetings were held between Messrs. Xxxxxx and Xxxxx and their
respective advisors. During the evening of August 18, Xx. Xxxxxx agreed to
confer with Purchaser Board members the following morning with respect to the
possibility of proceeding with an offer of $97 per Share; Xx. Xxxxx agreed to
convene a Special Committee meeting on August 19 to consider a $97 per Share
transaction; and it was agreed that the parties' respective legal counsel
would proceed with negotiation of the Merger Agreement.
During the morning of August 19, Xx. Xxxxxx called Xx. Xxxxx to advise him
that the Purchaser Board members with whom he conferred would support a
recommended transaction at $97 per Share.
At a meeting held in the evening of August 19, 1997, the Special Committee
unanimously recommended and approved the Merger Agreement and Merger. The
Company Board then met and approved and adopted the Merger Agreement and the
Merger Agreement was executed. On August 20, Purchaser and the Company
announced the Offer.
8
On August 22, 1997, Purchaser commenced the Offer. Pursuant to the Offer,
which expired, as scheduled, at 5:00 p.m. New York City time, on Wednesday,
October 1, 1997, Purchaser acquired 46,138,374 Shares. As a result of such
purchase and the prior acquisition of Shares, Purchaser owns 141,222,394
Shares (representing approximately 98.53% of the issued and outstanding Shares
based on the number of Shares issued and outstanding on October 1, 1997).
RECOMMENDATION OF THE COMPANY BOARD; FAIRNESS OF THE OFFER AND THE MERGER
Recommendation of the Special Committee and the Company Board
On August 19, 1997, the Special Committee unanimously determined that each
of the Offer and the Merger is fair to, and in the best interests of, the
Company, and unanimously voted to recommend and approve the Offer, the Merger
and the Merger Agreement.
On August 19, 1997, the Company Board, by a unanimous vote of all directors
present and voting, based in part on the unanimous recommendation and approval
of the Special Committee, approved the Merger Agreement and the transactions
contemplated thereby and determined that each of the Offer and the Merger is
fair to, and in the best interests of, the Company. The Company Board, by a
unanimous vote of all directors present and voting, recommended that all
holders of Shares accept the Offer and tender their Shares pursuant to the
Offer and approve and adopt the Merger Agreement. The directors of the Company
Board designated by Xxxxxxxxx and present at the Company Board meeting (other
than Xx. Xxxxxxxx) recused themselves from voting due to their inherent
conflict of interest. Xx. Xxxxxxxx did not recuse himself because, unlike the
other Purchaser designees, he had no affiliations with Purchaser other than
being a Purchaser designee to the Company Board, and in fact was the former
Chairman of the Board, President and Chief Executive Officer of the Company.
Furthermore, Xx. Xxxxxxxx beneficially owns 98,620 Shares and holds options to
purchase 326,789 Shares, and therefore has a significant economic incentive in
addition to his fiduciary duties to ensure that the best available transaction
for the Company was obtained.
Fairness of the Offer and the Merger
Special Committee. In reaching its determinations referred to immediately
above, the Special Committee considered the following factors, each of which,
in the view of the Special Committee, supported such determinations:
(i) the historical market prices and recent trading activity of the
Shares, including (x) that the Offer of $97 per Share represents a premium
of approximately 22% over the $79.44 per Share closing price on June 25,
1997, the day prior to the June 26, 1997 Announcement, a premium of
approximately 20% over the $80.88 per Share closing price on June 13, 1997,
which was the 52-week high closing price for the Shares prior to the June
26, 1997 Announcement, and a premium of approximately 53.1% over the $63.38
per Share closing price on July 24, 1996, which was the 52-week low closing
price prior to the June 26, 1997 Announcement, (y) that the weighted
average per Share price between June 26, 1997 and August 17, 1997 was
$92.48 per Share, and (z) that the Shares never traded on the New York
Stock Exchange (the "NYSE") above $96 per Share following the June 26, 1997
Announcement;
(ii) the history of the negotiations between the Special Committee and
its representatives and Purchaser and its representatives, including that
(a) the negotiations resulted in an increase in the price at which
Purchaser was prepared to acquire the Shares from $92 to $97 per Share, and
(b) the Special Committee's belief that Purchaser would not further
increase the Offer price, and accordingly $97 per Share was, in the opinion
of the Special Committee, the highest price which could be obtained from
Purchaser;
(iii) the opinion of Xxxxxxx Xxxxx that based upon and subject to the
assumptions and qualifications stated therein the $97 per Share to be
received by the shareholders of the Company (other than Purchaser and its
subsidiaries) in the Offer and the Merger is fair to such holders, and the
report and analysis presented to the Special Committee in connection
therewith (See "THE MERGER--Opinion of Xxxxxxx, Xxxxx & Co.");
9
(iv) the fact that the standstill provisions in the Acquisition Agreement
expired on July 31, 1997 after which time Purchaser is permitted to acquire
in the open market such number of Shares which together with the Shares
owned by Purchaser would not exceed 75% of the outstanding Shares, and to
the extent Purchaser wanted to exceed the 75% threshold, Purchaser was
entitled to commence a Qualifying Tender Offer which could be at a price
per Share below Purchaser's original price of $92 per Share or otherwise
substantially below the $97 per Share Offer price;
(v) the belief that a Qualifying Tender Offer unilaterally commenced by
Purchaser without a recommendation of the Special Committee may have been
successfully completed at a price lower than that negotiated and
recommended by the Special Committee;
(vi) the possibility that, because of potentially lower than expected
projected Company earnings or a decline in the trading price of the Shares
or the stock market in general, the consideration the minority shareholders
would obtain in a future transaction might be less advantageous than the
consideration they will receive pursuant to the Offer and the Merger;
(vii) the Special Committee recognized that the sale of control of the
Company to Purchaser occurred in 1990 upon consummation of the transactions
contemplated in the Acquisition Agreement;
(viii) Purchaser has sufficient stock ownership to control a disposition
of the Company and the Special Committee and Xxxxxxx Xxxxx were not
authorized to, and did not, solicit third party indications of interest for
the acquisition of the Company or its businesses;
(ix) the terms of the Offer, the Merger and the Merger Agreement,
including (a) that the Minimum Condition could not be waived; (b) that the
terms and conditions of the Offer could not be changed in any manner which
was materially adverse to the minority shareholders without the consent of
the Special Committee; (c) that the recommendation of the Special Committee
may be withdrawn, modified or amended to the extent the Special Committee
believes it necessary to do so in the exercise of its fiduciary duties; (d)
that the Offer was not subject to any financing condition; (e) that the
terms of the Merger Agreement may only be amended or waived by the Special
Committee; and (f) the limited nature of other conditions to the Offer and
the Merger;
(x) the Minimum Condition requirement that the Offer not be consummated
unless at least 68.7% of the Shares not held by Purchaser be validly
tendered pursuant to the Offer and not withdrawn;
(xi) the availability of dissenters rights for the minority shareholders
under the PBCL in connection with the Merger; and
(xii) the risk that the Company would suffer the loss of key employees
and other adverse consequences if Purchaser were to commence a unilateral
tender offer.
Company Board. In reaching its determinations referred to above, the Company
Board considered the following factors, each of which, in the view of the
Company Board, supported such determinations: (i) the conclusions and
recommendations of the Special Committee; (ii) the factors referred to above
as having been taken into account by the Special Committee, including the
receipt by the Special Committee of the opinion of Xxxxxxx Xxxxx addressed
solely to the Special Committee that based upon and subject to the assumptions
stated therein the $97 per Share to be received by the shareholders of the
Company (other than Purchaser and its subsidiaries) in the Offer and the
Merger is fair to such holders and the analysis presented to the Company
Board; and (iii) the fact that the Offer price and the terms and conditions of
the Merger Agreement were the result of arm's-length negotiations between the
Special Committee and Purchaser.
The members of the Company Board, including the members of the Special
Committee, evaluated the Offer and the Merger in light of their knowledge of
the business, financial condition and prospects of the Company, and based upon
the advice of financial and legal advisors. In light of the number and variety
of factors that the Company Board and the Special Committee considered in
connection with their evaluation of the Offer and the Merger, neither the
Company Board nor the Special Committee found it practicable to assign
relative weights to the foregoing factors, and, accordingly, neither the
Company Board nor the Special Committee did so.
10
The Company Board, including the members of the Special Committee, believes
that the Offer and the Merger are procedurally fair because, among other
things: (i) the Offer was in all material respects a Qualifying Tender Offer
as defined in the Acquisition Agreement and the Merger will be conducted in
accordance with requirements of the Acquisition Agreement; (ii) the Special
Committee consisted of Independent Directors appointed to represent the
interests of the shareholders other than Purchaser; (iii) the Special
Committee retained and was advised by independent legal counsel; (iv) the
Special Committee retained Xxxxxxx Xxxxx as its independent financial advisor
to assist it in evaluating a potential transaction with Purchaser and received
advice from Xxxxxxx Xxxxx; (v) the existence of the Minimum Condition (which
could not be waived) had the effect of requiring approximately two-thirds of
the Company's shareholders (other than Purchaser) to tender their Shares into
the Offer in order for it to be consummated; (vi) the deliberations pursuant
to which the Special Committee evaluated the Offer and the Merger and
alternatives thereto; and (vii) the fact that the $97 per Share price and the
other terms and conditions of the Merger Agreement resulted from active arm's-
length bargaining between representatives of the Special Committee, on the one
hand, and representatives of Purchaser, on the other.
The Board and the Special Committee recognized that the Merger is not
structured to require the approval of a majority of the shareholders of the
Company other than Purchaser, and that Purchaser currently has sufficient
voting power to approve the Merger Agreement without the affirmative vote of
any other shareholder of the Company. A condition to the Merger, however, is
that Purchaser shall have purchased all Shares tendered in the Offer.
Consummation of the Offer was conditioned upon there being validly tendered,
and not withdrawn, such number of the then issued and outstanding Shares,
other than the Purchaser Shares, which, when taken together with the Purchaser
Shares, constitutes 90% of the then issued and outstanding Shares, which
effectively required that approximately two-thirds of the minority
shareholders tender their Shares.
OPINION OF XXXXXXX, XXXXX & CO.
Xxxxxxx Xxxxx has acted as financial advisor to the Special Committee in
connection with the Merger, as described under "THE MERGER--Background of the
Merger". On August 19, 1997, Xxxxxxx Xxxxx delivered its oral opinion, which
was subsequently confirmed in writing, to the Special Committee that, as of
the date of such opinion, the $97 per Share in cash to be received by the
holders of Shares other than Purchaser and its subsidiaries in the Offer and
the Merger is fair to such holders.
THE FULL TEXT OF THE WRITTEN OPINION OF XXXXXXX XXXXX DATED AUGUST 19, 1997,
WHICH SETS FORTH ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE
REVIEW UNDERTAKEN IN CONNECTION WITH THE OPINION, IS ATTACHED HERETO AS ANNEX
C AND IS INCORPORATED HEREIN BY REFERENCE. SHAREHOLDERS OF THE COMPANY ARE
URGED TO, AND SHOULD, READ SUCH OPINION IN ITS ENTIRETY.
In connection with its opinion, Xxxxxxx Xxxxx reviewed, among other things,
(i) the Merger Agreement; (ii) the Annual Reports to Shareholders and Annual
Reports on Form 10-K of the Company for the five years ended December 31,
1996; (iii) certain interim reports to shareholders and Quarterly Reports on
Form 10-Q; (iv) certain other communications from the Company to its
shareholders; and (v) certain internal financial analyses and forecasts for
the Company prepared by its management. Xxxxxxx Xxxxx held discussions with
members of the senior management of the Company regarding its past and current
business operations, financial condition and future prospects. Xxxxxxx Xxxxx
also held discussions with members of the senior management of Centeon L.L.C.
("Centeon"), a joint venture in which the Company has a 50% interest. In
addition, Xxxxxxx Xxxxx reviewed the reported price and trading activity for
the Shares, compared certain financial and stock market information for the
Company with similar information for certain other companies the securities of
which are publicly traded, reviewed the financial terms of certain recent
business combinations and performed such other studies and analyses as it
considered appropriate.
Xxxxxxx Xxxxx relied upon the accuracy and completeness of all of the
financial and other information reviewed by it and has assumed such accuracy
and completeness for purposes of rendering its opinion. In addition, Xxxxxxx
Xxxxx has not made an independent evaluation or appraisal of the assets and
liabilities of the Company or any of its subsidiaries, and Xxxxxxx Xxxxx has
not been furnished with any such evaluation or
11
appraisal. Xxxxxxx Xxxxx was not requested or authorized to solicit, and did
not solicit, interest from any party with respect to an acquisition of the
outstanding Shares, the Company or its constituent businesses. The opinion of
Xxxxxxx Xxxxx referred to herein was provided for the information and
assistance of the Special Committee in connection with its consideration of
Offer and the Merger and does not constitute a recommendation as to how any
holder of Shares should vote such Shares with respect to the Merger Agreement.
The following is a summary of certain of the financial analyses used by
Xxxxxxx Xxxxx in connection with providing its opinion to the Special
Committee on August 19, 1997.
(i) Historical Stock Trading Analysis. Xxxxxxx Xxxxx reviewed the
historical trading prices and volumes for the Shares for the period from
August 14, 1995 to August 18, 1997. Such analysis indicated that the
closing price per Share during such period ranged from $42.13 to $95.94.
Xxxxxxx Xxxxx also reviewed the weighted average trading prices for the
Shares for four periods. Such analysis indicated that the weighted average
price per Share for the period from July 31, 1993 (the date of the
retirement of the Company's contingent value rights) to June 25, 1997 (the
day prior to the June 26, 1997 Announcement) was $52.31; for the one year
period ending June 25, 1997 was $72.22; for the period from October 10,
1996 (the date a product recall by Centeon was announced) to June 25, 1997
was $73.11; and for the period from June 26, 1997 to August 18, 1997 was
$92.48
(ii) Selected Companies Analysis. Xxxxxxx Xxxxx reviewed and compared
certain financial information relating to the Company to corresponding
financial information, ratios and public market multiples for publicly
traded corporations: Xxxxxx Laboratories, American Home Products Corp.,
Xxxxxxx-Xxxxx Squibb Co., Xxx Xxxxx & Co., Merck & Co. Inc., Pfizer Inc.,
Pharmacia & Upjohn, Inc., Schering-Plough Corp. and Xxxxxx-Xxxxxxx Co. (the
"Selected Companies"). The Selected Companies were chosen because they are
publicly traded companies with operations that for purposes of analysis may
be considered similar to the Company. Xxxxxxx Xxxxx calculated and compared
various financial multiples and ratios. The multiples of the Company were
calculated using per Share prices of $79.44 and $94.56, the closing prices
of the Shares on the NYSE on June 25, 1997 and August 18, 1997,
respectively, and a per Share price of $97.00, the price to be paid in the
Offer. The multiples and ratios for the Company were based on publicly
available information and information provided by the Company's management
and the multiples for each of the Selected Companies were based on the most
recent publicly available information. With respect to the Selected
Companies, Xxxxxxx Xxxxx considered levered market capitalization in United
States dollars (i.e., the market value of common equity plus book value of
debt less cash) as a multiple of Latest Twelve Months ("LTM") sales, as a
multiple of LTM earnings before interest, taxes, depreciation and
amortization ("EBITDA") and as a multiple of LTM earnings before interest
and taxes ("EBIT"). Xxxxxxx Xxxxx' analyses of the Selected Companies
indicated levered multiples of LTM sales, which ranged from 2.5x to 6.0x
with a mean and median of 5.0x, LTM EBITDA, which ranged from 8.2x to 26.9x
with a mean of 16.8x and a median of 16.1x, and LTM EBIT, which ranged from
10.5x to 32.9x with a mean of 19.8x and a median of 18.0x, compared to
levered multiples of 2.6x, 11.9x and 17.0x, respectively, for the Company
based on a stock price of $79.44 per Share, 3.1x, 13.8x and 19.6x,
respectively, for the Company based on a stock price of $94.56 per Share
and 3.1x, 14.1x and 20.0x, respectively, for the Company based on a stock
price of $97.00 per Share. Xxxxxxx Xxxxx also considered estimated calendar
year 1997 and 1998 price/earnings ratios, which, for the Selected
Companies, ranged from 20.3x to 38.9x with a mean of 26.6x and a median of
24.2x for estimated calendar year 1997 and 17.3x to 29.6x with a mean of
22.2x and a median of 20.5x for estimated calendar year 1998 compared to
22.1x and 18.7x, respectively, for the Company based on a stock price of
$79.44 per Share, 26.3x and 22.3x, respectively, for the Company based on a
stock price of $94.56 per Share and 26.9x and 22.8x, respectively, for the
Company based on a stock price equal to $97.00 per Share; LTM EBITDA
margins, LTM EBIT margins and LTM net margins, which, for the Selected
Companies, ranged from 18.8% to 38.1% with a mean of 30.2% and a median of
30.4%, 15.3% to 31.0% with a mean of 25.6% and a median of 26.8% and 10.3%
to 21.7% with a mean of 17.5% and a median of 17.6%, respectively, compared
to 22.2%, 15.5% and 7.6%, respectively, for the Company; estimated calendar
year 1997 price/earnings to total return ratios, which, for
12
the Selected Companies, ranged from 1.4x to 2.2x with a mean of 1.7x and a
median of 1.6x compared to 1.4x for the Company based on a stock price of
$79.44 per Share, 1.7x for the Company based on a stock price of $94.56 per
Share and 1.8x based on a stock price equal to the $97.00 per Share;
estimated calendar year 1997 and 1998 price/earnings growth multiples
which, for the Selected Companies, ranged from 1.7x to 2.4x with a mean and
median of 2.0x for estimated calendar year 1997 and 1.5x to 1.8x with a
mean and median of 1.7x for estimated calendar year 1998 compared to 1.6x
and 1.3x, respectively, for the Company based on a stock price of $79.44
per Share and 1.9x and 1.6x, respectively, for the Company based on a stock
price of $94.56 per Share and 1.9x and 1.6x, respectively, for the Company
based on a stock price equal to $97.00 per Share; and a five-year average
earnings per Share ("EPS") growth rate (obtained through Institutional
Brokers Estimate System) for the Selected Companies ranging from 10.0% to
16.5% with a mean of 13.4% and a median of 13.0% compared to 14.0% for the
Company.
(iii) Discounted Cash Flow Analysis. Xxxxxxx Xxxxx performed discounted
cash flow analyses using the August Projections (as hereinafter defined)
prepared by the Company (the "Base Case") and using the August Projections
and adding to the Base Case certain products in the Company's research and
development pipeline that were excluded ("Excluded Pipeline") from the Base
Case (the "Base Case Plus Excluded Pipeline"). Xxxxxxx Xxxxx calculated a
net present value of free cash flows for the fourth quarter of 1997 and for
the years 1998 through 2002 using discount rates ranging from 10.0% to
11.0%. Xxxxxxx Xxxxx calculated the Company's terminal values in the year
2002 based on the marginal free cash flow growth rate in 2002 to estimate
free cash flow in 2003 and perpetual growth rates of free cash flows
ranging from 5.0% to 6.0%. These terminal values were then discounted to
present value using discount rates ranging from 10.0% to 11.0%. Such
analyses indicated implied per Share values ranging from $72.88 to $114.54
in the Base Case and $84.70 to $132.93 in the Base Case Plus Excluded
Pipeline.
(iv) Component Analysis. Xxxxxxx Xxxxx performed separate valuation
analyses on three financial components of the Company: the Base Case
excluding the contribution to earnings and cash flow from Centeon, the
Company's 50/50 joint venture with Behringwerke AG, a subsidiary of Hoechst
AG ("Base Case without Centeon"), the Excluded Pipeline and Centeon.
Xxxxxxx Xxxxx performed discounted cash flow analyses on the Base Case
without Centeon, calculating a net present value of free cash flows for the
fourth quarter of 1997 and the years 1998 through 2002 using discount rates
ranging from 10.0% to 11.0%. Xxxxxxx Xxxxx calculated terminal values in
the year 2002 based on the marginal free cash flow growth rate in the year
2002 to estimate free cash flow in 2003 and perpetual growth rates of free
cash flows ranging from 5.0% to 6.0%. These terminal values were then
discounted to present value using discount rates ranging from 10.0% to
11.0%. Such analysis indicated implied per Share values ranging from $62.76
to $99.72.
Xxxxxxx Xxxxx also performed discounted cash flow analyses on the Base
Case without Centeon including the Excluded Pipeline, calculating the net
present value of free cash flows for the fourth quarter of 1997 and the
years 1998 through 2002 using discount rates ranging from 10.0% to 11.0%.
Xxxxxxx Xxxxx calculated terminal values in the year 2002 based on the
marginal free cash flow growth rate in the year 2002 to estimate free cash
flow in 2003 and perpetual growth rates of free cash flows ranging from
5.0% to 6.0%. These terminal values were then discounted to present value
using discount rates ranging from 10.0% to 11.0%. Xxxxxxx Xxxxx then
subtracted the net present values obtained for the Base Case without
Centeon from the net present values obtained for the Base Case without
Centeon including the Excluded Pipeline to determine the implied net
present value of the Excluded Pipeline. Such analyses indicated implied per
Share values of the Excluded Pipeline ranging from $9.55 to $14.84.
Xxxxxxx Xxxxx also valued the Excluded Pipeline by using a Monte Carlo
simulation to determine the probability-weighted value of the Excluded
Pipeline using management estimates for probability of technical success
and cash flows for the initial development period and the first ten years
from date of launch for each product for the Excluded Pipeline and standard
pharmaceutical product lifecycle sales and cash flow curves for an
additional 15 years for each product. Such analysis indicated implied per
Share values for the Excluded Pipeline, assuming 1 standard deviation
around the mean, ranging from $9.00 to $17.00.
13
Xxxxxxx Xxxxx calculated the net present value of Centeon using
management's projections for the years 1998 through 2000 and a terminal
value equal to 10.0x year 2000 operating income. Using discount rates of
12.0% to 15.0%, such analysis indicated implied per Share values of Centeon
of $7.88 and $7.31, respectively.
(v) Selected Transactions Analysis. Xxxxxxx Xxxxx analyzed certain
information relating to the following transactions involving sales of
control in the pharmaceutical industry since 1990: Hoechst/Xxxxxx-Xxxxxxx
Xxx; Glaxo plc/Wellcome plc; American Home Products/American Cyanamid;
Roche Ltd./Syntex; and Xxxxx-Xxxxxxx S.A./Xxxxx Group Inc. (the "Selected
Transactions"). Such analysis indicated that for the Selected Transactions
(i) total entity value as a multiple of LTM sales ranged from 2.0x to 3.6x
with a mean of 2.7x and a median of 2.5x, as compared to 3.2x for the total
entity value of the Company, (ii) total entity value as a multiple of LTM
EBIT ranged from 10.2x to 23.4x with a mean of 15.7x and a median of 12.3x,
as compared to 20.4x for the total entity value of the Company and (iii)
the total equity market value as a multiple of LTM net income ranged from
15.8x to 38.7x with a mean of 24.2x and a median of 22.1x, as compared to
35.8x for the total equity market value of the Company.
(vi) Selected Buyouts By Significant Existing Shareholders. Xxxxxxx Xxxxx
analyzed certain information relating to the premiums paid in selected
transactions involving buyouts of a minority interest by an existing
significant shareholder since 1988. Such analysis indicated initial bid
price premiums over market price one month prior to the announcement of the
transaction which ranged from negative 8.4% to 241.7% with a mean of 27.0%
and a median of 20.0% and final premiums over market price one month prior
to the announcement of the transaction ranging from negative 20.0% to
241.7% with a mean of 34.2% and a median of 26.1%, each as compared to a
30.8% premium of the $97.00 per Share to be paid in the Offer over the per
Share closing price on the NYSE on May 28, 1997 (four weeks prior to the
June 26, 1997 Announcement).
(vii) Present Value of Implied Future Stock Price. Xxxxxxx Xxxxx
performed an analysis to determine the present value of implied future
Share prices based on four different scenarios of estimates of EPS for the
Company for the years 1998 through 2002. Xxxxxxx Xxxxx used the EPS
estimates from the Base Case and the Base Case Plus Excluded Pipeline, each
with and without including the impact of reducing the Company's excess
inventory position with customers included in the Company's management's
projections ("De-load", respectively without De-load, the "Base Case
Without De-load" and the "Base Case Plus Excluded Pipeline Without De-
load"). Xxxxxxx Xxxxx calculated the implied future Share prices using
price/earnings multiples of 21.0x and 23.0x. These implied future Share
prices were then discounted to present value using discount rates of 10.5%
and 14.0%. This analysis indicated that the present value of the implied
future Share price for the years 1997 through 2001 using price/earnings
multiples of 21.0x and 23.0x and based upon a discount rate of 10.5% ranged
from $72.03 to $112.03 in the Base Case, $78.54 to $112.32 in the Base Case
Without De-load, $72.24 to $129.74 in the Base Case Plus Excluded Pipeline
and $78.75 to $130.04 in the Base Case Plus Excluded Pipeline Without De-
load, and, based upon a discount rate of 14.0% ranged from $72.03 to $99.21
in the Base Case, $78.54 to $99.49 in the Base Case Without De-load, $72.24
to $114.86 in the Base Case Plus Excluded Pipeline and $78.75 to $115.14 in
the Base Case Plus Excluded Pipeline Without De-load.
(viii) Impact on EPS Analysis. Xxxxxxx Xxxxx performed an analysis to
determine the impact on Purchaser of an acquisition of the Shares held by
holders other than Purchaser and its subsidiaries at prices per Share
ranging from $92.00 to $104.00. Such analysis indicated substantial
dilution to Purchaser's 1998 estimated EPS and that Purchaser's pro forma
net debt to total capital ratio ranged from 53.8% to 54.4%.
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary set forth above, without
considering the analyses as a whole, could create an incomplete view of the
processes underlying Xxxxxxx Xxxxx' opinion. In arriving at its fairness
determination, Xxxxxxx Xxxxx considered the results of all such analyses. No
company or transaction used in the above analyses as a comparison is directly
comparable to the Company or Purchaser or the contemplated transaction. The
analyses were prepared solely for purposes of
14
Xxxxxxx Xxxxx' providing its opinion to the Special Committee as to the
fairness of the $97 per Share in cash to be received by the holders of Shares
in the Offer and the Merger and do not purport to be appraisals or necessarily
reflect the prices at which businesses or securities actually may be sold.
Analyses based upon forecasts of future results are not necessarily indicative
of actual future results, which may be significantly more or less favorable
than suggested by such analyses. Because such analyses are inherently subject
to uncertainty, being based upon numerous factors or events beyond the control
of the parties or their respective advisors, none of the Company, Purchaser,
Xxxxxxx Xxxxx or any other person assumes responsibility if future results are
materially different from those forecast. As described above, Xxxxxxx Xxxxx'
opinion to the Special Committee was one of many factors taken into
consideration by the Special Committee in making its determination to
recommend the adoption of the Merger Agreement to the Company Board. The
foregoing summary does not purport to be a complete description of the
analysis performed by Xxxxxxx Xxxxx and is qualified by reference to the
written opinion of Xxxxxxx Xxxxx set forth on Annex C attached hereto.
Xxxxxxx Xxxxx, as part of its investment banking business, is continually
engaged in the valuation of businesses and their securities in connection with
mergers and acquisitions, negotiated underwritings, competitive biddings,
secondary distributions of listed and unlisted securities, private placements,
and valuations for estate, corporate and other purposes. The Special Committee
selected Xxxxxxx Xxxxx as its financial advisor because it is an
internationally recognized investment banking firm, has substantial experience
in transactions similar to the Offer and the Merger, has expertise in the
pharmaceutical industry and represented that it did not have an existing
engagement with Purchaser, nor would it accept an assignment from Purchaser
during its engagement by the Special Committee.
Xxxxxxx Xxxxx provides a full range of financial, advisory and brokerage
services and in the course of its normal trading activities may from time to
time effect transactions and hold positions in the securities or options on
securities of the Company and/or Purchaser for its own account and for the
account of customers. As of August 22, 1997 (the date on which Purchaser
commenced the Offer), Xxxxxxx Xxxxx held for its own account a long position
of 828,962 Shares.
Pursuant to a letter agreement dated July 21, 1997 (the "Engagement
Letter"), the Company engaged Xxxxxxx Xxxxx to act as exclusive financial
advisor to the Special Committee in connection with its consideration of any
proposals made by Purchaser to acquire all or substantially all of the
outstanding Shares held by shareholders other than Purchaser. Pursuant to the
terms of the Engagement Letter, the Company agreed to pay Xxxxxxx Xxxxx (i) a
financial advisory fee of $500,000, (ii) a fee of $1,500,000 upon the delivery
of its opinion and (iii) a transaction fee equal to (A) (I) 1.5% of the amount
by which $96.00 exceeds $93.50 plus (II) 2.0% of the amount by which $97.00
exceeds $96.00 times (B) the number of Shares (including Shares issuable
pursuant to options, warrants and convertible securities) acquired by
Purchaser. The Company has agreed to reimburse Xxxxxxx Xxxxx for its
reasonable out-of-pocket expenses, including attorney's fees, and to indemnify
Xxxxxxx Xxxxx against certain liabilities, including certain liabilities under
the federal securities laws.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
In considering the recommendation of the Company Board and the Special
Committee with respect to the Offer and the Merger, shareholders should be
aware that certain officers and directors of Purchaser and the Company have
interests in the Offer and the Merger which are described below and which may
present them with certain potential conflicts of interest. Currently, of the
thirteen directors of the Company, one is also a director of Purchaser and
three are executive officers of Purchaser. Xx. Xxxx Xxxx Xxxxx, a director of
the Company, is also a Vice-Chairman and a director of Purchaser; Xx. Xxxx
Xxxxxx, a director of the Company, is also a Group President of Purchaser; Mr.
Xxxx-Xxxxxx Xxxxxxxxx, a director of the Company, is also Senior Executive
Group Vice-President of Purchaser; and Xx. Xxxxxx xx Xxxxx, Chairman and Chief
Executive Officer of the Company, is also an executive officer of Purchaser.
Xx. Xxxxxx X. Xxxxxxxx is a designee of Purchaser to the Company Board,
although Xx. Xxxxxxxx is not an employee of Purchaser. See "OWNERSHIP OF
SHARES" for information regarding Shares and options to acquire Shares
beneficially owned by certain of Purchaser's executive officers or directors.
15
Shareholders also should be aware that Purchaser has certain interests that
present actual or potential conflicts of interest in connection with the Offer
and the Merger. As a result of Purchaser's current ownership of approximately
98.53% of the issued and outstanding Shares and its nominees constituting a
majority of the Company's directors, Purchaser may be deemed to control the
Company.
The Special Committee and the Board were aware of these actual and potential
conflicts of interest and considered them along with the other matters
described under "SPECIAL FACTORS--Recommendation of the Company Board;
Fairness of the Offer and the Merger".
PAYMENT FOR SHARES OF COMMON STOCK
As a result of the Merger, holders of certificates formerly representing
shares of Common Stock will cease to have any equity interest in the Company.
After consummation of the Merger, each Share issued and outstanding
immediately prior to the consummation of the Merger held by shareholders other
than Purchaser or any direct or indirect subsidiary of Purchaser will be
required to be surrendered to ChaseMellon Shareholder Services, L.L.C. (the
"Paying Agent") in order that such Share be cancelled and converted
automatically into the right to receive the cash price of $97 per Share. No
interest will be paid or accrued on the cash payable upon the surrender of
such certificates.
DETAILED INSTRUCTIONS WITH REGARD TO THE SURRENDER OF CERTIFICATES, TOGETHER
WITH A LETTER OF TRANSMITTAL, WILL BE FORWARDED TO FORMER HOLDERS OF SHARES BY
THE PAYING AGENT PROMPTLY FOLLOWING THE EFFECTIVE TIME. HOLDERS OF SHARES
SHOULD NOT SUBMIT THEIR CERTIFICATES TO THE PAYING AGENT UNTIL THEY HAVE
RECEIVED SUCH MATERIALS. PAYMENT FOR SHARES OF COMMON STOCK WILL BE MADE TO
FORMER HOLDERS OF SHARES AS PROMPTLY AS PRACTICABLE FOLLOWING RECEIPT BY THE
PAYING AGENT OF THEIR CERTIFICATES AND OTHER REQUIRED DOCUMENTS.
POSITION OF PURCHASER REGARDING FAIRNESS OF THE OFFER AND THE MERGER
Xxxxxxxxx believes that the consideration to be received by the Company's
shareholders, other than Purchaser, pursuant to the Offer and the Merger is
fair to the Company's shareholders other than Purchaser. Purchaser bases its
belief on the following facts: (i) the fact that the Special Committee
concluded that the Offer and the Merger are fair to, and in the best interests
of, the Company, (ii) notwithstanding the fact that Xxxxxxx Xxxxx' opinion was
provided solely for the information and assistance of the Special Committee
and that Purchaser is not entitled to rely on such opinion, the fact that the
Special Committee received an opinion from Xxxxxxx Xxxxx that the $97 per
Share in cash to be received by the holders of Shares other than Purchaser and
its subsidiaries in the Offer and the Merger is fair to such holders, (iii)
the Offer was a Qualifying Tender Offer under the Acquisition Agreement (other
than with respect to the minimum offering period, which has been reduced from
30 business days to 28 business days with the agreement of the Special
Committee) and as such is consistent with the original intent of the parties
to the Acquisition Agreement, and furthermore the Merger will be conducted in
accordance with the requirements of the Acquisition Agreement, (iv) the
presence of the Minimum Condition ensured that in order for the Offer to be
successful approximately two-thirds of the Shares not held by Purchaser would
have to be tendered into the Offer, (v) the historical and projected financial
performance of the Company and its financial results, (vi) the consideration
paid in the Offer represents a premium of 24.8% over the average closing price
for the one month period prior to June 26, 1997, (vii) the consideration paid
in the Offer represents a premium of 22.1% over the reported closing price on
the last full trading day prior to the June 26, 1997 Announcement of
Purchaser's study of a possible business combination with the Company, on
which date the last reported sale price was near its historic closing high,
(viii) the Acquisition Agreement was negotiated on an arm's-length basis in
1990 and has resulted in the shareholders of the Company benefiting from
substantial appreciation in the value of their Shares since 1990, (ix) the
same consideration will be paid in both the Offer and the Merger and (x) the
Offer and the Merger will each provide consideration to the shareholders
entirely in cash. Purchaser did not find it practicable to assign, nor did it
assign, relative weights to the individual factors considered in reaching its
conclusion as to fairness. In light of the nature
16
of the Company's business, Purchaser did not deem net book value or
liquidation value to be relevant indicators of the value of the Shares.
PURPOSE AND STRUCTURE OF THE OFFER AND THE MERGER; REASONS OF PURCHASER FOR
THE OFFER AND THE MERGER
The purpose of the Offer and the Merger is for Purchaser directly to
increase, within the terms established by the Acquisition Agreement, its
ownership of Shares from approximately 68.1% to 100%. Upon consummation of the
Merger, the Company will become a direct wholly owned subsidiary of Purchaser.
The acquisition of the Shares not owned by Purchaser has been structured as a
cash tender offer followed by a cash merger in order to (i) comply with the
requirements of the Acquisition Agreement, (ii) effect a prompt and orderly
transfer of ownership of the Company from the public shareholders to Purchaser
and (iii) provide shareholders with cash for all of their Shares.
Under the PBCL, the approval of the Company Board and the affirmative vote
of the holders of a majority of the issued and outstanding Shares are required
to approve and adopt the Merger Agreement and the transactions contemplated
thereby, including the Merger. The Company Board has approved and adopted the
Merger Agreement and the transactions contemplated thereby, and the only
remaining required corporate action of the Company is the approval and
adoption of the Merger Agreement and the transactions contemplated thereby by
the affirmative vote of the holders of a majority of the Shares. Purchaser
already has sufficient voting power to cause the approval and adoption of the
Merger without the affirmative vote of any other shareholder of the Company.
Pursuant to the Acquisition Agreement, however, Purchaser may only exercise
such voting power to effect a merger of the Company subsequent to a Qualifying
Tender Offer as defined in the Acquisition Agreement. The Offer satisfied the
requirements of a Qualifying Tender Offer except for the reduction in the
minimum offering period from 30 business days to 28 business days as approved
by the Special Committee.
In the Merger Agreement, the Company agreed to take all action necessary to
convene a special meeting of its shareholders as soon as practicable following
consummation of the Offer for the purpose of considering and taking action on
the Merger Agreement and the transactions contemplated thereby and to use its
reasonable best efforts to obtain such approval and adoption. Purchaser has
agreed that all Shares owned by it and its subsidiaries will be voted in favor
of the Merger Agreement and the transactions contemplated thereby.
Purchaser's principal strategic objective has been to reinforce its position
in the life sciences. In order to further this objective, Purchaser has
considered various means of expanding its collaboration with the Company,
including increasing its voting equity interest to 100%. Purchaser concluded
that such an acquisition would enhance Purchaser's strategic flexibility and
allow it to benefit from opportunities in the businesses in which Purchaser
and the Company operate. Purchaser also concluded that the combination of
Purchaser and the Company would result in Purchaser and its affiliates having
only one life sciences company with publicly-listed common stock, and a
separate listing of the specialty chemicals and services to industry business.
Such steps would bring about a clearer differentiation between life sciences,
on the one hand, and specialty chemicals and services, on the other. Purchaser
concluded that this clarification should promote an improvement in Purchaser's
market valuation. Consequently, Purchaser concluded that an acquisition by
Purchaser of the remaining Shares should be considered. Purchaser chose to
undertake the transaction at this time because (i) such a transaction was
prohibited by the Acquisition Agreement prior to the end of the standstill
period on July 31, 1997 and (ii) such transaction is consistent with
Purchaser's stated strategy of reinforcing its position in life sciences.
PLANS FOR THE COMPANY AFTER THE MERGER; CERTAIN EFFECTS OF THE OFFER AND THE
MERGER
Except as otherwise described in this Proxy Statement, Purchaser has no
current plans or proposals which relate to or would result in: (a) other than
the Merger, an extraordinary corporate transaction, such as a merger,
reorganization or liquidation involving the Company; (b) a sale or transfer of
a material amount of assets of the Company; (c) any change in the management
of the Company or any change in any material term of the employment contract
of any executive officer; or (d) any other material change in the Company's
corporate structure or business.
17
Nevertheless, Purchaser may initiate a review of the Company and its assets,
corporate structure, capitalization, operations, properties, policies,
management and personnel to determine what changes, if any, would be desirable
following the Merger in order best to organize and integrate the activities of
the Company and Purchaser. In particular, Purchaser may study the possibility
of changing the Company Board by changing the number or term of directors, and
may also consider material changes in the present dividend rate and policy,
indebtedness and capitalization of the Company. In particular, Purchaser
expressly reserves the right to make any changes that it deems necessary or
appropriate in light of its review or in light of future developments.
As a result of the Offer, the direct and indirect interest of Purchaser in
the Company's net book value and net earnings increased to the extent of the
46,138,374 Shares acquired under the Offer. Following consummation of the
Merger, Purchaser's direct and indirect interest in such items will increase
to 100% (other than the issued and outstanding shares of preferred stock of
the Company), and Purchaser and its subsidiaries will be entitled to all
benefits resulting from that interest, including all income generated by the
Company's operations (other than income payable to holders of such preferred
stock), and any future increase in the Company's value and the right to elect
all members of the Company Board (other than the right of holders of preferred
stock to elect members of the Company Board under certain circumstances).
Similarly, Purchaser will also bear the risk of losses generated by the
Company's operations and any decrease in the value of the Company after the
Merger. Upon consummation of the Merger, the Company will become a privately
held corporation. Accordingly, shareholders will not have the opportunity to
participate directly in the earnings and growth of the Company after the
Merger and will not have any right to vote on corporate matters. Similarly,
shareholders will not face the risk of losses generated by the Company's
operations or decline in the value of the Company after the Merger.
Following the consummation of the Merger, the Shares will no longer be
quoted on the NYSE or the Premier Marche (marche a reglement mensual) of the
Bourse de Paris (the "Paris Bourse"). In addition, the registration of the
Shares under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), will be terminated. Accordingly, following the Merger there will be no
publicly-traded Common Stock of the Company outstanding. It is expected that,
if the Merger is not consummated, the Company's current management, under the
general direction of the Company Board, will continue to manage the Company as
an ongoing business.
ACCOUNTING TREATMENT OF THE TRANSACTION
The Merger will be accounted for under the "purchase" method of accounting.
Accordingly, a determination of the fair value of the Company's assets and
liabilities will be made in order to allocate the purchase price to the assets
acquired and the liabilities assumed.
REGULATORY APPROVALS
Purchaser and the Company know of no remaining federal or state regulatory
requirements that must be complied with or approvals that must be obtained in
order to consummate the Merger, other than the filing of the articles of
merger with the Secretary of State of the Commonwealth of Pennsylvania.
CERTAIN SHAREHOLDER LITIGATION
Following the June 26, 1997 announcement by Purchaser that it was studying a
possible business combination with the Company, five putative class actions
were filed by the Company's shareholders. In Brickell x. Xxxxx-Xxxxxxx S.A.
(Supreme Court of the State of New York, County of New York, filed July 9,
1997), plaintiff claims that Purchaser has breached its fiduciary duties to
the Company's shareholders, that it is abusing its dominant position as a
majority shareholder by imposing an inadequate price per Share on the minority
shareholders, which is inadequate and was fixed arbitrarily, and that the
alleged "offer" was not the result of arm's-length negotiations. The relief
sought by plaintiff includes an injunction against the continuation of the
alleged "offer", a declaration that defendant has breached its fiduciary
duties, the establishment of a committee to ensure that the procedure with
respect to any transaction for the purchase of Shares is fair, and damages in
an unspecified amount. Purchaser has filed a motion to dismiss in this action
based upon lack of jurisdiction and
18
forum non conveniens. In Xxxxxxx x. Xxxxx-Xxxxxxx S.A. (United States District
Court for the Eastern District of Pennsylvania, filed July 15, 1997),
plaintiff alleges that Purchaser has committed violations of Section 14(d) and
(e) of the Exchange Act in failing to make the required filing and disclosures
required by those sections, abused its position as the majority shareholder
and undervalued the Share price. The relief sought by plaintiff includes an
injunction against continuation of the alleged "offer", and fees and costs of
the action in an unspecified amount. Purchaser has filed a motion to dismiss
the action based on the plaintiff's failure to serve process on Purchaser and
for failure to state a claim for which relief can be granted. In Krim x.
Xxxxx-Xxxxxxx S.A. et al. (New Jersey Superior Court, Xxxxxx County, filed
July 15, 1997), plaintiff alleges that the alleged "offer" was not the result
of arms'-length negotiations and does not take into account the Company's
future prospects, and that, in proposing an allegedly inadequate price,
defendants--Purchaser and several individuals who are officers and/or
directors of the Company--breached their fiduciary duties by abusing
Purchaser's position as a majority shareholder. The relief sought includes an
injunction against the alleged "offer" or, in the alternative, rescission of
the contemplated transaction, and damages in an unspecified amount. In Xxxxx
x. Xxxxxx X. Xxxxxxxx et al. (Pennsylvania Court of Common Pleas, Trial
Division, Xxxxxxxxxx County, filed July 31, 1997), plaintiff alleges that the
defendants--Purchaser and several individuals who are officers and/or
directors of the Company and/or Purchaser--have breached their fiduciary
duties by using positions of power and control to impose an allegedly
inadequate price per Share on the minority shareholders. The relief sought
includes an injunction against the alleged "offer" or, in the alternative,
rescission of the contemplated transaction, a declaration that defendants have
breached their fiduciary duties, and damages in an unspecified amount. On
August 25, 1997, an additional putative class action was filed by a
shareholder of the Company. In Columbo x. Xxxxx-Xxxxxxx Xxxxx Inc. et al.
(Pennsylvania Court of Common Pleas, Trial Division, Xxxxxxxxxx County, filed
August 25, 1997), plaintiff alleges that the defendants--Purchaser and several
individuals who are officers and/or directors of the Company and/or
Purchaser--have breached their fiduciary duties by using positions of power
and control to impose an allegedly inadequate price per share on the minority
Shareholders. The relief sought includes a declaration that defendants have
breached their fiduciary duties, an injunction against the Offer or, in the
alternative, rescission of the contemplated transaction and damages. Purchaser
and the Company believe that all five putative class actions lack merit and
intend to vigorously defend such actions.
THE MERGER AGREEMENT
The following is a summary of the material provisions of the Merger
Agreement, a conformed copy of which is included with this Proxy Statement as
Annex A. Such summary is qualified in its entirety by reference to the Merger
Agreement.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, and in accordance with Pennsylvania Law, at the
Effective Time, the Merger Subsidiary will be merged with and into the
Company. The Company will continue as the surviving corporation of the Merger
and will become a direct wholly owned subsidiary of Purchaser. At the
Effective Time, each Share issued and outstanding immediately prior to the
Effective Time held by shareholders (other than any Shares owned directly or
indirectly by Purchaser), shall be cancelled and, subject to dissenters rights
under Pennsylvania law, shall be converted automatically into the right to
receive from the Company the Merger Consideration.
The Merger Agreement provides that the directors of the Merger Subsidiary
immediately prior to the Effective Time will be the initial directors of the
Company and that the officers of the Company immediately prior to the
Effective Time remain officers of the Company. The Merger Agreement provides
that, at the Effective Time, the Articles of Incorporation and Bylaws of the
Company will remain unmodified.
The Merger Agreement provides, in accordance with the requirement of the
Acquisition Agreement that the Offer be a Qualifying Tender Offer (see
"INTRODUCTION--General"), that immediately prior to the Effective Time, each
outstanding option to purchase Shares (in each case, an "Option"), whether or
not then exercisable, shall be cancelled and each holder of a cancelled Option
shall be entitled to receive an indemnity payment (the "Exercise Amount") in
cash, in consideration for the cancellation of each such Option, at the same
time as the Merger Consideration is received by the holders of Shares, equal
to the product of (i) the number of Shares to be
19
issued upon the exercise of such Option and (ii) the excess, if any, of the
amount paid per Share pursuant to the Offer over the exercise price per Share
previously subject to such Option. Pursuant to the Merger Agreement, Purchaser
and the Company's Compensation Committee have also defined two alternatives to
such treatment of Options.
The first alternative permits United States holders of Options to defer the
payment of the Exercise Amount and to receive three equal installments of such
amount, plus interest at the rate of LIBOR plus 1%, payable in October 1998,
1999 and 2000. The second alternative permits holders of Options who are also
employees of either the Company or Centeon to convert such Options into fully-
vested options to acquire, on the same terms and conditions as were applicable
under such Options, 2.4 shares of Purchaser common stock. The exercise price
per share of Purchaser common stock will be equal to the exercise price per
Share previously subject to such Option, divided by 2.4. Holders of Options
can choose either alternative or choose to have a portion of their Options
treated pursuant to the first alternative and the balance pursuant to the
second alternative. However, Purchaser and the Company's Compensation
Committee have determined that a maximum of 5,000,000 shares of Purchaser
common stock will be available for option grants pursuant to the second
alternative. In the event that options for more than 5,000,000 shares of
Purchaser common stock would otherwise be issuable pursuant to the second
alternative, options will be equitably apportioned among those choosing the
second alternative.
Purchaser or the designated paying agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to the Merger
Agreement to any holder of Shares and/or Options such amounts that Purchaser
or the paying agent is required to deduct and withhold with respect to the
making of such payment under the United States Internal Revenue Code of 1986,
as amended, the rules and regulations promulgated thereunder or any provision
of state, local or foreign tax law. Purchaser is making no representation
regarding the tax consequences of the treatment of Options described above,
and each holder of Options should consult his or her tax advisor with respect
to such consequences.
Agreements of Purchaser, the Merger Subsidiary and the Company. Pursuant to
the Merger Agreement, the Company agreed to (i) duly call, give notice of,
convene and hold the special meeting of its shareholders to which this Proxy
Statement relates as soon as practicable following consummation of the Offer
for the purpose of considering and taking action on the Merger Agreement and
the transactions contemplated thereby (the "Shareholders' Meeting"), (ii)
include in the proxy statement for the Shareholders' Meeting the
recommendation of the Company Board and the Special Committee that the
shareholders of the Company approve and adopt the Merger Agreement and the
transactions contemplated thereby, subject to their respective fiduciary
duties as advised by independent counsel and (iii) use its reasonable best
efforts to obtain such approval and adoption. At the Shareholders' Meeting,
Purchaser is obligated to cause all Shares then owned by it and its
subsidiaries to be voted in favor of the approval and adoption of the Merger
Agreement and the transactions contemplated thereby. Purchaser currently has
sufficient voting power to approve the Merger, even if no other shareholder
votes in favor of the Merger.
Pursuant to the Merger Agreement, the Company has covenanted and agreed
that, between the date of the Merger Agreement and the Effective Time, unless
Purchaser shall otherwise agree in writing, the businesses of the Company and
its subsidiaries shall be conducted only in, and the Company and its
subsidiaries shall not take any action, except in the ordinary course of
business and in a manner consistent with past practice; and the Company shall
use its reasonable best efforts to preserve substantially intact the business
organization of the Company and its subsidiaries, to keep available the
services of the current officers, employees and consultants of the Company and
its subsidiaries and to preserve the current relationships of the Company and
its subsidiaries with customers, suppliers and other persons with which the
Company or any of its subsidiaries has significant business relations.
The Company and Purchaser are each obligated under the Merger Agreement to
give each other prompt notice of (i) the occurrence, or nonoccurrence, of any
event the occurrence, or nonoccurrence, of which would be likely to cause any
representation or warranty contained in the Merger Agreement to be untrue or
inaccurate in any material respect and (ii) any failure of the Company,
Purchaser or the Merger Subsidiary, as the case may
20
be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it thereunder.
Pursuant to the Merger Agreement, the Company shall, to the fullest extent
permitted under applicable law and regardless of whether the Merger becomes
effective, indemnify and hold harmless, each present and former director,
officer, employee, fiduciary and agent of the Company and each of its
subsidiaries (collectively, the "Indemnified Parties") against all costs and
expenses (including attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and settlement amounts paid in connection with any claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), whether civil, criminal, administrative or investigative,
arising out of or pertaining to any action or omission in their capacity as an
officer, director, employee, fiduciary or agent, whether occurring before or
after the Effective Time, until the expiration of the statute of limitations
relating thereto (and shall pay any expenses in advance of the final
disposition of such action or proceeding to each Indemnified Party to the
fullest extent permitted under Pennsylvania law, upon receipt from the
Indemnified Party to whom expenses are advanced of any undertaking to repay
such advances required under Pennsylvania law). In the event of any such
claim, action, suit, proceeding or investigation, (i) the Company shall pay
the reasonable fees and expenses of counsel selected by the Indemnified
Parties, which counsel shall be reasonably satisfactory to the Company,
promptly after statements therefor are received and (ii) the Company shall
cooperate in the defense of any such matter; provided, however, that the
Company shall not be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld); and provided
further that the Company shall not be obligated to pay the fees and expenses
of more than one counsel (plus appropriate local counsel) for all Indemnified
Parties in any single action except (x) that the persons who served as
directors of the Company who were not designees of Purchaser shall be entitled
to retain one additional counsel (plus appropriate local counsel) to represent
them at the expense of the Company, and (y) to the extent that two or more of
such Indemnified Parties shall have conflicting interests in the outcome of
such action, in which case such additional counsel (including local counsel)
as may be required to avoid any such conflict or likely conflict may be
retained by the Indemnified Parties at the expense of the Company, and
provided further that, in the event that any claim for indemnification is
asserted or made within the period prior to the expiration of the applicable
statute of limitations, all rights to indemnification in respect of such claim
shall continue until the disposition of such claim. All rights pursuant to the
foregoing indemnification provisions of the Merger Agreement are deemed to be
a contract between the Company and each of the Indemnified Parties.
The Merger Agreement provides that the Company shall use its reasonable
efforts to maintain in effect for six years from the Effective Time, if
available, the current directors' and officers' liability insurance policies
maintained by the Company covering those persons who are currently covered by
such policies (provided that the Company may substitute therefor policies of
at least the same coverage containing terms and conditions which are not
materially less favorable) with respect to matters occurring prior to the
Effective Time; provided, however, that in no event shall the Company be
required to expend more than an amount per year equal to 150% of current
annual premiums paid by the Company for such insurance. In the event that, but
for the proviso to the immediately preceding sentence, the Company would be
required to expend more than 150% of current annual premiums, the Company
shall obtain the maximum amount of such insurance obtainable by payment of
annual premiums equal to 150% of current annual premiums. In the event the
Company or any successor or assign (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successor and assign of the
Company, or at Purchaser's option, Purchaser, shall assume the foregoing
indemnification obligations and the indemnification agreements dated as of
July 2, 1997, between the Company and the members of the Special Committee.
Pursuant to the terms of the Merger Agreement and subject to the conditions
thereof, each of the parties thereto shall (i) use its reasonable best efforts
to take, or cause to be taken, all appropriate action, and to do, or cause to
be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
the Merger Agreement, including, without limitation, using
21
its reasonable best efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental
authorities and parties to contracts with the Company and its subsidiaries as
are necessary for the consummation of the transactions and to fulfill the
conditions to the Offer and the Merger. In case at any time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of the Merger Agreement, the proper officers and directors of each
party to the Merger Agreement and the Company shall use their reasonable best
efforts to take all such action.
Pursuant to the Merger Agreement, the parties thereto agreed that the
Acquisition Agreement shall be terminated as of the Effective Time and that
all representations, warranties and agreements between the parties thereto
which, by the terms of such agreement, survive either or both the Closing Date
(as that term is defined in the Acquisition Agreement) or the termination of
such agreement shall all be terminated as of the Effective Time.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto, including
representations by the Company, Purchaser and the Merger Subsidiary as to the
enforceability of the Merger Agreement and by the Company as to compliance
with law, corporate status and capitalization and the accuracy of financial
statements and filings with the Commission.
Conditions to the Merger. Under the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of the following conditions: (a) to the
extent required by Pennsylvania law and the Company's Articles of
Incorporation and Bylaws, the Merger Agreement and the transactions
contemplated thereby shall have been approved and adopted by the affirmative
vote of the shareholders of the Company; (b) no foreign, United States or
state governmental authority or other agency or commission or foreign, United
States or state court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any law, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or
permanent) which is then in effect and has the effect of preventing or
prohibiting consummation of the Merger or the effective operation of the
business of the Company and its subsidiaries after the Effective Time; and (c)
Purchaser or its permitted assignee shall have purchased all Shares validly
tendered and not withdrawn pursuant to the Offer.
Termination; Fees and Expenses. The Merger Agreement may be terminated and
the Merger and the other transactions contemplated by the Merger Agreement may
be abandoned at any time prior to the Effective Time, notwithstanding any
requisite approval and adoption of the Merger Agreement and the transactions
contemplated thereby by the shareholders of the Company: (a) by mutual written
consent duly authorized by the Boards of Directors of Purchaser, the Merger
Subsidiary and the Special Committee on behalf of the Company; or (b) by
either Purchaser or the Special Committee on behalf of the Company if (i) the
Effective Time shall not have occurred on or before March 31, 1998; provided,
however, that such right to terminate the Merger Agreement shall not be
available to any party whose failure to fulfill any obligation under the
Merger Agreement has been the cause of, or resulted in, the failure of the
Effective Time to occur on or before such date or (ii) any court of competent
jurisdiction or other governmental authority shall have issued an order,
decree, ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action shall
have become final and nonappealable; or (c) by the Company, upon approval of
the Special Committee, (i) if any representation or warranty of Purchaser and
the Merger Subsidiary in the Merger Agreement which is qualified as to
materiality shall not be true and correct or any such representation or
warranty that is not so qualified shall not be true and correct in any
material respect, in each case as if such representation or warranty was made
as of such time on or after the date of the Merger Agreement, or (ii) if
Purchaser or the Merger Subsidiary shall have failed to perform in any
material respect any obligation or to comply in any material respect with any
agreement or covenant of Purchaser or the Merger Subsidiary to be performed or
complied with by it under the Merger Agreement. In the event of the
termination of the Merger Agreement, the Merger Agreement shall forthwith
become void.
All costs and expenses incurred in connection with the Merger Agreement and
the transactions contemplated thereby shall be paid by the party incurring
such fees and expenses, whether or not the transactions contemplated by the
Merger Agreement are consummated.
22
Amendment and Waiver. The Merger Agreement may be amended in writing by the
parties thereto by or on behalf of their respective Boards of Directors (and
approved by the Special Committee) at any time prior to the Effective Time.
Except as otherwise provided by the Merger Agreement, any party thereto may
(i) extend the time for the performance of any obligation or other act of any
other party thereto, (ii) waive any inaccuracy in the representations and
warranties contained therein and (iii) waive compliance with any agreement or
condition contained therein, other than the Minimum Condition.
APPLICABILITY OF CERTAIN STATE TAKEOVER LAWS
The Company is incorporated under the laws of the State of Pennsylvania. The
Pennsylvania legislature has enacted a number of takeover statutes designed to
make corporate takeovers more difficult under certain circumstances. In
particular, the five-year moratorium on business combinations with interested
shareholders contained in the business combination statute offers substantial
protection to Pennsylvania corporations threatened by hostile takeover bids.
The other takeover statutes, however, provide only limited protection and the
Company has opted out of most of them. The following is a summary of the most
relevant Pennsylvania state takeover statutes that are applicable to the
Company.
First, the Business Combination Statute (Subchapter F of Chapter 25 of the
PBCL) prohibits certain business combinations of a Pennsylvania corporation
with any person that is the beneficial owner, directly or indirectly, of 20
percent or more of the issued and outstanding voting shares of the corporation
(an "interested shareholder") for five years after the date such person first
became an interested shareholder (the "share acquisition date") unless certain
fair price and other conditions are satisfied. Subchapter F of Chapter 25 of
the PBCL does not prohibit a business combination between a Pennsylvania
corporation and an interested shareholder where either the business
combination or the purchase of shares made by the interested shareholder on
the interested shareholder's share acquisition date has been approved by the
board of directors of the corporation prior to the interested shareholder's
share acquisition date. Because Purchaser became an interested shareholder in
1990 with the approval of the Board, Subchapter 25-F of the PBCL is
inapplicable to the Offer and the Merger and the five year limitation does not
apply to a business combination between the Company and Purchaser.
The Company has opted out of the application of the Control Transactions
Statute, the Control Share Acquisition Statute and the Disgorgement Statute
(Subchapters E, G and H, respectively, of Chapter 25 of the PBCL). Opting out
of the Control Share Acquisition Statute also has the effect of making
Subchapters I and J of the PBCL, which relate to certain labor matters,
inapplicable.
In addition, Pennsylvania has adopted a Takeover Disclosure Law which
purports to regulate attempts to acquire a corporation which (i) is
incorporated in Pennsylvania or (ii) has its principal place of business and
substantial assets located in Pennsylvania. Because the Company Board has
recommended acceptance of the Offer and approval and adoption of the Merger
Agreement, the Offer and the Merger are exempt from the registration
requirements of such law provided that certain information is filed with the
Pennsylvania Securities Commission and Purchaser undertakes to notify the
Company's shareholders that such filing has been made with the Pennsylvania
Securities Commission, must include substantial information about the Offer
and has been available for inspection at the offices of the Pennsylvania
Securities Commission, 0000 X. 0xx Xxxxxx, 0xx Xxxxx, Xxxxxxxxxx, Xxxxxxxxxxxx
00000 during normal business hours. Purchaser has made such filing, and the
distribution of the Offer to the Company's shareholders constituted the
required notification to them.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations which are incorporated, or have
substantial assets, shareholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Xxxxx x. MITE Corp., the Supreme Court of
the United States invalidated on constitutional grounds the Illinois Business
Takeover Statute, which, as a matter of state securities law, made takeovers
of corporations meeting certain requirements more difficult. However, in 1987
in CTS Corp. v. Dynamics Corp. of America, the Supreme Court held that the
State of Indiana may, as a matter of corporate law and, in particular, with
respect to
23
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 shareholders.
The state law before the Supreme Court was by its terms applicable only to
corporations that had a substantial number of shareholders in the state and
were incorporated there.
The Company conducts business in a number of states throughout the United
States, some of which have enacted takeover laws. Purchaser does not know
whether any of these laws will, by their terms, apply to the Offer or the
Merger and has not complied with any such laws. Should any person seek to
apply any state takeover law, Purchaser will take such action as then appears
desirable, which may include challenging the validity or applicability of any
such statute in appropriate court proceedings. In the event it is asserted
that one or more state takeover laws are applicable to the Offer or the
Merger, and an appropriate court does not determine that it is inapplicable or
invalid as applied to the Merger, Purchaser might be required to file certain
information with, or receive approvals from, the relevant state authorities.
In addition, if enjoined, Purchaser might be delayed in consummating the
Merger. In such case, Purchaser may not be obligated to accept for payment any
Shares tendered. See "THE MERGER--The Merger Agreement; Conditions to the
Merger".
CERTAIN U.S. FEDERAL AND FRENCH INCOME TAX CONSEQUENCES OF THE MERGER
U.S. Federal Income Tax. The receipt of cash for Shares in the Merger or
pursuant to the exercise of dissenters rights will be a taxable transaction
for U.S. federal income tax purposes under the Code and may also be a taxable
transaction under applicable state, local or foreign tax laws. In general, a
shareholder will recognize gain or loss for U.S. federal income tax purposes
equal to the difference between the amount of cash received in exchange for
the Shares sold and such shareholder's adjusted tax basis in such Shares.
Assuming the Shares constitute capital assets in the hands of the shareholder,
such gain or loss will be capital gain or loss and, in the case of an
individual shareholder, will be taxable at various preferential rates
depending on the extent to which such shareholder's holding period for the
Shares converted to cash pursuant to the Merger exceeds one year. Gain or loss
will be calculated separately for each block of Shares converted pursuant to
the Merger. The deduction of capital losses is subject to certain limitations.
Shareholders should consult their own tax advisors in this regard.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
SHAREHOLDERS, INCLUDING BROKER-DEALERS, SHAREHOLDERS WHO ACQUIRED SHARES
PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION, INDIVIDUALS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED
STATES AND FOREIGN CORPORATIONS.
THE U.S. FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR
GENERAL INFORMATION ONLY AND IS BASED UPON PRESENT LAW, WHICH IS SUBJECT TO
CHANGE POSSIBLY WITH RETROACTIVE EFFECT. SHAREHOLDERS ARE URGED TO CONSULT
THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER
TO THEM, INCLUDING THE APPLICATION AND EFFECT OF THE ALTERNATIVE MINIMUM TAX,
AND STATE, LOCAL AND FOREIGN TAX LAWS.
French Income Tax. The receipt of cash for Shares pursuant in the Merger or
pursuant to the exercise of dissenters rights will be a taxable transaction
for French tax purposes for French tax residents. In general, a resident of
France for tax purposes who is a shareholder will recognize gain or loss for
French tax purposes equal to the difference between the amount of cash
received in exchange for the Shares sold and such shareholder's tax basis in
such Shares. French resident individuals will generally be subject to tax in
France at a rate of 20.9% if their sales of securities exceed FF 100,000 in
1997. Capital losses can be offset against capital gains of the same nature,
but such deduction is subject to certain limitations. No assurance is provided
as to whether the indemnity paid to shareholders in connection with the Merger
will be subject to treatment as capital gains tax. French resident
corporations will generally be subject to tax at the effective rate of 36
2/3%, as ordinary income, unless the Shares were held in a special
participation account for more than two years, in which case the rate is
reduced to an effective rate of 20.9%. The French government has announced
that the rate of ordinary corporate income tax will be increased to 41.6% for
gain recognized in 1997 for corporations with sales of FF 50 million or more.
24
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN SHAREHOLDERS,
INCLUDING SHAREHOLDERS WHO ACQUIRED SHARES PURSUANT TO THE EXERCISE OF
EMPLOYEE STOCK OPTIONS OR OTHERWISE AS COMPENSATION, OR WHOSE PARTICIPATION IN
THE COMPANY IS AT LEAST EQUAL TO THE EQUIVALENT OF FF 150 MILLION.
THE FRENCH INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW, WHICH IS SUBJECT TO CHANGE
POSSIBLY WITH RETROACTIVE EFFECT. SHAREHOLDERS ARE URGED TO CONSULT THEIR TAX
ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO THEM.
RIGHTS OF DISSENTING SHAREHOLDERS
If the Merger is consummated, shareholders who fully comply with the
statutory procedures for asserting dissenters rights set forth in the PBCL,
the relevant portions of which are attached to this Proxy Statement as Annex
B, will be entitled to receive cash for the fair value of their Shares as
determined pursuant to the procedures prescribed by the PBCL. Merely voting
against the Merger Agreement will not perfect a shareholder's dissenters
rights. Shareholders are urged to review carefully the dissenting
shareholders' rights provisions of the PBCL, a description of which is
provided below and the full text of which is attached to this Proxy Statement
as Annex B and incorporated herein by reference. SHAREHOLDERS WHO FAIL TO
COMPLY STRICTLY WITH THE APPLICABLE PROCEDURES WILL FORFEIT THEIR DISSENTERS
RIGHTS IN CONNECTION WITH THE MERGER. See Annex B to this Proxy Statement.
Sections 1571-80 of the PBCL ("Subchapter D") and 1930(a) of the PBCL,
copies of which are attached to this Proxy Statement as Annex B, entitle any
holder of record of Shares who objects to the Merger, in lieu of receiving the
consideration for such Shares provided under the Merger Agreement, to demand
in writing that he be paid in cash the fair value of his Shares. Section 1572
of the PBCL defines "fair value" as: "The fair value of shares immediately
before the effectuation of the corporate action to which the dissenter
objects, taking into account all relevant factors, but excluding any
appreciation or depreciation in anticipation of the corporate action."
Any shareholder contemplating making demand for fair value is urged to
review carefully the provisions of Subchapter D, particularly the procedural
steps required to perfect his dissenters rights thereunder. DISSENTERS RIGHTS
WILL BE LOST IF THE PROCEDURAL REQUIREMENTS OF SUBCHAPTER D ARE NOT FULLY AND
PRECISELY SATISFIED. The following summary does not purport to be a complete
statement of the provisions of Subchapter D of the PBCL and is qualified in
its entirety by reference to Annex B and the PBCL.
Filing Notice of Intention to Demand Fair Value. Before the vote of the
shareholders is taken on the Merger, the dissenting shareholder must deliver
to the Company a written notice of intention to demand that he be paid the
fair value of his Shares if the Merger is effected. Such written notice must
be sent to the Secretary of the Company at Xxxxx-Xxxxxxx Xxxxx Inc., 000
Xxxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000. Neither the tendering of Shares
in the Offer, nor a vote against the Merger, is sufficient to satisfy the
requirement of delivering a written notice to the Company. In addition, the
shareholder must not effect any change in the beneficial ownership of his
Shares from the date of filing the notice with the Company through the
consummation of the Merger, and Shares for which payment of fair value is
sought must not be voted in favor of the Merger. Failure by a dissenting
shareholder to comply with any of the foregoing will result in the forfeiture
of any right to payment of fair value for his Shares.
Record Owners and Beneficial Owners. A record holder of Xxxxxx held in whole
or in part for the benefit of another person may assert dissenters rights as
to fewer than all of the Shares registered in his name only if he dissents
with respect to all the Shares beneficially owned by any one person and
discloses the name and address of the person or persons on whose behalf he
dissents. A beneficial owner of Shares who is not the record holder may assert
dissenters rights with respect to Xxxxxx held on his behalf if he submits to
the Company the written consent of the record holder not later than the time
of assertion of dissenters rights. A beneficial owner may not dissent with
respect to fewer than all of the Shares owned by him, whether or not such
Shares are registered in his name.
25
Notice to Demand Payment. If the Merger is approved, the Company shall mail
to all dissenters who gave due notice of their intention to demand payment of
fair value and who refrained from voting in favor of the Merger, a notice
stating where and when a demand for payment must be sent and certificates for
Shares deposited in order to obtain payment. The notice shall be accompanied
by a copy of Subchapter D and a form for demanding payment. The time set for
the receipt of demands and the deposit of certificates shall not be less than
30 days from the mailing of the notice. Failure by a shareholder to demand
payment or deposit certificates pursuant to such notice will cause such
shareholder to lose all right to have a court determine the fair value of his
Shares. If the Merger has not been effected within 60 days after the date set
for demanding payment and depositing certificates, the Company shall return
any certificates that have been deposited. The Company, however, may at any
later time send a new notice regarding demand for payment and deposit of
certificates with like effect.
Payment of Fair Value of Shares. Promptly after the consummation of the
Merger or upon timely receipt of demand for payment if the Merger has already
been effected, the Company shall remit to dissenters who have made timely
demand and deposited their certificates the amount the Company estimates to be
the fair value of their Shares or give written notice that no remittance will
be made under Section 1577 of the PBCL. Such remittance or notice shall be
accompanied by (i) the closing balance sheet and statement of income of the
Company for a fiscal year ending not more than 16 months prior to the date of
remittance or notice together with the latest available interim financial
statements, (ii) a statement of the Company's estimate of the fair value of
the Shares, and (iii) a notice of the right of the dissenting shareholder to
demand payment or supplemental payment, as the case may be, accompanied by a
copy of Subchapter D. If the Company does not remit the amount of its estimate
of the fair value of the Shares, it shall return all certificates that have
been deposited and may make a notation thereon that a demand for payment has
been made.
If Shares with respect to which notation has been so made shall be
transferred, each new certificate issued therefor shall bear a similar
notation, together with the name of the original dissenting holder or owner of
such Shares. A transferee of such Shares shall not acquire by such transfer
any rights in the Company other than those that the original dissenter had
after making demand for payment of fair value for such Shares.
Estimate by Dissenter of Fair Value of Shares. If a dissenting shareholder
believes that the amount estimated or paid by the Company for his Shares is
less than their fair value, the shareholder may send to the Company his own
estimate of the fair value which shall be deemed a demand for payment of the
amount of the deficiency. IF THE DISSENTER DOES NOT FILE HIS OWN ESTIMATE OF
FAIR VALUE WITHIN 30 DAYS AFTER THE MAILING BY THE COMPANY OF ITS REMITTANCE
OR ESTIMATE OF FAIR VALUE, THE DISSENTER SHALL BE ENTITLED TO NO MORE THAN THE
AMOUNT REMITTED TO HIM OR ESTIMATED BY THE COMPANY.
Valuation Proceedings. Within 60 days after the latest of (i) the
consummation of the Merger, (ii) timely receipt of any demands for payment and
(iii) timely receipt of any shareholder estimates of fair value, if any
demands for payment remain unsettled, the Company may file in court an
application for relief requesting that the fair value of the Shares be
determined by the court. Each dissenter whose demands have not been settled
shall be made a party to the proceeding and shall be entitled to recover the
amount by which the fair value of his Shares is found to exceed the amount, if
any, previously remitted, plus interest. Such dissenter shall also be entitled
to interest on such amount from consummation of the Merger until the date of
payment as is fair and equitable under the circumstances, taking into account
all relevant factors including the average rate currently paid by the Company
on its principal bank loans. If the Company fails to file an application
within the 60-day period, any dissenter who has not settled his claim may do
so in the name of the Company within 30 days after the expiration of this 60-
day period. If no dissenter files an application within such 30-day period,
each dissenter who has not settled his claim shall be paid no more than the
Company's estimate of the fair value of his Shares and may bring an action to
recover any amount not previously remitted.
Costs and Expenses of Valuation Proceedings. The costs and expenses of any
valuation proceedings, including the reasonable compensation and expenses of
any appraiser appointed by the court, shall be determined
26
by the court and assessed against the Company except that any part of such
costs and expenses may be assessed as the court deems appropriate against all
or some of the dissenters whose action in demanding supplemental payment is
found by the court to be dilatory, obdurate, arbitrary, vexatious or in bad
faith. The court may also assess the fees and expenses of counsel and experts
for any or all of the dissenters against the Company if the Company fails to
comply substantially with Subchapter D or acts in bad faith or in a dilatory,
obdurate, arbitrary or vexatious manner. The court can also assess any such
fees or expenses incurred by the Company against a dissenter if such dissenter
is found to have acted in bad faith or in a dilatory, obdurate, arbitrary or
vexatious manner. If the court finds that the services of counsel for any
dissenter were of substantial benefit to the other dissenters and should not
be assessed against the Company, it may award to such counsel reasonable fees
to be paid out of the amounts awarded to the dissenters who were benefitted.
Other. Section 1712 of the PBCL provides that a director of a Pennsylvania
corporation stands in a fiduciary relation to such corporation and must
perform his duties as a director in good faith, in a manner he reasonably
believes to be in the best interests of the corporation and with such care,
including reasonable inquiry, skill and diligence, as a person of ordinary
prudence would use under similar circumstances. Section 1105 of the PBCL
provides in substance that a shareholder of a Pennsylvania corporation shall
not have any right to obtain, in the absence of fraud or fundamental
unfairness, an injunction against any proposed merger, nor any right to claim
the right to valuation and payment of the fair value of his Shares because of
the merger, except that he may dissent and claim such payment if and to the
extent provided in Subchapter D of PBCL Chapter 15, described above. Absent
fraud or fundamental unfairness, such dissenters rights are the exclusive
remedy of such shareholders. However, the United States Court of Appeals,
Third Circuit, interpreting the predecessor statute to Section 1105 of the
PBCL in Xxxxxxxxxx v. NutriSystem, Inc., concluded that dissenters rights co-
exist with common law causes of action, such as rescission or money damages,
in the context of an action for breach of fiduciary duty or misrepresentation
in a cash-out merger. Shareholders should be aware that due to the enactment
of the PBCL in 1988 it is unclear whether the decision in Xxxxxxxxxx remains
applicable to dissenters rights. IN VIEW OF THE COMPLEXITIES OF THESE
PROVISIONS OF PENNSYLVANIA LAW, SHAREHOLDERS WHO ARE CONSIDERING DISSENTING
FROM THE MERGER SHOULD CONSULT THEIR OWN LEGAL COUNSEL.
FEES AND EXPENSES
Except as set forth below, Purchaser will not pay any fees or commissions to
any broker, dealer or other person for soliciting tenders of Shares pursuant
to the Offer and the Merger.
Xxxxxx Xxxxxxx and UBS acted as Dealer Managers in connection with the Offer
and have provided certain financial advisory services in connection with the
acquisition of the Company. In addition, Xxxxxx Xxxxxxx is acting as financial
advisor to Purchaser in connection with the Offer and the Merger. Xxxxxx
Xxxxxxx and UBS will each receive reasonable and customary compensation for
their services, and Xxxxxxxxx has agreed to reimburse Xxxxxx Xxxxxxx and UBS
for all reasonable out-of-pocket expenses incurred by them, including the
reasonable fees and expenses of legal counsel, and to indemnify Xxxxxx Xxxxxxx
and UBS against certain liabilities and expenses in connection with its
engagement, including certain liabilities under the federal securities laws.
Purchaser retained Xxxxxxxxx & Company Inc., as the Information Agent,
ChaseMellon Shareholder Services, L.L.C., as the Depositary, and Societe
Generale, as the French Depositary, in connection with the Offer. As
compensation for acting as Information Agent in connection with the Offer,
Xxxxxxxxx & Company Inc. will receive reasonable and customary compensation
for its services and will also be reimbursed for certain out-of-pocket
expenses and may be indemnified against certain liabilities and expenses in
connection with the Offer, including certain liabilities under the federal
securities laws. Purchaser will pay the Depositary and the French Depositary
reasonable and customary compensation for their services in connection with
the Offer, plus reimbursement for out-of-pocket expenses, and will indemnify
the Depositary against certain liabilities and expenses in connection
therewith, including certain liabilities under federal securities laws.
Brokers, dealers, commercial banks and trust companies will be reimbursed by
Purchaser for customary handling and mailing expenses incurred by them in
forwarding material to their customers.
27
As compensation to French brokers, banks and other financial intermediaries,
Purchaser has agreed to pay customary compensation for their services in
facilitating the tender of Shares in France. Such fee is equal to 1% of the
transaction value of each sales order for tendered Shares, subject to a
maximum fee per sales order of FF2000 (approximately $350).
The following is an estimate of expenses, other than such French
intermediary fees, incurred and to be incurred in connection with the Offer
and the Merger:
Expenses to be paid by Purchaser and its affiliates:
Financial Advisor Fees and Expenses...................... $10,300,000.00
Legal Fees and Expenses.................................. 3,500,000.00
Printing and Mailing..................................... 98,000.00
Advertising.............................................. 200,000.00
Filing Fees.............................................. 969,286.72
Depositary Fees.......................................... 50,000.00
French Depositary Fees................................... 40,000.00
Information Agent Fees................................... 25,500.00
Miscellaneous............................................ 50,000.00
--------------
Total.................................................. $15,232,786.72
==============
FINANCING OF THE MERGER
Approximately $4.49 billion was required to pay for the 46,138,374 Shares
purchased by Purchaser pursuant to the Offer. In addition, approximately $191
million will be required to purchase the remaining Shares pursuant to the
Merger and approximately $[ ] million will be required to pay related fees
and expenses incurred by Parent and Purchaser in connection with the Offer and
expected to be incurred by Parent and Purchase in connection with the Merger
(including debt-related costs). The foregoing does not include an additional
$[ ] million paid by the Company in connection with the cancellation of
employee stock options of the Company or approximately $[ ] million in fees
or expenses paid or to be paid by the Company in connection with the Offer and
Merger.
The total amount of funds required by Purchaser and the Company to
consummate the Offer and the Merger, respectively, and to pay related fees and
expenses is estimated to be approximately $4.8 billion. In connection with the
Offer, Purchaser entered into binding term sheets with Societe Generale,
Banque Nationale de Paris, Credit Lyonnais and Union Bank of Switzerland
regarding multicurrency credit facilities pursuant to which it borrowed an
aggregate of approximately [FF8.5 billion and $850 million] of unsecured
indebtedness maturing in less than one year. The all-in cost of such drawn
short-term indebtedness ranges from 0.10% to 0.125% over LIBOR or Paris
Interbank Offer Rate ("PIBOR"). In addition, Purchaser has entered into
binding term sheets with the following banks creating multicurrency credit
facilities pursuant to which it borrowed an aggregate of approximately
[FF12.75 billion and $230 million] of unsecured indebtedness maturing in five
years: Societe Generale, Banque Nationale de Paris, Natexis, Banque Paribas,
Credit Agricole Indosuez, Bayerische Landesbank, Caisse Centrale des Banques
Populaires, Royal Bank of Canada, Credit Commercial de France, Credit
Commercial et Industriel de Paris, Midland Bank plc, Credit Lyonnais,
Citibank, N.A. and Union Bank of Switzerland. The all-in cost of such drawn
medium-term indebtedness ranges from 0.17% to 0.20% over LIBOR or PIBOR.
Funds required to purchase the remaining Shares pursuant to the Merger and
to pay associated fees and expenses will be obtained from funds available
under the above sources. The decision as to the allocation of funding among
existing or anticipated credit facilities and working capital will be made
based on Purchaser's review from time to time of the advisability of
particular actions, as well as on prevailing interest rates and financial and
other economic conditions and such other factors as Purchaser may deem
appropriate.
28
The indebtedness incurred through borrowings under the credit facilities
listed above will be repaid from a variety of sources, including, but not
limited to, funds generated internally by Purchaser and its affiliates
(including, following the Merger, funds generated by the Company), bank
refinancing, and the public or private sale of debt or equity securities.
Purchaser intends to repay a portion of the indebtedness related to the Offer
and the Merger from the proceeds of a public offering of shares of Purchaser
the proceeds of which were [FF7 billion (which is currently approximately
$1.155 billion)]. In addition, Purchaser expects to make a public offering of
shares of NewChemco in 1998, subject to, among other things, market
conditions, and to make dispositions of certain non-strategic assets. The
source and allocation of various methods of repayment will be determined and
may be modified by Purchaser based on market conditions and such other factors
as Purchaser may deem appropriate.
BUSINESS OF THE COMPANY
The Company is a Pennsylvania corporation with its principal offices located
at 000 Xxxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 19426. The business of the
Company is the product of the 1990 combination of Xxxxx Group Inc. and
substantially all of the Human Pharmaceutical Business of Purchaser. The
Company is primarily engaged in the discovery, development, manufacture and
marketing of a broad line of pharmaceutical products for human use. On the
basis of sales, the Company is the leading pharmaceutical group in France,
among the top three in Europe and among the largest in the world. The Company
also has a growing presence in North America, in developing markets, and in
Japan. The Company has commercial operations in the major markets of the world
and its products are manufactured in approximately 30 countries.
SELECTED FINANCIAL INFORMATION OF THE COMPANY
Set forth below is certain selected financial information relating to the
Company which has been excerpted or derived from the audited financial
statements contained in the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 (the "Form 10-K") and the unaudited
financial statements contained in the Company's June 30 Form 10-Q. More
comprehensive financial information is included in the Form 10-K and the
Company's June 30 Form 10-Q and other documents filed by the Company with the
Commission. The financial information that follows is qualified in its
entirety by reference to such reports and other documents may be examined and
copies may be obtained from the offices of the Commission in the manner set
forth below. In addition, Annexes D and E hereto set forth the Company's
audited financial statements for the fiscal year ended December 31, 1996 and
the Company's unaudited financial statements for the period ended June 30,
1997, respectively.
29
XXXXX-XXXXXXX XXXXX INC.
SELECTED FINANCIAL INFORMATION
(DOLLARS IN MILLIONS, EXCEPT PER SHARE INFORMATION)
SIX MONTHS ENDED FISCAL YEAR ENDED
JUNE 30, DECEMBER 31,
------------------ --------------------
1997 1996 1996 1995
-------- -------- -------- --------
(UNAUDITED)
INCOME STATEMENT DATA:
Net sales......................... $2,323.8 $2,618.5 $5,420.6 $5,142.1
Cost of products sold............. 691.4 878.0 1,666.0 1,746.4
Selling, delivery and
administrative expenses.......... 946.2 1,046.7 2,109.7 1,863.7
Research and development
expenses......................... 405.2 414.3 882.1 766.2
Restructuring and other charges... -- -- 102.6 126.5
-------- -------- -------- --------
Operating income................ 281.0 279.5 660.2 639.3
Interest expense, net............. 76.2 84.5 169.6 84.9
Other (income) expense, net....... (20.8) (77.4) (199.8) 16.4
-------- -------- -------- --------
Income before income taxes...... 225.6 272.4 690.4 538.0
Provision for income taxes........ 70.1 85.2 216.9 181.5
-------- -------- -------- --------
Net income...................... 155.5 187.2 473.5 356.5
Dividends on preferred stock and
remunerations on capital equity
notes............................ 21.9 21.3 44.8 18.7
-------- -------- -------- --------
Net income available to common
shareholders................... $ 133.6 $ 165.9 $ 428.7 $ 337.8
======== ======== ======== ========
PER SHARE DATA:
Average number of shares issued
and outstanding during
period(1)........................ 137.0 135.3 135.8 134.2
Primary earnings per common
share............................ $ .98 $ 1.23 $ 3.16(2) $ 2.50(3)
======== ======== ======== ========
--------
(1) Does not include shares held in the Company's treasury or Employee Benefits
Trust.
(2) Net income available to common shareholders.
(3) Net income available to common shareholders, pro forma.
30
AT JUNE 30, AT DECEMBER 31,
------------------ ------------------
1997 1996 1996 1995
-------- -------- -------- --------
(UNAUDITED)
BALANCE SHEET DATA:
ASSETS
Cash and cash equivalents.............. $ 114.4 $ 60.9 $ 100.6 $ 115.4
Cash pooling arrangements with Xxxxx-
Xxxxxxx S.A. ......................... 4.2 10.4 3.2 16.0
Short-term investments and notes
receivable............................ 63.1 66.7 38.7 --
Trade accounts receivable, less
reserves.............................. 858.6 870.6 984.1 956.8
Inventories............................ 796.7 832.8 800.7 765.6
Other current assets................... 762.3 797.1 846.2 935.8
-------- -------- -------- --------
Total current assets................. 2,599.3 2,638.5 2,773.5 2,789.6
Time deposits, at cost................. 128.4 83.0 128.4 83.0
Property, plant and equipment, net of
accumulated depreciation.............. 1,426.5 1,556.5 1,525.9 1,621.0
Goodwill, net of accumulated
amortization.......................... 2,601.0 2,836.9 2,739.0 2,953.5
Intangibles, net of accumulated
amortization.......................... 707.4 849.2 766.7 866.8
Other assets........................... 839.1 769.1 834.6 673.2
-------- -------- -------- --------
Total assets......................... $8,301.7 $8,733.2 $8,768.1 $8,987.1
======== ======== ======== ========
LIABILITIES
Short-term debt........................ $ 157.9 $ 414.6 $ 126.7 $ 511.8
Accounts payable....................... 427.1 529.8 594.7 601.8
Other current liabilities.............. 1,109.4 1,143.4 1,331.5 1,291.5
-------- -------- -------- --------
Total current liabilities............ 1,694.4 2,087.8 2,052.9 2,405.1
Long-term debt......................... 2,432.0 2,415.2 2,272.0 2,159.0
Notes payable to Xxxxx-Xxxxxxx S.A. and
affiliates............................ 187.9 249.5 253.0 525.4
Deferred income taxes.................. 241.6 363.1 218.0 365.5
Other liabilities, including minority
interests............................. 1,208.4 1,201.5 1,322.4 1,174.9
-------- -------- -------- --------
Total liabilities.................... $5,764.3 $6,317.1 $6,118.3 $6,629.9
======== ======== ======== ========
SHAREHOLDERS' EQUITY
Money market preferred stock without
par value (liquidation preference
$100,000 per share); authorized,
issued and outstanding 1,750 shares... 175.0 175.0 175.0 175.0
Capital equity notes................... 500.0 500.0 500.0 500.0
Common stock, without par value; stated
value $1 per share; authorized
600,000,000 shares.................... 142.6 141.0 141.6 139.5
Capital in excess of stated value...... 273.9 204.2 234.8 153.2
Retained earnings...................... 1,883.8 1,662.3 1,837.9 1,580.3
Employee Benefits Trust................ (198.1) (185.7) (185.7) (185.7)
Cumulative translation adjustments..... (239.8) (80.7) (53.8) (5.1)
-------- -------- -------- --------
Total shareholders' equity........... 2,537.4 2,416.1 2,649.8 2,357.2
-------- -------- -------- --------
Total liabilities and shareholders'
equity.............................. $8,301.7 $8,733.2 $8,768.1 $8,987.1
======== ======== ======== ========
31
The Company does not, as a matter of course, make public forecasts or
projections as to future sales, earnings or other income statement data.
However, in connection with Purchaser's position as a controlling shareholder
of the Company, Purchaser has received and examined certain analyses prepared
by the Company which include projections of future financial results. In
addition, as a result of the review of the Company's financial position and
outlook, in the context of preparing for the Offer, Xxxxxxxxx has received and
examined the August Projections for the years 1997 through 2002. Such
information has been set forth below for the limited purpose of giving the
Company's shareholders access to financial projections by the Company's
management that were available for review by Purchaser in connection with the
Offer.
Preliminary 1997 Budget. In connection with its preparation of its annual
budget in December 1996, the Company's management provided projections for the
year ended December 31, 1997 (the "Preliminary 1997 Budget") to the Company
Board at its meeting on December 13, 1996. The Preliminary 1997 Budget did not
take into account the potential impact of the voluntary suspension (the
"Centeon Suspension") of certain production and distribution activities by
Centeon and accordingly reflects the operating plan of Centeon for 1997. The
Company's management was unable to take into account such effect due to the
uncertain outcome of (i) the then ongoing review by the U.S. Food & Drug
Administration of manufacturing processes at a U.S. production facility of
Centeon and (ii) an upcoming meeting of Centeon's Board of Directors that was
to discuss the Centeon 1997 budget. For information regarding the Centeon
Suspension, see "Annex D--Note 5 to Consolidated Financial Statements". The
Preliminary 1997 Budget also assumed sustainable growth in net sales,
increased cost reduction, a deceleration of research and development expenses
and further improvements to gross margins due to changes in the Company's
product mix. The Preliminary 1997 Budget further assumed a French franc/U.S.
dollar exchange rate of FF5.50 = $1. Selected information presented in the
Preliminary 1997 Budget is set forth below:
YEARS ENDING DECEMBER 31,
-------------------------------------
1996 FORECAST 1997 BUDGET
----------------- ----------------
(DOLLARS IN MILLIONS, EXCEPT FOR
PER SHARE INFORMATION)
Net Sales............................ $ 5,403 $ 5,409
Gross Margin......................... 3,736 3,915
Operating income..................... 751 897
Income before tax(1)................. 686 926
Earnings per Share................... 3.12 4.30
--------
(1) Includes equity in earnings of Centeon of $82 million and $179 million in
1996 and 1997, respectively.
1997 Budget. In light of the impact of the Centeon Suspension, the Company
Board appointed a special budget committee (the "Budget Committee"), comprised
of Messrs. Xxxx, Xxxxxx and Xxxxx, to update the Preliminary 1997 Budget to
reflect the impact of the Centeon Suspension. At the February 20, 1997 meeting
of the Company Board, the Company's management informed the Company Board on
the status of its initial review of the Preliminary 1997 Budget and indicated
that projected earnings per Share for 1997 could be reduced from $4.30 to
approximately $3.65 per Share, principally to reflect the impact of the
Centeon Suspension.
32
Following approval of Centeon's 1997 budget by Xxxxxxx's Board of Directors
at its March 4, 1997 meeting, the Budget Committee met on March 24, 1997 to
approve budgetary data projecting earnings per Share for 1997 of $3.65. The
Preliminary 1997 Budget was finalized by management in April 1997 and
presented to the Company Board at its meeting on May 7, 1997 (the "1997
Budget"). The 1997 Budget included the effect of the Centeon Suspension, but
was otherwise based on the same assumptions as the Preliminary 1997 Budget.
Selected information presented in the 1997 Budget is set forth below:
YEARS ENDING DECEMBER 31,
------------------------------------
1996 ACTUAL 1997 BUDGET
---------------- ----------------
(DOLLARS IN MILLIONS, EXCEPT FOR
PER SHARE INFORMATION)
Net sales............................. $ 5,421 $ 5,414
Gross margin.......................... 3,755 3,900
Operating income...................... 661 869
Income before tax(1).................. 699 800
Earnings per Share.................... 3.16 3.65
--------
(1) Includes equity in earnings of Centeon of $85 million and $36 million in
1996 and 1997, respectively.
August Projections. On August 9, 1997, certain projections for the years
ending December 31, 1997 through 2002 (the "August Projections") were
delivered by the Company's management to Xxxxxxx Xxxxx, which in turn
forwarded such projections to Xxxxxx Xxxxxxx. Xxxxxx Xxxxxxx delivered the
August Projections to Purchaser on August 11, 1997. The August Projections
were produced by the Company in connection with a study commenced in July,
1997 at the request of the Special Committee and were delivered to Xxxxxxx
Xxxxx at the request of the Special Committee. The August Projections are
based on the following assumptions: a French franc/U.S. dollar exchange rate
from 1998-2002 of FF5.50 = $1; increased competition in the U.S. respiratory
market, and the continuation of French government pressure to contain health
care costs; a gross margin improvement due to the product mix and to
divestitures of certain product lines; increased expenditures in promotional
efforts regarding the Company's strategic products; and an increase in French
corporate income taxes as proposed recently by the French government from
36.6% to 41.6% for calendar years 1997 and 1998.
It was also indicated by the Company that there was at the end of June 1997
a high level of inventory of certain of the Company's products currently held
by certain U.S. customers. The Company has not made any determination as to
whether and over what time period any inventory adjustments may be necessary.
If the Company decides to take actions to reduce inventories on a basis of a
three year adjustment (as was assumed in the August Projections that
management provided to Xxxxxxx Xxxxx), the projected increase in net sales
would be reduced by $80 million in each of the years 1998, 1999 and 2000, with
the impact on sales and earnings per Share as reflected below.
The August Projections are summarized below:
AUGUST PROJECTIONS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE INFORMATION)
FORECAST
FORECAST '97 IN '98
1997 STRUCTURE(1) 1998 1999 2000 2001 2002
-------- ------------ ------ ------ ------ ------ ------
Net sales............... $5,112 $5,041 $5,262 $5,648 $6,071 $6,573 $7,001
Gross margin............ 3,694 3,642 3,842 4,125 4,444 4,758 5,046
Operating income........ 780 731 822 947 1,082 1,233 1,372
Centeon joint
venture(2)............. (41) (41) 55 75 120 150 180
Income before tax....... 722 653 777 930 1,123 1,302 1,492
Earnings per Share...... 3.28 2.93 3.43 4.14 5.11 5.97 6.88
--------
(1) Excludes the effect of certain product lines divested by the Company in
1997.
(2) Equity in earnings of Centeon.
33
Excluding the impact of any adjustments to inventory levels, the projected
net sales and earnings per Share would be as reflected below:
(DOLLARS IN MILLIONS, EXCEPT PER SHARE INFORMATION)
FORECAST
FORECAST '97 IN '98
1997 STRUCTURE 1998 1999 2000 2001 2002
-------- ---------- ------ ------ ------ ------ ------
Net sales................ $5,112 $5,041 $5,342 $5,728 $6,151 $6,573 $7,001
Earnings per Share....... 3.28 2.93 3.72 4.43 5.40 5.97 6.88
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Certain matters discussed herein are forward-looking statements that involve
risks and uncertainties. Forward-looking statements include the information
set forth above concerning the Preliminary 1997 Budget, the 1997 Budget and
the August Projections (together, the "Projections"). Such information has
been included in this Proxy Statement for the limited purpose of giving the
Company's shareholders access to financial projections by the Company's
management that were made available to Purchaser. Such information was
prepared by the Company's management for internal use and not with a view to
publication. The foregoing budget information and Projections were based on
assumptions concerning the Company's products and business prospects in 1997
through 2002, including the assumption that the Company would continue to
operate under the same ownership structure as then existed. The budget
information and Projections were also based on other revenue and operating
assumptions. Information of this type is based on estimates and assumptions
that are inherently subject to significant economic and competitive
uncertainties and contingencies, all of which are difficult to predict and
many of which are beyond the Company's control. Accordingly, there can be no
assurance that the projected results would be realized or that actual results
would not be significantly higher or lower than those set forth above. In
addition, neither the budget information nor the Projections were prepared
with a view to public disclosure or compliance with the published guidelines
of the Commission or the guidelines established by the American Institute of
Certified Public Accountants regarding projections and forecasts and are
included in this Proxy Statement only because such information was made
available to Purchaser by the Company. Neither Purchaser's nor the Company's
independent accountants have examined, compiled or applied any agreed upon
procedures to this information and, accordingly, assume no responsibility for
this information. Neither Purchaser nor the Company nor any other party
assumes any responsibility for the accuracy or validity of the foregoing
projections.
34
OWNERSHIP OF SHARES
The following table presents information provided to the Company as to the
beneficial ownership of the Company's Shares, as of [ ] [ ], 1997 by
persons holding 5% or more of such Shares:
NAME AND ADDRESS NUMBER OF SHARES NATURE OF OWNERSHIP PERCENTAGE OF CLASS
---------------- ---------------- ------------------- -------------------
Xxxxx-Xxxxxxx S.A.
25, Quai Xxxx Xxxxxx
92408 Courbevoie Cedex,
France.................. 141,222,394 Direct 98.53%
The following table shows, for each director and each executive officer of
the Company, and for all directors and executive officers of the Company as a
group, the total number of Shares beneficially owned as of [ ] [ ], 1997,
and the nature of such beneficial ownership. Beneficial ownership includes,
among other things, the right to acquire shares within sixty (60) days through
the exercise of an option. Total ownership represents less than two percent of
the outstanding shares.
NUMBER OF SHARES
NUMBER OF SHARES SUBJECT TO
NAME OF BENEFICIAL OWNER OWNED DIRECTLY EXERCISABLE OPTIONS
------------------------ ---------------- -------------------
Xxxxx Xxxxxxxx........................... [ ] [6,685]
Xxxx-Xxxxxxx Xxxxxxxx.................... [ ] [52,072]
Xxxx Xxxx................................ [ ] [2,957]
Xxxx-Xxxx Xxxxx.......................... [ ] [0]
Xxxxxx X. Xxxxxxxx....................... [ ] [343,619]
Xxxxxxx X. Xxxxxxx....................... [ ] [22,929]
Xxxxxxx X. Xxxxxxxx...................... [ ] [45,645]
Xxxxxx xx Xxxxx.......................... [ ] [252,814]
Xxxxxxx-Xxxxx Xxxxxxx.................... [ ] [0]
Xxxxxxx Xxxxxxx.......................... [ ] [70,256]
Xxxx X. Xxxx............................. [ ] [4,000]
Xxxxxx Xxxxxx............................ [ ] [0]
Xxxxxxx X. Xxxxxxxx, M.D. ............... [ ] [110,993]
Xxxx Xxxxxx.............................. [ ] [0]
Xxxxx Xxxxxxx............................ [ ] [1,251]
Xxxxxxxx Xxxxxx.......................... [ ] [0]
Xxxx X. Xxxxxxxxxx....................... [ ] [62,155]
Xxxxxxxxx Xxxxxx......................... [0] [0]
Xxxxxxx Xxxxxxxx......................... [ ] [64,172]
Xxxxx X. Xxxxx........................... [ ] [10,000]
Xxxxxxx X. Xxxxxxxx...................... [ ] [15,702]
Xxxx-Xxxxxx Xxxxxxxxx.................... [ ] [0]
Xxxx X. Xxxxx, M.D. ..................... [ ] [0]
All Executive Officers and Directors as a
Group
(23 in number).......................... [ ] [1,065,250]
Pursuant to the terms of the Company's various stock option plans which have
been approved by the shareholders, directors, upon election to the Board,
receive an option to purchase 20,000 Shares at a price equal to the market
price on the date of grant. These options become exercisable during service as
a director at the rate of 20% of the Shares on each of the first five
anniversaries of the date of grant.
35
SHARE OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER AND MERGER
SUBSIDIARY
As set forth in "THE MERGER--Interests of Certain Persons in the Merger"
certain directors and executive officers of the Company are also directors and
executive officers of Purchaser and Xxxxxx Xxxxxxxxxx. With the exception of
the ownership of Shares by certain of such persons set forth in "OWNERSHIP OF
SHARES--Share Ownership of Directors and Executive Officers of the Company"
and the ownership of Shares by certain other persons set forth below, no
director or executive officer of Purchaser or Merger Subsidiary owns any
Shares. The following table shows, for certain directors and/or executive
officers of Purchaser who are not also directors or executive officers of the
Company, the total number of Shares beneficially owned as of October 2, 1997,
and the nature of such beneficial ownership. Beneficial ownership includes,
among other things, the right to acquire shares within sixty (60) days through
the exercise of an option. Total ownership represents less than two percent of
the outstanding shares.
NUMBER OF SHARES
NUMBER OF SHARES SUBJECT TO
NAME OF BENEFICIAL OWNER OWNED DIRECTLY EXERCISABLE OPTIONS
------------------------ ---------------- -------------------
Xxxxxxxx Xxxxxxxxxxxx.................... [ ] [ ]
Xxxxxxx Xxxxxxxxx-Xxxxxxxxx
(representative of Assurances
Generales de France).................... [ ] [ ]
S.G. Equities International, subsidiary
of Societe Generale..................... [ ] [ ]
Societe Generale......................... [ ] [ ]
36
TRANSACTIONS BY CERTAIN PERSONS IN SHARES
BNP Arbitrage, an affiliate of the Banque Nationale de Paris, a director of
Purchaser, has effected the following transactions in Shares during the past 60
days:
AMOUNT PRICE PER PLACE OF
DATE OF SHARES SHARE TRADE TYPE OF TRADE
---- --------- --------- -------- --------------------
June 19, 1997................. 200 $78.88 NYSE Open Market purchase
June 19, 1997................. 500 $79.00 NYSE Open Market sale
June 19, 1997................. 200 $78.88 NYSE Open Market sale
June 19, 1997................. 200 $78.88 NYSE Open Market sale
June 26, 1997................. 1,500 $90.56 NYSE Open Market purchase
June 26, 1997................. 2,500 $91.19 NYSE Open Market purchase
June 26, 1997................. 1,000 $91.06 NYSE Open Market sale
June 26, 1997................. 1,000 $91.00 NYSE Open Market sale
June 26, 1997................. 1,100 $91.06 NYSE Open Market sale
June 27, 1997................. 500 $91.38 NYSE Open Market purchase
June 27, 1997................. 1,000 $91.06 NYSE Open Market sale
June 30, 1997................. 1,000 $90.81 NYSE Open Market purchase
June 30, 1997................. 1,000 $90.81 NYSE Open Market sale
July 1, 1997.................. 1,000 $91.19 NYSE Open Market purchase
July 2, 1997.................. 600 $92.00 NYSE Open Market purchase
July 2, 1997.................. 1,000 $92.13 NYSE Open Market sale
July 3, 1997.................. 1,000 $92.25 NYSE Open Market purchase
July 3, 1997.................. 1,400 $93.00 NYSE Open Market sale
July 3, 1997.................. 200 $92.50 NYSE Open Market sale
July 7, 1997.................. 2,300 $93.25 NYSE Open Market purchase
July 7, 1997.................. 400 $93.33 NYSE Open Market sale
July 7, 1997.................. 100 $93.23 NYSE Open Market sale
July 7, 1997.................. 1,000 $93.00 NYSE Open Market sale
July 8, 1997.................. 1,000 $93.38 NYSE Open Market purchase
July 9, 1997.................. 1,000 $93.63 NYSE Open Market sale
July 9, 1997.................. 300 $93.63 NYSE Open Market sale
July 9, 1997.................. 500 $93.63 NYSE Open Market sale
July 10, 1997................. 1,600 $93.69 NYSE Open Market purchase
July 10, 1997................. 1,100 $93.75 NYSE Open Market sale
July 10, 1997................. 500 $93.69 NYSE Open Market sale
July 15, 1997................. 500 $93.44 NYSE Open Market purchase
July 17, 1997................. 500 $93.44 NYSE Open Market sale
July 18, 1997................. 400 $92.75 NYSE Open Market purchase
July 18, 1997................. 400 $92.75 NYSE Open Market purchase
July 18, 1997................. 300 $92.75 NYSE Open Market sale
July 18, 1997................. 500 $92.75 NYSE Open Market sale
July 24, 1997................. 2,000 $93.31 NYSE Open Market purchase
July 25, 1997................. 200 $93.38 NYSE Open Market sale
July 25, 1997................. 500 $93.38 NYSE Open Market sale
July 25, 1997................. 1,000 $93.44 NYSE Open Market sale
July 28, 1997................. 300 $93.56 NYSE Open Market sale
July 30, 1997................. 1,000 $94.38 NYSE Open Market purchase
July 30, 1997................. 300 $94.38 NYSE Open Market sale
July 30, 1997................. 700 $94.00 NYSE Open Market sale
37
Purchaser has effected the following transactions in Shares during the past
60 days:
DATE AMOUNT OF SHARES PRICE PER SHARE PLACE OF TRADE TYPE OF TRADE
---- ---------------- --------------- -------------- --------------------------------
July 15, 1997........... 6,000 $32.125 Private sale Sale pursuant to option exercise
July 30, 1997........... 1,000 $32.125 Private sale Sale pursuant to option exercise
August 26, 1997......... 10,000 $57.00 Private sale Sale pursuant to option exercise
September 8, 1997....... 6,000 $32.125 Private sale Sale pursuant to option exercise
September 8, 1997....... 132,000 $42.00 Private sale Sale pursuant to option exercise
September 8, 1997....... 96,000 $45.00 Private sale Sale pursuant to option exercise
September 8, 1997....... 106,000 $57.00 Private sale Sale pursuant to option exercise
September 16, 1997...... 11,000 $45.00 Private sale Sale pursuant to option exercise
September 19, 1997...... 4,000 $45.00 Private sale Sale pursuant to option exercise
September 22, 1997...... 12,000 $45.00 Private sale Sale pursuant to option exercise
September 23, 1997...... 129,850 $32.125 Private sale Sale pursuant to option exercise
September 23, 1997...... 334,500 $42.00 Private sale Sale pursuant to option exercise
September 23, 1997...... 612,000 $57.00 Private sale Sale pursuant to option exercise
September 23, 1997...... 626,000 $45.00 Private sale Sale pursuant to option exercise
The Company has not effected any transactions in Shares during the past 60
days. To the best of the Company's knowledge, no officer or director of the
Company has effected any transaction in Shares during the past 60 days.
According to Xxxxxxxxx's records, since January 1, 1995, the Company and
Purchaser have purchased the following number of Shares at the following
average price per Share:
COMPANY PURCHASER
----------------------- ------------------------
NUMBER OF AVERAGE PRICE NUMBER OF AVERAGE PRICE
SHARES PER SHARE SHARES PER SHARE
--------- ------------- ---------- -------------
1995:
First Quarter............... 264 $63.0000 45,800 $40.76
Second Quarter.............. 0 0.0000 72,000 41.28
Third Quarter............... 0 0.0000 25,000 44.87
Fourth Quarter.............. 237 49.0042 185,585 48.66
1996:
First Quarter............... 1,511 $59.5071 207,500 $59.38
Second Quarter.............. 3,143 64.5041 781,500 59.78
Third Quarter............... 192 71.3958 0 0.00
Fourth Quarter.............. 102 75.3297 1,406,337 72.69
1997:
First Quarter............... 728 $71.6250 0 $ 0.00
Second Quarter.............. 171,035 74.0218 531,436 77.58
Third Quarter............... 0 0.0000 0 0.00
Fourth Quarter (through
[ ] [ ], 1997)......... 0 0.0000 46,138,374 97.00
38
RELATED PARTY TRANSACTIONS
Purchaser and its affiliates manage their cash separately. In certain large
countries such as the United States, France, the United Kingdom and Germany,
the local entities have access to Purchaser's cash pooling arrangements
whereby they can, at their own request, lend to or borrow from Purchaser at
market terms and conditions. Amounts receivable from Purchaser and affiliates
totaled $48.9 million and $61.3 million at December 31, 1996 and 1995,
respectively. The 1996 balance included $6.3 million of accounts receivable
from sales of products and services to Purchaser (1995: $8.5 million) and
$39.4 million classified as other current assets (1995: $36.8 million).
Accounts payable related to purchase of materials and services from Purchaser
and affiliates were $16.8 million at December 31, 1996 (1995: $12.2 million);
accrued and other liabilities due to Purchaser at December 31, 1996 were $30.0
million (1995: $20.9 million). In 1996, sales to Purchaser and affiliates were
$31.3 million (1995: $31.1 million). Materials purchased from Purchaser
totaled $38.7 million in 1996 (1995: $41.4 million). At December 31, 1996,
debt to Purchaser and affiliates totaled $259.8 million (1995: $653.0
million). Interest expense incurred with respect to Purchaser indebtedness in
1996 was $22.3 million (1995: $12.4 million). In addition, Purchaser provides
the Company with a $500.0 million medium-term currency facility, with interest
based on LIBOR plus a margin, and has guaranteed certain obligations of the
Company under certain joint ventures.
Purchaser charges the Company for expenses incurred on its behalf, including
research, data processing, insurance, legal, tax, advertising, public
relations and management fees. Such charges are reflected in the financial
statements and amounted to approximately $24.0 million in 1996 (1995: $23.6
million). Xxxxxxxxx believes that the expenses so charged are representative
of amounts that the Company would have incurred if it had been operated as an
unaffiliated entity.
In 1995, the Company acquired from Purchaser the businesses of Cooperation
Pharmaceutique Francaise ("Xxxxxx"), primarily in France, and a
pharmaceuticals business in Brazil for cash and preferred stock of a
subsidiary of the Company aggregating approximately $273.2 million. The
preferred shares, accounted for as minority interest in other liabilities,
have a liquidation preference of approximately FF645.0 million (approximately
$123.1 million) and pay dividends of 7.5% per annum on a stated value of
FF145.0 million. The acquisition agreements call for potential adjustments to
the purchase price of the businesses based on several factors, including
earnings performance.
In December 1995, the Company issued $500.0 million of undated capital
equity notes to Purchaser. The notes have a liquidation preference that ranks
senior to the Shares, but junior to all existing and future Company preferred
stock. Semiannual remuneration on the unpaid principal balance of the equity
notes is based on LIBOR plus a margin and was approximately $35.2 million in
1996. The capital equity notes are redeemable only at the Company's option,
but not earlier than five years after issuance, subject to certain exceptions.
In addition, the Company has entered into various licensing and
confidentiality agreements with Purchaser and its affiliates regarding certain
intellectual property rights.
In the ordinary course of their businesses, Purchaser and the Company engage
in a variety of commercial and financial transactions with several of the
companies (and/or their affiliates) which are represented on the Purchaser
Board (such as the Banque Nationale de Paris, Credit Lyonnais, Credit Suisse
First Boston, Fiat and Societe Generale). These commercial and financial
transactions are conducted on an arm's-length basis in accordance with the
Purchaser's standard business practices.
39
MANAGEMENT OF PURCHASER, MERGER SUBSIDIARY AND THE COMPANY
DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER
The following table sets forth the name, current business address,
citizenship and present principal occupation or employment, and material
occupations, positions, offices or employments and business addresses thereof
for the past five years of each director and executive officer of Purchaser.
Unless otherwise indicated, the current business address of each person is
Xxxxx-Xxxxxxx S.A., 00, xxxx Xxxx Xxxxxx, 00000 Xxxxxxxxxx Xxxxx, Xxxxxx.
Unless otherwise indicated, each such person is a citizen of France.
Directors
Purchaser's current directors and certain biographical information concerning
such individuals are set forth below.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME, CITIZENSHIP AND MATERIAL POSITIONS HELD DURING THE PAST
CURRENT BUSINESS ADDRESS FIVE YEARS AND BUSINESS ADDRESSES THEREOF
------------------------ -------------------------------------------
Xxxx-Xxxx Xxxxxxx................ Director, Chairman of the Board and Chief
Executive Officer of Xxxxx-Xxxxxxx S.A.
(since 1986); Director of Xxxxx-Xxxxxxx
Japan, Xxxxx-Xxxxxxx Limited, Xxxxx-Xxxxxxx
Quimica S.A., Air France, The Equitable,
Axa Assurances Iard, Axa Assurance Vie
Mutuelle, Axa Assurance Vie, Axa Xxxx
Xxxxxxxx, Midi Participations, Assurance
Xxxx Xxxxxxxx, Alpha Assurance Vie, Alpha
Assurance Vie Mutuelle, Uni Europe
Assurance Mutuelle, Xxxxxxxxx X.X., Societe
Generale and Pernod Xxxxxx; Vice-President
of the Supervisory Board of Axa UAP; Member
of the Supervisory Board of Xxxxx Holding
A.G. and the Supervisory Board of Casino.
Xxxx-Xxxx Xxxxx.................. Director of Xxxxx-Xxxxxxx S.A. (since
December 1993), Institut Merieux S.A.,
Xxxxx-Xxxxxxx Xxxxx Inc., Xxxxx-Xxxxxxx
Japan, Rhone Poulenc Quimica, Sita, V.E.V.,
Xxxxxx Gestion and Ecole Centrale des Arts
et des Manufactures de Paris; Vice Chairman
of Xxxxx-Xxxxxxx (supervises Quality,
Safety and Environmental Protection,
Industrialization and South American and
Asian-Pacific operations) (since November
1992); Chairman of Xxxxx-Xxxxxxx China and
Fondation Vilette-Entreprises; Member of
the Supervisory Board of Banque Paribas and
the Executive Committee of Institut de
Protection et de Surete Nucleaire.
Xxxxx Xxxxx...................... Director of Xxxxx-Xxxxxxx S.A. (since March
c/o Cap Gemini Sogeti 1993), Cap Gemini America (U.S.A.), Cap
00, xxx Xxxxxx Gemini Holding Inc. (U.S.A.), Gemini
75017 Paris, France Consulting Holding Ltd (U.K.), Hoskyns
Group plc (U.K.), Cap Gemini France S.A.,
Cap Gemini Telecom S.A. and Gemini
Consulting Holding S.A.; Chairman and Chief
Executive Officer of Cap Gemini Sogeti
(business management consulting) (since
January 1975); Chief Executive Officer of
Cap Gemini (Switzerland) S.A., Gemini
Consulting Holding BV, Gemini Consulting
Inc. (Delaware) and Cap Gemini Service
S.A.; Managing Director of Cap Gemini
Europe BV and Cap Gemini Benelux BV; Cap
Gemini S.A.'s representative on the Board
of Cap Gemini Universite S.A. and the Board
of Cap Gemini Innovation S.A.
40
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME, CITIZENSHIP AND MATERIAL POSITIONS HELD DURING THE PAST
CURRENT BUSINESS ADDRESS FIVE YEARS AND BUSINESS ADDRESSES THEREOF
------------------------ -------------------------------------------
Xxxxx Xxxxxxx.................... Director of Xxxxx-Xxxxxxx S.A. (since
c/o Institut Merieux S.A. 1986), Compagnie Generale d'Industrie et de
00, xxx Xxxxxxxxx Xxxxxxxxxxxxx X.X. and Compagnie Plastic
69002 Lyon, France Omnium S.A.; Chairman and Chief Executive
Officer of Institut Merieux S.A. (research
and development in biology, medicine and
pharmaceuticals) (since July 1965),
Biomerieux S.A., Biomerieux Alliance S.A.
Xxxxxx Xxxxxx-Xxxxxxxxxxx........ Director of Xxxxx-Xxxxxxx S.A. (since
c/o Xxxxxxxxx X.X. January 1997), Compagnie Generale
00-00, xxxxxx X.X. Clement d'Industrie et de Participation (CGIP)
92646 Boulogne-Billancourt (since 1992), Equitable (USA) (since 1991)
Cedex, France and Sema Group plc (United Kingdom) (since
1990); Chairman and Chief Executive Officer
of Xxxxxxxxx X.X. (industrial/electric)
(since 1981), Xxxxxxxxx Electric S.A. and
Square D; Member of the European Advisory
Board of Bankers Trust Company (USA) (since
1990), the Advisory Board of Xxxx Xxxxx &
Xxxxxxxx (since 1992), the Supervisory
Committee of AXA-UAP (since 1990), the
Supervisory Board of Banque Paribas (since
1989) and the Advisory Committee of Banque
de France (since 1989).
Xxxxxx Xxxxxxx................... Director of Xxxxx-Xxxxxxx S.A. (since March
c/o Credit Lyonnais 1993), Aerospatiale, Albatros
00, xxxxxxxxx xxx Xxxxxxxx Investissement, Xxxxxxxx Xxxxx, D.M.C.
75001 Paris, France (Dollfus Mieg & Cie) and V.E.V. S.A.; Chief
Executive Officer of Credit Lyonnais
(banking) (since September 1992); Chairman
of Slivam, Consortium Auxiliaire de
Participations, Credit Lyonnais Europe
S.A., Credit Lyonnais Espana (since 1995)
and the Supervisory Board of Bfg Bank A.G.
(since 1995); Credit Lyonnais'
representative on the Board of Clinvest,
the Board of Credito Bergamasco (since
1995), the Board of Groupe Flo and the
Supervisory Board of Lagardere Groupe.
Assurances Generales de France,
represented by Xxxxxxx Xxxxxxxxx-
Xxxxxxxxx .......................
c/o Assurances Generales de Assurances Generales de France: Director of
France Xxxxx-Xxxxxxx S.A (since March 1993), AGF-
87, rue de Richelieu IART (since June 1996), Comptoir des
75060 Paris Cedex 02, France Entrepreneurs (since June 1996), Xxxxxxxx
(since February 1997), AGF 2X (since 1997)
and Credit National (since 1997); Member of
the Supervisory Board of Xxxxx (since
November 1996) and the Supervisory Board of
Worms & Cie (since December 1995).
Xxxxxxx Xxxxxxxxx-Xxxxxxxxx: Assurances
Generales de France's representative on the
Board of Xxxxx-Xxxxxxx (since February
1994), the Board of Credit National and the
Board of Euler; Chairman and Chief
Executive Officer of Assurances Generales
de France (insurance) (since January 1994),
Chairman and Chief Executive Officer of
Banque Indosuez (1979-1993), AGF
International, AGF-IART, AGF-Vie and
Compagnie Financiere du Phenix; Director of
Bouygues, Societe Generale, Total, and
Xxxxxxx and Broad Home Corporation Los
Angeles; Chairman of the Supervisory Board
of Euro Disney SCA; Member of the
Supervisory Board of Compagnie Financiere
de Paribas, the Supervisory Board of
Aachener u. Munchener (AMB), Aix la
Chapelle and the Supervisory Board of
Pinault-Printemps-Redoute.
41
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME, CITIZENSHIP AND MATERIAL POSITIONS HELD DURING THE PAST
CURRENT BUSINESS ADDRESS FIVE YEARS AND BUSINESS ADDRESSES THEREOF
------------------------ -------------------------------------------
Banque Nationale de Paris,
represented by Xxxxxxxx Xxxx..... Banque National de Paris: Director of
c/o Banque Nationale de Xxxxx Xxxxx-Xxxxxxx S.A. (Since April 1994),
00, xxxxxxxxx des Italiens Director and Member of the Supervisory
75009 Paris, France Board of a large number of companies.
Xxxxxxxx Xxxx: Banque Nationale de Paris'
representative on the Board of Xxxxx-
Xxxxxxx S.A. (since December 1996);
President of Banque Nationale de Paris
(banking) (since September 1996); Chairman
of the Board of Compagnie Immobiliere de
France; Chairman of the Supervisory Board
of Xxxxxxx Promotion; Director of Banque
Nationale de paris Inercontinentale, BNP
U.K. Holdings Limited, Pechiney and Banque
de Bretagne; Member of the Supervisory
Board and Banque pour L'Expansion
Industrielle (Banexi); Banque Nationale de
Paris' representative on the Board of Xxxxx
and the Supervisory Board of Accor.
Credit Suisse First Boston, a
Swiss corporation, represented by
Xxxxxxx Xxx...................... Credit Suisse First Boston: Director of
c/o Credit Suisse Xxxxx-Xxxxxxx S.A. (since December 1993).
Xxxxxxxxxxxxxxx 000
0000 Xxxxxx, Xxxxxxxxxxx Xxxxxxx Xxx: Director of Xxxxx-Xxxxxxx S.A.
(since December 1993); President of Credit
Suisse (through 1996); Director of Credit
Suisse First Boston Aktiengesellschaft
Frankfurt, Xxxxx Xxxxxx Maschinenbau GmbH
Essen, Siemens Beteiligungen AG Zurich,
Societe Internationale Pirelli X.X. Xxxx,
Societe Internationale SaintGobain Fribourg
and Xxxxxx X.X. Winterthour; Member of the
Executive Board and Credit Suisse Zurich
(banking) (since 1987); President of Credit
Suisse (Luxembourg) S.A. Luxembourg, Credit
Suisse First Boston Canada Toronto and
Credit Suisse First Boston (Moscow) Limited
Moscow.
Fiat France S.A., represented by
Xxxxxxx Xxxxxx................... Fiat France S.A.: Director of Xxxxx-Xxxxxxx
c/o Societe Fiat France S.A. (since December 1993) and Europ
000, xxxxxx xxx Xxxxxx-Xxxxxxx Xxxxxxxxxx X.X.
00000 Xxxxx, Xxxxxx Xxxxxxx Xxxxxx: Fiat France S.A.'s
representative on the Board of Europ
Assistance S.A. (since 1994) and the Board
of Xxxxx-Xxxxxxx S.A. (since December
1993); Chairman and Chief Executive Officer
of Fiat France S.A. (automobiles) (since
1984) and Iveco France S.A.; Director of Le
Continent & Le Continent Vie, Magneti
Marelli France, Saint Louis and Ufima; La
Stampa S.p.A.'s representative on the Board
of Le Monde Presse S.A.; Member of the
Coordination Committee of Fiat S.p.A.
42
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME, CITIZENSHIP AND MATERIAL POSITIONS HELD DURING THE PAST
CURRENT BUSINESS ADDRESS FIVE YEARS AND BUSINESS ADDRESSES THEREOF
------------------------ -------------------------------------------
Societe Financiere et
Immobiliere, Xxxxxx Xxxxxxxx,
represented by Xxxxxxxx Xxxxxxxxxx et Immobiliere Xxxxxx
Xxxxxxxx......................... Dassault: Director of Xxxxx-Xxxxxxx S.A.
c/o Societe Financiere et (since April 1994), Electriciteet Eaux de
Immobiliere Xxxxxx Xxxxxxxx Madagascar and Genset.
9, rond-point des Champs-Elysees
75008 Paris, France Xxxxxxxx Xxxxxxxx: Director of Xxxxx-
Xxxxxxx S.A. (since June 1995); President
and Director of Societe Financiere et
Immobiliere Xxxxxx Xxxxxxxx (real estate
management) (since April 1994); Chief
Executive Officer of EIF Aquitaine S.A.
(1988-1994); Director of Transgene, Banque
Odier Bungener Courvoisier (OBC), Sanofi,
Societe Centrale d'Investissement (SCI),
Dassault Electronique, Banque Vernes and
Compagnie Nationale Porte-Feuille (CNP)
Belgium; Societe Financiere et Immobiliere
Xxxxxx Xxxxxxxx's representative on the
Board of Kapt and Kapt Aquitaine.
Societe Generale, represented by
Xxxx Xxxxxx...................... Societe Generale: Director of Xxxxx-Xxxxxxx
c/o Societe Generale S.A. (since December 1993), Xxxxxxxx Xxxxx,
Tour Societe Generale Credit General Industriel, Europe Computer
92972 Paris La Defense Cedex, Systeme Finextel, Union Immobiliere de
France France, Genefim, Klepierre, Salvepar,
Sefimeg, Silic and TF1; Member of the
Supervisory Board of Accor, the Supervisory
Board of Siparex and the Supervisory Board
of Worms & Cie.
Xxxx Xxxxxx: Societe Generale's
representative on the Board of Xxxxx-
Xxxxxxx S.A. (since December 1993);
Chairman and Chief Executive Officer of
Societe Generale (banking) (since 1986);
Director of Association Francaise des
Banques, Association Francaise des
Entreprises Privees, Alcatel Alsthom,
Association Nationale des Societes par
Actions (A.N.S.A.), Compagnie Generale des
Eaux, Havas and Societe Generale Marocaine
de Banques; Societe Generale's
representative on the Board of TF1; Member
of Conseil National du Credit.
Xxxx Xxxxx....................... Director of Xxxxx-Xxxxxxx S.A. (since June
1994); Employee of Xxxxx-Xxxxxxx S.A.
(since 1953).
Xxxxxx Xxxxxx.................... Director of Xxxxx-Xxxxxxx S.A. (since June
1994); Employee of Xxxxx-Xxxxxxx S.A.
(since 1970).
Xxxxx Xxxxxxxxxx................. Director of Xxxxx-Xxxxxxx S.A. (since June
1994); Employee of Xxxxx-Xxxxxxx S.A.
(since 1961).
43
Executive Officers
Purchaser's current executive officers and certain biographical information
concerning such individuals are set forth below.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME, CITIZENSHIP AND MATERIAL POSITIONS HELD DURING THE PAST
CURRENT BUSINESS ADDRESS FIVE YEARS AND BUSINESS ADDRESSES THEREOF
------------------------ -------------------------------------------
Xxxx-Xxxx Xxxxxxx................ Director, Chairman of the Board and Chief
Executive Officer of Xxxxx-Xxxxxxx S.A.
(since 1986); Director of Xxxxx-Xxxxxxx
Japan, Xxxxx-Xxxxxxx Limited, Xxxxx-Xxxxxxx
Quimica S.A., Air France, The Equitable,
Axa Assurances Iard, Axa Assurance Vie
Mutuelle, Axa Assurance Vie, Axa Xxxx
Xxxxxxxx, Midi Participations, Assurance
Xxxx Xxxxxxxx, Alpha Assurance Vie, Alpha
Assurance Vie Mutuelle, Uni Europe
Assurance Mutuelle, Xxxxxxxxx X.X., Societe
Generale and Pernod Xxxxxx; Vice-President
of the Supervisory Board of Axa UAP; Member
of the Supervisory Board of Xxxxx Holding
A.G. and the Supervisory Board of Casino.
Xxxx-Xxxx Xxxxx.................. Director of Xxxxx-Xxxxxxx S.A. (since
December 1993), Institut Merieux S.A.,
Xxxxx-Xxxxxxx Xxxxx Inc., Xxxxx-Xxxxxxx
Japan, Rhone Poulenc Quimica, Sita, V.E.V.,
Xxxxxx Gestion and Ecole Centrale des Arts
et des Manufactures de Paris; Vice Chairman
of Xxxxx-Xxxxxxx (supervises Quality,
Safety and Environmental Protection,
Industrialization and South American and
Asian-Pacific operations) (since November
1992); Chairman of Xxxxx-Xxxxxxx China and
Fondation Vilette-Entreprises; Member of
the Supervisory Board of Banque Paribas and
the Executive Committee of Institut de
Protection et de Surete Nucleaire.
Phippe Desmarescaux.............. Group President (since December 1992),
supervises the Chemical segment, Research
and Development and North American
operations (since January 1995); Chairman
and Director of Xxxxx Xxxxxxx Inc.;
Director of Xxxxx-Xxxxxxx Japan, Groupe Seb
S.A., SNPE, Societe Francaise de Chimie and
Universite Catholique xx Xxxx; Chairman of
the Board of Institut de Chimie et de
Physique xx Xxxx and the Board of Ecole
Normale Superieure xx Xxxx; Vice-Chairman
of Ecole de Chimie, Physique and
Electronique xx Xxxx.
Xxxxx Xxxxxx..................... Chairman of Animal and Plant Health segment
(January 1997); Chief Executive Officer,
Agro Segment (1992-1996); Director of
Xxxxx-Xxxxxxx Animal Nutrition, Merial,
Centre de Cooperation Internationale en
Recherche Agronomique pour le Developpement
and Institut National de la Recherche
Agronomique.
Xxxx Xxxxxx...................... Group President. (Supervises the
Pharmaceuticals segment, Corporate
Communication and operations in the
European Union and the European Free Trade
Association) (since December 1992);
Director of Xxxxx-Xxxxxxx Xxxxx, Xxxxxxx
Merieux Serums & Vaccins Institut Merieux;
Member of the Supervisory Board of Rhodia
AG, Institut de Developpement Industriel
and Xxxxx-Xxxxxxx Limited.
Xxxx Xxxxxxxx.................... Group Senior Vice President Human Resources
(since 1990); Director of Xxxxx-Xxxxxxx
Fibres & Polymeres S.A. (since 1994) and
Xxxxx-Xxxxxxx Japan, Ltd.
44
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME, CITIZENSHIP AND MATERIAL POSITIONS HELD DURING THE PAST
CURRENT BUSINESS ADDRESS FIVE YEARS AND BUSINESS ADDRESSES THEREOF
------------------------ -------------------------------------------
Xxxxxx Xxxxx..................... Executive Vice President of the Chemical
segment and President of the segment's
European Zone (since March 1997), President
of Fibers and Polymers segment (1993-
February 1997).
Xxxxxx xx Xxxxx.................. Chairman of Xxxxx-Xxxxxxx Xxxxx Inc. (since
c/o Xxxxx-Xxxxxxx Xxxxx Inc. 1996); Chief Executive Officer of Rhone-
000 Xxxxxx Xxxx Poulenc Xxxxx Inc. (since 1995), President
Collegeville, Pennsylvania of Xxxxx-Xxxxxxx Xxxxx Inc. (1993-1996),
19426-0107 President of Fibers and Polymers Segment
(1988-1993).
Xxxx-Xxxxxx Xxxxxxxxx............ Group Executive Vice President (since
November 1992); President of the Fibers and
Polymers segment, Group Finance, Corporate
Strategy and Development, Control,
Information Systems and Legal Functions,
and International Affairs, the Garden Care
division and operations in Central and
Eastern Europe and the CIS; Director of
Xxxxx-Xxxxxxx Fibres & Polymeres, Xxxxx-
Xxxxxxx Inc., Xxxxx-Xxxxxxx Chemicals Asia
Pacific Pte Ltd, Xxxxx-Xxxxxxx Xxxxx Inc.,
Xxxxx-Xxxxxxx Viscosuisse (starting
September 1997), Institut Merieux (since
April 1994) and Objectif Rendement (since
June 1986); Member of Supervisory Board of
Cecar (since December 1993), Supervisory
Board of Cap Gemini (since May 1996) and
Supervisory Board of Indosuez (since March
1996).
45
DIRECTORS AND EXECUTIVE OFFICERS OF MERGER SUBSIDIARY
The following table sets forth the name, current business address,
citizenship and present principal occupation or employment, and material
occupations, positions, offices or employments and business addresses thereof
for the past five years of each director and executive officer of Xxxxxx
Xxxxxxxxxx. Unless otherwise indicated, the current business address of each
person is c/o Xxxxx-Xxxxxxx S.A., 00, xxxx Xxxx Xxxxxx, 00000 Xxxxxxxxxx
Xxxxx, Xxxxxx.
Directors
Xxxxxx Xxxxxxxxxx's current director and certain biographical information
concerning such individual is set forth below.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME, CITIZENSHIP MATERIAL POSITIONS HELD DURING THE PAST
AND CURRENT BUSINESS ADDRESS FIVE YEARS AND BUSINESS ADDRESSES THEREOF
---------------------------- -------------------------------------------
Xxxx Xxxxxx...................... Sole Director; Group President of Purchaser
(since December 1992); Director of Xxxxx-
Xxxxxxx Xxxxx, Xxxxxxx Xxxxxxx Serums &
Vaccins, Institut Merieux; Member of the
Supervisory Board of Rhodia AG, Institut de
Developpement Industriel and Xxxxx-Xxxxxxx
Limited. Citizen of France.
Executive Officers
Xxxxxx Xxxxxxxxxx's current executive officers and certain biographical
information concerning such individuals are set forth below.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME, CITIZENSHIP MATERIAL POSITIONS HELD DURING THE PAST
AND CURRENT BUSINESS ADDRESS FIVE YEARS AND BUSINESS ADDRESSES THEREOF
---------------------------- -------------------------------------------
Xxxx Xxxxxx...................... President; Group President of Purchaser
(since December 1992); Director of Xxxxx-
Xxxxxxx Xxxxx, Xxxxxxx Xxxxxxx Serums &
Vaccins, Institut Merieux; Member of the
Supervisory Board of Rhodia AG, Institut de
Developpement Industriel and Xxxxx-Xxxxxxx
Limited. Citizen of France.
Xxxxxx Xxxxxxxxx Xxxxxxxx, Xx. .. Secretary and Treasurer; Executive Vice
President and General Counsel of Xxxxx-
Xxxxxxx Inc. (since February 1996); Vice
President and General Counsel of Xxxxxxx
XxXxxxx Inc. (since January 1989). Citizen
of the United States of America.
46
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the name, current business address,
citizenship and present principal occupation or employment, and material
occupations, positions, offices or employments and business addresses thereof
for the past five years of each director and executive officer of the Company.
Unless otherwise indicated, the current business address of each person is
Xxxxx-Xxxxxxx Xxxxx Inc., 000 Xxxxxx Xxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000.
Directors
The Company's current directors and certain biographical information
concerning such individuals are set forth below.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST
NAME AND FIVE YEARS AND BUSINESS ADDRESSES THEREOF;
CURRENT BUSINESS ADDRESS CITIZENSHIP
------------------------ -------------------------------------------
Xxxx-Xxxx Xxxxx.................. Director of Xxxxx-Xxxxxxx Xxxxx Inc. (since
c/o Xxxxx-Xxxxxxx S.A. 1990), Institut Merieux S.A., Xxxxx-Xxxxxxx
00, xxxx Xxxx Xxxxxx X.X., Xxxxx-Xxxxxxx Japan, Xxxxx-Xxxxxxx
92408 Courbevoie Cedex, France Quimica, Xxxx, V.E.V., Xxxxxx Xxxxxxx and
Ecole Centrale des Arts et des Manufactures
de Paris; Vice Chairman of Xxxxx-Xxxxxxx
(supervises Quality, Safety and
Environmental Protection, Industrialization
and South American and Asian-Pacific
operations) (since November 1992); Chairman
of Xxxxx-Xxxxxxx China and Fondation
Vilette-Entreprises; Member of the
Supervisory Board of Banque Paribas and the
Executive Committee of Institut de
Protection et de Surete Nucleaire. Citizen
of France.
Xxxxxxx-Xxxxx Xxxxxxx............ Director of Xxxxx-Xxxxxxx Xxxxx Inc. (since
c/o Credit Commercial de France 1990); Managing Director in Charge of
103 av. des Champs Elysees Investment Banking (since 1995), Senior
75419 Paris Cedex 08, France Executive Vice President (since 1993) and
Executive Vice President in Charge of Large
Enterprises (1989-1993), Credit Commercial
de France. Citizen of France.
Xxxxxxx X. Xxxxxxxx, M.D. ....... Director of Xxxxx-Xxxxxxx Xxxxx Inc. (since
c/o Xxxxx-Xxxxxxx Xxxxx 1994); Executive Vice President (since
00, xxxx Xxxxx Xxxxxx BP14 1996) and Senior Vice President (1992-1996)
Vitry Sur Seine Cedex of Xxxxx-Xxxxxxx Xxxxx Inc. and President
94403 France of Xxxxx-Xxxxxxx Xxxxx Inc. Research &
Development since 1992; Director of
Research & Development Switzerland of
Sandoz Pharma Ltd. (1989-1992); and
Director of Pasteur Merieux Serums &
Vaccines and Centeon L.L.C. Citizen of
[Austria].
Xxxxx X. Xxxxx................... Director of Xxxxx-Xxxxxxx Xxxxx Inc. (since
c/o X. Xxxx Price Associates, 1982); Managing Director (since 1989) of T.
Inc. Xxxx Price Associates, Inc., an investment
000 Xxxx Xxxxx Xxxxxx management firm; and Director of X. Xxxx
Xxxxxxxxx, MD 21202 Price Associates, Inc. and various X. Xxxx
Price-sponsored mutual funds. Citizen of
the United States of America.
Xxxxxxx X. Xxxxxxxx.............. Director of Xxxxx-Xxxxxxx Xxxxx Inc. (since
1996); President (since 1996), Executive
Vice President and President,
Pharmaceutical Operations (since 1995) of
Xxxxx-Xxxxxxx Xxxxx Inc; and Chief
Executive Officer and President of the US
pharmaceutical business of Sandoz
Pharmaceuticals from 1992 to 1994 and
Senior Vice President of Worldwide Business
Development and Licensing from 1994 to
1995. Citizen of United States of America.
47
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST
NAME AND FIVE YEARS AND BUSINESS ADDRESSES THEREOF;
CURRENT BUSINESS ADDRESS CITIZENSHIP
------------------------ -------------------------------------------
Xxxx X. Xxxxx, M.D. ............. Director of Xxxxx-Xxxxxxx Xxxxx Inc. (since
c/o The Cleveland Clinic 1997); Chairman of the Department of
Foundation Cardiology, The Cleveland Clinic Foundation
Department of Cardiology, #F25 and Co-Director, The Cleveland Clinic Heart
0000 Xxxxxx Xxxxxx Xxxxxx since 1991. Citizen of the United
Cleveland, OH 44195 States of America.
Xxxxxx X. Xxxxxxxx............... Director of Xxxxx-Xxxxxxx Xxxxx Inc. (since
c/o Global Health Care Partners, 1984); Chairman Emeritus (since 1996),
DLJ Merchant Banking Partners Chairman (1986-1996), Chief Executive
000 Xxxx Xxxx Xxxxxx, Xxxxx 000 Officer (1985-1995) President (1984-1991),
Bala Cynwyd, PA 19004-1122 and Executive Vice President (1982-1984) of
Xxxxx-Xxxxxxx Xxxxx Inc; Managing Director,
Global Health Care Partners, a unit of DLJ
Merchant Banking Partners, L.P; and
Director of Sun Company, the Vanguard Group
of Investment Companies and Westinghouse
Electric Corporation. Citizen of the United
Kingdom.
Prof. Xxxxxx Xxxxxx.............. Director of Xxxxx-Xxxxxxx Xxxxx Inc. (since
c/o Xxxxx-Xxxxxxx S.A. 1990); Senior Vice President and Directeur
00, xxxx Xxxx Doumer Scientifique of Xxxxx-Xxxxxxx since 1990;
92408 Courbevoie Cedex, France Professeur at the Musee National D'Histoire
Naturelle (Paris, France) since 1976;
Director of a Research Center of Institut
National de la Sante et de la Recherche
Medicale (1980-1992); and member of the
French Academy of Sciences. Citizen of
France.
Xxxx-Xxxxxxx Xxxxxxxx............ Director of Xxxxx-Xxxxxxx Xxxxx Inc. (since
c/o Pasteur Merieux Serums & 1990); Chairman & Chief Executive Officer
Vaccines (since 1995) and Vice Chairman & CEO (in
00, Xxxxxx Xxxxxxx 1994) of Pasteur Merieux Serums and
BP 7046 Vaccines; Executive Vice President of
69348 Lyon Cedex 07, France Xxxxx-Xxxxxxx Xxxxx Inc. (1990-1993); and
President, Worldwide Pharmaceutical
Operations of Xxxxx-Xxxxxxx Xxxxx (1987-
1990). Citizen of France.
Michel de Rosen.................. Director (since 1993), Chairman (since
1996) and Chief Executive Officer (since
1995) of Rhone-Poulenc Rorer Inc; President
of Rhone-Poulenc Rorer Inc. (1993-1996),
President of Fibers and Polymers Segment of
Rhone-Poulenc S.A. (1988-1993). Citizen of
France.
Dale F. Frey..................... Director of Rhone-Poulenc Rorer Inc. (since
c/o The Michael Allen Company 1996); Retired Chairman and Chief Executive
One Gorham Island Officer, General Electric Investment
Westport, CT 06880 Corporation (1984-1996), Vice President and
Treasurer, General Electric Corporation
(1980-1984, 1986-1994); and Director of
USF&G Corporation, Praxair, Inc.,
Doubletree Corp., First American Financial
and Reacon Properties Corporation. Citizen
of the United States of America.
Igor Landau...................... Director of Rhone-Poulenc Rorer Inc. (since
c/o Rhone-Poulenc S.A. 1990); Group President of Rhone-Poulenc
25, quai Paul Doumer S.A. (Supervises the Pharmaceuticals
92400 Courbevoie Cedex, France segment, Corporate Communication and
operations in the European Union and the
European Free Trade Association) (since
December 1992); Director of Pasteur Merieux
Serums & Vaccins Institut Merieux; Member
of the Supervisory Board of Rhodia AG,
Institut de Developpement Industriel and
Rhone-Poulenc Limited. Citizen of France.
48
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST
NAME AND FIVE YEARS AND BUSINESS ADDRESSES THEREOF;
CURRENT BUSINESS ADDRESS CITIZENSHIP
------------------------ -------------------------------------------
Jean-Pierre Tirouflet............ Director of Rhone-Poulenc Rorer Inc. (since
1990); Group Executive Vice President of
Rhone-Poulenc S.A. (since November 1992);
President of the Fibers and Polymers
segment, Group Finance, Corporate Strategy
and Development, Control, Information
Systems and Legal Functions, and
International Affairs, the Garden Care
division and operations in Central and
Eastern Europe and the CIS; Director of
Rhone-Poulenc Fibres & Polymeres, Rhone-
Poulenc Inc., Rhone-Poulenc Chemicals Asia
Pacific Pte Ltd, Rhone-Poulenc Rorer Inc.,
Rhone-Poulenc Viscosuisse (starting
September 1997), Institut Merieux (since
April 1994) and Objectif Rendement (since
June 1986); Member of Supervisory Board of
Cecar (since December 1993), Supervisory
Board of Cap Gemini (since May 1996) and
Supervisory Board of Indosuez (since March
1996). Citizen of France.
Executive Officers
The Company's current executive officers and certain biographical information
concerning such individuals are set forth below.
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST
NAME AND FIVE YEARS AND BUSINESS ADDRESSES THEREOF;
CURRENT BUSINESS ADDRESS CITIZENSHIP
------------------------ -------------------------------------------
Michel de Rosen.................. Director (since 1993), Chairman (since
1996) and Chief Executive Officer (since
1995) of Rhone-Poulenc Rorer Inc; President
of Rhone-Poulenc Rorer Inc. (1993-1996),
President of Fibers and Polymers Segment of
Rhone-Poulenc S.A. (1988-1993). Citizen of
France.
Timothy G. Rothwell.............. Director of Rhone-Poulenc Rorer Inc. (since
1996); President (since 1996), Executive
Vice President and President,
Pharmaceutical Operations (since 1995) of
Rhone-Poulenc Rorer Inc; and Chief
Executive Officer and President of the US
pharmaceutical business of Sandoz
Pharmaceuticals from 1992 to 1994 and
Senior Vice President of Worldwide Business
Development and Licensing from 1994 to
1995. Citizen of the United States of
America.
Manfred E. Karobath, MD.......... Director of Rhone-Poulenc Rorer Inc. (since
c/o Rhone-Poulenc Rorer 1994); Executive Vice President (since
13, quai Jules Guesde BP14 1996) and Senior Vice President (1992-1996)
Vitry Sur Seine Cedex of Rhone-Poulenc Rorer Inc. and President
94403 France of Rhone-Poulenc Rorer Inc. Research &
Development since 1992; Director of
Research & Development Switzerland of
Sandoz Pharma Ltd. (1989-1992); and
Director of Pasteur Merieux Serums &
Vaccines and Centeon L.L.C. Citizen of
[Austria].
Guillaume Prache................. Senior Vice President and Chief Financial
Officer of Rhone-Poulenc Rorer Inc. since
July 1979; Employee of Rhone-Poulenc S.A.
since 1992. Citizen of France.
Alain Audubert................... Mr. Audubert joined Rhone-Poulenc Rorer
c/o Rhone-Poulenc Rorer S.A. Inc. as Senior Vice President and
20, Avenue Raymond Aron President, Industrial Operations, in 1994,
92165 Antony Cedex, France having served as Chief Executive Officer of
Pasteur Merieux Connaught since 1990.
Citizen of France.
49
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST
NAME AND FIVE YEARS AND BUSINESS ADDRESSES THEREOF;
CURRENT BUSINESS ADDRESS CITIZENSHIP
------------------------ -------------------------------------------
Richard T. Collier............... Mr. Collier was appointed to Senior Vice
President and General Counsel effective
January 1995, having served as Vice
President and General Counsel, U.S. since
October 1992. Since joining Rhone-Poulenc
Rorer Inc. in 1986, Mr. Collier has held
several positions in the legal organization
including Vice President and Assistant
Secretary and also served as Assistant to
the Chairman of Rhone-Poulenc Rorer Inc.
Citizen of the United States of America.
Stephen P. Connelly.............. Mr. Connelly became Senior Vice President
and General Manager, Americas, in 1996,
having served as Vice President and General
Manager, U.S. Prescription Products since
1995. Prior to that, Mr. Connelly was
Senior Vice President, General Manager,
Asia Pacific from 1992, having held
numerous successive positions including
General Manager of Rhone-Poulenc Rorer
Dermatologicals. Citizen of the United
States of America.
Richard Forrest.................. Mr. Forrest was appointed to Senior Vice
c/o Rhone-Poulenc Rorer S.A. President and General Manager, Europe, in
20, Avenue Raymond Aron October 1995. Before that, he had been
92165 Antony Cedex, France General Manager, DOMA, since 1991. Citizen
of [Italy].
Hadia Lafavre.................... Ms. Lefavre joined Rhone-Poulenc Rorer Inc.
in October 1995 as Senior Vice President
and General Manager, Human Resources,
having held various positions at Honeywell
Bull since 1993, including Human Resources
Vice President of Top Executive Management.
Ms. Lefavre also served as European
Director for Human Resources and Quality
for Oracle France in 1992 and as Director,
Human Resources, for Compaq Computer France
from 1988 to 1992. Citizen of France.
John D. Michelmore............... Mr. Michelmore was appointed to Senior Vice
c/o Rhone-Poulenc Rorer President and General Manager, Asia-
Asia/Pacific Pacific, in October 1995, having served as
Citibank Tower General Manager, Europe, since 1993. Prior
Hong Kong, China to that, he had served as Senior Vice
President and General Manager, Northern
Europe since 1990. Citizen of the United
Kingdom.
Bernard Reculeau................. Mr. Reculeau was appointed Senior Vice
President and General Manager, Central and
Eastern Europe, Middle East, South-Western
Asia, and Africa in October 1995. Mr.
Reculeau was General Manager, France and
Benelux, from 1994 to 1995, and before
that, Senior Vice President, Worldwide
Industrial Operations since 1990. Citizen
of France.
John Bond........................ Mr. Bond was appointed Vice President and
Corporate Treasurer in June 1996, having
served as Vice President, Finance, Europe
since 1993. Since joining Rhone-Poulenc in
1990, Mr. Bond has held such positions as
Vice President, Finance, Worldwide Research
and Development and Finance Director,
European Industrial Operations. Citizen of
the United Kingdom.
50
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT;
MATERIAL POSITIONS HELD DURING THE PAST
NAME AND FIVE YEARS AND BUSINESS ADDRESSES THEREOF;
CURRENT BUSINESS ADDRESS CITIZENSHIP
------------------------ ------------------------------------------
Philippe Maitre.................. Mr. Maitre was appointed to Vice President
and Corporate Controller in March 1996,
having served as Vice President and
Treasurer since 1994. Mr. Maitre joined
Rhone-Poulenc Rorer Inc. as Group Vice
President, Finance and Planning for North
America and Pacific Rim countries in 1993.
Prior to that, he held various finance
positions within Rhone-Poulenc S.A.,
including General Manager, Finance and
Planning of Rhone-Poulenc Japan from 1991
to 1993. Citizen of France.
INFORMATION CONCERNING PURCHASER AND MERGER SUBSIDIARY
Purchaser and its affiliates comprise one of the world's leading life
sciences and specialty chemicals companies. Purchaser's principal executive
offices are located at 25, quai Paul Doumer, 92408 Courbevoie Cedex, France.
Merger Subsidiary is a newly incorporated Pennsylvania corporation organized
in connection with the Offer and the Merger and has not carried on any
activities other than in connection with the Offer and the Merger.
Merger Subsidiary is a direct wholly owned subsidiary of Purchaser. Merger
Subsidiary's principal executive offices are located at Twelfth Floor, Packard
Building, 111 South 15th Street, Philadelphia, Pennsylvania 19102-2678.
Purchaser owns 141,222,394 Shares, representing approximately 98.53% of the
Shares issued and outstanding at October 1, 1997.
Except as described in this Proxy Statement, (i) none of Purchaser, the
Merger Subsidiary, nor, to the best knowledge of Purchaser and the Merger
Subsidiary, any of the persons listed in "MANAGEMENT OF PURCHASER, MERGER
SUBSIDIARY AND THE COMPANY--Directors and Executive Officers of Purchaser" and
"--Directors and Executive Officers of Merger Subsidiary" or any associate or
majority-owned subsidiary of Purchaser or the Merger Subsidiary or any of the
persons so listed beneficially owns or has any right to acquire, directly or
indirectly, any Shares and (ii) none of Purchaser, the Merger Subsidiary, nor,
to the best knowledge of Purchaser and the Merger Subsidiary, any of the
persons or entities referred to above nor any director, executive officer or
subsidiary of any of the foregoing has effected any transaction in the Shares
during the past 60 days.
Except as provided in the Merger Agreement or as otherwise described in this
Proxy Statement, none of Purchaser, the Merger Subsidiary nor, to the best
knowledge of Purchaser and the Merger Subsidiary, any of the persons listed in
"MANAGEMENT OF PURCHASER, MERGER SUBSIDIARY AND THE COMPANY--Directors and
Executive Officers of Purchaser" and "--Directors and Executive Officers of
Merger Subsidiary", 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 voting of such
securities, finder's fees, joint ventures, loan or option arrangements, puts
or calls, guarantees of loans, guaranties against loss, guaranties of profits,
division of profits or loss or the giving or withholding of proxies. Except as
set forth in this Proxy Statement, since January 1, 1995, none of Purchaser,
the Merger Subsidiary nor, to the best knowledge of Purchaser and the Merger
Subsidiary, any of the persons listed in "MANAGEMENT OF PURCHASER, MERGER
SUBSIDIARY AND THE COMPANY--Directors and Executive Officers of Purchaser" and
"--Directors and Executive Officers of Merger Subsidiary", has had any
business relationship or transaction with the Company or any of its executive
officers, directors or affiliates that is required to be reported under the
rules and regulations of the Commission applicable to the Merger. Except as
set forth in this Proxy Statement, since January 1, 1995, there have been no
contacts,
51
negotiations or transactions between Purchaser or any of their subsidiaries
or, to the best knowledge of Purchaser, any of the persons listed in
"MANAGEMENT OF PURCHASER, MERGER SUBSIDIARY AND THE COMPANY--Directors and
Executive Officers of Purchaser" and "--Directors and Executive Officers of
Merger Subsidiary", on the one hand, and the Company or its affiliates, on the
other hand, concerning a merger, consolidation or acquisition, tender offer or
other acquisition of securities, an election of directors or a sale or other
transfer of a material amount of assets.
Purchaser is subject to the informational reporting requirements of the
Exchange Act applicable to foreign private issuers, and in accordance
therewith files reports, including annual reports on Form 20-F, and other
information with the Commission. Such reports and other information can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at
the Commission's regional offices located at Seven World Trade Center, Suite
1300, New York, New York 10048, and the Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Information regarding the public
reference facilities may be obtained from the Commission by telephoning 1-800-
SEC-0330. Copies of such materials may also be obtained by mail from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Certain reports and other
information concerning the Purchaser may also be inspected at the offices of
the New York Stock Exchange, 20 Broad Street, New York, New York 10005.
REVOCATION OF PROXIES
You may revoke your proxy at any time prior to its exercise by attending the
Special Meeting and voting in person (although attendance at the Special
Meeting will not in and of itself constitute revocation of a proxy), by giving
notice of revocation of your proxy at the Special Meeting, or by delivering a
written notice or revocation or a duly executed proxy relating to the matters
to be considered at the Special Meeting and bearing a later date to the
Secretary of the Company at the Company's Executive Offices, 500 Arcola Road,
Collegeville, Pennsylvania 19426. Unless revoked in the manner set forth
above, proxies in the form enclosed will be voted at the Special Meeting in
accordance with your instructions.
INDEPENDENT PUBLIC ACCOUNTANTS
Upon appointment by the Company Board, Coopers & Lybrand L.L.P., independent
public accountants, audited and reported on the consolidated financial
statements of the Company and its subsidiaries for its fiscal year ended
December 31, 1996. Such financial statements have been included in this Proxy
Statement in reliance upon such report. A representative of Coopers & Lybrand
L.L.P. is expected to be present at the Special Meeting.
PROXY SOLICITATION
Any costs of soliciting proxies will be borne by the Company. Employees of
the Company, personally or by telephone, may solicit the return of proxies. In
addition, arrangements may be made with brokerage houses and other custodians,
nominees and fiduciaries to send proxies and proxy material to their
principals, in such circumstances, and the Company may reimburse them for
their expenses in so doing.
52
INCORPORATION BY REFERENCE
The following documents filed with the Commission by the Company pursuant to
the Exchange Act are incorporated herein by reference: the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1996 and the
Company's Quarterly Reports on Form 10-Q for the quarterly periods ended March
31, 1997 and June 30, 1997.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c) 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the date of the Special Meeting are hereby incorporated by reference
into this Proxy Statement and shall be deemed a part hereof from the date of
filing such documents or reports. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Proxy Statement to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Proxy Statement.
THIS PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. SUCH DOCUMENTS (OTHER THAN EXHIBITS TO
SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY
REFERENCE) ARE AVAILABLE, WITHOUT CHARGE, TO ANY PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM THIS PROXY STATEMENT IS DELIVERED, ON WRITTEN OR
ORAL REQUEST TO THE COMPANY AT 500 ARCOLA ROAD, COLLEGEVILLE, PENNSYLVANIA
19426 (TELEPHONE NUMBER (610) 454-8000), ATTENTION: VICE PRESIDENT OF INVESTOR
RELATIONS. IN ORDER TO ENSURE DELIVERY OF THE DOCUMENTS PRIOR TO THE SPECIAL
MEETING OF SHAREHOLDERS, REQUESTS SHOULD BE RECEIVED BY [ ] [ ], 1997.
ADDITIONAL AVAILABLE INFORMATION
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is required 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, stock 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 proxy statements distributed
to the Company's shareholders and filed with the Commission. Such reports,
proxy statements and other information can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549, and at the Commission's regional
offices located at Seven World Trade Center, Suite 1300, New York, New York
10048 and the Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Information regarding the public reference facilities may be
obtained from the Commission by telephoning 1-800-SEC-0330. The Company's
filings are also available to the public on the SEC Internet site
(xxxx://xxx.xxx.xxx.). Copies of such materials may also be obtained by mail
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. Certain reports and other
information concerning the Company may also be inspected at the offices of the
New York Stock Exchange, 20 Broad Street, New York, New York 10005.
53
OTHER MATTERS; 1998 ANNUAL MEETING
The Company Board does not intend to bring any other matters before the
Special Meeting and does not know of any other matters that may be brought
before the Special Meeting by others.
The Company has indefinitely postponed the annual meeting of shareholders of
the Company for fiscal year 1998. An annual meeting of shareholders of the
Company will be held for fiscal year 1998 only if the Merger is not
consummated. If a shareholder desires to present a proposal at the Company's
1998 annual meeting, if held, such proposal must be received by the Company no
later than December 3, 1997 at the Office of the Secretary, Rhone- Poulenc
Rorer Inc., 500 Arcola Road, Collegeville, Pennsylvania 19426.
By Order of the Board of Directors,
Richard B. Young
Secretary
[ ] [ ], 1997
54
ANNEX A
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
RHONE-POULENC S.A.
RP VEHICLE, INC.
AND
RHONE-POULENC RORER INC.
DATED AS OF AUGUST 19, 1997
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
ARTICLE I
The Offer
PAGE
----
Section 1.01. The Offer................................................ A-1
Section 1.02. Company Action........................................... A-2
ARTICLE II
The Merger
Section 2.01. The Merger............................................... A-3
Section 2.02. Effective Time; Closing.................................. A-3
Section 2.03. Effect of the Merger..................................... A-3
Section 2.04. Articles of Incorporation; By-laws....................... A-4
Section 2.05. Directors and Officers................................... A-4
Section 2.06. Conversion of Securities................................. A-4
Section 2.07. Options and Warrants..................................... A-4
Section 2.08. Dissenting Shares........................................ A-4
Section 2.09. Surrender of Shares; Stock Transfer Books................ A-5
Section 2.10. Withholding Rights....................................... A-6
ARTICLE III
Representations and Warranties of the Company
Section 3.01. Organization and Qualification; Subsidiaries............. A-6
Section 3.02. Articles of Incorporation and Bylaws..................... A-6
Section 3.03. Capitalization........................................... A-6
Section 3.04. Authority Relative to this Agreement..................... A-7
Section 3.05. No Conflict; Required Filings and Consents............... A-7
Section 3.06. Compliance............................................... A-7
Section 3.07. SEC Filings; Financial Statements........................ A-8
Section 3.08. Offer Documents; Schedule 14D-9; Schedule 13E-3; Proxy
Statement............................................... A-8
Section 3.09. Brokers.................................................. A-9
ARTICLE IV
Representations and Warranties
of Parent and Merger Subsidiary
Section 4.01. Corporation Organization................................. A-9
Section 4.02. Authority Relative to this Agreement..................... A-9
Section 4.03. No Conflict; Required Filings and Consents............... A-9
Section 4.04. Offer Documents; Proxy Statement......................... A-10
Section 4.05. Brokers.................................................. A-10
Section 4.06. Ownership of Merger Subsidiary; No Prior Activities...... A-10
Section 4.07. Financing................................................ A-11
ARTICLE V
Covenants
PAGE
----
Section 5.01. Conduct of the Business Pending the Merger............... A-11
Section 5.02. Shareholders' Meeting; Voting of Shares.................. A-11
Section 5.03. Proxy Statement.......................................... A-11
Section 5.04. Access to Information; Confidentially.................... A-12
Section 5.05. Directors' and Officers' Indemnification and Insurance... A-12
Section 5.06. Notification of Certain Matters.......................... A-13
Section 5.07. Further Action; Reasonable Best Efforts.................. A-13
Section 5.08. Public Announcements..................................... A-13
Section 5.09. Termination of Agreements................................ A-13
Section 5.10. Financing................................................ A-13
ARTICLE VI
Covenants
Section 6.01. Conditions to the Merger................................. A-14
ARTICLE VII
Termination, Amendment and Waiver
Section 7.01. Termination.............................................. A-14
Section 7.02. Effect of Termination.................................... A-15
Section 7.03. Amendment................................................ A-15
Section 7.04. Waiver................................................... A-15
ARTICLE VIII
General Provisions
Non-Survival of Representations, Warranties and
Section 8.01. Agreement............................................... A-15
Section 8.02. Notices.................................................. A-16
Section 8.03. Certain Definitions...................................... A-16
Section 8.04. Severability............................................. A-17
Section 8.05. Entire Agreement; Assignment............................. A-17
Section 8.06. Parties in Interest...................................... A-17
Section 8.07. Specific Performance..................................... A-17
Section 8.08. Fees and Expenses........................................ A-17
Section 8.09. Governing Law............................................ A-17
Section 8.10. Headings................................................. A-18
Section 8.11. Counterparts............................................. A-18
Consent to Jurisdiction: Appointment of Agent for Service
Section 8.12. of Process.............................................. A-18
Annex A Conditions to the Offer.................................. A-19
ii
GLOSSARY OF DEFINED TERMS (NOT PART OF THIS AGREEMENT)
DEFINED TERM LOCATION OF DEFINITION
------------ ----------------------
Acquisition Agreement.................................... Recitals
affiliate................................................ (S)8.03(a)
Agent.................................................... (S)8.12
Agreement................................................ Preamble
beneficial owner......................................... (S)8.03(b)
Blue Sky Laws............................................ (S)3.05(b)
Board.................................................... Recitals
business day............................................. (S)8.03(c)
Certificates............................................. (S)2.09(b)
Code..................................................... (S)2.10
Company.................................................. Preamble
Company Preferred Stock.................................. (S)3.03
control.................................................. (S)8.03(d)
Dissenting Shares........................................ (S)2.08(a)
Effective Time........................................... (S)2.02
Exchange Act............................................. (S)1.02(b)
Exercise Amount.......................................... (S)2.07(a)
Goldman, Sachs........................................... Recitals
Governmental Entity...................................... (S)3.05(b)
Indemnified Parties...................................... (S)5.05(b)
Law...................................................... (S)3.05(a)
Material Adverse Effect.................................. (S)3.01
Merger................................................... Recitals
Merger Consideration..................................... (S)2.06(a)
Merger Documents......................................... (S)2.02
Merger Subsidiary........................................ Preamble
Minimum Condition........................................ (S)1.01(a)
Money Market Preferred Stock............................. (S)3.03
Offer.................................................... Recitals
Offer Documents.......................................... (S)1.01(b)
Offer to Purchase........................................ (S)1.01(b)
Option................................................... (S)2.07(a)
Parent................................................... Preamble
Parent Shares............................................ Recitals
Paying Agent............................................. (S)2.09(a)
Pennsylvania Law......................................... Recitals
Per Share Amount......................................... Recitals
person................................................... (S)8.03(e)
Proxy Statement.......................................... (S)3.08
Schedule 14D-1........................................... (S)1.01(b)
Schedule 14D-9........................................... (S)1.02(b)
Schedule 13E-3........................................... (S)1.01(b)
SEC...................................................... (S)1.01(b)
SEC Reports.............................................. (S)3.07(a)
Securities Act........................................... (S)3.07(a)
Shareholders' Meeting.................................... (S)5.02
Shares................................................... Recitals
Special Committee........................................ Recitals
DEFINED TERM LOCATION OF DEFINITION
------------ ----------------------
Special Committee Approval............................... Recitals
Subsidiary............................................... (S)3.01
subsidiary............................................... (S)8.03(f)
Surviving Corporation.................................... (S)2.01
Transactions............................................. (S)1.01(b)
AGREEMENT AND PLAN OF MERGER, dated as of August 19, 1997 (this
"Agreement"), among RHONE-POULENC S.A., a French societe anonyme (hereinafter
"Parent"), RP VEHICLE, INC., a Pennsylvania corporation and a direct wholly
owned subsidiary of Parent ("Merger Subsidiary"), and RHONE-POULENC RORER
INC., a Pennsylvania corporation (the "Company").
WHEREAS, Parent beneficially owns approximately 68.1% (the "Parent Shares")
of the Common Shares (without par value) stated value $1 per share of the
Company ("Shares");
WHEREAS, Parent and the Company have entered into an Acquisition Agreement,
dated as of March 12, 1990 (the "Acquisition Agreement"), pursuant to which
Parent acquired a substantial portion of the Parent Shares and pursuant to
which Parent agreed to certain restrictions on subsequent acquisitions of
Shares;
WHEREAS, Parent has proposed that it acquire all of the issued and
outstanding Shares not owned by Parent;
WHEREAS, the Board of Directors of the Company (the "Board") and a special
committee comprised of the Independent Directors (as defined in the
Acquisition Agreement) of the Board (the "Special Committee") have determined
that it is in the best interests of the Company to approve Parent's proposed
acquisition and have voted (i) to recommend that the shareholders of the
Company accept the Offer (as defined below) and tender their Shares pursuant
to the Offer and (ii) to approve the merger (the "Merger") of Merger
Subsidiary with and into the Company, with the Company being the surviving
corporation, in accordance with the Pennsylvania Business Corporation Law of
1988 ("Pennsylvania Law") following consummation of the Offer;
WHEREAS, it is proposed that Parent will make a cash tender offer (the
"Offer") in compliance with (i) Section 14(d)(1) of the Exchange Act (as
defined below) and the rules and regulations promulgated thereunder and (ii)
the terms of Section 7.6 of the Acquisition Agreement, to acquire all the
issued and outstanding Shares for $97.00 per Share (such amount, or any
greater amount per Share paid pursuant to the Offer, being hereinafter
referred to as the "Per Share Amount") net to the seller in cash, upon the
terms and subject to the conditions of this Agreement; and that the Offer will
be followed by the Merger, pursuant to which each issued and outstanding Share
not owned by Parent will be converted into the right to receive the Per Share
Amount, upon the terms and subject to the conditions provided herein; and
WHEREAS, the Special Committee has received the opinion of Goldman, Sachs &
Co. ("Goldman, Sachs") that the consideration to be received by the holders of
Shares (other than Parent and its subsidiaries) pursuant to the Offer and the
Merger is fair to such holders;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Merger Subsidiary and the Company hereby agree as follows:
ARTICLE I
The Offer
Section 1.01. The Offer. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 7.01, Parent shall commence within
the meaning of Rule 14d-2 under the Exchange Act (as hereinafter defined) the
Offer as promptly as practicable after the date hereof, but in no event later
than five business days after the initial public announcement of Parent's
intention to commence the Offer. Parent shall not accept for payment any
Shares tendered pursuant to the Offer unless there shall have been validly
tendered and not withdrawn prior to the expiration of the Offer such number of
Shares which, when taken together with the Parent Shares, constitutes at least
90% of the then issued and outstanding Shares (the "Minimum Condition").
Parent shall, on the terms and subject to the conditions of the Offer
(including the Minimum Condition), accept for payment and pay for Shares
tendered as soon as practicable after the date which is the later of (x)
October 1,
A-1
1997 and (y) the date on which it legally may do so. The obligation of Parent
to accept for payment and pay for Shares tendered pursuant to the Offer shall
be further subject to the satisfaction of the conditions set forth in Annex A
hereto. Parent expressly reserves the right to increase the Per Share Amount.
Without the prior written consent of the Special Committee, Parent will not
(i) decrease the Per Share Amount, (ii) change the number of Shares to be
purchased in the Offer, (iii) change the form of the consideration payable in
the Offer, (iv) amend or add to the conditions to the Offer set forth in Annex
A hereto; or (v) make any other change in the terms or conditions of the Offer
which is materially adverse to the holders of Shares. Under no circumstances
shall Parent waive the Minimum Condition. The Per Share Amount shall, subject
to applicable withholding of taxes, be net to the seller in cash, upon the
terms and subject to the conditions of the Offer. Subject to the terms and
conditions of the Offer (including, without limitation, the Minimum
Condition), Parent shall pay, as promptly as practicable after expiration of
the Offer, for all Shares validly tendered and not withdrawn.
(b) As soon as reasonably practicable on the date of commencement of the
Offer, Parent shall file with the Securities and Exchange Commission (the
"SEC") (i) a Tender Offer Statement on Schedule 14D-1, including the exhibits
thereto (together with all amendments and supplements thereto, the "Schedule
14D-1"), including the exhibits thereto with respect to the Offer and (ii) a
Rule 13e-3 Transaction Statement on Schedule 13E-3, including the exhibits
thereto (together with all amendments and supplements thereto, the "Schedule
13E-3") with respect to the Offer and the other transactions contemplated
hereby (the "Transactions"). The Schedule 14D-1 and the Schedule 13E-3 shall
contain or shall incorporate by reference an offer to purchase (the "Offer to
Purchase") and forms of the related letter of transmittal and any related
summary advertisement (the Schedule 14D-1, the Schedule 13E-3, the Offer to
Purchase and such other documents, together with all supplements and
amendments thereto, being referred to herein collectively as the "Offer
Documents"). Parent, Merger Subsidiary and the Company agree to correct
promptly any information provided by any of them for use in the Offer
Documents which shall have become false or misleading, and Parent and Merger
Subsidiary further agree to take all steps necessary to cause the Schedule
14D-1 and the Schedule 13E-3 as so corrected to be filed with the SEC and the
other Offer Documents as so corrected to be disseminated to holders of Shares,
in each case as and to the extent required by applicable Law (as defined
hereinafter). The Company, the Special Committee and their respective counsel
shall be given the opportunity to review and comment on the Offer Documents
and any amendments thereto prior to the filing thereof with the SEC. Parent
and Merger Subsidiary shall provide the Company, the Special Committee and
their respective counsel with a copy of any written comments or telephonic
notification of any oral comments Parent or Merger Subsidiary may receive from
the SEC or its staff with respect to the Offer Documents promptly after the
receipt thereof. Parent and its counsel shall provide the Company and the
Special Committee and their respective counsel with a reasonable opportunity
to participate in all communications with the SEC and its staff, including any
meetings and telephone conferences, relating to the Transactions or this
Agreement.
Section 1.02. Company Action. (a) The Company hereby approves of and
consents to the Offer and represents that (i) the Special Committee and the
Board at meetings duly called and held on August 19, 1997, have each, by
unanimous vote of all directors present and voting, (A) determined that this
Agreement and the Transactions, including each of the Offer and the Merger,
are fair to and in the best interests of the Company, (B) approved this
Agreement and the Transactions and (C) resolved to recommend that the
shareholders of the Company accept the Offer and tender their Shares pursuant
to the Offer and approve and adopt this Agreement and the Transactions;
provided that such recommendation may be withdrawn, modified or amended to the
extent the Board or the Special Committee deems it necessary to do so in the
exercise of its fiduciary duties, as advised by independent counsel, and (ii)
Goldman, Sachs has delivered to the Special Committee a written opinion that
the consideration to be received by the holders of Shares (other than Parent
and its subsidiaries) pursuant to the Offer and the Merger is fair to the
holders of Shares. The Company hereby consents to the inclusion in the Offer
Documents of the recommendations of the Special Committee and the Board
described in the immediately preceding sentence.
(b) As soon as reasonably practicable on the date of commencement of the
Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9, including all exhibits thereto
A-2
(together with all amendments and supplements thereto, the "Schedule 14D-9"),
containing the recommendations of the Special Committee and the Board
described in Section 1.02(a) and shall disseminate the Schedule 14D-9 to the
extent required by Rule 14d-9 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and any other applicable federal
securities laws. The Company, Parent and Merger Subsidiary agree to correct
promptly any information provided by any of them for use in the Schedule 14D-9
which shall have become false or misleading, and the Company further agrees to
take all steps necessary to cause the Schedule 14D-9 as so corrected to be
filed with the SEC and disseminated to holders of Shares, in each case as and
to the extent required by applicable federal securities laws. Parent and its
counsel shall be given the opportunity to review and comment on the Schedule
14D-9 and any amendments thereto prior to the filing thereof with the SEC. The
Company shall provide Parent and its counsel with a copy of any written
comments or telephonic notification of any oral comments the Company may
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt thereof. The Company and its counsel shall provide Parent
and its counsel with a reasonable opportunity to participate in all
communications with the SEC and its staff, including any meetings and
telephone conferences, relating to the Transactions or this Agreement.
(c) In connection with the Transactions, the Company (i) shall promptly
furnish Parent with mailing labels containing the names and addresses of all
record holders of Shares and with security position listings of Shares held in
stock depositories, each as of a recent date, together with all other
available listings and computer files containing names, addresses and security
position listings of record holders and beneficial owners of Shares and (ii)
shall furnish Parent with such additional information, including, without
limitation, updated listings and computer files of shareholders, mailing
labels and security position listings, and such other assistance as Parent,
Merger Subsidiary or their agents may reasonably request in connection with
the Offer and the Merger.
ARTICLE II
The Merger
Section 2.01. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with Pennsylvania Law, at the
Effective Time Merger Subsidiary shall be merged with and into the Company. As
a result of the Merger, the separate corporate existence of Merger Subsidiary
shall cease and the Company shall continue as the surviving corporation of the
Merger (the "Surviving Corporation").
Section 2.02. Effective Time; Closing. As promptly as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VI, the parties hereto shall cause the Merger to be consummated by delivering
to the Secretary of the Commonwealth of Pennsylvania the articles of merger
and any clearance certificates required by Section 139 of Pennsylvania Law,
each in such form or forms as may be required by, and executed and
acknowledged in accordance with, the relevant provisions of Pennsylvania Law
(such documents being referred to collectively as the "Merger Documents"), and
shall make all other filings and recordings required by Pennsylvania Law in
connection with the Merger. The Merger shall become effective at the time of
filing of the appropriate Merger Documents with the Secretary of the
Commonwealth of Pennsylvania, or at such later time, which shall be as soon as
reasonably practicable, specified as the effective time in the Merger
Documents (the "Effective Time"). Prior to such filing, a closing shall be
held at the offices of Shearman & Sterling, 599 Lexington Avenue, New York,
New York USA 10022, or such other place as the parties shall agree, for the
purpose of confirming the satisfaction or waiver, as the case may be, of the
conditions set forth in Article VI.
Section 2.03. Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of Pennsylvania Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and Merger Subsidiary shall vest in the Surviving Corporation, and
all debts, liabilities, obligations, restrictions, disabilities and duties of
the Company and Merger Subsidiary shall become the debts, liabilities,
obligations, restrictions, disabilities and duties of the Surviving
Corporation.
A-3
Section 2.04. Articles of Incorporation; By-laws. (a) The Articles of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the Articles of Incorporation of the Surviving Corporation
following the Effective Time until thereafter amended as provided by
Pennsylvania Law.
(b) The By-laws of the Company, as in effect immediately prior to the
Effective Time, shall be the By-laws of the Surviving Corporation following
the Effective Time until thereafter amended as provided by law, the Articles
of Incorporation of the Surviving Corporation and such By-laws.
Section 2.05. Directors and Officers. (a) The directors of Merger Subsidiary
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Articles of
Incorporation and By-laws of the Surviving Corporation.
(b) The officers of the Company immediately prior to the Effective Time
shall be the initial officers of the Surviving Corporation, in each case until
their respective successors are duly elected or appointed and qualified.
Section 2.06. Conversion of Securities. At the Effective Time, by virtue of
the Merger and without any action on the part of Merger Subsidiary, the
Company or the holders of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the Effective
Time (other than Shares owned directly or indirectly by Parent) shall be
cancelled and, subject to Section 2.08, shall be converted automatically
into the right to receive from the Company an amount equal to the Per Share
Amount in cash (the "Merger Consideration") payable, without interest, to
the holder of such Share, upon surrender, in the manner provided in Section
2.09, of the certificate that formerly evidenced such Share;
(b) Each Share issued and outstanding immediately prior to the Effective
Time owned directly or indirectly by Parent shall remain issued and
outstanding and no payment or distribution shall be made with respect
thereto;
(c) Each share of Common Stock, par value $.01 per share, of Merger
Subsidiary issued and outstanding immediately prior to the Effective Time
shall be cancelled and no payment or distribution shall be made with
respect thereto; and
(d) Each outstanding share of Money Market Preferred Stock (as
hereinafter defined) issued and outstanding immediately prior to the
Effective Time shall remain issued and outstanding and no payment or
distribution shall be made with respect thereto.
Section 2.07. Options and Warrants. (a) Immediately prior to the Effective
Time, each outstanding option to purchase Shares (in each case, an "Option"),
whether or not then exercisable, shall be canceled and each holder of a
canceled Option shall be entitled to receive an indemnity payment (the
"Exercise Amount") in cash from the Company, in consideration for the
cancellation of each such Option, at the same time as the Merger Consideration
is received by the holders of Shares, equal to the product of (i) the number
of Shares to be issued upon the exercise of such Option and (ii) the excess,
if any, of the amount paid per Share pursuant to the Offer over the exercise
price per Share previously subject to such Option;
(b) Parent and the Company hereby agree that Parent, on the one hand, and
the Compensation Committee of the Company, on the other hand, will define,
prior to the Effective Time, alternatives to the treatment of Options set
forth in Section 2.07(a), which alternatives may include (i) deferral of the
payment of the amount payable pursuant to Section 2.07(a) and (ii) conversion
into options to purchase securities of Parent.
Section 2.08. Dissenting Shares. (a) Notwithstanding any provision of this
Agreement to the contrary, Shares that are outstanding immediately prior to
the Effective Time and which are held by shareholders who shall have neither
voted in favor of the Merger nor consented thereto in writing and who shall
have filed with the Company, prior to the vote on the Merger by the Company's
shareholders, a written notice of intention to demand that such shareholder be
paid the fair value for his Shares if the proposed action is effected and
thereafter demanded properly in writing payment of fair value for such Shares
in accordance with, and otherwise complied in all respects with, Sections 1930
and 1571 through 1580 of Pennsylvania Law (collectively, the "Dissenting
A-4
Shares") shall be canceled but not be converted into or represent the right to
receive the Merger Consideration. Such shareholders shall be entitled instead
to receive payment of the court determined fair value of such Shares (which
may be more than, equal to, or less than the Merger Consideration) in
accordance with the provisions of such Sections 1930 and 1571 through 1580,
except that all Dissenting Shares held by shareholders who shall have failed
to perfect or who effectively shall have withdrawn or lost their rights to
fair value for such Shares under such Sections 1930 and 1571 through 1580
shall thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective Time, the right to receive the Merger
Consideration, without any interest thereon, upon surrender, in the manner
provided in Section 2.09, of the certificate or certificates that formerly
evidenced such Shares.
(b) The Company shall give Parent (i) prompt notice of any demands for
payment of fair value received by the Company, withdrawals of such demands,
and any other instruments served pursuant to Pennsylvania Law and received by
the Company and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for payment of fair value under
Pennsylvania Law. The Company shall not, except with the prior written consent
of Parent, make any payment with respect to any demands for payment of fair
value or offer to settle or settle any such demands.
Section 2.09. Surrender of Shares; Stock Transfer Books. (a) Prior to the
Effective Time, Parent shall designate a bank or trust company to act as agent
(the "Paying Agent") for the holders of Shares in connection with the Merger
to receive the funds to which holders of Shares shall become entitled pursuant
to Section 2.06(a). Such funds shall be deposited with the Paying Agent by the
Surviving Corporation promptly following the Effective Time and shall be
invested by the Paying Agent as directed by the Surviving Corporation.
(b) Promptly after the Effective Time, the Surviving Corporation shall cause
to be mailed to each person who was, at the Effective Time, a holder of record
of Shares entitled to receive the Merger Consideration pursuant to Section
2.06(a) a form of letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the certificates evidencing
such Shares (the "Certificates") shall pass, only upon proper delivery of the
Certificates to the Paying Agent) and instructions for use in effecting the
surrender of the Certificates pursuant to such letter of transmittal. Upon
surrender to the Paying Agent of a Certificate, together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be required pursuant to
such instructions, the holder of such Certificate shall be entitled to receive
in exchange therefor the Merger Consideration for each Share formerly
evidenced by such Certificate. No interest shall accrue or be paid on the
Merger Consideration payable upon the surrender of any Certificate for the
benefit of the holder of such Certificate. If payment of the Merger
Consideration is to be made to a person other than the person in whose name
the surrendered Certificate is registered on the stock transfer books of the
Company, it shall be a condition of payment that the Certificate so
surrendered shall be endorsed properly or otherwise be in proper form for
transfer and that the person requesting such payment shall have paid all
transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such taxes either have been paid or are not applicable.
(c) At any time commencing 180 days after the Effective Time, the Surviving
Corporation shall be entitled to require the Paying Agent to deliver to it any
funds which had been made available to the Paying Agent and not disbursed to
holders of Shares (including, without limitation, all interest and other
income received by the Paying Agent in respect of all funds made available to
it), and thereafter such holders shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat and other similar laws)
only as general creditors thereof with respect to any Merger Consideration
that may be payable upon due surrender of the Certificates held by them.
Notwithstanding the foregoing, neither Parent, the Company nor the Paying
Agent shall be liable to any holder of a Share for any Merger Consideration
delivered in respect of such Share to a public official pursuant to any
abandoned property, escheat or other similar law.
(d) At the Effective Time, the stock transfer books of the Company shall be
closed and thereafter there shall be no further registration of transfers of
Shares on the records of the Company. From and after the Effective
A-5
Time, except for Parent, the holders of Shares outstanding immediately prior
to the Effective Time shall cease to have any rights with respect to such
Shares except as otherwise provided herein or by applicable law.
Section 2.10. Withholding Rights. The Surviving Corporation and the Paying
Agent shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of Shares and/or
Options such amounts that the Surviving Corporation or the Paying Agent is
required to deduct and withhold with respect to the making of such payment
under the United States Internal Revenue Code of 1986, as amended (the
"Code"), the rules and regulations promulgated thereunder or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld by
the Surviving Corporation or the Paying Agent, such amounts shall be treated
for all purposes of this Agreement as having been paid to the holder of the
Shares and/or Options in respect of which such deduction and withholding was
made by the Surviving Corporation or the Paying Agent.
ARTICLE III
Representations and Warranties of the Company
The Company hereby represents and warrants to Parent and Merger Subsidiary
that:
Section 3.01. Organization and Qualification; Subsidiaries. Each of the
Company and each subsidiary of the Company (a "Subsidiary") is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the requisite power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such
power, authority and governmental approvals would not, individually or in the
aggregate, have a Material Adverse Effect (as defined below). The Company and
each Subsidiary is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to
be so qualified or licensed and in good standing that would not, individually
or in the aggregate, have a Material Adverse Effect. The term "Material
Adverse Effect" means any change or effect that is or is reasonably likely to
be materially adverse to the business, operations, properties, financial
condition, assets or liabilities of the Company and the Subsidiaries taken as
a whole.
Section 3.02. Articles of Incorporation and Bylaws. The Company has
heretofore furnished to Parent a complete and correct copy of the Articles of
Incorporation and the Bylaws or equivalent organizational documents, each as
amended to date, of the Company. Such Articles of Incorporation, Bylaws or
equivalent organizational documents are in full force and effect, and neither
the Company nor any Subsidiary is in violation of any provision of its
Articles of Incorporation, Bylaws or equivalent organizational documents.
Section 3.03. Capitalization. The authorized capital stock of the Company
consists of 600,000,000 Shares and 3,000,000 shares of preferred stock,
without par value ("Company Preferred Stock"). As of July 31, 1997, (i)
142,687,492 Shares (including 5,169,412 Shares held by the Rhone-Poulenc Rorer
Inc. Employee Benefits Trust) are issued and outstanding, all of which are
validly issued, fully paid and nonassessable, (ii) 10,410 Shares are held in
the treasury of the Company, and (iii) 6,723,603 options were outstanding
pursuant to the Company's employee stock option plans, each such Option
entitling the holder thereof to purchase one Share. As of July 31, 1997, 1,750
shares of Money Market Preferred Stock, without par value (liquidation
preference $100,000 per share), of the Company (the "Money Market Preferred
Stock") are issued and outstanding. Except as set forth above, there are no
options, warrants or other rights, agreements, arrangements or commitments of
any character issued or authorized by the Company relating to the issued or
unissued capital stock of the Company or any Subsidiary or obligating the
Company or any Subsidiary to issue or sell any shares of capital stock of, or
other equity interests in, the Company or any Subsidiary. All Shares subject
to issuance as aforesaid, upon issuance on the terms and conditions specified
in the instruments pursuant to which they are issuable, will
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be duly authorized, validly issued, fully paid and nonassessable. There are no
outstanding contractual obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any Shares or any capital stock of any
Subsidiary or to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any person. Each outstanding
share of capital stock of each Subsidiary is duly authorized, validly issued,
fully paid and nonassessable and each such share owned by the Company or
another Subsidiary is free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on the
Company's or such other Subsidiary's voting rights, charges and other
encumbrances of any nature whatsoever.
Section 3.04. Authority Relative to this Agreement. The Company has all
necessary power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the Transactions. The
execution and delivery of this Agreement by the Company, the performance by
the Company of its obligations hereunder and the consummation by the Company
of the Transactions have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the Transactions
(other than, with respect to the Merger, the approval and adoption of this
Agreement by the holders of a majority of the then outstanding Shares if and
to the extent required by applicable law, and the filing and recordation of
appropriate merger documents as required by Pennsylvania Law). This Agreement
has been duly and validly executed and delivered by the Company and, assuming
the due authorization, execution and delivery by Parent and Merger Subsidiary,
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms. The restrictions on business
combinations contained in Subchapter F of Chapter 25 of Pennsylvania Law have
been satisfied with respect to the Transactions.
Section 3.05. No Conflict; Required Filings and Consents. (a) The execution
and delivery of this Agreement by the Company do not, and the performance of
this Agreement by the Company will not, (i) conflict with or violate the
Articles of Incorporation or Bylaws or equivalent organizational documents of
the Company or any Subsidiary, (ii) conflict with or violate any United States
federal, state or local or any foreign statute, law, rule, regulation,
ordinance, code, order, or any other requirement or rule of law (a "Law"),
applicable to the Company or any Subsidiary or by which any property or asset
of the Company or any Subsidiary is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of the
Company or any Subsidiary pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary or any property or asset of either of them is bound
or affected, except for any such conflicts, violations, breaches, defaults or
other occurrences which would not, individually or in the aggregate, have a
Material Adverse Effect or prevent or materially delay the performance by the
Company of any of its obligations under this Agreement or the consummation of
any of the Transactions.
(b) The execution and delivery of this Agreement by the Company do not, and
the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any United States federal, state or local or any foreign government or any
court, administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "Governmental Entity"), except (i)
for applicable requirements, if any, of the Exchange Act, French securities
laws, state securities or "blue sky" laws ("Blue Sky Laws") and state takeover
laws and the filing of the applicable Merger Documents with the Secretary of
the Commonwealth of Pennsylvania and (ii) where failure to obtain such
consents, approvals, authorizations or permits, or to make such filings or
notifications, would not, individually or in the aggregate have a Material
Adverse Effect or prevent or materially delay the performance by the Company
of any of its obligations under this Agreement or the consummation of any of
the Transactions.
Section 3.06. Compliance. Except as previously disclosed, neither the
Company nor any Subsidiary is in conflict with, or in default or violation of,
(i) any Law applicable to the Company or any Subsidiary or by
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which any property or asset of the Company or any Subsidiary is bound or
affected, or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or any property or asset of the Company or any Subsidiary is bound
or affected, except for any such conflicts, defaults or violations that would
not, individually or in the aggregate, have a Material Adverse Effect or
prevent or materially delay the performance by the Company of any of its
obligations under this Agreement or the consummation of any of the
Transactions.
Section 3.07. SEC Filings; Financial Statements. (a) The Company has filed
all forms, reports and documents required to be filed by it with the SEC since
December 31, 1994, and has heretofore delivered to Parent, in the form filed
with the SEC, (i) its Annual Reports on Form 10-K for the fiscal years ended
December 31, 1994, 1995, and 1996, respectively, (ii) its Quarterly Reports on
Form 10-Q for the periods ended March 31 and June 30, 1997, (iii) all proxy
statements relating to the Company's meetings of shareholders (whether annual
or special) held since December 31, 1994, and (iv) all other forms, reports
and other registration statements (other than Quarterly Reports on Form 10-Q
not referred to in clause (ii) above) filed by the Company with the SEC since
December 31, 1994 (the forms, reports and other documents referred to in
clauses (i), (ii), (iii) and (iv) above being referred to herein,
collectively, as the "SEC Reports"). The SEC Reports (i) were prepared in all
material respects in accordance with the applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the Exchange
Act, as the case may be, and the rules and regulations thereunder and (ii) did
not at the time they were filed contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. No Subsidiary is
required to file any form, report or other document with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any notes thereto) contained in the SEC Reports was prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto or, in the case of the unaudited interim financial statements, as
permitted by Form 10-Q under the Exchange Act) and each fairly presented the
consolidated financial position, results of operations and changes in
financial position of the Company and the consolidated Subsidiaries as at the
respective dates thereof and for the respective periods indicated therein,
except that the unaudited interim financial statements are subject to normal
and recurring year- end adjustments which are not expected to be material in
amounts.
(c) Except as and to the extent set forth on the consolidated balance sheet
of the Company and the consolidated Subsidiaries at December 31, 1996,
including the notes thereto, included in the Company's Annual Report on Form
10-K for the fiscal year then ended, or on the unaudited consolidated balance
sheet of the Company and the consolidated Subsidiaries at June 30, 1997,
including the notes thereto, included in the Company's Quarterly Report on
Form 10-Q for the period then ended, the Company and the consolidated
Subsidiaries have no liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise) which would be required to be reflected on
a consolidated balance sheet, or in the notes thereto, prepared in accordance
with generally accepted accounting principles, except for liabilities and
obligations incurred in the ordinary course of business consistent with past
practice since June 30, 1997 and which would not have a Material Adverse
Effect.
Section 3.08. Offer Documents; Schedule 14D-9; Schedule 13E-3; Proxy
Statement. Neither the Schedule 14D-9 nor any information supplied by the
Company for inclusion in the Offer Documents or the Schedule 13E-3 shall, at
the respective times the Schedule 14D-9, the Offer Documents, the Schedule
13E-3 or any amendments or supplements thereto are filed with the SEC or are
first published, sent or given to shareholders of the Company, as the case may
be, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they
are made, not misleading. Neither the proxy statement to be sent to the
shareholders of the Company in connection with the Shareholders' Meeting (as
hereinafter defined) nor the
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information statement to be sent to such shareholders, as appropriate (such
proxy statement or information statement, as amended or supplemented, being
referred to herein as the "Proxy Statement"), shall, at the date the Proxy
Statement (or any amendment or supplement thereto) is first mailed to
shareholders of the Company, at the time of the Shareholders' Meeting, be
false or misleading with respect to any material fact, or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they
are made, not misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the
Shareholders' Meeting which shall have become false or misleading.
Notwithstanding the foregoing, the Company makes no representation and
warranty with respect to information supplied by Parent, Merger Subsidiary or
any of their representatives which is contained in any of the foregoing
documents or the Offer Documents. The Schedule 14D-9 and the Proxy Statement
shall comply in all material respects as to form with the requirements of the
Exchange Act and the rules and regulations thereunder.
Section 3.09. Brokers. No broker, finder or investment banker (other than
Goldman, Sachs) is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of the Company. The Company has heretofore furnished to Parent a
complete and correct copy of all agreements between the Company and Goldman,
Sachs pursuant to which such firm would be entitled to any payment relating to
the Transactions.
ARTICLE IV
Representations and Warranties of Parent and Merger Subsidiary
Parent and Merger Subsidiary hereby, jointly and severally, represent and
warrant to the Company that:
Section 4.01. Corporate Organization. Parent is a societe anonyme duly
organized and validly existing under the laws of the Republic of France and
Merger Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the state of Pennsylvania.
Section 4.02. Authority Relative to this Agreement. Each of Parent and
Merger Subsidiary has all necessary corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the Transactions. The execution and delivery of this Agreement by
Parent and Merger Subsidiary, the performance by Parent and Merger Subsidiary
of their respective obligations hereunder and the consummation by Parent and
Merger Subsidiary of the Transactions have been duly and validly authorized by
all necessary corporate action and no other corporate proceedings on the part
of Parent or Merger Subsidiary are necessary to authorize this Agreement or to
consummate the Transactions (other than, with respect to the Merger, the
filing and recordation of appropriate merger documents as required by
Pennsylvania Law). This Agreement has been duly and validly executed and
delivered by Parent and Merger Subsidiary and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of each of Parent and Merger Subsidiary enforceable against each of
Parent and Merger Subsidiary in accordance with its terms.
Section 4.03. No Conflict; Required Filings and Consents. (a) The execution
and delivery of this Agreement by Parent and Merger Subsidiary do not, and the
performance of this Agreement by Parent and Merger Subsidiary will not, (i)
conflict with or violate the statuts (articles of association) and By-laws of
Parent or the Articles of Incorporation or By-laws of Merger Subsidiary, (ii)
conflict with or violate any Law applicable to Parent or Merger Subsidiary or
by which any property or asset of either of them is bound or affected, or
(iii) result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of,
or result in the creation of a lien or other encumbrance on any property or
asset of Parent or Merger Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or Merger Subsidiary is a party or by
which Parent or Merger Subsidiary
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or any property or asset of either of them is bound or affected, except for
any such conflicts, violations, breaches, defaults or other occurrences which
would not prevent, individually or in the aggregate have a Parent Material
Adverse Effect or materially delay the performance by Parent or Merger
Subsidiary of any of its obligations under this Agreement or the consummation
of any of the Transactions. The term "Parent Material Adverse Effect" means
any change of effect that is or is reasonably likely to be materially adverse
to the business, operations, properties, financial condition, assets or
liabilities of Parent and its subsidiaries taken as a whole.
(b) The execution and delivery of this Agreement by Parent and Merger
Subsidiary do not, and the performance of this Agreement by Parent and Merger
Subsidiary will not, require any consent, approval, authorization or permit
of, or filing with or notification to, any Governmental Entity, except (i) for
applicable requirements, if any, of the Exchange Act, French securities laws,
Blue Sky Laws and state takeover laws, and the filing of the applicable Merger
Documents with the Secretary of the Commonwealth of Pennsylvania and (ii)
where failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, would not, individually or in the
aggregate, have a Parent Material Adverse Effect or prevent or materially
delay the performance by Parent or Merger Subsidiary of any of its obligations
under this Agreement or the consummation of any of the Transactions.
Section 4.04. Offer Documents; Proxy Statement. None of the Offer Documents
nor any of the information supplied by Parent or Merger Subsidiary
specifically for inclusion in the Schedule 14D-9 shall, at the time the
respective documents or the Schedule 14D-9 are filed with the SEC or are first
published, sent or given to shareholders of the Company, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they
are made, not misleading. The information supplied by Parent for inclusion in
the Proxy Statement will not, on the date the Proxy Statement (or any
amendment or supplement thereto) is first mailed to shareholders of the
Company, at the time of the Shareholders' Meeting, contain any statement
which, at such time and in light of the circumstances under which it is made,
is false or misleading with respect to any material fact, or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein not false or misleading or necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Shareholders' Meeting which shall have become false or
misleading. Notwithstanding the foregoing, Parent and Merger Subsidiary make
no representation or warranty with respect to any information supplied by the
Company or any of its representatives which is contained in any of the
foregoing documents or the Offer Documents. The Offer Documents shall comply
in all material respects as to form with the requirements of the Exchange Act
and the rules and regulations thereunder.
Section 4.05. Brokers. No broker, finder or investment banker (other than
Morgan Stanley & Co. Incorporated, Union de Banques Suisses Paris and UBS
Limited) is entitled to any brokerage, finder's or other fee or commission in
connection with the Transactions based upon arrangements made by or on behalf
of Parent or Merger Subsidiary.
Section 4.06. Ownership of Merger Subsidiary; No Prior
Activities. (a) Merger Subsidiary was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement.
(b) As of the date hereof through the Effective Time, all of the outstanding
capital stock of the Merger Subsidiary will be owned directly by Parent. As of
the date hereof and through the Effective Time, there will be no options,
warrants or other rights (including registration rights), agreements,
arrangements or commitments to which Merger Subsidiary is a party of any
character relating to the issued or unissued capital stock of, or other equity
interests in, Merger Subsidiary or obligating Merger Subsidiary to grant,
issue or sell any shares of the capital stock of, or other equity interests
in, Merger Subsidiary, by sale, lease, license or otherwise. There are no
obligations, contingent or otherwise, of Merger Subsidiary to repurchase,
redeem or otherwise acquire any shares of the capital stock of Merger
Subsidiary.
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(c) As of the date hereof and as of the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement, Merger
Subsidiary has not and will not have incurred, directly or indirectly, through
any subsidiary or affiliate, any obligations or liabilities or engaged in any
business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person.
Section 4.07. Financing. Parent has or will have available, prior to the
expiration of the Offer, and will, as necessary, provide to Merger Subsidiary
on a timely basis, sufficient funds to enable Parent and Merger Subsidiary to
consummate the Offer, the Merger and the other transactions contemplated
hereby and to pay all related fees and expenses.
ARTICLE V
Covenants
Section 5.01. Conduct of the Business Pending the Merger. The Company
covenants and agrees that, between the date of this Agreement and the
Effective Time, unless Parent shall otherwise agree in writing, the businesses
of the Company and the Subsidiaries shall be conducted only in, and the
Company and the Subsidiaries shall not take any action except in, the ordinary
course of business and in a manner consistent with past practice; and the
Company shall use its reasonable best efforts to preserve substantially intact
the business organization of the Company and the Subsidiaries, to keep
available the services of the current officers, employees and consultants of
the Company and the Subsidiaries and to preserve the current relationships of
the Company and the Subsidiaries with customers, suppliers and other persons
with which the Company or any Subsidiary has significant business relations.
Section 5.02. Shareholders' Meeting; Voting of Shares. In order to
consummate the Merger, the Company, acting through the Board, shall, in
accordance with applicable law and the Company's Articles of Incorporation and
Bylaws, (a) duly call, give notice of, convene and hold a special meeting of
its shareholders as soon as practicable following consummation of the Offer
for the purpose of considering and taking action on this Agreement and the
Transactions (the "Shareholders' Meeting") and (b) (i) include in the Proxy
Statement the recommendation of the Board and the Special Committee that the
shareholders of the Company approve and adopt this Agreement and the
Transactions, subject to their respective fiduciary duties as advised by
independent counsel and (ii) use its reasonable best efforts to obtain such
approval and adoption. At the Shareholders' Meeting, Parent shall cause all
Shares then owned by it and its subsidiaries to be voted in favor of the
approval and adoption of this Agreement and the Transactions.
Section 5.03. Proxy Statement. If required by applicable law, as soon as
practicable following consummation of the Offer, the Company shall file the
Proxy Statement with the SEC under the Exchange Act, and shall use its
reasonable best efforts to have the Proxy Statement cleared by the SEC.
Parent, Merger Subsidiary and the Company shall cooperate with each other in
the preparation of the Proxy Statement, and the Company shall notify Parent of
the receipt of any comments of the SEC with respect to the Proxy Statement and
of any requests by the SEC for any amendment or supplement thereto or for
additional information and shall provide to Parent promptly copies of all
correspondence between the Company or any representative of the Company and
the SEC. The Company shall give Parent and its counsel the opportunity to
review the Proxy Statement prior to its being filed with the SEC and shall
give Parent and its counsel the opportunity to review all amendments and
supplements to the Proxy Statement and all responses to requests for
additional information and replies to comments prior to their being filed
with, or sent to, the SEC. Each of the Company, Parent and Merger Subsidiary
agrees to use its reasonable best efforts, after consultation with the other
parties hereto, to respond promptly to all such comments of and requests by
the SEC and to cause the Proxy Statement and all required amendments and
supplements thereto to be mailed to the holders of Shares entitled to vote at
the Shareholders' Meeting at the earliest practicable time.
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Section 5.04. Access to Information; Confidentiality. (a) From the date
hereof to the Effective Time, the Company shall, and shall cause the
Subsidiaries and the officers, directors, employees, auditors and agents of
the Company and the Subsidiaries to, afford the officers, employees and
agents, including financing sources, of Parent and Merger Subsidiary complete
access during normal business hours and without disrupting the orderly conduct
of business by the Company and its Subsidiaries to the officers, employees,
agents, properties, offices, plants and other facilities, books and records of
the Company and each Subsidiary, and shall furnish Parent and Merger
Subsidiary with all financial, operating and other data and information as
Parent or Merger Subsidiary, through its officers, employees or agents, may
reasonably request.
(b) No investigation pursuant to this Section 5.04 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
Section 5.05. Directors' and Officers' Indemnification and
Insurance. (a) The By-laws of the Surviving Corporation shall contain
provisions no less favorable with respect to indemnification than are set
forth in Article VII of the Bylaws of the Company, which provisions shall not
be amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would affect adversely the rights thereunder
of individuals who at the Effective Time were directors, officers, employees,
fiduciaries or agents of the Company, unless such modification shall be
required by law.
(b) The Company shall, to the fullest extent permitted under applicable law
and regardless of whether the Merger becomes effective, indemnify and hold
harmless, and, after the Effective Time, the Surviving Corporation shall, to
the fullest extent permitted under applicable law, indemnify and hold
harmless, each present and former director, officer, employee, fiduciary and
agent of the Company and each Subsidiary (collectively, the "Indemnified
Parties") against all costs and expenses (including attorneys' fees),
judgments, fines, losses, claims, damages, liabilities and settlement amounts
paid in connection with any claim, action, suit, proceeding or investigation
(whether arising before or after the Effective Time), whether civil, criminal,
administrative or investigative, arising out of or pertaining to any action or
omission in their capacity as an officer, director, employee, fiduciary or
agent, whether occurring before or after the Effective Time, until the
expiration of the statute of limitations relating thereto (and shall pay any
expenses in advance of the final disposition of such action or proceeding to
each Indemnified Party to the fullest extent permitted under Pennsylvania Law,
upon receipt from the Indemnified Party to whom expenses are advanced of any
undertaking to repay such advances required under Pennsylvania Law). In the
event of any such claim, action, suit, proceeding or investigation, (i) the
Company or the Surviving Corporation, as the case may be, shall pay the
reasonable fees and expenses of counsel selected by the Indemnified Parties,
which counsel shall be reasonably satisfactory to the Company or the Surviving
Corporation, promptly after statements therefor are received and (ii) the
Company and the Surviving Corporation shall cooperate in the defense of any
such matter; provided, however, that neither the Company nor the Surviving
Corporation shall be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld); and provided
further that neither the Company nor the Surviving Corporation shall be
obligated pursuant to this Section 5.05(b) to pay the fees and expenses of
more than one counsel (plus appropriate local counsel) for all Indemnified
Parties in any single action except (x) that the persons who served as
directors of the Company who were not designees of Parent shall be entitled to
retain one additional counsel (plus appropriate local counsel) to represent
them at the expense of the Company or the Surviving Corporation, and (y) to
the extent that two or more of such Indemnified Parties shall have conflicting
interests in the outcome of such action, in which case such additional counsel
(including local counsel) as may be required to avoid any such conflict or
likely conflict may be retained by the Indemnified Parties at the expense of
the Company or the Surviving Corporation; and provided further that, in the
event that any claim for indemnification is asserted or made within the period
prior to the expiration of the applicable statute of limitations, all rights
to indemnification in respect of such claim shall continue until the
disposition of such claim. All rights under this Section 5.05(b) shall be
deemed to be a contract between the Company and each of the Indemnified
Parties.
(c) The Surviving Corporation shall use its reasonable best efforts to
maintain in effect for six years from the Effective Time, if available, the
current directors' and officers' liability insurance policies maintained by
the
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Company covering those persons who are currently covered by such policies
(provided that the Surviving Corporation may substitute therefor policies of
at least the same coverage containing terms and conditions which are not
materially less favorable) with respect to matters occurring prior to the
Effective Time; provided, however, that in no event shall the Surviving
Corporation be required to expend pursuant to this Section 5.05(c) more than
an amount per year equal to 150% of current annual premiums paid by the
Company for such insurance. In the event that, but for the proviso to the
immediately preceding sentence, the Surviving Corporation would be required to
expend more than 150% of current annual premiums, the Surviving Corporation
shall obtain the maximum amount of such insurance obtainable by payment of
annual premiums equal to 150% of current annual premiums.
(d) In the event the Company or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors and assigns of the
Company or the Surviving Corporation, as the case may be, or at Parent's
option, Parent, shall assume the obligations set forth in this Section 5.05
and the indemnification agreements, dated as of July 2, 1997, between the
Company and the members of the Special Committee.
Section 5.06. Notification of Certain Matters. The Company shall give prompt
notice to Parent, and Parent shall give prompt notice to the Company, of (i)
the occurrence, or nonoccurrence, of any event the occurrence, or
nonoccurrence, of which would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any
material respect and (ii) any failure of the Company, Parent or Merger
Subsidiary, as the case may be, to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any notice pursuant
to this Section 5.06 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
Section 5.07. Further Action; Reasonable Best Efforts. Upon the terms and
subject to the conditions hereof, each of the parties hereto shall (i) use its
reasonable best efforts to take, or cause to be taken, all appropriate action,
and to do, or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
Transactions, including, without limitation, using its reasonable best efforts
to obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of each Governmental Entity and parties to contracts
with the Company and the Subsidiaries as are necessary for the consummation of
the Transactions and to fulfill the conditions to the Offer and the Merger. In
case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement and the Surviving Corporation shall
use their reasonable best efforts to take all such action.
Section 5.08. Public Announcements. Parent, Merger Subsidiary and the
Company shall consult with each other before issuing any press release or
otherwise making any public statements with respect to this Agreement or any
Transaction and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law or any
listing agreement with a securities exchange to which Parent or the Company is
a party.
Section 5.09. Termination of Agreements. The parties hereto hereby agree
that the Acquisition Agreement shall be terminated as of the Effective Time.
For purposes of clarity, it is understood by the parties hereto that all
representations, warranties and agreements between the parties which, by the
terms of such agreement, survive either or both the Closing Date (as that term
is defined in the Acquisition Agreement) or the termination of such agreement
shall all be terminated as of the Effective Time.
Section 5.10. Financing. Parent shall ensure that it or Merger Subsidiary,
as the case may be, has sufficient funds to acquire all the outstanding Shares
in the Offer and the Merger and pay all related fees and expenses.
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ARTICLE VI
Conditions to the Merger
Section 6.01. Conditions to the Merger. The respective obligations of each
party to effect the Merger shall be subject to the satisfaction at or prior to
the Effective Time of the following conditions:
(a) Shareholder Approval. This Agreement and the Transactions shall have
been approved and adopted by the affirmative vote of the shareholders of
the Company to the extent required by Pennsylvania Law and the Articles of
Incorporation and Bylaws of the Company;
(b) No Order. No Governmental Entity shall have enacted, issued,
promulgated, enforced or entered any Law (whether temporary, preliminary or
permanent) which is then in effect and has the effect of preventing or
prohibiting consummation of the Merger or the effective operation of the
business of the Company and the Subsidiaries after the Effective Time;
(c) Offer. Parent or its permitted assignee shall have purchased all
Shares validly tendered and not withdrawn pursuant to the Offer; provided,
however, that this condition shall not be applicable to the obligations of
Parent or Merger Subsidiary if, in breach of this Agreement or the terms of
the Offer, Parent fails to purchase any Shares validly tendered and not
withdrawn pursuant to the Offer.
ARTICLE VII
Termination, Amendment and Waiver
Section 7.01. Termination. This Agreement may be terminated and the Merger
and the other Transactions may be abandoned at any time prior to the Effective
Time, notwithstanding any requisite approval and adoption of this Agreement
and the Transactions by the shareholders of the Company:
(a) by mutual written consent duly authorized by the Boards of Directors
of Parent, Merger Subsidiary and the Special Committee on behalf of the
Company; or
(b) by either Parent or the Special Committee on behalf of the Company if
(i) the Effective Time shall not have occurred on or before March 31, 1998;
provided, however, that the right to terminate this Agreement under this
Section 7.01(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such
date or (ii) any court of competent jurisdiction or other Governmental
Entity shall have issued an order, decree, ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and nonappealable;
or
(c) by Parent, if (i) due to an occurrence or circumstance that would
result in a failure to satisfy any condition set forth in Annex A hereto,
Parent shall have (A) failed to commence the Offer within 30 days following
the date of this Agreement, or (B) terminated the Offer without having
accepted any Shares for payment thereunder or failed to pay for Shares
pursuant to the Offer within 90 days following the commencement of the
Offer, unless such termination or failure to pay for Shares shall have been
caused by or resulted from the failure of Parent or Merger Subsidiary to
perform in any material respect any material covenant or agreement of
either of them contained in this Agreement or the material breach by Parent
or Merger Subsidiary of any material representation or warranty of either
of them contained in this Agreement or (ii) prior to the purchase of Shares
pursuant to the Offer, the Special Committee shall have withdrawn or
modified in a manner adverse to Parent or Merger Subsidiary its approval or
recommendation of the Offer, this Agreement, the Merger or any other
Transaction or shall have resolved to do any of the foregoing; or
(d) by the Company, upon approval of the Special Committee, if due to an
occurrence or circumstance that would result in a failure to satisfy any of
the conditions set forth in Annex A hereto, Parent shall have (i) failed to
commence the Offer within 30 days following the date of this Agreement, or
(ii) terminated the
A-14
Offer without having accepted any Shares for payment thereunder or (iii)
failed to pay for Shares pursuant to the Offer within 90 days following the
commencement of the Offer, unless such termination or failure to pay for
Shares shall have been caused by or resulted from the failure of the
Company to perform in any material respect any material covenant or
agreement of it contained in this Agreement or the material breach by the
Company of any material representation or warranty of it contained in this
Agreement; or
(e) by the Company, upon approval of the Special Committee, if any
representation or warranty of Parent and Merger Subsidiary in this
Agreement which is qualified as to materiality shall not be true and
correct or any such representation or warranty that is not so qualified
shall not be true and correct in any material respect, in each case as if
such representation or warranty was made as of such time on or after the
date of this Agreement; or Parent or Merger Subsidiary shall have failed to
perform in any material respect any obligation or to comply in any material
respect with any agreement or covenant of Parent or Merger Subsidiary to be
performed or complied with by it under this Agreement.
Section 7.02. Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.01, this Agreement shall forthwith become
void, and there shall be no liability on the part of any party hereto, except
(i) as set forth in Section 8.01 and (ii) nothing herein shall relieve any
party from liability for any willful breach hereof.
Section 7.03. Amendment. This Agreement may be amended by the parties hereto
by action taken by or on behalf of their respective Boards of Directors (and
approved by the Special Committee) at any time prior to the Effective Time;
provided, however, that, after the approval and adoption of this Agreement and
the Transactions by the shareholders of the Company, no amendment may be made
which would reduce the amount or change the type of consideration into which
each Share shall be converted upon consummation of the Merger, imposes
conditions to the Merger other than set forth in Section 6.01 or would
otherwise amend or change the terms and conditions of the Merger in a manner
materially adverse to the holders of the Shares (other than Parent and its
affiliates) or would adversely affect the rights of the Indemnified Persons
under Section 5.05. This Agreement may not be amended except by an instrument
in writing signed by the parties hereto.
Section 7.04. Waiver. At any time prior to the Effective Time except as
otherwise provided in this Agreement, any party hereto may (i) extend the time
for the performance of any obligation or other act of any other party hereto,
(ii) waive any inaccuracy in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any agreement or condition contained herein, other than the Minimum
Condition. Any such extension or waiver shall be valid if set forth in an
instrument in writing signed by the party or parties to be bound thereby and,
in the case of any extension or waiver by which the Company is to be bound,
only if approved by the Special Committee.
ARTICLE VIII
General Provisions
Section 8.01. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this
Agreement pursuant to Section 7.01, as the case may be, except that (i) the
agreements set forth in Articles II and VIII and Section 5.05 shall survive
the Effective Time indefinitely and (ii) the agreements set forth in Article
VIII shall survive the termination of this Agreement indefinitely.
A-15
Section 8.02. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by
telecopy or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in
accordance with this Section 8.02):
if to Parent or Merger Subsidiary:
Rhone-Poulenc S.A.
25, quai Paul Doumer
92408 Courbevoie
Cedex, France
Telecopier No: (33-1) 47-68-11-33
Attention: General Counsel
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopier No: (212) 848-7179
Attention: Creighton O'M. Condon, Esq.
if to the Company:
Rhone-Poulenc Rorer Inc.
500 Arcola Road
Collegeville, PA 19426
Telecopier No: (610) 454-8985
Attention: General Counsel
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Telecopier No: (212) 735-2000
Attention: Margaret L. Wolff, Esq.
Section 8.03. Certain Definitions. For purposes of this Agreement, the term:
(a) "affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by,
or is under common control with, such specified person;
(b) "beneficial owner" with respect to any Shares means a person who
shall be deemed to be the beneficial owner of such Shares (i) which such
person or any of its affiliates or associates (as such term is defined in
Rule 12b-2 promulgated under the Exchange Act) beneficially owns, directly
or indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of consideration rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement
or understanding or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or associates or person with whom such person or any of its
affiliates or associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any Shares;
(c) "business day" means any day on which the principal offices of the
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized by law or executive order to close in the City of
New York;
A-16
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise;
(e) "person" means an individual, corporation, partnership, limited
partnership, limited liability company, syndicate, person (including,
without limitation, a "person" as defined in Section 13(d)(3) of the
Exchange Act), trust, association or entity or government, political
subdivision, agency or instrumentality of a government; and
(f) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means an affiliate controlled by
such person, directly or indirectly, through one or more intermediaries.
Section 8.04. Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law, or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner
in order that the Transactions be consummated as originally contemplated to
the fullest extent possible.
Section 8.05. Entire Agreement; Assignment. The Acquisition Agreement and
this Agreement constitute the entire agreement among the parties with respect
to the subject matter hereof and supercede all prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. This Agreement shall not be assigned by
operation of law or otherwise, except that Parent and Merger Subsidiary may
assign all or any of their rights and obligations hereunder to any wholly-
owned subsidiary Parent provided that no such assignment shall relieve the
assigning party of its obligations hereunder if such assignee does not perform
such obligations. To the extent that any terms of the Acquisition Agreement
and this Agreement are inconsistent, the terms of this Agreement shall
control.
Section 8.06. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement, other than Section 5.05 (which is intended to be for
the benefit of the persons covered thereby and may be enforced by such
persons).
Section 8.07. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or in equity.
Section 8.08. Fees and Expenses. All fees and expenses incurred in
connection with this Agreement and the Transactions shall be paid by the party
incurring such fees and expenses, whether or not such transactions are
consummated.
Section 8.09. Governing Law. Except to the extent that Pennsylvania Law is
mandatorily applicable to the Transactions, this Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York
(without regard to conflicts of laws principle thereof). All actions and
proceedings arising out of or relating to this Agreement shall be heard and
exclusively determined in any New York state or federal court sitting in the
County of New York and the parties hereto hereby consent to the jurisdiction
of such courts in any such action or proceeding.
A-17
Section 8.10. Headings. The descriptive headings contained in this Agreement
are included for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
Section 8.11. Counterparts. This Agreement may be executed in one or more
counterparts (including by facsimile transmission), and by the different
parties hereto in separate counterparts, each of which when executed shall be
deemed to be an original but all of which taken together shall constitute one
and the same agreement.
Section 8.12. Consent to Jurisdiction: Appointment of Agent for Service of
Process. Parent hereby (a) submits to the jurisdiction of any New York State
and Federal courts sitting in New York City with respect to such matters
arising out of or relating hereto, (b) agrees that all claims with respect to
such action or proceeding may be heard and determined in such New York State
or Federal court, (c) waives the defense of an inconvenient forum, (d)
consents to service of process upon it by mailing or delivering such service
to its agent CT Corporation System, 1633 Broadway, New York, New York 10019
(the "Agent") and authorizes and directs its Agent to accept such service, (e)
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law, and (f) to the extent that it or its
properties have or hereafter may acquire immunity from jurisdiction of any
court or from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise),
waives such immunity in respect of its obligations under this Agreement.
In Witness Whereof, Parent, Merger Subsidiary and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
Rhone-Poulenc S.A.
/s/ Igor Landau
By: _________________________________
Name:
Title:
RP Vehicle, Inc.
/s/ Igor Landau
By: _________________________________
Name:
Title:
Rhone-Poulenc Rorer Inc.
/s/ Timothy Rothwell
By: _________________________________
Name:
Title:
A-18
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Parent shall not be
required to accept for payment or pay, subject to the applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act, for
any Shares tendered pursuant to the Offer, and may terminate or amend the
Offer to the extent expressly provided in this Agreement and may postpone the
acceptance for payment of and payment for Shares tendered, if (i) the Minimum
Condition shall not have been satisfied or (ii) at any time on or after the
date of this Agreement, and prior to the acceptance for payment of Shares, any
of the following conditions shall exist:
(a) there shall have been instituted or be pending any action or
proceeding by any Governmental Entity, (i) challenging or seeking to make
illegal, materially delay or otherwise directly or indirectly restrain or
prohibit or make materially more costly the making of the Offer, the
acceptance for payment of, or payment for, any Shares by Parent or any
other affiliate of Parent or the consummation of any other Transaction;
(ii) seeking to prohibit or limit materially the ownership or operation by
the Company, Parent or any of their subsidiaries of all or any material
portion of the business or assets of the Company or any of its
subsidiaries, or to compel the Company, Parent or any of their subsidiaries
to dispose of or hold separate all or any material portion of the business
or assets of the Company or any of its subsidiaries, as a result of the
Transactions; (iii) seeking to impose or confirm limitations on the ability
of Parent or any other affiliate of Parent to exercise effectively full
rights of ownership of any Shares, including, without limitation, the right
to vote any Shares acquired by Parent pursuant to the Offer or otherwise on
all matters properly presented to the Company's shareholders, including,
without limitation, the approval and adoption of the Agreement and the
Merger; (iv) seeking to require divestiture by Parent or any other
affiliate of Parent of any Shares; or (v) which otherwise has a Material
Adverse Effect on the Company;
(b) there shall have been any order or injunction issued, or any Law
enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to Parent, the Company or any subsidiary or affiliate of Parent
or the Company which has resulted, or is reasonably likely to result,
directly or indirectly, in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above;
(c) there shall have occurred any change, condition, event or development
that has a Material Adverse Effect;
(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities of the Company on the NYSE
or the Paris Bourse; (ii) any general suspension of, or limitation on
prices for, trading in equity securities on the Paris Bourse; (iii) any
decline, measured from the date hereof, in the Standard & Poor's 500 Index
by an amount in excess of 20%; (iv) any change in currency exchange rates,
measured from the close of business on the date of this Agreement,
resulting in an increase of 15% or more in the Per Share Amount as
translated from U.S. dollars into French Francs; (v) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States or the Republic of France; (vi) any limitation (whether or
not mandatory) by any Governmental Entity, on, or other event that, could
reasonably be expected to have a material adverse effect on the extension
of credit by banks or other lending institutions, which limitation or other
event is reasonably likely to materially affect the ability of Parent to
pay for the Shares; (vii) a commencement of war or armed hostilities or
other national or international calamity directly or indirectly involving
the United States or the Republic of France; or (viii) in the case of any
of the foregoing existing on the date hereof, a material acceleration or
worsening thereof;
(e) (A) the Special Committee shall have withdrawn or modified in a
manner adverse to Parent or Merger Subsidiary the adoption or
recommendation of the Offer, the Merger or the Agreement, or (B) the
Special Committee shall have resolved to do any of the foregoing;
(f) any representation or warranty of the Company in this Agreement which
is qualified as to materiality shall not be true and correct or any such
representation or warranty that is not so qualified shall not be true and
correct in any material respect; provided in any such case, such
representation and warranty shall continue to be incorrect in any material
respect at the time of such termination;
A-19
(g) the Company shall have failed to perform in any material respect any
obligation or to comply in any material respect with any agreement or
covenant of the Company to be performed or complied with by it under this
Agreement;
(h) this Agreement shall have been terminated in accordance with its
terms; or
(i) Parent, Merger Subsidiary and the Company (with the approval of the
Special Committee) shall have agreed that Parent shall terminate the Offer
or postpone the acceptance for payment of or payment for Shares thereunder;
which, in the reasonable judgment of Parent in any such case, and regardless
of the circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Parent and may be
asserted by Parent regardless of the circumstances giving rise to any such
condition or may be waived by Parent in whole or in part at any time and from
time to time in its reasonable discretion. The failure by Parent at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any
such right; the waiver of any such right with respect to particular facts and
other circumstances shall not be deemed a waiver with respect to any other
facts and circumstances; and each such right shall be deemed an ongoing right
that may be asserted at any time and from time to time.
A-20
ANNEX B
SECTIONS 1930(A) AND 1571-80
(SUBCHAPTER D OF CHAPTER 15)
OF THE PENNSYLVANIA BUSINESS CORPORATION LAW
SECTION 1930. DISSENTERS RIGHTS
(A) GENERAL RULE.--If any shareholder of a domestic business corporation
that is to be a party to a merger or consolidation pursuant to a plan of
merger or consolidation objects to the plan of merger or consolidation and
complies with the provisions of Subchapter D of Chapter 15 (relating to
dissenters rights), the shareholder shall be entitled to the rights and
remedies of dissenting shareholders therein provided, if any. See also section
1906(c) (relating to dissenters rights upon special treatment).
CHAPTER 15
SUBCHAPTER D. -- DISSENTERS RIGHTS
SECTION 1571. APPLICATION AND EFFECT OF SUBCHAPTER
(A) GENERAL RULE.--Except as otherwise provided in subsection (b), any
shareholder of a business corporation shall have the right to dissent from,
and to obtain payment of the fair value of his shares in the event of, any
corporate action, or to otherwise obtain fair value for his shares, where this
part expressly provides in this subchapter. See:
Section 1906(c) (relating to dissenters rights upon special exchanges).
Section 1930 (relating to dissenters rights).
Section 1931(d) (relating to dissenters rights in share exchanges).
Section 1932(c) (relating to dissenters rights in asset transfers).
Section 1952(d) (relating to dissenters rights in division).
Section 1962(c) (relating to dissenters rights in conversion).
Section 2104(b) (relating to procedure).
Section 2324 (relating to corporation option where a restriction on
transfer of a security is held invalid).
Section 2325(b) (relating to minimum vote requirement).
Section 2704(c) (relating to dissenters rights upon election).
Section 2705(d) (relating to dissenters rights upon renewal of election).
Section 2907(a) (relating to proceedings to terminate breach of
qualifying conditions).
Section 7104(b)(3) (relating to procedure).
(B) EXCEPTIONS.--
(1) Except as otherwise provided in paragraph (2), the holders of the
shares of any class or series of shares that, at the record date fixed to
determine the shareholders entitled to notice of and to vote at the meeting
at which a plan specified in any of section 1930, 1931(d), 1932(c) or
1952(d) is to be voted on, are either:
(i) listing on a national securities exchange; or
(ii) held of record by more than 2,000 shareholders; shall not have
the right to obtain payment of the fair value of any such shares under
this subchapter.
(2) Paragraph (1) shall not apply to and dissenters rights shall be
available without regard to the exception provided in that paragraph in the
case of:
(i) Shares converted by a plan if the shares are not converted solely
into shares of the acquiring, surviving, new or other corporation or
solely into such shares and money in lieu of fractional shares.
B-1
(ii) Shares of any preferred or special class unless the articles,
the plan or the terms of the transaction entitle all shareholders of
the class to vote thereon and require for the adoption of the plan or
the effectuation of the transaction the affirmative vote of a majority
of the votes cast by all shareholders of the class.
(iii) Shares entitled to dissenters rights under section 1906(c)
(relating to dissenters rights upon special treatment).
(3) The shareholders of a corporation that acquires by purchase, lease,
exchange or other disposition all or substantially all of the shares,
property or assets of another corporation by the issuance of shares,
obligations or otherwise, with or without assuming the liabilities of the
other corporation and with or without the intervention of another
corporation or other person, shall not be entitled to the rights and
remedies of dissenting shareholders provided in this subchapter regardless
of the fact, if it be the case, that the acquisition was accomplished by
the issuance of voting shares of the corporation to be outstanding
immediately after the acquisition sufficient to elect a majority or more of
the directors of the corporation.
(C) GRANT OF OPTIONAL DISSENTERS RIGHTS.--The bylaws or a resolution of the
board of directors may direct that all or a part of the shareholders shall
have dissenters rights in connection with any corporate action or other
transaction that would otherwise not entitle such shareholders to dissenters
rights.
(D) NOTICE OF DISSENTERS RIGHTS.--Unless otherwise provided by statute, if a
proposed corporate action that would give rise to dissenters rights under this
subpart is submitted to a vote at a meeting of shareholders, there shall be
included in or enclosed with the notice of meeting:
(1) a statement of the proposed action and a statement that the
shareholders have a right to dissent and obtain payment of the fair value
of their shares by complying with the terms of this subchapter; and
(2) a copy of this subchapter.
(E) OTHER STATUTES.--The procedures of this subchapter shall also be
applicable to any transaction described in any statute other than this part
that makes reference to this subchapter for the purpose of granting dissenters
rights.
(F) CERTAIN PROVISIONS OF ARTICLES INEFFECTIVE.--This subchapter may not be
relaxed by any provision of the articles.
(G) CROSS REFERENCES.--See sections 1105 (relating to restriction on
equitable relief), 1904 (relating to a de facto transaction doctrine
abolished) and 2512 (relating to dissenters rights procedure).
SECTION 1572. DEFINITIONS
The following words and phrases when used in this subchapter shall have the
meanings given to them in this section unless the context clearly indicates
otherwise:
"CORPORATION." The issuer of the shares held or owned by the dissenter
before the corporate action or the successor by merger, consolidation,
division, conversion or otherwise of that issuer. A plan of division may
designate which of the resulting corporations is the successor corporation
for the purposes of this subchapter. The successor corporation in a
division shall have sole responsibility for payments to dissenters and
other liabilities under this subchapter except as otherwise provided in the
plan of division.
"DISSENTER." A shareholder or beneficial owner who is entitled to and
does assert dissenters rights under this subchapter and who has performed
every act required up to the time involved for the assertion of those
rights.
"FAIR VALUE." The fair value of shares immediately before the
effectuation of the corporation action to which the dissenter objects,
taking into account all relevant factors, but excluding any appreciation or
depreciation in anticipation of the corporate action.
B-2
"INTEREST." Interest from the effective date of the corporate action
until the date of payment at such rate as is fair and equitable under all
the circumstances, taking into account all relevant factors, including the
average rate currently paid by the corporation on its principal bank loans.
SECTION 1573. RECORD AND BENEFICIAL HOLDERS AND OWNERS
(A) RECORD HOLDERS OF SHARES.--A record holder of shares of a business
corporation may assert dissenters rights as to fewer than all of the shares
registered in his name only if he dissents with respect to all the shares of
the same class or series beneficially owned by any one person and discloses
the name and address of the person or persons on whose behalf he dissents. In
that event, his rights shall be determined as if the shares as to which he has
dissented and his other shares were registered in the names of different
shareholders.
(B) BENEFICIAL OWNERS OF SHARES.--A beneficial owner of shares of a business
corporation who is not the record holder may assert dissenters rights with
respect to shares held on his behalf and shall be treated as a dissenting
shareholder under the terms of this subchapter if he submits to the
corporation not later than the time of the assertion of dissenters rights a
written consent of the record holder. A beneficial owner may not dissent with
respect to some but less than all shares of the same class or series owned by
the owner, whether or not the shares so owned by him are registered in his
name.
SECTION 1574. NOTICE OF INTENTION TO DISSENT
If the proposed corporate action is submitted to a vote at a meeting of
shareholders of a business corporation, any person who wishes to dissent and
obtain payment of the fair value of his shares must file with the corporation,
prior to the vote, a written notice of intention to demand that he be paid the
fair value for his shares if the proposed action is effectuated, must effect
no change in the beneficial ownership of his shares from the date of such
filing continuously through the effective date of the proposed action and must
refrain from voting his shares in approval of such action. A dissenter who
fails in any respect shall not acquire any right to payment of the fair value
of his shares under this subchapter. Neither a proxy nor a vote against the
proposed corporate action shall constitute the written notice required by this
section.
SECTION 1575. NOTICE TO DEMAND PAYMENT
(A) GENERAL RULE.--If the proposed corporate action is approved by the
required vote at a meeting of shareholders of a business corporation, the
corporation shall mail a further notice to all dissenters who gave due notice
of intention to demand payment of the fair value of their shares and who
refrained from voting in favor of the proposed action. If the proposed
corporate action is to be taken without a vote of shareholders, the
corporation shall send to all shareholders who are entitled to dissent and
demand payment of the fair value of their shares a notice of the adoption of
the plan or other corporate action. In either case, the notice shall:
(1) State where and when a demand for payment must be sent and
certificates for certificated shares must be deposited in order to obtain
payment.
(2) Inform holders of uncertificated shares to what extent transfer of
shares will be restricted from the time that demand for payment is
received.
(3) Supply a form for demanding payment that includes a request for
certification of the date on which the shareholder, or the person on whose
behalf the shareholder dissents, acquired beneficial ownership of the
shares.
(4) Be accompanied by a copy of this subchapter.
(B) TIME FOR RECEIPT OF DEMAND FOR PAYMENT.--The time set for receipt of
demand and deposit of certificated shares shall be not less than 30 days from
the mailing of the notice.
B-3
SECTION 1576. FAILURE TO COMPLY WITH NOTICE TO DEMAND PAYMENT, ETC.
(A) EFFECT OF FAILURE OF SHAREHOLDER TO ACT.--A shareholder who fails to
timely demand payment, or fails (in the case of certificated shares) to timely
deposit certificates, as required by a notice pursuant to section 1575
(relating to notice to demand payment) shall not have any right under this
subchapter to receive payment of the fair value of his shares.
(B) RESTRICTION ON UNCERTIFICATED SHARES.--If the shares are not represented
by certificates, the business corporation may restrict their transfer from the
time of receipt of demand for payment until effectuation of the proposed
corporate action or the release of restrictions under the terms of section
1577(a) (relating to failure to effectuate corporate action).
(C) RIGHTS RETAINED BY SHAREHOLDER.--The dissenter shall retain all other
rights of a shareholder until those rights are modified by effectuation of the
proposed corporate action.
SECTION 1577. RELEASE OF RESTRICTIONS OR PAYMENT FOR SHARES
(A) FAILURE TO EFFECTUATE CORPORATE ACTION.--Within 60 days after the date
set for demanding payment and depositing certificates, if the business
corporation has not effectuated the proposed corporate action, it shall return
any certificates that have been deposited and release uncertificated shares
from any transfer restrictions imposed by reason of the demand for payment.
(B) RENEWAL OF NOTICE TO DEMAND PAYMENT.--When the uncertificated shares
have been released from transfer restrictions and deposited certificates have
been returned, the corporation may at any later time send a new notice
conforming to the requirements of section 1575 (relating to notice to demand
payment), with like effect.
(C) PAYMENT OF FAIR VALUE OF SHARES.--Promptly after effectuation of the
proposed corporate action, or upon timely receipt of demand for payment if the
corporate action has already been effectuated, the corporation shall either
remit to dissenters who have made demand and (if their shares are
certificated) have deposited their certificates the amount that the
corporation estimates to be the fair value of the shares, or give written
notice that no remittance under this section will be made. The remittance or
notice shall be accompanied by:
(1) The closing balance sheet and statement of income of the issuer of
the shares held or owned by the dissenter for a fiscal year ending not more
than 16 months before the date of remittance or notice together with the
latest available interim financial statements.
(2) A statement of the corporation's estimate of the fair value of the
shares.
(3) A notice of the right of the dissenter to demand payment or
supplemental payment, as the case may be, accompanied by a copy of this
subchapter.
(D) FAILURE TO MAKE PAYMENT.--If the corporation does not remit the amount
of its estimate of the fair value of the shares as provided by subsection (c),
it shall return any certificates that have been deposited and release
uncertificated shares from any transfer restrictions imposed by reason of the
demand for payment. The corporation may make a notation on any such
certificate or on the records of the corporation relating to any such
uncertificated shares that such demand has been made. If shares with respect
to which notation has been so made shall be transferred, each new certificate
issued therefor or the records relating to any transferred uncertificated
shares shall bear a similar notation, together with the name of the original
dissenting holder or owner of such shares. A transferee of such shares shall
not acquire by such transfer any rights in the corporation other than those
that the original dissenter had after making demand for payment of their fair
value.
SECTION 1578. ESTIMATE BY DISSENTER OF FAIR VALUE OF SHARES
(A) GENERAL RULE.--If the business corporation gives notice of its estimate
of the fair value of the shares, without remitting such amount, or remits
payment of its estimate of the fair value of a dissenter's shares
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as permitted by section 1577(c) (relating to payment of fair value of shares)
and the dissenter believes that the amount stated or remitted is less than the
fair value of his shares, he may send to the corporation his own estimate of
the fair value of the shares, which shall be deemed a demand for payment of
the amount or the deficiency.
(B) EFFECT OF FAILURE TO FILE ESTIMATE.--Where the dissenter does not file
his own estimate under subsection (a) within 30 days after the mailing by the
corporation of its remittance or notice, the dissenter shall be entitled to no
more than the amount stated in the notice or remitted to him by the
corporation.
SECTION 1579. VALUATION PROCEEDINGS GENERALLY
(A) GENERAL RULE.--Within 60 days after the latest of:
(1) effectuation of the proposed corporate action;
(2) timely receipt of any demands for payment under section 1575
(relating to notice to demand payment); or
(3) timely receipt of any estimates pursuant to section 1578 (relating to
estimate by dissenter of fair value of shares);
if any demands for payment remain unsettled, the business corporation may file
in court an application for relief requesting that the fair value of the
shares be determined by the court.
(B) MANDATORY JOINDER OF DISSENTERS.--All dissenters, wherever residing,
whose demands have not been settled shall be made parties to the proceeding as
in an action against their shares. A copy of the application shall be served
on each such dissenter. If a dissenter is a nonresident, the copy may be
served on him in the manner provided or prescribed by or pursuant to 42
Pa.C.S. Ch. 53 (relating to bases of jurisdiction and interstate and
international procedure).
(C) JURISDICTION OF THE COURT.--The jurisdiction of the court shall be
plenary and exclusive. The court may appoint an appraiser to receive evidence
and recommend a decision on the issue of fair value. The appraiser shall have
such power and authority as may be specified in the order of appointment or in
any amendment thereof.
(D) MEASURE OF RECOVERY.--Each dissenter who is made a party shall be
entitled to recover the amount by which the fair value of his shares is found
to exceed the amount, if any, previously remitted, plus interest.
(E) EFFECT OF CORPORATION'S FAILURE TO FILE APPLICATION.--If the corporation
fails to file an application as provided in subsection (a), any dissenter who
made a demand and who has not already settled his claim against the
corporation may do so in the name of the corporation at any time within 30
days after the expiration of the 60-day period. If a dissenter does not file
an application within the 30-day period, each dissenter entitled to file an
application shall be paid the corporation's estimate of the fair value of the
shares and no more, and may bring an action to recover any amount not
previously remitted.
SECTION 1580. COSTS AND EXPENSES OF VALUATION PROCEEDINGS
(A) GENERAL RULE.--The costs and expenses of any proceeding under section
1579 (relating to valuation proceedings generally), including the reasonable
compensation and expenses of the appraiser appointed by the court, shall be
determined by the court and assessed against the business corporation except
that any part of the costs and expenses may be apportioned and assessed as the
court deems appropriate against all or some of the dissenters who are parties
and whose action in demanding supplemental payment under section 1578
(relating to estimate by dissenter of fair value of shares) the court finds to
be dilatory, obdurate, vexatious or in bad faith.
(B) ASSESSMENT OF COUNSEL FEES AND EXPERT FEES WHERE LACK OF GOOD FAITH
APPEAR.--Fees and expenses of counsel and of experts for the respective
parties may be assessed as the court
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deems appropriate against the corporation and in favor of any or all
dissenters if the corporation failed to comply substantially with the
requirements of this subchapter and may be assessed against either the
corporation or a dissenter, in favor of any other party, if the court finds
that the party against whom the fees and expenses are assessed acted in bad
faith or in a dilatory, obdurate, arbitrary or vexatious manner in respect to
the rights provided by this subchapter.
(C) AWARD OF FEES FOR BENEFITS TO OTHER DISSENTERS.--If the court finds that
the services of counsel for any dissenter were of substantial benefit to other
dissenters similarly situated and should not be assessed against the
corporation, it may award to those counsel reasonable fees to be paid out of
the amounts awarded to the dissenters who were benefitted.
B-6
ANNEX C
[OPINION OF GOLDMAN, SACHS & CO. TO BE FILED WITH DEFINITIVE PROXY STATEMENT
IN THE FORM ATTACHED TO THE OFFER TO PURCHASE DATED AUGUST 22, 1997 RELATING
TO PURCHASER'S OFFER TO PURCHASE ALL OF THE ISSUED AND OUTSTANDING SHARES OF
COMMON STOCK, WITHOUT PAR VALUE, OF THE COMPANY]
C-1
RHONE-POULENC RORER INC.
500 ARCOLA ROAD
COLLEGEVILLE, PA 19426-0107
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
OF RHONE-POULENC RORER INC.
The undersigned hereby appoints Michel de Rosen, Richard T. Collier, and
Guillaume Prache and each of them, with the power of substitution, attorneys to
vote the number of shares the undersigned would be entitled to vote if
personally present at the Annual Meeting of Shareholders of Rhone-Poulenc Rorer
Inc., in Collegeville, Pennsylvania, at 10:00 a.m., local time, on [ ] [ ],
1997 and any adjournment or postponement thereof, for the transaction of such
business as may come before the meeting.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned. If no direction is given, this proxy will be voted FOR the
approval and adoption of the Merger Agreement.
THE BOARD OF DIRECTORS OF THE COMPANY, BY UNANIMOUS VOTE OF ALL DIRECTORS
PRESENT AND VOTING, RECOMMENDS A VOTE FOR THE APPROVAL AND ADOPTION OF THE
MERGER AGREEMENT.
1. Approve and adopt the Merger Agreement as described in the Company's Proxy
Statement.
[_] FOR [_] AGAINST [_] ABSTAIN
2. In their discretion with respect to such other matters as may properly
come before the Meeting or any postponement or adjournment thereof.
(Continued, and to be dated and signed, on the other side)
(Continued from other side)
(Please sign, date and return this proxy in the enclosed postage prepaid
envelope.)
YOUR SIGNATURE SHOULD APPEAR EXACTLY AS
YOUR NAME APPEARS IN THE SPACE AT THE
LEFT. WHEN SIGNING IN A FIDUCIARY OR
REPRESENTATIVE CAPACITY, PLEASE SIGN YOUR
FULL TITLE AS SUCH. IF SHARES ARE HELD IN
MORE THAN ONE CAPACITY, THIS PROXY WILL BE
DEEMED TO VOTE ALL SHARES HELD IN ALL
CAPACITIES. IF YOUR IMPRINTED NAME IS
INCORRECT, PLEASE PRINT YOUR CORRECT NAME
IN THE SPACE BELOW.
Date: ______________________________ , 1997
___________________________________________
SIGNATURE
___________________________________________
TITLE
VOTES MUST BE INDICATED [X] IN BLACK OR BLUE INK.
